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13May2016 Pre-Market Commentary: US Financial's Better Than Expected, Crude Volatile Ahead Of Market Opening, US Dollar Jumps Higher, But Investors Remain Concerned Over China And US Financial Stability Issues

Written by Gary

US stock future indexes started out down a half percentage point but have been steadily trending upwards to the unchanged line after a batch of better than expected reports came in this morning. The important Advance Retail Sales, Retail Sales Less Autos and Retail Sales Control Group all came in higher pushing futures higher. Whether or not this good news is sufficient to move the markets higher remains to be seen.


Here is the current market situation from CNN Money

European markets are mixed. The DAX is higher by 0.43%, while the CAC 40 is leading the FTSE 100 lower. They are down 0.33% and 0.21% respectively.

First column is what was reported this morning. The second is what was expected and the third is the last report.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures lower ahead of retail data; oil prices fall

(Reuters) - U.S. stock index futures were lower on Friday as oil prices fell and investors awaited April retail sales data for clues on the strength of the economy.

Apple invests $1 billion in Chinese ride-hailing service Didi Chuxing

(Reuters) - Apple Inc said on Thursday it has invested $1 billion in Chinese ride-hailing service Didi Chuxing, a move that Apple Chief Executive Tim Cook said would help the company better understand the critical Chinese market.

Oil falls as dollar strengthens but traders eye Nigerian outages

LONDON (Reuters) - Oil prices ended a three-day bull run on Friday, falling as a strong dollar weighed and investors cashed in on recent gains, though losses were cushioned by outages in Nigeria that have slashed output there to the lowest in 22 years.

BOJ will act decisively using its 'ample' tools: Kuroda

TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Friday the central bank will act "decisively" to achieve its 2 percent inflation target, stressing that it still has "ample" policy options available if it were to expand stimulus again.

Nissan faces challenges with Mitsubishi but won't impose management: Ghosn

YOKOHAMA, Japan (Reuters) - Nissan Motor Co CEO Carlos Ghosn said restoring Mitsubishi Motors' credibility with consumers will be his top challenge but that Japan's second-biggest automaker will not impose its management on the smaller, scandal-hit car maker.

German minister has summoned Opel to investigative committee: spokesman

BERLIN (Reuters) - Germany's transport minister has summoned carmaker Opel to appear in front of an investigative committee following media reports about suspected emissions rigging, a spokesman said on Friday, adding that the appointment was due to take place next week.

For Deutsche Bank's Cryan, profit can wait

FRANKFURT (Reuters) - Almost one year into his tenure as Deutsche Bank's chief executive, John Cryan says he has ushered in a new culture of openness, rooted out bad behavior and set about untangling the bank's technology.

U.S. jobless claims hit 14-month high; analysts blame Verizon strike

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose last week to a more than one-year high, but economists blamed striking telecommunications workers for the surge and said the data did not signal a deterioration in the overall labor market.

Honda posts loss as it seeks to draw a line under Takata recalls

TOKYO (Reuters) - Honda Motor Co posted a quarterly loss on Friday, hit by massive recall costs for Takata air bags but forecast a rebound this year as it took dramatic steps to put the debacle behind it.

IMF Forecasts 83% Decline of Venezuela's Bolivar by Year's End

In January, the International Monetary Fund (IMF) told us that Venezuela's annual inflation rate would hit 720 percent by the end of the year. The IMF's World Economic Outlook, which was published in April, stuck with the 720 percent inflation forecast. What the IMF failed to do is tell us how they arrived at the forecast. Never mind. The press has repeated the 720 percent inflation forecast ad nauseam.

Since the IMF's 720 percent forecast has been elevated to the status of a factoid, it is worth a bit of reflection and analysis. We can reverse engineer the IMF's inflation forecast to determine the bolivar-greenback exchange rate implied by the inflation forecast.

When we conduct that exercise, we calculate that the VEF/USD rate moves from today's black market (read: free market) rate of 1,110 to 6,699 by year's end. So, the IMF is forecasting that the bolivar will shed 83 percent of its current value against the greenback by New Year's Day, 2017. The following chart shows the dramatic plunge anticipated by the IMF.

Gundlach: "I See The S&P Going To 1600", Bashes Hillary Clinton

In what is now a weekly tradition for the new bond king, overnight DoubleLine's Jeff Gundlach spoke to Reuters' Jenn Ablan following his periodic investor conference call, to discuss such things as the Fed's rate hike, on which he remains understandably skeptical and said the Fed will be "challenged" to raise interest rates this year. Specifically he said that there appears to be "some (hawkish) rebellion showing up at the Fed." This came following the latest statement by Kansas City Fed President and noted hawk, Esther George, who said on Thursday that the Fed is keeping interest rates too low and risks encouraging companies to take on excessive amounts of debt.

As a reminder, George was the sole dissenter to the April FOMC decision to keep rates at 0.25%, which means other "hawks" have yet to build up the courage to even voice a minority opinion, "hawks" such as Boston Fed's Eric Rosengren who also yesterday said the economy appears to be strengthening after the sluggish first quarter, giving the green light for the central bank to continue its attempt to normalize interest-rate policy. We doubt he will dissent when the Fed again does nothing next month.

Which is why only the opinion of Yellen, who to Gundlach is "the biggest dove" at the Federal Reserve, matters and why Gundlach believes there is a 50% chance of only one rate hike this year.

More importantly, Gundlach told Reuters that the with the S&P500 rangebound around 2,050 for some time, "it's tough to get much of a rally off of price-to-earnings this high with earnings falling and the Fed itching to tighten with GDP growth already projected to decline," he said.

In keeping with his recent skepticism, he said that his forecast on the market remains a gloomy one: "I'm sticking with my '2 ...

Apple Takes Billion Dollar Detour to Fix Troubles in China

Apple's Didi Chuxing investment shows the company is looking to change its fortunes in China. Investors should now factor in that the cost of doing so has risen.

Homesickness Cure for Chinese Firm Stranded in New York

Shares of Chinese interactive music company YY Inc. have plunged on new regulatory obstacles to privatization offers. But that just makes the company more attractive.

Why Noble Group Needs More Headroom

A drop in Noble Group's liquidity headroom shows this commodity trader remains under thin cover.

Retail Sales Up In April 2016

Written by Steven Hansen

Retail sales improved according to US Census headline data. Our view is that this month's data was mixed, There was an improvement in the rolling averages.

Capitol Report: U.S. producer prices climb 0.2% in April

U.S. producer prices rose 0.2% in April after two straight declines, but inflation at the wholesale level remained largely absent in the broader economy.

Capitol Report: Retail sales leap 1.3% in April

Sales at U.S. retailers jumped 1.3% in April to mark the biggest gain in a year, with auto dealers, gas stations and online vendors spearheading the charge.

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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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