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12May2016 Pre-Market Commentary: US Futures Are Fractionally Higher, WTI Crude Melts Higher Along With The US Dollar, Sudden Market Reversals Possible

Written by Gary

US stock future indexes are fractionally up this morning (SPY +.6%) helped by a rise in oil prices, after the International Energy Agency indicated that we could see a dramatic reduction in the supply glut later this year. WTI crude has climbed into the high 46's and the US dollar continues to trend higher. Markets are expected to open higher even though yesterday's indicators suggested otherwise. Keep a sharp lookout.

Here is the current market situation from CNN Money

European markets are higher today with shares in France leading the region. The CAC 40 is up 0.94% while Germany's DAX is up 0.55% and London's FTSE 100 is up 0.39%.


June Nymex crude oil was higher overnight after the International Energy Agency said that global oil stocks will experience a 'dramatic reduction' in the second half of the year due to strong demand and falling supply by some major producers. A series of production outages around the globe have also taken barrels out of the market in recent weeks, providing support to prices.

Stochastics and the RSI are diverging but are neutral to bullish signaling that sideways to higher prices are possible near-term. If June resumes this year's rally, the reaction high crossing at 48.02 is the next upside target. Closes below the 20-day moving average crossing at 44.13 are needed to confirm that a short-term top has been posted.

First resistance is the reaction high crossing at 46.78. Second resistance is the reaction high crossing at 48.02. First support is the 20-day moving average crossing at 44.13. Second support is the reaction low crossing at 39.00.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures higher a day after consumer stocks-led rout

(Reuters) - U.S. stock index futures were higher on Thursday, a day after a rout led by consumer stocks led to the Dow post its biggest one-day drop in three months.

Fed to delay rate hike until September on tame inflation outlook: Reuters poll

(Reuters) - The U.S. Federal Reserve will likely wait until September before raising interest rates again, stretching to nine months the time since its first hike in nearly a decade, as it waits for clear signs inflation is picking up, a Reuters poll found.

Germany's Bayer considering bid for Monsanto: Bloomberg

(Reuters) - Germany's Bayer AG is exploring a bid for U.S. seed company Monsanto Co , Bloomberg reported, citing people familiar with the matter.

Nissan buying $2.2 billion controlling stake in scandal-hit Mitsubishi Motors

YOKOHAMA, Japan (Reuters) - Nissan Motor Co has agreed to buy a 34 percent stake in Mitsubishi Motors Corp, taking de facto control with a $2.2 billion bet that bails out its smaller, scandal-hit rival.

U.S. crude hits six-month high after IEA sees tighter supply

LONDON (Reuters) - U.S. oil prices hit a six-month high on Thursday, supported by data from the International Energy Agency (IEA) showing tightening supply, in addition to a surprise drop in U.S. crude inventories.

Sharp names Foxconn executive as CEO to spearhead revival

TOKYO/TAIPEI (Reuters) - Japan's Sharp Corp has named a top Foxconn executive as CEO and said it would seal a $3.5 billion stake sale to the Taiwanese firm ahead of schedule, as the display maker seeks a return to profit in the face of slowing smartphone sales.

Exclusive: Hyundai to make low-cost SUVs to battle Chinese rivals - sources

SEOUL (Reuters) - Hyundai Motor and affiliate Kia Motors plan to launch three low-cost sport utility vehicles (SUVs) in China, their biggest market, from next year, people with knowledge of the plans told Reuters.

Kerry seeks to soothe European bank nerves over Iran trade

LONDON (Reuters) - U.S. Secretary of State John Kerry told Europe's top banks they have nothing to fear from resuming business with Iran, as long as they make proper checks on trade partners and pursue "legitimate business".

Chesapeake says swapped debt for 4 percent of equity over past week

(Reuters) - Debt-laden Chesapeake Energy Corp , the second-largest U.S. natural gas producer, said on Thursday it had issued or agreed to issue about 4 percent of its outstanding shares in exchange for debt over the past week.

Full-Blown Fearmongering: Bank Of England Warns Of Recession, "Sharp" Sterling Fall If UK Leaves Europe

While the Bank of England voted unanimously 9-0 to keep rates on hold at 0.5%, what the market was far more focused on the BOE's latest gloomy scenarios about what would happen should the UK vote for Brexit on June 23. The BOE did not disappoint, and cautioned that that sterling could fall "sharply" and unemployment would probably rise, while in the press conference after the announcement BOE governor and former Goldmanite Mark Carney went all the way warning Brexit "could possibly lead to recession."

That this takes place just days after UK's David Cameron warned of a World War threat should the UK leave the EU is not surprising: after all the whole point is to scare the UK population into submission and into a vote to stay in the EU.

Among the warnings from the BOE's fire and brimstone forecast was that the "Sterling is also likely to depreciate further, perhaps sharply. This combination of influences ... could lead to a materially lower path for growth and notably higher path for inflation."

Which is ironic: in a world in which every central bank is scrambling to crush its own currency, shouldn't the BOE then welcome any event that will send the sterling "sharply" lower? Questions, questions...

Meanwhile, the torrent of doom and gloom "if Brexit happens" continues. As Reuters puts it, "British voters have faced a raft of reports from the government and international bodies in recent weeks warning of the dangers of leaving, and the International Monetary Fund is expected to weigh in again on Friday." All of them have been uniformly bearish which likely means that the outcome from a Brexit would be quite favorable.

Earlier this week, Britain's National Institute for Economic and Social Rese ...

Why Hedge Funds Have Rarely Been More Bearish: Highlights From The SALT Conference

Following last week's Sohn Conference, where the overarching theme was one of prevailing bearishness topped by Stanley Druckenmiller's near-apocalyptic forecast that only gold will be left standing after all confidence evaporates in the "magic people" known as central bankers, yesterday some 1,800 hedge fund industry executives gathered in Las Vegas at the SkyBridge Alternatives Conference or SALT, where the prevalent concern about the future of the world continued, driven primarily by worries about China.

As Bloomberg puts it, the mood "contrasts with last year's meeting, where many money managers expressed confidence in China. Last May, Passport Capital's John Burbank -- now a China bear -- predicted that China would come through its economic slowdown œstrong and positive. Michael Novogratz, who at the time ran Fortress Investment Group LLC's macro fund business, predicted that the country was on the brink of œone of the greatest bull markets we've seen.

Not so much this year. The conflict of opinion culminated during a "fiery exchange" between money managers Emanuel Friedman, Milton Berg and Don Brownstein "broke with the polite decorum" on the topic was China.

Friedman, co-founder of hedge fund EJF Capital, said he was reminded of overblown reactions to the late 1990s Asian financial crisis: œPeople said, 'Well Korea, it's finished, it's collapsed. People are in the streets. '

œThe issue is not that, shot back fellow panelist Berg of MB Advisors. œThe issue is not that! Friedm ...

Regulators Want To Know What Goldman Was Doing In The Panama Papers Database

Since the International Consortium of Investigative Journalists (ICIJ) released what is referred to as the "Panama Papers", there has been a flurry of activity taking place to see just who was involved, and to what extent.

Earlier this week, the ICIJ released a searchable database containing nearly 214,000 offshore entities created in 21 jurisdictions to make it easier for those who wish to continue to dig through the data.

It turns out that New York State's financial regulator, the New York Department of Financial Services (NYDFS) did want to search the database. What investigators found from the published database and other leaked documents is that none other than Goldman Sachs and three other banks that are licensed by the state of New York had set up Panamanian shell companies. The other banks are BNP Paribas SA, Canadian Imperial Bank of Commerce and Standard Chartered Plc according to Bloomberg.

As it did with 13 other banks last month (including Deutsche Bank, Credit Suisse, Commerzbank, ABN Amro Group, and Societe Generale), the NYDFS sent a letter to Goldman asking the bank to describe any internal or external investigations under way that relate to Mossack Fonseca or the shell companies it sponsored, including any probes launched by regulators in the U.S. or abroad.

Frontrunning: May 12

Brazil's Rousseff undone by hubris, economic missteps (Reuters)

Trump's Early Backers on Capitol Hill See Their Profile Raised (WSJ)

Oil prices rise toward six-month high, tightening supply (Reuters)

EIA says outlook for oil brightens as output disruptions erode surplus (Reuters)

Investors Fleeing $9 Trillion of Negative Yields Fuel Bond Binge (BBG)

Beaten-Up Hedge Fund Billionaires Reminisce About 'Golden Age' (BBG)

Hong Kong first-quarter economic growth likely weakest in 4 years (Reuters)

Gold Fund Buying Frenzy Spurs Demand to Second-Highest Ever (BBG)

Voters, lawmakers resist French government over labor reform (Reuters)

Blackstone Is Pulling the Plug on Online Consumer Loans (BBG)

Theranos Executive Sunny Balwani to Depart Amid Regulatory Probes (

Spring Hasn't Sprung for Wall Street's Bond Traders

Bond-trading volumes rose in April, but big Wall Street banks remain under pressure

Untold Story That Could Revive Autohome Bidding War

Chinese car website Autohome is increasingly looking undervalued and its shareholders are looking underpaid.

Why Zurich Insurance Group Needs a Lot of Patience

The Swiss insurer has a new chief executive, but it isn't yet clear what he means for shareholders.

07 May 2016 Initial Unemployment Claims Rolling Average Again Worsened. 62 Consecutive Weeks Of Initial Claims Below 300,000

Weekly Initial Unemployment Claims

The market expectations for weekly initial unemployment claims (from Bloomberg) were 263,000 to 275,000 (consensus 267,000), and the Department of Labor reported 294,000 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 258,000 (reported last week as 258,000) to 268,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

Economic Report: U.S. import prices rise 0.3% for second straight month

The cost the U.S. paid for imported goods rose 0.3% in April, largely because of higher oil prices.

Economic Report: Jobless claims surge to 14-month high of 294,000

The number of Americans who applied for unemployment benefits in early May jumped for a third week in a row to 294,000, hitting a 14-month high and adding to evidence that the U.S. labor market may have weakened.

Outside the Box: How U.S. and European energy companies can profit from Venezuela's crisis

Venezuela's Petrocaribe policy is no longer the boon it once seemed to be for Caribbean nations. That's creating an opportunity for U.S. energy companies.

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