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09May2016 Pre-Market Commentary: Futures Higher For The Opening, But Melting Towards The Red, Crude Prices Remain High As Canadian Wildfires Continue To Rage

Written by Gary

US stock index futures are fractionally higher this morning, but appears to be melting off after Friday's weaker than expected non-farm payrolls number caused investors to revise down the likelihood of the Fed hiking rates in June.

Canadian crude is down a million bbs a day as operators curbed their activities and officials warned they could be fighting the blaze for weeks. Markets expected to open higher.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.60% while France's CAC 40 is up 1.21% and London's FTSE 100 is up 0.27%.

Indexes

The June S&P 500 was higher overnight as it consolidates some of the decline off April's high. Stochastics and the RSI are oversold but are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing at 2072.83 are needed to confirm that a short-term low has been posted.

If June extends the decline off April's high, the reaction low crossing at 2027.00 is the next downside target. First resistance is the 20-day moving average crossing at 2072.83. Second resistance is April's high crossing at 2105.00. First support is the reaction low crossing at 2027.00. Second support is the 38% retracement level of the February-April-rally crossing at 1993.13.

S&p trying to move back below lower parallel.

https://www.dailyfx.com/forex/technical/article/cross-market_technical_update/2016/05/05/SP-500-Buyers-Need-to-Step-Up-or-Step-Aside-PRtech.html

What Is Moving the Markets

Here are the headlines moving the markets.

Oil rises after Canada fire knocks out production

LONDON (Reuters) - Oil rose on Monday after Canada's most destructive wildfire in recent memory knocked out over a million barrels in daily production capacity, but caution among investors prevented a return to late April's 2016 price highs.

Oil gains, German orders help stocks recover

LONDON (Reuters) - European stock markets bounced back from their worst week since early February with a more than 1 percent gain on Monday, a rise in oil prices and strong economic numbers from Germany outweighing worries over China.

China stocks plunge again as hopes for economic recovery fade

SHANGHAI (Reuters) - China stocks fell sharply again on Monday, reaching eight-month lows, as investors saw hopes for a strong economic recovery fade and worried about fresh regulatory curbs on speculation.

Redstone legal drama could come to abrupt end

(Editor's note: paragraph 5 contains language that may offend some readers.)

China curbs Baidu healthcare ads business after student's death

BEIJING (Reuters) - Chinese regulators imposed limits on the lucrative healthcare adverts carried by Baidu Inc on Monday following the death of a student who underwent experimental cancer treatment he found via China's biggest search engine.

Exclusive: Technicians from SWIFT left Bangladesh Bank exposed to hackers - police

DHAKA/BOSTON (Reuters) - Bangladesh's central bank became more vulnerable to hackers when technicians from SWIFT, the global financial network, connected a new bank transaction system to SWIFT messaging three months before a $81 million cyber heist, Bangladeshi police and a bank official alleged.

Fed's Evans favors 'wait and see' on more rate hikes

LONDON (Reuters) - The U.S. economy's fundamentals are solid and growth this year should pick up to around 2.5 percent, but the Federal Reserve's current 'wait and see' approach to monetary policy is appropriate, a Fed policymaker said on Monday.

Car parts maker Bosch to open business, hire staff in Iran

FRANKFURT (Reuters) - German auto parts supplier Robert Bosch is opening an office in Tehran and plans to hire 50 staff by the end of this year because it sees growing potential for Iran's car market following the lifting of international sanctions.

Lending Club's CEO resigns after internal probe

(Reuters) - Online lending platform operator Lending Club Corp said its Chief Executive and Chairman Renaud Laplanche has resigned following an internal review, which revealed a violation of the company's business practices.

BofA Says It's Time To Sell WTI Crude With A Price Target As Low As $35; Here's Why

Following this weekend's news that the massive Calgary fire, while still spreading, may soon be under control courtesy of some wet weather and favorable winds, as well as the stunner from Saudi Arabia that Ali al-Naimi was out, replaced with a puppet of the hawkish deputy drown prince Mohammed bin Sultan - a succession many saw as bearish for future oil prices - algos had refused to give up on recent momentum, and pushed WTI just why of $46/bbl overnight. However, to Bank of America this proved too much, and the bank's strategist Paul Ciana has come out with a new trading recommendation as follows: "Sell WTI Crude Oil: Sell crude oil into event driven stress at $45.75, stop at $48.25. Target market profile levels of $38.50 and possibly $35.25."

If this was Goldman, we would say sell everything and buy WTI on 3x margin. With BofA, however, we are less sure - this may even be a correct recommendation...

Here are the details from the BofA technician:

Price action at fair value resistance suggests correction

Three intraday crude oil rallies were sold last week resulting in prices closing near the open of the trading day. According to Japanese candlestick analysis; Wednesday, Thursday and Friday each formed a doji* candle suggesting indecision amongst market participants to effectively push prices higher. On April 29th crude oil reached an intraday high of $46.78 and closed near the open of the day forming the first of four doji candles in six trading sessions. Thursday can loosely be considered a gravestone** doji, which as the name implies is bearish.

Aggregate volume and open interest bearishly diverge

The rally to the YTD high occurred on light volume. Considering the total (aggregate) volume across all WTI crude oil futures contracts, volume during the rally in the latter half of April was less than the rolling 15 day average. The decline from the YTD high occur ...

P2P Bubble Bursts? LendingClub Stock Plummets 25% After CEO Resigns On Internal Loan Review

Back in February we showed that it is not only China which is troubled by non-performing loans: America's own nascent private Peer 2 Peer industry was having very similar issues, evident most notably in the books of category "leader" LendingClub, whose write-offs had soared to nearly double the company's own forecasts.

First, a quick reminder on the industry dynamics over the past year. As we reported last May, P2P loan volume was set to surpass $76 billion in 2015 and one driver of the boom is demand from the likes of BlackRock, Morgan Stanley, and Goldman, who had all underwritten securitizations of loans originated on P2P platforms like LendingClub, the number one player in the space. For those unfamiliar, P2P loans create the conditions whereby borrowers can refi high-interest debt via personal loans, transferring credit risk from large financial institutions to private lenders in the process.

It's not entirely clear what the implications of that shift might ultimately be, especially if the market continues to grow rapidly. œOne thing, we said, œis clear : Using a relatively low-interest P2P loan to pay off a high-interest credit card is no different in principle than using a new credit card that comes with a teaser rate to pay off an old credit card. In the end, the borrower will very often max out the old card again and thus end up with twice the original amount of debt.

The same dynamic applies to P2P lending. œSo what's to stop consumers from levering their credit cards back up? Bloomberg asked last year. œSuch behavior could spell bad news for investors in P2P loans if an interest rate hike or an un ...

Frontrunning: May 9



China stocks plunge again as hopes for economic recovery fade (Reuters)

European Stock Gains Defy China Data That Hurt Metals; Oil Rises (BBG)

Yen falls after Tokyo warning (Reuters)

Soros Chart Signals BOJ Bond Buying Already Enough to Weaken Yen (BBG)

Dollar Jump Catches Traders Short in One More Currency Calamity (BBG)

Even China's Party Mouthpiece Is Warning About Debt (BBG)

Fed's Evans sees U.S. growth picking up to 2.5 percent, favors 'wait and see' on rates (Reuters)

Alberta Fire Set to Move From Oil-Sands Sites in Wind Shift (BBG)

Canada hopes cooler weather aids battle with Alberta wildfire (Reuters)

Noble Group Slumps Most Since '11 After Fitch Debt Ratings Move (BBG)

Bill Gross, Mohamed El-Erian Warn Against Counting the Fed Out (

Oil's Blazing Canadian Wake-up Call

Wildfires near Canada's Fort McMurray have temporarily brought the global oil market back into balance and should serve as a sign the glut isn't permanent.

Here Are the Cracks in China's Steel Story

Steel exports reinforce the view that easy money-fueled speculation is the prime mover of steel and iron ore prices, not underlying demand.

GoPro: Its Drone Must Fly High

Delaying its first quadcopter is a painful decision, but GoPro needs to get this product right.

April 2016 CBO Monthly Budget Review: Total Receipts Were Less Than Expected

from the Congressional Budget Office

The federal budget deficit was $352 billion for the first seven months of fiscal year 2016, the Congressional Budget Office estimates - $69 billion more than the shortfall recorded in the same span last year. Outlays were 4 percent higher than they were at this time last year and receipts were 1 percent higher.

How to decide how much of your 401(k) should be in stocks

It has been seven years since the start of this bull market for stocks in the U.S. Is it time for investors to adjust the equity allocations in their retirement portfolios?

Need to Know: Get your affairs in order because this rare technical signal is flashing red

The U.S. dollar, which has been under pressure since late last year, is coming off its best week of the 2016. While it wasn't a huge move, it was enough to delivered a hit to currency traders, who bet heavily on the short side.

Freeport-McMoRan to sell African mining stake for $2.7 bln

Freeport-McMoRan Inc. said it would sell its stake in an African surface-mining operation to a Chinese mining-and-processing firm for $2.65 billion in cash, as Freeport looks to pay down debt.

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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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