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05May2016 Pre-Market Commentary: Crude Prices Rise, Stock Futures Higher, Weekly Jobless Claims Higher, Investor Optimism May Be Short Lived

Written by Gary

US stock future indexes are fractionally higher, WTI crude climbing past 46 and the US dollar showing some life. Weekly jobless claims rose by 17,000 to 274,000 last week. Wildfires in Canada's oil sands at Ft. McMurry and Libya in-fighting between rival factions, crude output could fall by 120K barrels per day if tankers continue to be blocked. Markets expected to open higher.

Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.05% while the FTSE 100 gains 0.04%. The CAC 40 is off 0.06%.

Wednesday's Key Earnings

AB Inbev (BUD) -1.6% on unfavorable currency, Brazil turmoil.
Annaly Capital (NYSE:NLY) flat AH following in-line results.
Delphi Automotive (NYSE:DLPH) -4.2% despite doubling its profits.
Energy Transfer Partners (NYSE:ETP) unmoved AH after beating estimates.
Fitbit (NYSE:FIT) -10.4% AH following heavy spending.
Priceline (NASDAQ:PCLN) -7.5% hammered by weak profit guidance.
Shell (NYSE:RDS.A) -2.5% as tumbling oil prices took their toll.
Tesla (TSLA) +3.8% AH after a beat and strong guidance.
Time Warner (NYSE:TWX) +1.6% driven by Turner and HBO.
Transocean (NYSE:RIG) +1.1% AH after topping expectations.
Twenty-First Century Fox (NASDAQ:FOXA) swung AH following a mixed quarter.
Whole Foods (NASDAQ:WFM) +1.1% AH battling a traffic dip in FQ2.
Zynga (NASDAQ:ZNGA) +14.8% AH boosted by big ad gains.

Today's Markets

In Asia, Japan closed. Hong Kong -0.5% to 20429. China +0.2% to 2997. India +0.6% to 25262.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt +0.1%.
Futures at 6:20, Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +3.1% to $45.12. Gold +0.2% to $1277.80.
Ten-year Treasury Yield flat at 1.78%

Today's Economic Calendar

Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 Gallup Good Jobs Rate
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:50 Fed's Bullard speech
4:30 Money Supply
4:30 Fed Balance Sheet

What Is Moving the Markets

Here are the headlines moving the markets.

Alibaba's revenue rises 39 percent as more shoppers buy online

(Reuters) - Alibaba Group Holding Ltd, China's biggest e-commerce company, said fourth-quarter revenue rose 39 percent, beating Wall Street estimates, helped by growth in gross merchandise volume.

Europe shares, oil snap four-day losing streaks

LONDON (Reuters) - European stocks and oil prices snapped a four-day losing streak on Thursday and a rally in bond markets fizzled out as investors began to position themselves for U.S. jobs data.

Oil rallies as Canada fire and Libya violence threaten supply

LONDON (Reuters) - A huge wildfire near Canada's oil sands region and escalating tensions in Libya stoked concern among investors over a near-term supply shortage, driving crude prices up for the first time in a week on Thursday.

Merck posts better-than-expected profit, raises forecast

(Reuters) - Merck & Co Inc reported better-than-expected profit in the first quarter, driven by higher sales of its diabetes drug Januvia and heart drug Zetia.

U.S. bullet train proposals shun public funds, favor private cash

(Reuters) - It took years of lawsuits and political battles for California to finally break ground last year on the nation's first bullet train, which aims to connect San Francisco to Los Angeles by 2029.

China to invest $11.9 billion in aviation infrastructure in 2016: Xinhua

SHANGHAI/SINGAPORE (Reuters) - China will invest 77 billion yuan ($11.9 billion) this year in building aviation infrastructure, the official Xinhua news agency reported late on Wednesday, citing the country's civil aviation regulator.

Cosmetics maker Avon posts surprise loss

(Reuters) - Cosmetics maker Avon Products Inc reported a surprise quarterly loss and a 16 percent drop in revenue as demand fell further in Brazil and China.

Bangladesh Bank officials say to meet NY Fed, SWIFT; seek to recover stolen money

DHAKA (Reuters) - Bangladesh's central bank chief will meet the head of the Federal Reserve Bank of New York and a senior executive from global financial messaging service SWIFT next week to seek the recovery of about $81 million stolen by hackers, officials in Dhaka said.

China regulator to launch campaign to clean up e-commerce, online ads

BEIJING (Reuters) - Chinese authorities will launch a campaign to clean up e-commerce - targeting trademark violations, counterfeit and poor quality products and the faking of transactions to boost a merchant's online rankings, the official People's Daily said.

A "Recovery" Paradox: Job Cuts In 2016 Are Highest Since 2009 As Initial Jobless Claims Tumble

The paradoxical divergence between the government's data on initial jobless claims, which in just over half an hour is expected to print at or close to another multi-decade low, and the actual number of layoff announcements by employers as tracked by Challenger Gray, and which continues to soar is puzzling to say the least.

While one can debate the veracity of the BLS' seasonally adjusted data, one thing is certain: when a company announces it will layoff thousands, it will. So for all those who suggest that all is well with the US jobs picture based on initial claims reports, here is the latest report from Challenger according to which the pace of downsizing increased in April jumped by 35% to 65,141 during the month of April, from the 48,207 layoff announcements in March.

Looking further back, in the first four months of 2016, employers have announced a total of 250,061 planned job cuts, up 24% from the 201,796 job cuts tracked during the same period a year ago. This represents the highest January-April total since 2009, when the opening four months of the year saw 695,100 job cuts in the aftermath of the biggest financial crisis in modern history.

Contrary to popular belief it is not just energy: "We continue to see large scale layoffs in the energy sector, where low oil prices are driving down profits. However, we are also seeing heavy downsizing activity in other areas, such as computers and retail, where changing consumer trends are creating a lot of volatility, said John A. Challenger, chief executive officer of Chall ...

Europe Is Now the Frontline in the War on Cash

Europe has banned the use of 500 bills.

The reason?

They claim these bills are used in money laundering and for drugs. And if you believe that is the concern, you probably believe the earth is flat.

The fact of the matter is that Europe is now the center for misguided Central Planning for monetary policy. ECB President Mario Draghi has cut interest rates not once, not twice, not even thrice, but FOUR times into NIRP.

The end result has been two items:

1) A barely noticeable blip in EU inflation and GDP growth (the former has already rolled over while the latter began to move up even before NIRP)

2) Savers and investors to begin to hoard cash rather than go out and spend it or even better (according to Draghi's thinking) take out loans and spend them too.

NIRP is highly DE-flationary. It is a current tax on capital as well as a future tax on interest income payments. NIRP, in a vulgar fashion, is telling you that you are "screwed" no matter what you do.

Even a basic understanding of human nature suggests that the natural reaction to this is to panic and begin hoard cashing. If you KNOW that the bank is going to charge you for having a deposit, why not take the money out of the bank and put it in a safe where it won't be charged?

This, not drug money and certainly not money laundering, is why the EU decided to ban 500 bills: to stop people from taking their money out of the banks.

After all, if you're moving 20,000 or mo ...

Haunting Pictures Of A Transportation Recession As Freight Rail Traffic Plunges

Submitted by Wolf Richter of Wolf Street

Freight Rail Traffic Plunges: Haunting Pictures of Transportation Recession

292 Union Pacific engines idled in Arizona Desert

Total US rail traffic in April plunged 11.8% from a year ago, the Association of American Railroads reported today. Carloads of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to 944,339 units.

The coal industry is in a horrible condition and cannot compete with US natural gas at current prices. Coal-fired power plants are being retired. Demand for steam coal is plunging. Major US coal miners " even the largest one " are now bankrupt. So in April, carloads of coal plummeted 40% from the already beaten-down levels a year ago. The AAR report:

Rail coal traffic continues to suffer due to low natural gas prices and high coal stockpiles at power plants. Coal accounted for just 26% of non-intermodal rail traffic for US railroads in April 2016, down from 36% in April 2015 and 45% as recently as late 2011.

Only five of the 20 commodity categories saw gains. Of the decliners, coal was the biggest. But petroleum products also plunged 25%, and grain mill products dropped 7%. Even without coal, carloads were down 3% year-over-year.

But it's not just coal. In April, loads of containers and trailers fell 7.5% year-over-year to 1,028,460 intermodal units. They transport goods for re ...

Is The Emerging Markets Rally Built on Flimsy Foundations?

Emerging markets have come in from the cold. But can they retain investors' favor?

Casino Magnate James Packer Learns Art of Letting Go

James Packer's Crown Resorts is selling Melco Crown's shares well below their peak, but the move makes some sense.

Tesla Earnings: It's All About the Dream

Enthusiasm for the Model 3 mass-market car has powered Tesla Motors to lofty heights. But first-quarter results should remind investors that the future isn't too far away.

30 April 2016 Initial Unemployment Claims Rolling Average Worsened. 61 Consecutive Weeks Of Initial Claims Below 300,000

Weekly Initial Unemployment Claims

The market expectations for weekly initial unemployment claims (from Bloomberg) were 256,000 to 271,000 (consensus 262,000), and the Department of Labor reported 274,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 256,000 (reported last week as 256,000) to 258,000. The rolling averages generally have been equal to or under 300,000 since August 2014.

April 2016 Job Cuts Job Cuts Jump to 65K

from Challenger Gray and Christmas

The pace of downsizing increased in April, as US-based employers announced workforce reductions totaling 65,141 during the month

The Margin: Fresh images, videos show the nightmare of Canada wildfires

Thursday brought more terrifying images and fresh evacuations for Alberta, Canada, where a forest fire is raging out of control.

The Wall Street Journal: Turkey's prime minister decides to step down

Turkish Prime Minister Ahmet Davutoglu says he's stepping side, a move that solidifies President Recep Tayyip Erdogan's position as the country's most powerful leader.

Economic Report: U.S. jobless claims climb 17,000 to 274,000

The number of Americans who applied for unemployment benefits at the end of April rose by 17,000 to a five-week high of 274,000, but the pace of layoffs remained extremely low.

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