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28Apr2016 Market Close: US Markets Closed Down Over 1%, Crude Prices Still Climbing To The $48 Resistance

Written by Gary

US equities closed down over one percentage point after it was unable to best yesterday's highs. The DOW closed down 211 points near the session lows and the near-term indicator remain bearish with a promise of a repeat performance tomorrow. Crude Prices melted up to new highs not seen since early November, 2015 and the US dollar settled at the bottom level of its support zone..

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street drops after BOJ decision; Apple weighs

NEW YORK (Reuters) - U.S. stocks closed down on Thursday as the Bank of Japan's shocking call to cap monetary stimulus continued to rattle investors while a late day decline in Apple shares on remarks from billionaire investor Carl Icahn added to selling pressure.

U.S. economy stalls in first quarter as activity weakens broadly

WASHINGTON (Reuters) - U.S. economic growth braked sharply in the first quarter to its slowest pace in two years as consumer spending softened and a strong dollar continued to undercut exports, but a pick-up in activity is anticipated given a buoyant labor market.

Facebook in class of its own as ad revenue soars

After underwhelming results from Apple Inc , Google Inc and other big tech names, investors finally found a friend in Facebook Inc after the company shredded Wall Street's forecasts for revenue, profit and user growth.

Carl Icahn says he sold entire Apple stake on China woes: CNBC

NEW YORK (Reuters) - Billionaire activist investor Carl Icahn said Thursday he had sold his entire stake in Apple Inc, citing the risk of China's influence on the stock.

Stocks ride roller coaster into second longest bull market

NEW YORK (Reuters) - The first few months of the year have given investors both severe selloffs and powerful rallies, and U.S. stocks have now limped into the record books with the second-longest bull market in history - with an asterisk.

Abbott to buy St. Jude for $25 billion to boost heart devices

(Reuters) - Abbott Laboratories said on Thursday that it would buy St. Jude Medical Inc in a $25 billion deal to expand its heart device business, but investors worried that the acquisition would not pay off as promised.

Comcast to buy DreamWorks Animation for $3.8 billion

(Reuters) - Comcast Corp, the owner of NBCUniversal, said on Thursday it would buy Hollywood studio DreamWorks Animation SKG Inc for $3.8 billion to boost its family-friendly offerings and help it take on media conglomerate Walt Disney. The acquisition will add major children's franchises to Universal's film library such as "Shrek," "How to Train Your Dragon" and "Kung Fu Panda," which it could tap for its growing theme parks and consumer products businesses.

VW sees light at end of tunnel after U.S. emissions deal

WOLFSBURG, Germany (Reuters) - Volkswagen , battling to rebuild its reputation following a scandal over rigged emissions tests, said on Thursday it could see light at the end of the tunnel following a deal with U.S. authorities last week.

Truck sales drive record results at Ford; shares up

DETROIT (Reuters) - Ford Motor Co reported first-quarter net income that more than doubled thanks to robust deliveries of pickup trucks in North America and a profit rebound in Europe, but cautioned that results in the second half of the year would likely not be as strong.

Kamikaze-Kuroda & Carl Icahn Crush Facebook-Driven Stock-Feeding Frenzy

There is only one clip for this...

It started in Japan...when Kuroda let the world down... 1500 NKY points down!!

And then China stomped on its latest bubble...

But then US GDP printed its worst level in 2 years... and stocks took off!! soaring all the way to the edge of Kuorda's Kamikaze moment before Carl Icahn upset everyone...

Stops run to Kuroda's cliff and then icah npushed the market over the edge...

Of course, Nasdaq was outperforming thanks to Facebook out of the gate but once the selling started everything collapsed...

Earnings "Beats" & The Warning In Today's GDP Data

Submitted by Lance Roberts via RealInvestmentAdvice.com,

Earnings Are Beating Estimates Like Crazy

In a not so surprising outcome, the number of companies beating earnings estimates currently is above the 12-quarter average. Via Zacks Research:

"While growth remains problematic, actual results are turning out to be less bad relative to the low levels to which estimates had fallen ahead of this reporting cycle. More companies are coming out with positive surprises for both earnings as well as revenues."

Zacks-Earnings-Update-042816

"Total earnings for the 209 S&P 500 members that have reported results are down -5.5% from the same period last year on -1.6% lower revenues, with 75.6% beating EPS estimates and 56% coming ahead of top-line expectations."

So, this is all good news and a reason to buy stocks, right? Not so fast.

The problem, as shown in the chart above, is that the pace of growth in earnings is far weaker than previous averages. Furthermore, while Wall Street will point to the "beat rate" as a reason why the current "bull market" is still intact, it has been a function of excessively low expectations.

Why Is JPM's "Quant Guru" Suddenly Worried About The "Endgame"

When JPM quant Marko Kolanovic released his latest report today, we were expecting him to read his latest insight on the positioning of quant funds, on the relative imbalance of risk parity, or perhaps whether market gamma was suggesting that the market is poised for an inflection point, either lower or higher. Instead, we were surprised to read an extended analysis looking at how trapped the "out of options" central banks are, what the next steps are for the global economy, how the market is now as overvalued as it was before the 2000 crash, how rising rates "would make the current S&P 500 level look like a bubble", and the exhaustion of all available policy options, which he dubbed the "endgame." To wit:

If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying. This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

We were most surprised by Kolanovic's strong case to buy gold, although considering it comes just one week after a Pimco economist dared to propose that central banks should monetize gold next in an attempt to massively boost inflation expectations (while send the price of gold to $5,000), perhaps we are not that surprised.

* * * .

We are confident readers will find it just as an engaging read.

From JPM's Marko Kolanovic

Central banks, Inflation, and Debt Endgame

With the Fed and BoJ meetings behind us, markets are increasingly accepting that central banks are nearly out of options. Central banks can hardly raise interest rates ...

Focused On The Wrong End Of Oil

Submitted by Jeffrey Snider via Alhambra Investment Partners,

The front end of the oil price complex continues to get all the attention because it seems to further the more optimistic narrative. It is the back end, however, that is most significant. The nearer maturities of the futures curve reflect more the funding environment than the fundamental view of oil and the economy. The lack of continued liquidation has "allowed" investors (and speculators who are no longer, apparently, deserving of mainstream scorn) to bid up the front, but the outer years remain flat and unimpressed.

SABOOK Apr 2016 WTI Curves

The entire curve has moved higher, to be sure, but the $6 or so in 2018 maturities and out isn't nearly as impressive as the $18 at the front. Viewing the curve as it is now compared to what it was entering the last liquidation wave, however, reveals the changed disposition especially upon more macroeconomic considerations.

SABOOK Apr 2016 WTI Curve In and Out

The steepness is almost gone with the flattening centered around $50. At one time not all that long ago, such a low level was unthinkable. A year ago, the curve was settling more toward $65 to $70. The difference is reality, where the gravity of desperate funding "pulled" on the f ...

Valeant: Swapping Scandal for Growing Pains

Investors will need patience as Valeant cleans house.

Facebook Results: Investors Like Living in Zuckerberg's World

Facebook's new class of shares is a reminder of Mark Zuckerberg's control, but the company's strong results mean investors don't mind.

Why the Bank of Japan Held Fire for Another Day

The Bank of Japan's lack of action caught markets by surprise. But that doesn't mean it is done easing.

Cable companies are adding subscribers again

So far in 2016, the major cable companies are adding subscribers, easing investor fears about cord cutting.

Where to buy a home if you haven't saved for a big down payment

Recent research shows the average required initial mortgage payment is only getting lower for hopeful homeowners.

Summary of Economic Releases this Week

Real Time Economic Calendar provided by Investing.com.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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