13Apr2016 Pre-Market Commentary: Futures Higher, WTI Crude Steady In The Mid 41’s, US Dollar Rising Into The Mid 94’s, Markets Expected To Open Higher

Here is the current market situation from CNN Money

European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 2.63% while Germany’s DAX is up 2.06% and London’s FTSE 100 is up 1.43%.

JPMorgan profit hurt by weak investment banking and trading

(Reuters) – JPMorgan Chase & Co , the biggest U.S. bank by assets, reported a drop in quarterly profit – its first in five quarters – as costs to cover sour loans to troubled oil companies rose and revenue from trading and investment banking declined.

About 40,000 Verizon workers launch strike

(Reuters) – Verizon Communications Inc’s wireline employees kicked off a strike on Wednesday after failing to reach an agreement with management on a new labor contract.

Stocks jump on China trade surprise, buoyant banks

LONDON (Reuters) – Global stocks rose on Wednesday after surprisingly upbeat Chinese trade data offered hope Asia’s biggest economy is finally stabilising, boosting risk appetite.

U.S. retail sales fall, hurt by weak auto sales

WASHINGTON, (Reuters) – U.S. retail sales unexpectedly fell in March as households cut back on purchases of automobiles, further evidence that economic growth stumbled in the first quarter.

‘Living wills’ for five out of eight big banks fail U.S. regulators’ test

WASHINGTON (Reuters) – Five out of eight of the biggest U.S. banks do not have credible plans for winding down operations during a crisis without the help of public money, federal regulators said on Wednesday, saying the institutions could face stricter oversight if they do not fix their plans.

OPEC cuts 2016 oil demand growth forecast, warns of more

LONDON (Reuters) – OPEC on Wednesday cut its forecast for global oil demand growth in 2016 and warned of further reductions citing concern about Latin America and China, pointing to a larger supply surplus this year.

Peabody, world’s top private coal miner, files for bankruptcy

(Reuters) – Peabody Energy Corp , the world’s largest privately owned coal producer, filed for U.S. bankruptcy protection on Wednesday in the wake of a sharp fall in coal prices that left it unable to service a recent debt-fueled expansion into Australia.

Exclusive: Wal-Mart expands online grocery pickup to eight more cities

(Reuters) – Wal-Mart Stores Inc is expanding free curbside pickup of groceries into eight new cities this month including Kansas City and Austin as the retailer gains confidence it can make the strategy work on a larger scale, a senior executive told Reuters.

Wells Fargo energy investment unit sought risky deals, faces losses

NEW YORK (Reuters) – When Cubic Energy Inc’s bankruptcy plan took effect on March 1, shareholders of the Dallas-based oil and gas company were wiped out. Among the losers was Wells Fargo & Co.

Oil Rally Fizzles After OPEC Sees Lower Global Demand; BofA Says “Reduce Risk Into Doha”

The ridiculous headline risk that is whipsawing oil showed up this morning once again. WTI slide as much as $41.26 earlier on news that Iran’s Oil Minister Bijan Namdar Zanganeh wouldn’t be attending the April 17 meetings in Doha, however just moments later it was reported that Iran’s OPEC Governor Kaempour will be attending and losses were largely erased.

Elsewhere, BofA is out with a report saying to “Reduce risk heading into the Doha meeting.” The bank has developed four possible scenarios, and say that freeze or no freeze, due to a drop in US supplies and rising global demand the oil market is already rebalancing and project oil prices to trade on average above $50/bbl next year.

Truth be told, there is hardly any information on what will be discussed at Doha this Sunday. So in this note we develop four possible scenarios: back to a price war, no output freeze, a soft output freeze, and a hard output freeze with some enforcement mechanism. In our view, the last two scenarios would send Brent prices above $50/bbl in relatively short order, while the first two outcomes could lead to a price drop below $40/bbl. Having said all that, the global oil market is rebalancing, freeze or no freeze, due to a drop in US supplies and rising global demand. Stocks are set to draw structurally starting in 4Q16, in our estimates. So we still project oil prices to trade on average back above $50/bbl next year.

However, politics could trump economics introducing a bearish outcome as a possible scenario if Saudit Arabia doesn’t play ball, which could see oil retrace to the $30-35/bbl range. Incidentally Saudi Arabia hit the wires this morning with reports Oil Minister Ali al-Naimi said “an outright production cut is out of the question, forget about this topic”.

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Frontrunning: April 13

China trade surprise gives stocks a lift (Reuters)

JPMorgan profit hurt by drop in investment banking revenue (Reuters)

About 40,000 Verizon workers launch strike (Reuters)

Regulators Set to Reject Some Big Banks’ ˜Living Wills’ (WSJ)

More Startups Are Getting Lower Valuations Than Joining the Billion-Dollar Club (BBG)

Closures and court cases leave Turkey’s media increasingly muzzled (Reuters)

PBOC Seen Averting Cash Shortage as $155 Billion Leaves Market (BBG)

Mossack Fonseca Says It’s Cooperating After Panama Office Raids (BBG)

Tax-Rule Changes Ripple Widely (WSJ)

VW says management bonuses to be cut significantly (Auto News)

IMF Sees No Cause for Japan to Intervene Now in Currency Market (BBG)

China Steelmaker Misses 3rd Bond Payment as Defaults Spread (

JPM Q1 Profit Slides 7%; Trading Revenue Beats; Loss Reserve Jumps Most In 6 Years – Full Summary

Going into today, everyone’s attention was focused on the JPM earnings report, the first big bank to report, on concerns about the profitability of the banking sector. And sure enough, as the chart below shows, going into JPM’s earnings announcement, EPS expectations had been drastically cut to account for what was clearly set to be a painful quarter for banks.

Which is probably why there was a sigh of relief, when moments ago JPM reported that it had beat expectations of a $1.25 print, when it announced $1.41 in adjusted EPS, with total revenue sliding by $700 MM to $24.1 billion but also beating lowered expectations of $23.8 billion. The largest U.S. bank by assets reported a profit of $5.52 billion, or $1.35 a share before 6 cents in adjustments, a drop of 6.7% compared to the profit of $5.91 billion, or $1.45 a share, in the same period of 2015.

Where the market was particularly pleasantly surprised, was that despite the drop in markets trading revenue of -13% to $5.718BN and the slide in investment banking revenue -19% to $2.417B. And while FICC trading revenue slid by $557 million, or 13% YoY, to $3.6 billion, this was well above the estimate $3.23BN print. On the other hand, investment banking revenue of $1.2 billion missed estimates of a $1.36 billion print.

Futures Jump On Chinese Trade Data; Oil Declines; Global Stocks Turn Green For 2016

With oil losing some of its euphoric oomph overnight, following the API report of a surge in US oil inventories, and a subsequent report that Iran’s oil minister would skip the Doha OPEC meeting altogether, the global stock rally needed another catalyst to maintain the levitation. It got that courtesy of the return of USDJPY levitation, which has pushed the pair back above 109, the highest in over a week, as well as a boost in sentiment from the previously reported Chinese trade data where exports rose the most in over a year, however much of the bounce was due to a favorable base effect from last year’s decline. Additionally, as RBC reported, the 116.5% y/y increase in China’s reported March imports from HK likely reflects the growing trend of “over-invoicing”, which is merely another form of capital outflow.

In other words, which giving the impression that growth is stabilizing, China was really just covering up for even more outflows. Curiously the onshore yuan fell 0.06%, shrugging off the “better-than-forecast” China March exports data, suggesting that at least the FX market may have been paying attention.

Equities, however, were not, and as a result global stocks advanced higher for one more session, wiping out the year’s declines.

Copper and iron ore were among the beneficiaries, while haven assets including the yen and gold retreated.

œThe commodity sector is well supported after the good numbers out of China, said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. œMost inve …

Facebook and Google: The $230Billion Question

Mobile-advertising growth has driven a stunning rise in the two companies’ market values. But investors may be taking a glass-overflowing view.

Why Investors Should Beware the Gulf Between Stocks and Bonds

U.S. stocks and Treasurys are both in positive territory. That looks disconcerting.

China’s Bond Market Shows Silver Lining of Stress

Even nascent signs that China’s bond markets are properly pricing risk should be welcomed.

Need to Know: Trouble for oil and this market may start well after any Doha deal

It’s all go for global markets, as China trade data delivers some good news. But the Doha oil producers’ meeting is going to be front and center. Our call of the day says look beyond any deal to see where oil is headed.

The Wall Street Journal: Russian warplanes fly close to U.S. Navy destroyer, Polish helicopter

U.S. considering protest to Moscow over incidents.