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25Apr2016 Market Update: Hopes For A Minor Bull Rally Today Are Off The Casino Tables, Crude Prices Volatile But Going Nowhere, Short-Term Indicators Bearish

Written by Gary

The Dow Jones Industrial Average slid more than 100 points after the opening as a drop in oil prices, lackluster quarterly earnings and an impending Federal Reserve meeting weighed on investor sentiment. The major indexes have traded sideways for most of the morning with a fractional gain off the morning lows.


Here is the current market situation from CNN Money

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St. dragged down by oil, lackluster earnings

(Reuters) - Wall Street was lower on Monday as a drop in oil prices, lackluster quarterly earnings and an impending Federal Reserve meeting weighed on investor sentiment.

USA Today publisher Gannett makes unsolicited bid for Tribune

(Reuters) - Gannett Co Inc, publisher of USA Today, said it offered to buy Tribune Publishing Co in a deal valued at about $815 million, including debt, but the owner of the Los Angeles Times and Chicago Tribune refused to begin "constructive" talks.

Valeant names Papa CEO after he resigns from Perrigo

(Reuters) - Valeant Pharmaceuticals International Inc named former Perrigo Co Plc head Joseph Papa as its chief executive officer on Monday to work on righting the company.

Saudi prince unveils sweeping plans to end 'addiction' to oil

RIYADH (Reuters) - The powerful young prince overseeing Saudi Arabia's economy unveiled ambitious plans on Monday aimed at ending the kingdom's "addiction" to oil and transforming it into a global investment power.

New U.S. home sales drop on sharp decline in the West

WASHINGTON (Reuters) - New U.S. single-family home sales unexpectedly fell in March, but the decline was concentrated in the West region, suggesting that the housing market continued to steadily improve.

Bangladesh Bank hackers compromised SWIFT software, warning issued

(Reuters) - The attackers who stole $81 million from the Bangladesh central bank probably hacked into software from the SWIFT financial platform that is at the heart of the global financial system, said security researchers at British defense contractor BAE Systems.

Oil down; Morgan Stanley, Barclays warn of bearish forces

NEW YORK (Reuters) - Oil prices fell as much as 2 percent on Monday after an inventory spike at a key storage base for U.S. crude and leading banks in the commodities trade said a two-month long rebound has defied fundamentals.

If Mitsubishi Motors needs help, group firms may look away

TOKYO (Reuters) - A decade ago, Japanese automaker Mitsubishi Motors survived a defect cover-up scandal through a bail-out by other Mitsubishi Group companies. Now, facing uncertainty and potential liabilities from a new scandal, it may be on its own.

El-Erian says this week's Fed meeting to set stage for June hike

NEW YORK (Reuters) - Mohamed El-Erian, the chief economic adviser at Allianz SE , said on Monday he expects this week's Federal Reserve policy-setting meeting to set the stage for a June interest rate hike.

The Status Quo Has Failed And Is Beyond Reform

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The truth is the usual menu of reforms can't stop this failure, so we have to prepare ourselves for the radical transformations ahead.

That the status quo--the current pyramid of wealth and power dominated by the few at the top--has failed is self-evident, but we can't bear to talk about it. This is not just the result of a corporate media that serves up a steady spew of pro-status quo propaganda--it is also the result of self-censorship and denial.

Why do we avoid talking about the failure of the status quo? We know it is beyond reform, and we're afraid: afraid that the promises of financial security cannot be kept, afraid of our own precariousness and fragility, and afraid of what will replace the status quo, for we all know Nature abhors a vacuum, and when the status quo crumbles, something else will take its place.

We all prefer the comforting promises of vast central states. No wonder so many Russians pine for the glory days of the Soviet Union, warts and all.

But the central bank/state model has failed, and history can't be reversed. The failure is not rooted in superficial issues such as which political party is in power, or which regulations are enforced; the failure is structural. The very foundation of the status quo has rotted away, and brushing on another coat of reformist paint will not save our societal house from collapse.

Yet those wh ...

"China Is Hoarding Crude At The Fastest Pace On Record"

In the aftermath of China's gargantuan, record new loan injection in Q1, which saw a whopping $1 trillion in new bank and shadow loans created in the first three months of the year, many were wondering where much of this newly created cash was ending up.

We now know where most of it went: soaring imports of crude oil.

We know this because as the chart below shows, Chinese crude imports via Qingdao port in Shandong province surged to record 9.86 million metric tons last month based on data from General Administration of Customs.

As Energy Aspects pointed out in a report last week, "Imports through Qingdao surged to another record as teapot utilization picked up, leading to rising congestion at the Shandong ports."

And sure enough, this kind of record surge in imports should promptly lead to another tanker "parking lot" by China's most important port. This is precisely what happened when according to reports, some 21 crude oil tankers with ~33.6 million bbls of capacity signaled from around Qingdao last Monday, according to data compiled by Bloomberg. 12 of those vessels, with about 18 million bbls, were also there 10 days earlier, data show.

As Bloomberg adds, port management had met to discuss measures to ease congestion, citing an official at Qingdao port's general office, however for now it appears to not be doing a great job. Incidentally, putting Qingdao oil traffic in context, last year the port handled 69.9 million metric tons overseas oil shipments, or ~21% of nation's total crude i ...

Fund CIO Explains "The Only Way To Make Money This Year"

Now that everyone has finally figured out that the only way to not get steamrolled in this "market" is to frontrun central banks - something we have been pounding the table on since mid-2009 when we said that the only two financial statements that matter are the Fed's H.4.1 and H.3 - and not just central banks, but central banks who are now so intimately intertwined in capital markets that the moments they adjust one variable, they unleash a torrent of "reflexive" actions which promptly leads to a cascading effect across the markets and promptly undoes whatever it is that they wanted to do in the first place (Yellen's recent failed attempt at hiking rates which unleashed chaos in China being the best example), we are glad to see that what was until recently yet another apocryphal "conspiracy theory" is the de facto norm.

In the latest note from Eric Peters, CIO of One River Asset Management, he cites another CIO who basically breaks down the convoluted pathway in which monetary policy "works" as of this moment, and explains what, in a world in which "central banks are mistaken", is "the only way to make money this year."

From Peters:

"The world doesn't work anymore when interest rates go up, said the CIO, explaining his model. œSince the taper tantrum, the S&P 500 has gone nowhere. Each time bond yields rise, with a lag of 3mth (but continually getting shorter), risk assets have fallen. œAt first people felt it was ok, any Fed tightening would be offset by ECB and BOJ easing. But this simply sparked a dollar rally that in turn tightened global financial conditions. œThe issue is that the world is not growing fast enough to service its debt, so if rates rise you get massive defaults.

"The Japanese private sector a ...

The Fed Fights the Tape Over Interest Rates

Despite the Federal Reserve's protests to the contrary, the market remains unconvinced a rate increase is coming.

Big Pharma Gets Solace From Europe

Are the transatlantic tables turning in the pharmaceuticals industry? Switzerland's Novartis says it is seeing faster uptake of heart-failure drug Entresto in Europe than in the U.S.

Global Bond Yields: Still Too Low for Comfort

Fears about the global economy have receded. So why are bond yields still so low?

The Wall Street Journal: Facebook developing stand-alone camera app

Facebook is developing a camera-first format aimed at motivating users to create content rather than just consume content.

The Fed: What to expect in the Fed's statement

The Fed's statement released after this week's meeting will leave open the possibility of an interest rate hike at their next meeting in June but will stop well short of promising action.

The Wall Street Journal: Honeywell unveils $5 billion stock buyback plan

Honeywell sets new $5 billion stock repurchase program, as its strong balance sheet allows it flexibility to reinvest in its businesses.

Earnings Summary for Today

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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