OVERNIGHT

Energy was the story of the day and apparently overnight as U.S. crude oil prices shot up 4.5%  moving above it's 200 day moving average, a sign many are suggesting indicates that the bottom is in and higher prices loom ahead in 2016.

The Japanese market rallied as the yen softened after making a 17-month high at the start of the week against the U.S. dollar. The Australian dollar also rose against the greenback, reaching above 77 U.S. cents. The Australian S&P/ASX 200 was up 1.2%, the Hong Kong Hang Send Index railled 2% and
South Korean Kospi was closed for a holiday.

 Based on some upbeat export numbers, Shanghai stocks were up nearly 2% while the Nikkei jumped 2.4%, it's highest level in eight sessions, the WSJ reported. Officials in China reported stronger export numbers compared to a year ago with a meager drop in imports. Also, MSCI, the broadest index of Asian-Pacific shares outside Japan tack on 1.4% gains in early trading. The upbeat mood in China lent some support to other area markets.
 
Bloomberg reported: Production dropped to 9.01 million barrels a day in the week ended April 1, the lowest since Nov. 2014, according to the EIA. In another story, Bloomberg also reported the following:

The down market is behind us,” Torbjorn Tornqvist, chief executive officer of Gunvor Group Ltd., said on Tuesday at the FT Global Commodities Summit in Lausanne. “It is the beginning of the end of that for sure.”

Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut will ease as U.S. output declines. The world’s largest oil traders were meeting in Switzerland as members of OPEC and other major producers prepare to assemble in Doha on April 17 to discuss an output freeze. Oil traders benefited from a surge in volatility last year and that should continue, according to Tornqvist.

“We are going to have lots of volatility going forward,” Tornqvist said. “From here on the trend is up.”

A “rebalancing” of global crude oil supply and demand could take place by the end of the third quarter as production cuts by cash-strapped producers start to curb the current glut, according to Trafigura Group Pte CEO Jeremy Weir.

“I believe we’ve seen the bottom unless there is some sort of catastrophic situation, political or otherwise,” Weir said.

BREXIT AND GOLDMAN SACHS

 
If you want to know how much elitist, big money is bankrolling the anti-Brexit vote coming up this June in the UK, look no further than Goldman Sachs.

If you want to better understand the threat a Trump presidency poses to the elitist establishment, look no further than Goldman Sachs.

If you're tired of having Goldman Sachs via their long and incestuous relationships with global central bankers toy with your life, look no further than Goldman Sachs.

If you want to know why the Donald received so much push back over his recent "rigged system" comment, look no further than Goldman Sachs.

Though Goldman isn't alone among big bankers who want to defeat Brexit, they're big time players, symbolic at its core of a stacked system.

According to a recent WSJ article, Goldman's net 2015 "revenue from Europe, Middle East and Africa" totaled $8.9 billion.  Goldman is among one of the largest contributors, $700,000, to a firm lobbying against Brexit. It's executives have, the Journal reports, sent "warning letters" to major media.

It's president, Gary Cohn, last January lobbed  a scaremonger theme at that elitist of elite annuals in Davos: "It is imperative for the UK to keep the financial services industry in the UK. I don't know what would replace that industry," he urged. What he apparently conveniently left out is what would replace Goldman's lucrative booty. "The European trading block has been," the Journal notes, "a boon to Goldman Sachs. In 1970, the U.S. investment firm arrived in London with five people."

A rapid expansion followed UK deregulation in the 1980s and Goldman profited greatly expanding across the continent opening several offices in places like Frankfurt and Milan and Paris. With the advent of a single currency, however, the Euro, branches became unnecessary, centralizing its operation in London, helping to cut overhead in the process.

Since then it's been pretty much Katy bar the door with Goldman holding the key. Ninety percent of Goldman's reported 6,000 workers in Europe are London-based. The threat to Goldman is great, but that hardly means the threat to ordinary Brits is. That's the big lie; there won't a meaningful financial industry without Goldman and it's Wall Street brethren if Brexit passes and Goldman is forced to change.

Bernie Sanders, the good Vermont socialist, if you noticed, took a lot of flack from the elitists in the Donkey Party for telling the truth--that Hilary took a lot more Wall Street money than he did. The real truth is: She took a lot more money from Wall Street that he and Trump put together.

The scare tactics unfortunately on worked the Scots. If the people of the UK truly love their sovereignty, their currency and their liberty, they won't be fooled this time around by this elitist ploy.

NEGATIVE INTEREST RATE DANGERS

On Monday Larry Fink, CEO BlackRock the world's largest asset manager, reportedly told investors in a recent letter that "negative interest rates are lining up savers and the economy for 'potentially dangerous financial and economic consequences.'"

According to Fink, lower rates force people to save more for their retirements and other needs, cutting into discretionary income and translating to less spending to aid economic growth. In other words, something has got to give if these people are going to reach their goals, the economy or the people and their retirement goals.

The point is in such low interest rate environment one has to put more money aside each year to reach a certain dollar amount goal for annual living expenses. But that's not the only drag on the situation, insurance companies and state retirement funds face a similar problem since their projects usually are based  on what were higher rates in the past.

Here's a chart from BlackRock. We don't know for sure, but just maybe it's what Fink is referring to and the dangers that await.

POINTING IT OUT

This is one of those superfluous debates that actually makes an important point. Though the author supports his position quite well, whether he intended to or otherwise, he shows just how big a bubble this thing is.

We think it's a candidate for most maligned market, deservedly so in our view owing to an out of control money printing Fed now aided by many of their global comrades. The need to keep this charade going and the built-in danger grows daily.

Take this chart, for example.


Why would you want to have any cash in money markets when some now even before inflation and taxes are yielding less than zero? And that's not the only reason MMFs have lost some of their appeal. Safety is another.



This next chart we think the author strokes one of those high fastballs over the edge of the plate out of the park. Deep center field. Higher interest  rates when they arrive--and they will arrive-- will catch more than a few looking for something off speed and soft like the Fed's been serving up regularly.



The above chart speaks for itself. There's a lot of leverage out there.



 This is what we call the fear of missing out chart. To us it helps explain the low cash levels in these funds. Mutual fund money runners are known for their lemming-like characteristics. It's hardly new.

businessinsider.com/stop-calling-this-the-most-hated-bull-market-in-history-2016

We hope you enjoy reading this author's article. We enjoyed pointing it out.

OVERNIGHT

What was once all the rage, Abernomics, now finds itself embroiled in growing investor skepticism as the Nikkei though up slightly in trading Tuesday morning is down 16% so far in 2016 and on course some believe to retrace its 40% gain from 2012 at the start of Abernomics.

Prospects of a weaker U.S. dollar and interest rate hikes at least for now on hold pushed gold higher in New York trading for June delivery at $1258 an ounce. The yellow stuff is up 18% on the year despite the MSM's constant jawboning for yielding nothing to hold it. With negative zero interest rates in Japan, the EU, Sweden and Switzerland, investors in gold seem to be saying such cheap talk is just that.

Meanwhile, oil settled back above $40 a barrel helped out by the weaker dollar. A weaker dollar bodes trouble for Japanese officials as some inflection point might be hit soon, calling for more intervention. Earnings season both in Japan and the U.S. loom over markets also.

Here's an overnight look from Reuters.

TOKYO, April 12 Japan's Nikkei share average rose on Tuesday morning as the dollar gained versus the yen in early morning trade, lifting cyclical stocks such as exporters as well as recently battered banking shares.

Weakness in the dollar kept the market worried after it slumped to a 17-month low of 107.63 yen on Monday but by 0146 GMT on Tuesday, the dollar stood at 108.14 yen.

The Nikkei gained 1.0 percent to 15,903.30 in midmorning trade. The benchmark index has fallen 16 percent this year, while it is retracing about 40 percent of gains since the start of 'Abenomics' in 2012.

Traders said that Japanese equities are swayed by foreign exchange rates, with Japan Inc's last fiscal years' earnings announcements scheduled within a few weeks. Investors will likely start taking positions after companies release their forecasts for this fiscal year, they said.

They added that the Nikkei may stay sluggish until then, as many investors remain sceptical of 'Abenomics."

"Investors are frustrated about the lack of effective measures against the strong yen," said Hikaru Sato, senior technical analyst at Daiwa Securities. "Confidence in Japanese stocks has waned since the end of last year and it still hasn't recovered."

Banking stocks were leading the gains on Tuesday, with Mitsubishi UFJ Financial Group rising 4.8 percent and Mizuho Financial Group gaining 4.2 percent.

LACK OF CONFIDENCE GROWS

We recently wrote about those low rates and the damages they're doing to the COLA-dependent and retirees in general.

 And we noted that bureaucratic monster called the IMF and how their love for negative zero rates and its phony stimulus affect has on the global recovery made no mention of the pain such inflicts on the above. Now, guess what, those money-grubbing, fees-loading big banks are wailing the low-interest rate blues, too.

A WSJ headline,"Banks' Outlook Suffers As Rates Remain Low," tells the story. It turns out financial stocks which as 2016 was starting in what was suppose to be a good time isn't. Hello, Jamie Dimon. Toss in the recently released "Panama Papers" and you have some idea why this year's U.S. presidential election is going to be a most entertaining one. Standup comics, as we've said before, pay attention. There's going to be some hot material here. And for free.

It is also why--though MSM and its minions will never admit it--Trump-traction and the Vermont Socialist are climbing in the races. According to reports, Bernie spent his honeymoon in the old Soviet Union. That's seems like an important qualification for occupying the White Shack.

Bottom line, banks are apparently victims of bureaucratic unintended consequences. First quarter earnings on the big boys start this week. Key is net interest margins, since trading profits are nil or worse owing to regulatory fears and wrist-slapping. Where utilities were the surprised leaders in the first three months, banks have been the market's laggers. Both are interest rates sensitive, but for different reasons.

Banks are suppose to be"fundamental" to the economy. The same can be said for utilities.This is all the more reason to suspect the recent so-called positive data Yellen and her crew celebrated about the U.S. recovery and used it to hold back on raising rates. There are other clouds also hanging over the industry.

European banks and their known troubles are one thing, but markets are now leery of those unknown things owing to the lack of forthrightness afoot today seemingly everywhere. A recent example is those secret IMF documents that were leaked about Greece. There is a danger here and it's a big one.

If this whole bureaucratic-driven financial ball of wax comes unglued, you can bet you won't find any of these over-compensated, benighted bureaucrats pounding their chests for recognition in public after it goes down. By now most probably have those lucrative speaking fees buried somewhere other than Panama. Probably in gold.

A lack of confidence is their worst nightmare. If you think not, just turn your gaze east toward China.

TENTATIVELY MEANINGFUL BUT PROBABLY USELESS

If you're looking for a good reason to know why the International Monetary Fund is dangerous to your financial health and future here it is. The IMF is a bureaucratic mess that symbolizes globalism and everything you should fear about globalism.

It's clear they are flying by the seat of your pants not theirs because you will be the ones to suffer as they work their destruction. It's should also be clear they have not a clue at this stage of what will and what will not work. This is a cold, indifferent, secretive clutch of bureaucrats with way too much power that should be disbanded.

Though they admit having little experience with negative interest rates, they "tentatively conclude that overall they help deliver additional monetary stimulus and easier financial conditions." Note too the phrase "probably supported stronger economic growth."

Tentatively and probably are two of the best hedge or CYA  terms in the entire lexicon of bureaucratic gobbledygook.You should also question the timing of this nonsense just before this big circus rolls into Washington this week and MSM will fall all over itself to spread their gospel.

We have a suggestion. Maybe these bureaucratic wonders should tentatively pick up their paychecks every payday, but probably never cash them.

Washington (AFP) - The IMF on Sunday defended negative interest rates set by central banks, given "significant risks" of slow growth, while acknowledging potential for dangerous boom-and-bust cycles.

Six central banks, notably the European Central Bank and the Bank of Japan, have taken the unprecedented measure, aimed at loosening the reins on credit to help spur consumer spending and investment.

"Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall they help deliver additional monetary stimulus and easier financial conditions," three top officials at the International Monetary Fund wrote in a blog. 

It comes ahead of the IMF's annual Spring Meetings this week in Washington.

In mid-March, IMF Managing Director Christine Lagarde said that the unorthodox negative short-term rates, in which commercial banks pay central banks to hold their money, had probably supported stronger economic growth.

While in theory the concept should work, economists are closely studying what happens in Europe and Japan amid worries that negative rates could actually provoke businesses and consumers to be more cautious about spending.

The three IMF officials also had words of caution.

"Negative interest rates may induce boom and bust cycles in asset prices. These potential risks require close monitoring and supervisory scrutiny," they said.

IT'S THE MARKETS, JAKE!

What is Asia's best performing currency? The answer is the same one up 11% through last week  against the U.S. dollar--the Japanese yen.

Like a lot of things, that wasn't suppose to happen. To paraphrase a line from a classic film, some might conclude: "It's the markets, Jake!" Japanese officials--Abernomics, in short--have been twisting their monetary spigot open for so long with such force their hands should be fatigued if not their resolve.

Don't get confused, the markets get moved by what some call external factors. But Japanese officials have not been reluctant to intervene to soften the yen. And the recent and surprising reversal of the Federal Reserve's posture hasn't helped Japanese officials. In fact, it's more of a clear sign central bankers are focused on China and it's problems.

Meanwhile, investors and market pundits are being forced to refocus on they're expectations for the yen in 2016. The European bank situation isn't helping either. Higher U.S. rates would've provided some cushion for the yen, relieving some of it's pressure as a safe haven stop for concerned investors.
That could still happen, but perception often trumps an actual dose of reality down the road.

And that raises another question: What if any validity does negative interest rates strategy have left with investors?  Covenants in the trans-Pacific trade agreement reportedly forbid a nation from weakening its currency to improve its trade. Though agreements hardly are written in stone at meetings like the recent G20 when officials return home, industrial and developing nations at the recent gathering in February agreed not to start a currency war if growth slows further.

If we had to guess, we think the yen's rise might go through a brief head fake owing to the above before going higher. Maybe even much higher. Like we said above: "It's the markets, Jake," And it wasn't suppose to happen.

OVERNIGHT

Dollar down, yen up.

If that sounds like a parlor game, it isn't. As noted last week the U.S. dollar fell to a 17 month low against the yen and Japanese stocks took their early Monday cue from the currency markets.

Meanwhile, the WSJ reported: China shares jumped Monday amid expectations that soft inflation leaves room for authorities to stimulate the economy through further monetary easing.

The Shanghai Composite Index was up 1.8% at 3038.78.

But in Japan, where the yen touched a fresh high against the U.S. dollar, the Nikkei Stock Average fell by 1.3%.

Shares in China and Japan have diverged markedly in performance over the past one-month period, as the People’s Bank of China and Bank of Japan face starkly different challenges.

Investors and analysts believe that China’s central bank has ample tools to ease policy, including potentially cutting interest rates, but that Japanese officials are running short of options, after already moving to negative interest rates earlier this year.

Data Monday showed Chinese consumer inflation rising 2.3% in March from a year earlier, the same as February’s tally and remaining below the government’s target ceiling.

Other data released Monday showed Japan's core machinery orders dropped 9.2% in February from the previous month adding to concerns about the lack of recovery in the light of Japanese official attempts to stimulate growth. The prospect of a stronger yen also weighs heavy on Japanese exports.

The next unknown is when or if the BOJ will take any further action to offset the rising yen, unlike in China where investors seem to think officials there have further room to tackle their situation.

THE BOND GURU

It's nice of bond guru Bill Gross to finally come out and say that ultra low interest rates are killing folks. Most likely after he's made tons of money off them.

It's nice of the Butler Creek boy to say what others have been saying for some time now. Who are these others? Mostly the voiceless. But here's an example--anyone on a COLA. Like maybe your 87-year-old grandmother those politicians who care so much about and want her vote this November.

And what savers? Is that term still in the lexicon of most people? It's been reported that Japanese investors are moving funds to the U.S. because they find the zero return rates on cash attractive. We know you do too. We also know that those rates are somewhat responsible for gold's recent upswing, zero yield.

In the land of the poor-sighted, the one-eyed guy is king. Who doesn't understand that zero  outperforms minus zero? Gross apparently has some Chuck Schumer lineage in him. Any opportunity for publicity is a good one, so he dons the cover of this week's Barron's. No, we're not knocking Gross' smarts. Like we said, he's smart enough to know when to keep quiet about an investment and when to open the flood gates.

He makes an interesting point about volatility, every retail investors'--including the February Japan and China sell off--worst fear. There's really three kinds--upside, downside and flat. All can be used to make money. He says volatility--at least right now--has the lowest risk relative to the return on the others such as credit., currency and liquidity. If you don't know and have some understanding of these, forget the market. Take up sports betting. The bookies will love you.

The average retail investor usually doesn't realize what he and she is buying and selling. It's not just a stock or bond or earnings or P/E or whatever. That's the financial gobbledygook they want you to buy into. It's buying and selling disappointment. If what he thinks will happen happens, someone else is disappointed. And just the reverse. Can credit ratings ever disappoint? Yes. How about liquidity?

We had this really attractive girlfriend recently who was a neurotic nightmare. We had to evict her to get rid of her. That can be a real illiquid situation .So you know the answer to liquidity, it can really disappoint. The same goes for earnings, analysts' reports, and here's an even more certain one, predictions of economists.

We apologize. We omitted another big one--promises of politicians.

What Gross is intelligently saying here is central bankers won't any time soon be adorning the face of your currency with inscription of: In Central Bankers We Trust. Now don't take our word for it.This is Bill Gross, the bond guru.