Barclays

"...The negative divergence of the markets from economic strength and momentum are simply warning signs and do not currently suggest becoming grossly underweight equity exposure. However, warning signs exist for a reason, and much like Wyle E. Coyote chasing the Roadrunner, not paying attention to the signs has tended to have rather severe consequences."

It's a day of ‘master of the universe,’ central bank speeches as both Bank of England governor Mark Carney and Fed chief Janet Yellen preach their ultra loose policies and certain market participants lap up the Gospel according to Mark … and Janet ...

We're just a little over two weeks into PSPP and signs are already beginning to show that the ECB is effectively breaking the market. "The soaring cost of borrowing government bonds in secured lending markets highlights the distortions caused by the ECB's asset-purchase scheme, which analysts say could clog up Europe's financial system," Reuters notes.

All Wars Are Bankers’ Wars

In a somewhat surprising turn of events, this morning's futures reaction to last night's shocking start of a completely unexpected Yemen proxy war, which has seen an alliance of Gulf State launch an air, and soon land, war against Yemen's Houthi rebels, is what one would expect: down, and down big. This is surprising, because on previous occasions one would expect the NY Fed, or its pet hedge fund, Citadel, or the BOJ or ECB (via the CME's "Central Bank Incentive Program") to aggressively buy ES to prevent a slide, something has changed, and for the BTFDers, that something may be very fatal with the e-Mini rapidly approaching a 1-handle yet again. The offset to tumbling stocks, as previously observed, is oil, with WTI soaring over 6% in a delayed algo response to the Qatar headlines.

• Saudi Arabia, allies launch air strikes in Yemen against Houthi fighters (Reuters)
• Pilot on Crashed Jet Was Locked Out of Cockpit, NY Times Says (BBG)
• Why Bombing This Tiny Oil Producer Is Roiling the Energy Market (BBG)
• U.S.-led coalition, Iraqis pound Islamic State in Tikrit (Reuters)
• Munger Says Prepare for Harder World as Buying Power Slides (BBG),Mocks Greek ‘Idiotic Idea’ You Can Vote Yourself Rich (BBG)
• The Central Banker Who Saved the Russian Economy From the Abyss (BBG)
• Bank of Canada says foreign buyers complicate housing market (Reuters)
• Investors Scoop Up Companies’ Bonds (WSJ)
• Espirito Santo Probe Turns Mariana Mortagua Into Portuguese Star (BBG)

From almost 2.5% GDP growth expectations in February, The Atlanta Fed's GDPNow model has now collapsed its estimates of Q1 GDP growth to just 0.2% - plunging from +1.4% just 2 weeks ago. The reality of plunging capex and no decoupling is starting to rear its ugly head in the hard data and as the sun warms things up, weather will start to lose its ability to sway sentiment. While sell-side consensus has dropped (Goldman, Morgan Stanley, and Barclays all cut today following Durable goods), it remains unable to quite accept the reality of massively weaker than expected macro data evident everywhere (except in the soft-survey PMI data).

After three days of unexpected market weakness without an apparent cause, especially since after 7 years of conditioning, the algos have been habituated to buy on both good and bad news, overnight futures are getting weary, and futures are barely up, at least before this morning's transitory FX-driven stop hunt higher. Whether this is due to the previously noted "blackout period" for stock buybacks which started a few days ago and continues until the first week of May is unclear, but should the recent "dramatic" stock weakness persist, expect Bullard to once again flip flop and suggesting it is clearly time to hike rates, as long as the S&P does not drop more than 5%. In that case, QE4 is clearly warranted.

• Germanwings Airbus crashes in France, 148 feared dead (Reuters)
• Greece promises list of reforms by Monday to unlock cash (Reuters)
• Merkel Points Tsipras Toward Deal With Greece’s Creditors (BBG)
• Banks Shift Bond Portfolios -Move to ‘held to maturity’ category aims to guard against rising rates, shield capital  (WSJ)
• Beijing to Shut All Major Coal Power Plants to Cut Pollution (BBG)
• As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes (NYT)
• Oil below $56 as Saudi output near record, China activity slows (Reuters)

"The Fed is a reluctant Dollar bull," explains Goldman Sachs, noting that Yellen inadvertently revealed the FOMC's expectation that coming policy changes will boost the greenback. Broadly speaking the rest of the sell-side has herded along into the strong US Dollar camp with only Unicredit (rate shift may slow recent very strong USD momentum) and Morgan Stanley (suggesting USD corrective activity) backing away from full dollar bull though most suggest adding to dollar longs on any dip as the most crowded trade in the world gets crowded-er. Then Stan Fischer added... "DOLLAR WON'T KEEP RISING FOREVER."

Following Friday's manic quad-witching melt-up in oil (and everything else), the exuberance (surprise surprise) is fading as fundamental reality is slapped back onto the face of the energy complex by Saudi Arabia. As Reuters reports, Saudi oil minister Ali al Naimi also said the kingdom was now pumping a record high 10 million barrels per day (bpd), and would only cut if non-OPEC countries cut production. The 'supply' weakness in crude has been tempered somewhat by a tumbling USD (EUR surging) for now (and also by news from Sinopec of major capex cuts).

• Saudis keep on pumping, oil prices keep on slumping (Reuters)
• Tenet Healthcare Nearing Deal to Buy United Surgical Partners (WSJ)
• Dizzying Pre-IPO Tech Values Spurred by Rush of Hedge-Fund Money (BBG)
• Russia threatens to aim nuclear missiles at Denmark ships if it joins NATO shield (Reuters)
• Torrent of Cash Exits Eurozone (WSJ)
• Draghi Cheerleads for Euro-Area Economy as Greek Risk Looms (BBG)
• Fortescue Mines for More Financing Options (WSJ)
• Topix Charts Evoke Calm Before ’13 Rout as Momentum Gains (BBG)

The inverted relationship between gold and the dollar broke down in November 2011. The dollar soared from July to the present, spiking 21% against the other major currencies. Most of the negative commentary regarding gold in recent months misses the rather bigger point that the gold price has held up remarkably well given the extent of dollar’s move.

• Clinton Charity Tapped Foreign Friends (WSJ)
• Dollar Set for Worst Week Since ’13; S&P Futures Rise (BBG)
• Shale Producers Have Found Another Lifeline: Shareholders (BBG)
• BOJ Kuroda says no sign of 'currency war' brewing in world (Reuters)
• Fed Is Pushing and Pulling on Rates Riddle (WSJ
• Brent oil falls towards $54 on OPEC output, Iran (Reuters)
• Iran Talks Stall Over Ending of Sanctions (WSJ)

• Hilsenrath: Fed to Markets: No More Promises (WSJ)
• Fed set to ditch 'patient' rate vow as it eyes U.S., world growth (Reuters)
• Fannie, Freddie could need another bailout (Reuters)
• Alibaba Stock-Sale Lockup Is Ending (WSJ)
• Netanyahu Sweeps Aside Herzog’s Challenge to Win Israel Vote (BBG)
• Oil Bonds Lose Investors $7 Billion in 10 Days (BBG)
• There’s a mysterious $1.1 trillion in spending cuts in the House GOP’s budget (WaPo)
• ECB's Celebration of Its New $1.4 Billion Tower Is Spoiled by Protesters (BBG)