It's not just Halliburton ("What we are experiencing today is far beyond headwinds; it is unsustainable") and Intel (12,000 layoffs amid re-evaluation of programs) that are facing up to a new normal very different from expectations. As Avondale Asset Management notes, having poured over 100s of earnings transcripts, while most CEOs don’t see signs of an imminent downturn, the environment still feels a little fragile. It seems that almost everyone is on high alert for a macro curve-ball...
One day after stocks were this close from hitting new all time highs on what have been either ok earnings, if looking at non-GAAP data, or atrocious earnings, based on GAAP, and where any oil headline is now immediately translated as bullish by the oil algos, so far futures are relatively flat, while European stocks were at their moments ago in anticipation of the latest ECB announcement due out in just one hour. However, unlike last month's "quad-bazooka", this time the market expects far less from Draghi. “Having pulled put the monetary bazooka in March, the market is sensibly expecting no further policy measures from the ECB,”
The biggest catalyst for overnight markets, first reported on this site, was the announcement by Kuwait that its oil workers had ended their strike which disrupted oil production in the 4th largest OPEC producer for 3 days cutting it by as much as 1.7 mmb/d, and had served to offset the negative news from the Doha debacle. Kuwait Petroleum also added that it would boost output to 3m b/d within 3 days, which in turn has pressured the price of oil overnight, and the May WTI contract was back to just over $40 at last check, sliding 2%. Not helping things was a very dejected Venezuela oil minister Eulogio Del Pino who said at a conference in Moscow that he sees oil prices returning to lows in 3-4 weeks if oil producers can't make a deal. For now the algos - and central banks - disagree.
The only question is, who doesn’t Hillary Clinton owe favors to? We’ll give you a hint: The American people. Vote wisely, New York.
If asking traders where stocks and oil would be trading one day after a weekend in which the Doha OPEC meeting resulted in a spectacular failure, few if any would have said the S&P would be over 2,100, WTI would be back over $40 and the VIX would be about to drop to 12 and yet that is precisely where the the S&P500 is set to open today, hitting Goldman's year end target 8 months early, and oblivious of the latest batch of poor earnings news, this time from Intel and Netflix, both of which are sharply lower. We expect that after taking out any 2,100 stops, the S&P will then make a solid effort to take out all time highs, now just over 1% away.
- Crude's Losses Drag Ruble, Loonie Lower; Stocks Pare Their Drop (BBG)
- Grand Oil Bargain Is Victim of Saudi Arabia's Iran Fixation (BBG)
- Both Parties’ Presidential Front-Runners Increasingly Unpopular (WSJ)
- It's up to you, New York: state takes center stage in election campaign (Reuters)
- Rousseff Hangs by a Thread After Losing Impeachment Vote (BBG)
- China March home prices rise at fastest rate in two years, top cities boom (Reuters)
Following yesterday's OPEC "production freeze" meeting in Doha which ended in total failure, where in a seemingly last minute change of heart Saudi Arabia and specifically its deputy crown prince bin Salman revised the terms of the agreement demanding Iran participate in the freeze after all knowing well it won't, oil crashed and with it so did the strategy of jawboning for the past 2 months had been exposed for what it was: a desperate attempt to keep oil prices stable and "crush shorts" while global demand slowly picked up. And whether it is central banks, or chronic BTFDers, just 12 hours after oil opened for trading with a loud crash, the commodity has nearly wiped out all losses, and both brent and WTI were down barely 2%, leading to both European stocks and US equity futures virtually unchanged on the session.
- Global shares reach four-month high, forex hit by Singapore sting (Reuters)
- Dollar Rally Hits Commodities as Europe Halts Global Stock Gains (BBG)
- Currencies Across Asia Fall Sharply Against U.S. Dollar (WSJ)
- IEA expects limited impact from oil output freeze at Doha (Reuters)
- IEA Sees Oil Oversupply Almost Gone in Second Half on Shale Drop (BBG)
- BofA Profit Declines 13% on Trading Slump, Energy Reserves (BBG)
Starting early today, over 36,000 Verizon workers will go on strike after the firm failed - after 8 months of 'negotiations' - to meet two union's demands (which merely includes controlling health care costs, protecting well-paying jobs and expanding the ranks of the workers who have them). The strike - one of the largest in years, according to NYTimes - will affect some consumers but Verizon has said that customers will be less impacted because it has trained thousands of non-union employees since last year to fill in for those who walk the picket line.
- 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)
- Gloomy start to results season hits shares (Reuters)
- Stocks Rise Around World as Commodities Advance; Bonds, Yen Drop (BBG)
- Oil hits 2016 high above $43 on producer meeting hopes (Reuters)
- Rosneft chief Igor Sechin says low oil prices will not last (FT)
- Banks Face Massive New Headache on Oil Loans (WSJ)
- Wells Fargo Misjudged the Risks of Energy Financing (BBG)
- Italian Bank Stocks are Surging on the Back of Rescue Reports (WSJ)
- European Stocks Rise Led by Italian Banks; Emerging Markets Gain (BBG)
- Oil price dips on prospects for producers' meeting (Reuters)
- U.S. shale oil firms feel credit squeeze as banks grow cautious (Reuters)
- U.S. banks' dismal first quarter may spell trouble for 2016 (Reuters)
- Miserable Year for Banks: Stocks Suffer as Rates Stay Low (WSJ)
it has been a rather quiet session, which saw Japan modestly lower dragged again by a lower USDJPY which hit fresh 17 month lows around 170.6 before staging another modest rebound and halting a six-day run of gains; China bounced after a slightly disappointing CPI print gave hope there is more space for the PBOC to ease; European equities rose, led by Italian banks which surged ahead of a meeting to discuss the rescue of various insolvent Italian banks, while mining stocks jumped buoyed by rising metal prices with signs of a pick-up in Chinese industrial demand.
While YHOO shares have jumped after the announcement of several potential bidders (including Time Inc, Verizon, Bain, TPG, and Google), it has merely recovered the day's losses.