Continuing to pile on the bearish oil case, Goldman warns today that not even an OPEC deal would stop oil going lower, adding that "we remain sceptical of its impact. For one, our production forecast continues to reflect a seasonal Saudi production decline into year-end, with no growth elsewhere. Second, even with this OPEC help, our updated oil supply-demand forecast now points to a renewed build in inventories in 4Q 2016 vs. a forecast for a draw only last month.
Morgan Stanley's Adam Longson confirmed overnight that he isn't going to change his bearish oil call any time soon, with a warning that "very little has been addressed fundamentally to correct these problems. Greater headwinds lay ahead, especially for crude oil. In fact, we would argue that recent price action and developments may have exacerbated the situation." Putting a number to his call: oil will slide to $35 in the next 1-3 months.
When it comes to AAPL, the company is truly in a class of its own. And while in the past it helped propel the S&P500 profitability almost singlehandedly (it was responsible for 7% of total S&P earnings in 2015), this has reverse, and now AAPL is set to be the single biggest detractor from S&P growth. Here is what to look for and what Wall Street expects when AAPL reports earnings at 1:30pm Pacific today...
"We remain cautious heading into Apple’s FQ3 results as we believe that iPhone expectations are still high for the second half of CY16. Our revenue estimate for the September QTR (FQ4) is 1.5% below sell-side consensus as we remain concerned about weaker consumer demand driven by macro conditions. We believe this could be exacerbated by consumers delaying upgrades this Fall in favor of a reported large form factor change in 2017."
So to recap - Fed dismal and no change - warns of Brexit, BoJ disappoints with no change - warns of Brexit, BoE does nothing - warns of Brexit, Brexit polls show "Leave" leading... but an England win in Euro2016 and the death of a British MP was enough to turn the entire day around...
A "technical red flag" looms according to Sven Henrich - better known to Zero Hedge readers as Northman Trader. "The technical target that I see would be 1,573 on the S&P," Henrich warns an anxious CNBC anchorette, adding that the S&P 500 must stay above the 2,025 to 2,030 range in order to keep the index from falling by nearly 500 points from current levels. "If we break below this level by the end of May, then stocks may actually indeed retest lows or break lower.."
"...the subsequent rally we have been on over the last few weeks or so will be retraced and not only violate that “Bullard Bottom” but will do so with conviction and spike down to levels not seen in years. Again let me iterate – and quickly!"
"Three quarters of the previous selling of equity ETFs during January and February has been reversed in just three weeks. CTAs appear to have fully covered their shorts. Indeed both CTAs and Discretionary Macro hedge fund managers appear to be close to neutral right now... we conclude that the short covering phase that started a month ago is very advanced."