Equities extended their gains buoyed by improving Chinese data, better than expected earnings from a large money center bank and data that did not threaten the monetary policy.
Stocks were also encouraged by the Beige Book—or the statistical compilation utilized at the upcoming Fed meeting—indicating the economy continued to expand from late February to early April, boosting employment and delivering some long awaited upward pressure on wage and prices.
Weekly oil inventory surveys suggested an increase in stores but such did crush prices after the huge run up given that US production is now at the lowest level since October 2014. Because of massive infrastructure cuts, it is expected US production will continue to drop significantly in 2016.
Regarding OPEC, will there be a production cap? As noted many times I think such is symbolic given that OPEC, Russia and the other countries meeting next week representing about 75% of global production is already pumping at peak capacity.
According to Bloomberg, OPEC production is expected to be frozen around January levels. For a myriad of reasons, March’s production was 487,000 barrels a day below January’s level, the result of supply disruptions caused by Caliphate inspired violence. Can production rise back to January’s?
It depends upon funds available to repair damaged infrastructure and replace spent reserves.
What will happen today? There are several high profile financial earnings, the CPI and weekly jobless claims.
Last night the foreign markets were up. London was up 0.04%, Paris up 0.16% and Frankfurt up 0.19%. China was up 0.51%, Japan up 3.23%and Hang Sang up 0.85%.
The Dow should open flat. Goldman reported last night a gauge of the 50 most shorted stocks posted its largest two day jump tin almost two months thus suggesting some of the recent the gains is a function of short covering. As noted the other day short interest is around 4.3% or about $1 trillion. It is nominally off the 4.4% apex reached in March. In August short interest eclipsed the 4% level for the first time since 2008. The 10-year is off 6/32 to yield 1.79%.