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25May2016 Market Update: Markets Up 1%, Volume Declining, Short-Term Indicators Moderately Bullish

Written by Gary

US markets up almost one percentage point from the opening bell and have been trading in a narrow band since 10 am for the second straight session after logging their best daily gains in nearly three months. Crude is volatile and remains just below the $50 resistance, the US dollar is trending, albeit slowly, down and gold futures are at risk of booking a sixth straight losing session as near-term sentiment for precious metals remains gloomy.


Here is the current market situation from CNN Money

North and South American markets are broadly higher today with shares in Brazil leading the region. The Bovespa is up 1.32% while U.S.'s S&P 500 is up 0.83% and Mexico's IPC is up 0.54%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street up as banks rally on prospects of higher rates

(Reuters) - Wall Street was higher on Wednesday, extending gains from Tuesday, as the possibility of the U.S. Federal Reserve raising interest rates as early as this summer boosted bank stocks.

Bayer could get ECB financing for Monsanto bid, rules show

FRANKFURT (Reuters) - Bayer could receive financing from the European Central Bank that would help to fund a takeover of Monsanto , according to the terms of the ECB's bond-buying program.

Exxon shareholders OK measure that could put climate expert on board

DALLAS/SAN RAMON, Calif (Reuters) - Voters at Exxon Mobil's annual meeting approved a measure on Wednesday to let minority shareholders nominate outsiders for seats on the company's board, meaning a climate activist could eventually become a director at the oil giant.

SEC investigating Alibaba's accounting practices

(Reuters) - Alibaba Group Holding Ltd said it was being investigated by the U.S. Securities and Exchange Commission over whether the Chinese e-commerce company's accounting practices violated any federal laws.

Fed survey lays bare U.S. economic divide

WASHINGTON (Reuters) - Almost half of American families say they would struggle to pay for emergency expenses and those with a high school degree or less are most likely to say their well-being has declined, according to a Federal Reserve survey released on Wednesday.

Oil up but backs off $50 target; profit-taking after U.S. drawdown

NEW YORK (Reuters) - Oil prices rose as much as 1 percent on Wednesday after the U.S. government reported a larger-than-expected drop in crude stocks for last week, but profit-taking after the data kept prices below the $50 a barrel level that oil bulls had been hoping for.

Aetna-Humana tie-up is anti-competitive in Missouri: state regulator

NEW YORK (Reuters) - A tie-up of Aetna Inc and Humana Inc would be anti-competitive in Missouri for several types of insurance, including individual Medicare Advantage plans where the combined company would have more than a 50 percent market share, the Missouri Department of Insurance said.

Citigroup to pay $425 million over attempted benchmark manipulation

WASHINGTON (Reuters) - Citigroup Inc has agreed to pay $425 million to resolve civil charges by the Commodities Futures Trading Commission it tried to manipulate foreign exchange and interest rate benchmarks, the latest settlement in ongoing international probes of global banks.

Exclusive: Sanofi to unveil challenge to Medivation's board - sources

(Reuters) - France's Sanofi SA is preparing to name candidates it will put forward to replace the entire board of U.S. cancer drug company Medivation Inc as early as Wednesday, according to people familiar with the matter.

Another Blistering Auction: Foreign Central Banks Just Can't Get Enough Of 5Y Paper

Following yesterday's surprisingly strong 2 Year auction, the US Treasury pulled off another blistering auction when moments ago it sold $34 billion in 5 year paper (Cusip R77), at a high yield of 1.395%, stopping through the when issued by 0.8 bps, a surprising outcome following two consecutive tailing auctions, with a Bid to Cover of 2.60, the highest since November 2014. Incidentally, the yield of 1.395% was lower than last month's 1.41% when June rate hike odds were in the single digits.

But it was the internals where the surprise lay this time, as Indirects took down 66.6% of the final allotment, a jump from last month's 58.5% and well above the 58.5% TTM average. It was also the third highest Indirect award on record as foreign central banks just can't seem to get enough of US paper. And since Indirects stormed, and Directs also saw a pick up in their allotment, rising from 6.8% to 11.6%, the Dealer award of 21.8% ended up being not only over 10% below the recent average, but also the lower Dealer award on record.

With such dramatic demand for US Treasury paper just a month ahead of the putative Fed rate hike, one wonders just how much flatter the yield curve will end up if indeed the Fed does hike and pushes the ultra-short end higher by another 25 bps as the long end continues to grind lower.

Why Cheap Shale Gas Will End Soon

Submitted by Arthur Berman via OilPrice.com,

Enthusiasts believe that shale gas is simultaneously cheap, abundant and profitable thus defying all rules of business and economics. That is magical thinking.

The recently released EIA Annual Energy Outlook 2016 sparkles with pixie dust as it forecasts almost unlimited gas supply at low prices out to 2040 and beyond. Exuberant press reports herald a new era of LNG exports that will change the geopolitical balance of the world and make America great again.

But U.S. shale gas production is declining because of low prices and shale gas companies are in deep financial trouble because in the real world, price and cost matter.

That is not magical.

First Quarter 2016 Financial Performance

The financial performance of shale gas-weighted E&P companies in the first quarter of 2016 was a disaster.

Chesapeake Energy, the biggest shale gas producer in the world, had negative cash from operations. That means that oil and gas sales didn't even cover operating costs much less capital expenditures like drilling and completion.

Other shale gas-weighted companies including Anadarko, Comstock and Petroquest also had negative cash from operations. Goodrich and Sandridge are in bankruptcy and Exco and Halcon will soon follow. Ultra, Forest, ...

œOnly Money Outside Of the Matrix" Will Survive ...

œOnly Money Outside Of the Matrix" Will Survive ...

œGold and silver bottom is in , renowned silver analyst David Morgan tells Max Keiser on the Keiser Report and warns about paper and digital proxies for money and gold. Morgan, also known as the 'Silver Guru' of the TheMorganReport.com, talks to Max about the gold, silver and global bond markets and the ponzi scheme that are these markets.

Also covered in the show are central banks creating a financial and economic system not free for its participants, the end of hegemony spotted in the price of Russian bonds and the Bank of Japan failing, yet again, to get any sign of life from the Japanese economy.

Morgan warns about the importance of owning physical gold coins and bars rather than paper or digital proxies for bullion and money. He points out how gold investors lost money in the MF Global fiasco and were exposed by the ABN AMRO unallocated gold account fiasco.

ABN AMRO, the largest Dutch bank and one of the largest banks in Europe announced in a letter to clients in April 2013 that that it would no longer allow clients to take delivery of their precious metals including gold, silver, platinum, and palladium bullion coins and bars. Instead, they paid account holders in a paper currency equivalent to the current spot value of the precious metal.

Thus, instead of legally owning a risk free, physical asset (a bullion bar or a bullion coin), the bank's clients were unsecured creditors and were exposed to the bank and the financial system " somewhat defeating the purpose of owning precious metals.

The move highlighted once again the importance of owning physical bullion either in your possession (b ...

Greece and Europe: Why the Deal Is Good Enough for Now

The Eurogroup deal with Greece at least puts relations on a more normal footing, although it doesn't provide a long-term solution.

Gilead: What the Stock Needs to Bounce Back

Gilead's leadership refresh isn't a cure-all for the stock's troubles.

The Libor Mess: How It Will Hit Bank Profits

The threat of big settlements in Libor litigation may weigh on the earnings of J.P. Morgan, Citigroup and Bank of America.

The Tell: How Zika virus could infect the municipal-bond market

The municipal-bond market "a relatively quiet corner of the financial universe "could be the first to get infected, according to a report by Loop Capital released this week.

Matthew Lynn's London Eye: Europe's unemployment crisis is much worse than we thought

Europe is still in denial about its unemployment crisis; it's much worse than the official unemployment rate indicates, writes Matthew Lynn.

Tesla driver gets caught napping while in traffic

This Tesla Model S driver decided to doze off while stuck in light traffic.

Earnings Summary for Today

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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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