Market Update: Wednesday, April 13, 2016


  • Stocks gain as oil posts 2016 high. Equities moved up on Wednesday, boosted by a 4.1% rise in WTI crude oil, which closed the day at $42.12/barrel. All 10 sectors finished higher on the day, with the biggest gains coming from energy and the heavily weighted financial sector. Financials benefited from a continued bounce in Treasury yields, as the 10-year note closed at 1.77%, up 0.05% on the day. Meanwhile, COMEX gold was relatively unchanged, closing up 0.2%. Final tallies: Dow +164.84 to 17721.25, Nasdaq +38.69 to 4872.09, S&P 500 +19.65 (+0.96%) to 2061.72.
  • Strong Chinese trade data, JPM results boost equities. Surprise growth in both imports and exports fueled stock rallies across the globe, with China’s Shanghai Composite finishing higher by 1.4% and Japan’s Nikkei Index doubling that gain. Positive sentiment carried over to Europe where Germany’s DAX and France’s CAC 40 are both up over 2%. An earnings beat from JP Morgan added to the upbeat mood this morning with U.S. stocks also moving higher. The risk-on attitude has driven the 10-year Treasury yield up for a fourth straight session, while gold is down over 1% to start the day. Meanwhile, oil is pulling back toward its 200-day moving average after recent strength.


  • Now it really starts. With JPMorgan Chase results this morning (and Wells Fargo after the close), today really kicks off earnings season (no offense to Alcoa). The good news is that JPMorgan was able to hit Wall Street’s earnings and revenue targets despite declines in capital markets revenue, higher reserves against bad energy loans, and little help from the December increase in the federal funds rate; plus, loan demand remains strong and the read-through for the economy appears incrementally positive. The bad news is that low interest rates continue to pressure net interest margins—and may not provide much help over the next couple of quarters—and energy defaults are rising. After dragging down overall Q4 2015 earnings, this report may provide some hope that the worst may be behind the financials sector in terms of earnings. Although we remain cautious on the sector overall, cheap valuations make the banks an intriguing long-term investment.
  • April in the green. After a rocky start to April, as of last night the S&P 500 Index was actually positive for the month of April—by +0.1%. We’ve noted before that going back the past 10 years, April is the strongest month on average and it has gained in 9 of the past 10 years. What is also worth noting though is the first half of April tends to be weak, with nearly all of the gains happening the second half of the month. With the second half of April right around the corner, seasonality is one bullet in the bulls’ pocket.
  • A bullish sign for crude? Crude oil closed above its 200-day moving average for the first time in 427 days earlier this week. Going back to 1983, this was by far the longest streak we’ve seen. In fact, the previous streak beneath this long-term trend line was 280 days in 1993 and 1994. After such an extended time beneath this important trend line, the logical question is: How long will it now stay above this trend line? Crude oil bottomed exactly two months ago when it was nearly 80% off its all-time high, another record. So far the bounce has been impressive, but the key could be how it reacts up near the 200-day moving average.
  • March retail sales soft, but prior months (January and February) were revised higher; shift in Easter/spring break between 2015 and 2016 and the ongoing bout of retail deflation are likely distorting the data. The 0.3% drop in retail sales between February and March was below expectations (+0.1) and a deceleration from the flat reading in February. However, the February reading was revised higher (from -0.1% to 0.0%). Core retail sales (sales excluding autos, gasoline, and building materials) rose just 0.1%, short of expectations (+0.4%), but were in-line with February’s upwardly revised 0.1% gain. Building material sales—a proxy for business capital spending and housing—were robust in March, rising 1.4%, and are up 15% from a year ago. The March data and revisions to prior months suggest that gross domestic product (GDP) in Q1 is tracking to around 1.5%. Keep in mind that the retail sales data are nominal, not inflation adjusted, and with prices of many items falling, including gasoline, the nominal retail sales data understate the health of the economy.
  • Chinese trade data was released overnight. Exports for March were up 11.5%, a solid number. However, because of the seasonal distortions due to the timing of the lunar New Year, it’s best to look at data over the entire quarter. First quarter exports fell about 10% on a dollar basis. Commodity imports, especially for copper and iron ore, were up for the quarter on a volume, not price, basis. Overall, this is a positive for the economy, suggesting the possibility of an acceleration in the future. The data show stability, but not meaningful growth at this point.



  • Retail Sales (Mar)
  • Beige Book
  • IMF publishes Fiscal Monitor
  • Canada: Bank of Canada Meeting (No Change Expected)
  • Singapore: GDP (Q1)


  • CPI (Mar)
  • Lockhart (Dove)
  • IMF’s Christine Lagarde speaks on the Global Economic Outlook in Washington, DC
  • UK: Bank of England (No Change Expected)
  • China: GDP (Q1)
  • China: Industrial Production (Mar)
  • China: Retail Sales (Mar)


  • Empire State Manufacturing Index (Apr)
  • Consumer Sentiment and Inflation Expectations (H1 Apr)
  • IMF and World Bank hold their spring meetings in Washington, DC
  • Official campaign for UK’s EU referendum begins (Vote on June 23, 2016)


China: Property Price Indexes (Mar)


Click Here for our detailed Weekly Economic Calendar


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The economic forecasts set forth in the presentation may not develop as predicted.

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