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Markets Tread on Shaky Ground Amid Oil, Earnings Concerns

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April 20, 2016

(Wednesday Market Open) The markets are on wobbly ground today but will an influx of blue-chip earnings reports last night and today crush the base that has supported a two-day run to fresh peaks?

Shares of Intel (INTC) were under pressure after the chip maker said last night that it will cut some 12,000 jobs, or 11% of its workforce, as part of its ongoing efforts to move into more profitable businesses like cloud computing. And results out of the gate early from Coca-Cola (KO) weighed on those shares. The beverage giant’s earnings managed to barely beat Wall Street’s profit projections but missed the mark on revenue. Volumes “were a bit disappointing” throughout the world, Stifel Nicolaus analyst Mark Swartzberg said on CNBC Wednesday, and could hurt sales going forward.

On Tuesday, markets were swimming in green with the Dow Jones Industrials (DJIA) and S&P 500 (SPX) breaking through new levels to get within striking distance of touching new all-time highs. Can we get that back today?   

As for oil, the bears are back. The so-what attitude the markets took after the oil super powers failed to reach an agreement in Doha Sunday appears to be leaving with the Kuwaiti workers who have ended their three-day strike.

Crude prices slumped after that key support helped steady a market imbalance by draining Kuwait’s production in half. Reuters reports that six supertankers have lined up at Kuwait's crude export terminal to load oil, and the country has upped its output to 1.6 million barrels per day from 1.1 million on Sunday. Kuwait typically produces 2.8 million to 3.3 million barrels per day.

S&P 500

FIGURE 1: ON A RUN.

The S&P 500 (SPX), plotted through the end of Tuesday on the TD Ameritrade thinkorswim platform, broke through another resistance, at 2100, on its climb to a fresh all-time peak.

Too Big to Fail Too Much. The numbers have been tallied and the results aren’t pretty: The six biggest U.S. banks have crawled out of their worst quarter since 2011. JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Wells Fargo (WFC) rung up total sales of $98 billion in Q1, according to a Financial Times analysis of Bloomberg data. That is a 9% drop from the year-ago period, representing the deepest dive in five years. Their collective net income plunged 24% since last years to $18 billion. It could have been worse. The FT said the banks labeled too big to fail took sharp cuts to costs that helped fatten margins. “The aggregate figures for the big six banks illustrate the sector’s reliance on turbulent securities businesses,” the FT reported. “Banks that have sizeable consumer divisions held up significantly better.” Net income at the retail arms of JPM and BAC, for example, climbed 12% and 22%, respectively.

Controlling the Price of Gold. China is already the king of the global gold-producing pile, but now it wants to be known as the worldwide price controller too. Yesterday we saw the launch of the Shanghai Gold Fix, a two-times-a-day per-gram price fixing on the yellow metal, according to MarketWatch. The pricing on the Shanghai Gold Exchange, the self-proclaimed largest physical gold exchange in the world, will be denominated in Chinese yuan, the report said. Julian Phillips, founder and contributor to GoldForecaster.com, called the move “hugely important” because it’s a step toward “China controlling the gold price.”

Did Fidel Castro Bid Farewell? The revolutionary leader made an extremely rare public appearance at the wrap up of a four-day confab of the Cuban Communist Party late Tuesday. "Soon I will be 90 years old," NPR reported he said, in what may be his last address to Cuba's once-every-five-year gathering of the party faithful. In what NPR described as a “crackling yet firm voice,” Castro spoke of his mortality: "Soon I'll be like all the others; everyone's turn must come," according to NPR.

Good Trading,
JJ
@TDAJJKinahan

Economic Report Calendar

FIGURE 2: THIS WEEK'S ECONOMIC REPORT CALENDAR.

Source: Briefiing.com

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