19Apr2016 Market Update: Markets Flat, Crude Prices Off Highs, But Remain Strong With The US Dollar Getting Weaker

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 1.60% while Mexico’s IPC is up 1.30% and U.S.’s S&P 500 is up 0.09%.

Wall St. flat as weak earnings offset rise in oil

(Reuters) – The S&P 500 and the Dow gave up early gains on Tuesday, but were still within shouting distance of their record highs, as investors assessed weak earnings reports by IBM and Netflix.

Oil rises 3 percent as Kuwaiti strike cuts output for third day

NEW YORK (Reuters) – Oil prices jumped more than 3 percent on Tuesday after a strike by workers in Kuwait nearly halved the OPEC member’s crude production, overshadowing bearish sentiment after Sunday’s failure by producers to agree to freeze output levels.

Apple refused China request for source code in last two years: lawyer

WASHINGTON (Reuters) – Apple has been asked by Chinese authorities within the last two years to hand over its source code but refused to do so, the company’s top lawyer told U.S. lawmakers at a hearing on Tuesday.

Goldman Sachs revenue slumps to lowest in more than four years

(Reuters) – Goldman Sachs Group Inc’s quarterly profit fell by more than half and revenue slumped to its lowest in more than four years as market volatility hit the Wall Street bank’s bond trading and investment banking businesses.

Exclusive: Bass Pro teams up with Goldman for Cabela’s bid – sources

(Reuters) – Privately held outdoors retailer Bass Pro Shops has partnered with Goldman Sachs Group Inc’s private equity arm to make an offer for U.S. hunting and fishing store chain Cabela’s Inc , according to people familiar with the matter.

Who speaks for Saudi Arabia on oil, rivals and allies wonder

MOSCOW/DOHA (Reuters) – As far as Venezuelan oil minister Eulogio Del Pino is concerned, his counterpart Ali al-Naimi, the world’s most influential oil official for the past two decades, is no longer the voice of authority for Saudi Arabia.

Exclusive: Iran struggles to find enough ships for oil exports

LONDON (Reuters) – Iran faces a struggle to increase oil exports because many of its tankers are tied up storing crude, some are not seaworthy, and foreign shipowners remain reluctant to carry its cargoes.

Teamsters recommends members approve new Costco contract

(Reuters) – Teamsters unions representing 16,000 workers of Costco Wholesale Corp recommended their members approve a new contract offer from the retailer, a month after urging they reject an earlier proposal due to a long-running disagreement over pension plans.

J&J shares hit new high on strong drug sales, weaker dollar

(Reuters) – Johnson & Johnson beat quarterly earnings forecasts on strong prescription drug revenue and a weakening dollar, and it reassured investors that it did not expect its blockbuster Remicade arthritis drug to face U.S. competition this year.

Why Sentiment, Positioning And Price Action Is All The Matters In This Market

Submitted by Vanda Research Group

Hippocrates Sleve

In his most recent Sunday note entitled “The Stock Market Doctor”, Morgan Stanley equity strategist Adam Parker writes that:

‘The main questions investors ask us today seem to be about the exterior appearance of the market and not fundamentals. œWhat is this price action telling you? œWhat are other investors asking you about? œHow are other people positioned? Or, œwhat’s the current sentiment? ‘

Parker goes on to bemoan this recent hyper-focus on positioning and sentiment, arguing that clients should instead be asking more “fundamental” questions like:

‘Which areas of the market may show accelerating growth in cash flows? What is the future value of all cash flows discounted back to the present? How have your assumptions about growth or rates changed recently?

With all due respect to our former employer, we couldn’t disagree more. Positioning, sentiment and all of those other behavioral nuances that the sellside historically doesn’t like to dirty their hands with are hugely important to returns, especially in the short-to-medium term.

That isn’t just the case today. That’s been true for a long, long time; and certainly since the crisis. If share prices are a function of a fundamental factor (earnings, cash flows, etc) multiplied by a behavioral one (price multiples), then the latter …

The Next Round of QE is Just Around the Corner

NIRP has proven to be a dud as far as monetary policy goes.

Europe has implemented FOUR NIRP cuts since June 2014. Throughout this period, EU inflation has barely flat-lined.

The story is similar for Japan, which implemented NIRP at the end of February 2016. Since then the Yen has surged.

While Japanese inflation is trending down:

Mr Kuroda often points to signs of stronger inflation in goods prices, with the BoJ adopting a new version of the CPI that leaves out energy but includes processed food. However, the trend has slowed in the past few months.

According to Nowcast, a company that uses supermarket scanner data to track inflation ahead of the official figures, this kind of “core-core” CPI fell from a year-on-year rise of 1.42 per cent in December to 1.31 per cent in January, 1.21 per cent in February and 1.16 per cent in March.

Source: Financial Times

Put simply, NIRP is not effective in any way at generating significant inflation. The reason is that NIRP is in fact DE-flationary as it frightens savers and investors into hoarding cash.

Psychologically people are more afraid of losing what they have than they are of missing out on potential gains. NIRP is a guarantee that you will lose some of what you have. As such, it has a hugely deflationary on consumers.

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Does Not Compute: “Smart Money” Clients Sell Stocks For 12 Consecutive Weeks

One week ago we were shocked to learn that no matter what the market was doing, whether it was going, down or sideways, Bank of America’s “smart money” (institutional, private and hedge funds) client, simply refused to buy anything, and in fact had continued to sell stocks for a near-record 11 consecutive weeks.

The selling continued despite what we said, namely that “at this point it was about time for the selling to stock, if purely statistically, otherwise said “smart money” would be sending the clearest signal yet that the market rally from the February lows is nothing but a huge gift to sell into.”

One week later we were convinced that finally the selling would end. It did not.

As BofA reported overnight when looking at the latest trading activity by its smart money clients, last week, during which the S&P 500 was up 1.6%, BofAML clients were net sellers of US stocks for the twelfth consecutive week, in the amount of $1.36bn. Sales were chiefly in large caps, though all three size segments saw outflows.

And while “the pace of selling slowed for the second week, but persistent sales suggest to us that clients continue to doubt the market rally.”

Institutional clients continued to lead the selling, while priva …

UnitedHealth: Who Needs Obamacare?

As investors hoped, UnitedHealth signals its ACA woes are behind it.

What Will the Bank of Japan Think of Next?

Bank of Japan Governor Haruhiko Kuroda all but promised more monetary easing. The question is, What buttons will he push?

Emerging Markets: Shareholders Buy What Customers Don’t at This Fund Manager

Ashmore Group’s shares have rocketed this year even though its funds are still suffering outflows.

March 2016 Residential Building Situation Is Mixed.

Written by Steven Hansen

Be careful in analyzing this data set with a microscope as the potential error ranges and backward revisions are significant. Also the nature of this industry variations from month to month so the rolling averages are the best way to view this series – and the data remains in the range we have seen over the last 3 years. The slowing of building permits this month is attributable to softness in multiple family dwellings.

4 ways airlines punish passengers for not being total jerks

Airlines rake in billions from a la carte fees.

The Margin: Watch these rival construction workers attack each other with front-end loaders

Two companies vying for business in China’s increasingly competitive construction market got into a tussle and decided to settle it the old fashioned way: a heavy-machinery duel.