18Apr2016 Market Update: DOW Up Almost Tripe Digits, Crude Prices May Go Higher, Markets At Direction Decision Level, Bulls Had Better Watch Out

Here is the current market situation from CNN Money

North and South American markets are mixed. The S&P 500 is higher by 0.44%, while the IPC is leading the Bovespa lower. They are down 0.40% and 0.03% respectively.

Wall Street rises on oil recovery, gains in Hasbro, Disney

(Reuters) – Wall Street held onto gains on Monday as a recovery in oil boosted energy shares and Hasbro and Disney lifted the consumer discretionary sector.

Weak markets leave Morgan Stanley struggling to reach return-on-equity target

(Reuters) – Morgan Stanley’s trouble growing revenue in weak markets may cause management to take further actions to achieve its financial goals, Chief Executive James Gorman said on Monday.

PepsiCo benefits from cost cuts, strong North America snack sales

(Reuters) – PepsiCo Inc reported a better-than-expected quarterly profit as it trimmed costs and demand rose in North America for its snacks, which include Cheetos and Lay’s chips.

Oil steadies as Kuwait strike offsets scuttled output-freeze plan

NEW YORK (Reuters) – Oil prices steadied on Monday after a Kuwaiti workers’ strike slashed the country’s oil output by more than half, offsetting worries about a scuttled plan by major oil producers to freeze production.

Fed’s Kashkari favors higher capital requirements, smaller banks

(Reuters) – Minneapolis Federal Reserve Bank President Neel Kashkari on Monday doubled down on his call for reforms to the U.S. banking system, saying that failing to make changes could leave taxpayers on the hook for big bank bailouts in any future financial crisis.

If oil stays cheap, household spending could rise: Fed paper

SAN FRANCISCO (Reuters) – The dramatic drop in the price of oil since 2014 has delivered only a muted boost to the U.S. economy, but that could change if households start figuring cheap oil is here to stay.

Silicon Valley veteran Bill Campbell has died: Re/code

(Reuters) – Silicon Valley veteran Bill Campbell, who advised tech leaders including Apple’s Steve Jobs and Amazon.com’s Jeff Bezos, has died, technology website Re/code reported on Monday.

U.S. economy looks good but Fed remains cautious: Dudley

NEW YORK (Reuters) – U.S. economic conditions are “mostly favorable” yet the Federal Reserve remains cautious in raising interest rates because threats loom, New York Fed President William Dudley said on Monday.

Disney princesses, Star Wars propel Hasbro results

(Reuters) – Hasbro Inc , the No. 2 U.S. toymaker, reported better-than-expected quarterly profit and revenue, driven by strong demand for “Star Wars” action figures and the addition of Disney Princess dolls to its basket of toys.

Dow Tops 18,000 – Highest In 9 Months (Earnings At 12-Month Lows)

Was it ever in doubt?

Oh just one thing…

Earnings expectations have plunged over 6% since the last time The Dow was here.

Chart: Bloomberg

Greenspan Admits The Fed’s Plan Was Always To Push Stocks Higher

Former Federal Reserve Chairman Alan Greenspan admitted in an interview with Sara Eisen that quantitative easing did what it was supposed to do, which was to inflate stock prices and drive multiple expansion.

He was confused as to why things such as corporate earnings, capital spending, and productivity have declined given how much QE was pumped into the system. The answer to the riddle of course, is that QE was never intended to help fix anything fundamentally, it was as Kyle Bass said recently, simply a mechanism to transfer wealth and make the rich richer.

“Monetary policy has done everything it can, unless you want to put additional QEs on and QEs on, they’re not helping that much.

What ultimately determines whether or not you’re getting an effect from the QEs are what has happened to the price/earnings ratio, and that obviously has done what you’d expect it to do.

You bring long-term rates down, and the price/earnings ratios in the equity markets go up, which is exactly what they planned to do and it’s happened that way.”

All of this is precisely what we’ve been saying all along, which is that QE has always been about one thing, and that is to take wealth from many (savers), and transfer it to a select few (asset owners).

The Elephant’s Not Even In The Room Yet

Submitted by Howard Kunstler via Kunstler.com,

The elephant’s not even in the room, which is why the 2016 election campaign is such a soap opera. The elephant outside the room is named Discontinuity. That’s perhaps an intimidating word, but it is exactly what the USA is in for. It means that a lot of familiar things come to an end, stop, don’t work the way they are supposed to – beginning, manifestly, with the election process now underway in all its unprecedented bizarreness.

One reason it’s difficult to comprehend discontinuity is because so many operations and institutions of daily life in America have insidiously become rackets, meaning that they are kept going only by dishonest means. If we didn’t lie to ourselves about them, they couldn’t continue.

For instance the automobile racket. Without a solid, solvent middle-class, you can’t sell cars. Americans are used to paying for cars on installment loans. If the middle class is so crippled by prior debt and the disappearance of good-paying jobs that they can’t qualify for car loans, well, the answer is to give them loans anyway, on terms that don’t really pencil out — such as 7-year loans at 0 percent interest for used cars (that will be worth next to nothing long before the loan expires).

This will go on until it can’t, which is what discontinuity is all about. The car companies and the banks (with help from government regulators and political cheerleaders) have created this work-around by treating “sub-prime” car loans the …

The Real Test Of The Petro Dollar System

Currently the US Dollar, traded on the stock market as (UUP), and (USDU); is the world’s reserve currency. Although there is talk of the fall of the US Dollar as the world reserve currency, it’s all talk and there’s no signs that this will happen any time soon. Hungary recently issued sovereign bonds in Yuan – but so what? It’s just a drop in the bucket. The practical fact is there is no real threat to the US Dollar’s status as a reserve currency. However, there may be one. When Richard Nixon essentially created the modern Forex system by defaulting on the previous Breton Woods agreement, he cleverly supported the US Dollar with the one commodity the world needs most: Oil. By making an agreement with Saudi Arabia and then other Oil producing nations, it created natural support of the US Dollar. Nixon told them the following: Sell Oil in US Dollars, and we’ll provide you with military technology, security, and other benefits. We’ll do business, you’ll invest in our markets, and recycle those dollars you get from our partners. It all works like a well oiled machine (pun intended) for 40+ years. There’s only one thing that could disrupt it – Saudi Arabia chooses to end it. And they’ve threatened to do so, if the US releases classified documents about 911 which implicate Saudi Arabia.

How it could impact the markets

Under the Petro Dollar agr …

Oil’s Anti-Freeze: The Saving Grace of a Stalemate

Exporters’ failure to reach agreement in Doha is a blow to sentiment. But longer-term the market is still creaking in the right direction.

What’s Driving Bidding War for China’s Leading Auto Website

A $3.5 billion battle is brewing to own China’s biggest auto sales website, Autohome.

Biotech’s Big Slowdown Doesn’t Have to Last

Biotech’s recent troubles have made valuations more reasonable, setting the stage for improved performance.

The Tell: Meet the 30-year-old titan emerging as oil market’s new top dog

A 30-year old Saudi prince appears to be the driving force in Saudi oil policy-making him one of the most powerful players in the world economy.