The Jim Bakker Show

Dollar drops to eight-month low as commodity currencies climb

By Jemima Kelly

LONDON (Reuters) – The dollar fell to its weakest since late August against a basket of currencies on Tuesday, while commodity-linked currencies climbed, as a rise in oil prices whetted investors’ appetite for riskier assets across financial markets.

The greenback has been subject to a heavy sell-off over the past month, losing 5 percent <.DXY> as investors have pushed back their expectations for when the Federal Reserve will raise U.S. interest rates after Chair Janet Yellen threw into doubt the view there could be two hikes this year.

Fed funds futures <0#FF:> imply barely one quarter point increase for the whole of 2016, with only about a 20 percent chance of a hike in June priced in.

The dollar index <.DXY>, which measures the greenback against a basket of six major currencies, fell to as low as 93.627.

With a rise in commodity prices and rallying global stocks boosting investors’ assets for riskier assets, commodity-linked currencies such as the Australian dollar <AUD=D4> and Norwegian crown <NOK=> gained strongly against their U.S. counterpart, further bruising the greenback.

“It appears that for now, markets are turning their noses up at the prospect that more gloomy earnings that might trigger some more negative risk sentiment,” said Rabobank currency strategist Jane Foley in London, adding that the dollar’s sell-off looked a little “overdone”.

Against the safe-haven yen, though, the dollar strengthened 0.3 percent, having hit a 1-1/2-year low of 107.63 yen <JPY=D4> on Monday. The yen had its strongest start to a year since 2008 in the first quarter <JPY=> as shaky global markets boosted demand for the traditional safe-haven currency.

Those gains prompted Japanese officials to warn on Monday that the yen moves were “one-sided and speculative” and that the government stood ready to intervene to weaken the currency.

But with oil prices hitting a 2016 high above $43 per barrel on Tuesday and risk appetite on the rise, the yen needed no such intervention to drive it lower. [O/R]

“(Higher) oil prices … have got the dollar on the back foot, more than anything else, so we have the yen and the dollar at the bottom, and everything else at the top,” said Kit Juckes, macro strategist at Societe Generale in London.

“I think dollar/yen will get back to 120 at some point – we might want to sell it again there, but I think this move is way overdone,” he added.

As the dollar sold off, the euro touched a six-month high of $1.1465 <EUR=>.

(Additional reporting by Ian Chua in Sydney and Hideyuki Sano in Tokyo; Editing by Andrew Heavens)

World Bank says Russia crisis to send poverty to highest in decade

By Alexander Winning

MOSCOW (Reuters) – Russian poverty rates will return to 2007 levels this year as the economy continues to contract and inflation reduces people’s purchasing power, the World Bank said on Wednesday.

The international lender’s comments add to the view that it is ordinary Russians who have borne the brunt of the country’s economic crisis, as the blow for many firms has been cushioned by the weaker rouble and state aid.

The number of poor people in Russia will rise to more than 20 million out of a population of over 140 million, the World Bank said, the largest increase in poverty since the 1998-99 crisis that included a sovereign debt default.

Birgit Hansl, lead Russia economist for the World Bank, said the government would find it difficult to combat rising poverty because of a sharp fall in budget revenues stemming from the oil price collapse. Global prices for oil, Russia’s main export, have fallen to under $40 per barrel from over $115 in June 2014, while the economy has also been hit by Western sanctions imposed over Moscow’s role in the Ukraine crisis.

“It’s clear the fiscal space is very small to continue with social expenditure increases,” Hansl told a news conference.

Among ways to help ease poverty, she said social expenditure could be better targeted, including by means testing.

Mikhail Matytsin, a World Bank poverty economist, said the crisis had also driven a dramatic shift in consumption patterns.

The World Bank sees private consumption falling by 3 percent in 2016 in Russia after a decline of over 9 percent in 2015, a far sharper slump than during the 2008-09 global financial crisis.

“This is a new adjustment to the (economic) shock,” Matytsin said, saying households had cut back most on durable goods such as cars and domestic appliances.

The World Bank now sees private consumption recovering only very modestly and stabilizing at growth levels of around 2 percent from 2018. Before the latest economic downturn, private consumption in Russia had been rising at around 6 percent each year, Hansl said.

In its latest Russia economic report, the World Bank downgraded its growth forecasts to a contraction in gross domestic product of 1.9 percent this year and tepid growth of 1.1 percent in 2017.

It previously saw a contraction of 0.7 percent in 2016 and growth of 1.3 percent in 2017. It said its weaker forecasts reflected its new assumption that the oil price would average $37 a barrel in 2016, rather than the $49 forecast previously.

The World Bank said serious structural reforms, which it has long said are needed to ensure sustainable economic growth in Russia, were not likely before the 2018 presidential election.

(Editing by Jason Bush and Catherine Evans)

Roller-coaster first quarter ends with dollar down, global stocks flat

People walk through the lobby of the London Stock Exchange in London

By David Gaffen

NEW YORK (Reuters) – Equity markets worldwide fell for the first time in four days on Thursday, the final day of a roller-coaster first quarter that has hammered the dollar and the pound but helped gold and bonds to big gains.

March closed on a subdued note after a volatile quarter that saw investors vacillate between calm and panic. Oil prices, the source of much concern throughout the quarter, were a touch higher as investors looked for clarity over a possible agreement by major oil-producing nations to reduce supply.

The dollar hovered near seven-week lows against the euro. It has fallen this week on reduced expectations for near-term interest rate hikes from the Federal Reserve, particularly after comments from Fed Chair Janet Yellen.

U.S. oil futures edged lower, slipping in late trading to lose 0.4 percent to $38.15 a barrel, after another report of record U.S. stockpiles, while China was put on a downgrade warning by S&P.

This quarter “has all been about the three C’s: commodities, China and central banks,” said Aberdeen Asset Management investment committee member Kevin Daly.

When oil hit $27 a barrel in mid-January there were “pretty dark” predictions for the global economy, Daly said, but the rebound in crude, China and ECB stimulus and the Federal Reserve cooling rate hike expectations had all bolstered confidence.

Wall Street was sleepy one day ahead of key monthly labor market data. In the span of three months, the S&P 500 erased an 11 percent fall, one of its worst-ever starts to a year, and is now set to end the quarter with modest gains.

The S&P 500 dipped 0.2 percent to 2,059.74; it ended the quarter up about 0.8 percent.

Safe-haven gold has been the big winner of 2016 so far. It ticked up to $1,231 an ounce and has jumped a whopping 16 percent this quarter, its best run in nearly 30 years. [GOL/]

The euro rose to $1.1382 and the yen hovered at 112.53 to the greenback, leaving the six-currency dollar index on track for its biggest monthly fall since April 2015 and largest quarterly drop in five years.

Bond yields declined during the quarter as investors reduced expectations for rate increases from the Federal Reserve and central banks in Europe and Japan added to stimulus efforts. The U.S. Barclays Aggregate bond index has returned 2.78 percent in the first quarter.

European markets were hit, with shares down 1 percent on Thursday. Euro zone inflation data was muted, underscoring just why the European Central Bank is cranking up its stimulus efforts.

Sterling has also taken a pounding this year as concerns have grown about a potential British exit, or ‘Brexit’, from the European Union. It barely budged on Thursday but has seen its biggest quarterly tumble in 6-1/2 years against the euro.

This year’s turbulent start pushed MSCI’s benchmark emerging market equity index down 14 percent by the time it bottomed on Jan. 21.

But fast forward 2-1/2 months and EM stocks are up 20 percent. Currencies from the Russian rouble to the Brazilian real have surged and struggling parts of Africa have some of the best-performing bonds in the world.

Japan’s Nikkei sagged 0.7 percent on Thursday to an 11 percent quarterly loss, having been slammed by the 7-percent surge in the yen against the dollar.

Shanghai shares have been an even bigger loser, having dropped about 15 percent since the start of the year.

(Additional reporting by Marc Jones in London and A. Ananthalakshmi in Singapore; Editing by Nick Zieminski and James Dalgleish)

Dollar under pressure, on track for biggest quarterly fall in five years

By Anirban Nag

LONDON (Reuters) – The U.S. dollar fell to its lowest level in five months against the euro on Thursday in trade dominated by month-end rebalancing flows, putting the dollar index on track for its worst quarterly performance in five years.

These flows are caused by global portfolio managers adjusting their existing currency hedges, with many banks taking the view that they could weigh on the dollar.

The dollar index <.DXY> was on track for its biggest monthly fall since April 2015 and its largest quarterly loss since March 2011, as dovish comments from Federal Reserve Chair Janet Yellen continued to resonate, prompting investors and speculators to cut favourable bets in the greenback.

The index was down 0.2 percent at 94.555 <.DXY>, a five-month low. The dollar was flat against the yen at 112.25 yen <JPY=>, while the euro was up 0.3 percent at $1.1383 <EUR=>, its highest since October 2015.

The common currency was on track to post a quarterly gain of 4.7 percent.

“Things have settled down a bit after those comments from Yellen, with the focus turning to the U.S. jobs data on Friday,” said Nordea FX strategist Niels Christensen.

“More than the employment numbers, what will be important are the average earnings, and if that misses expectations, then we could see the dollar come under more pressure,” Christensen added. “Yellen has left the dollar vulnerable to the downside.”

INFLATION SIGNS

U.S. nonfarm payrolls are expected to show the world’s largest economy added 205,000 jobs in March, with the jobless rate steady at 4.9 percent. Average earnings, seen as signalling inflation trends, are expected to rise by 0.2 percent. <ECONUS>

Despite signs of inflation picking up in the United States, Yellen said on Tuesday the Fed would proceed cautiously in raising rates and she highlighted external risks such as slower global growth.

Chicago Fed President Charles Evans on Wednesday underscored that caution, saying a “very shallow” series of rate hikes over the next few years is appropriate to buffer the economy from outside shocks and the risk of inflation slipping too low.

In the European session, the euro zone inflation showed some signs of improvement, but traders were cautious about pushing the euro too much higher, given the European Central Bank’s ultra-accommodative policy stance. <ECONEZ>

“The euro is likely to enter a period of range trading around the $1.10 level for the rest of the year,” said Petr Krpata, currency strategist at ING.

“The range-trading argument is based on fading effecting monetary divergence between the Fed and the ECB. The ECB seems to be reluctant to cut the depo rate further into negative territory while the Fed is unlikely to embark on an aggressive tightening cycle.”

(Additional reporting by Hideyuki Sano; Editing by Gareth Jones)

Central banks ‘running out of time’ to reflate economies: Bill Gross

Bill Gross speaks at the Morningstar Investment Conference in Chicago

By Jennifer Ablan

NEW YORK (Reuters) – Bond manager Bill Gross, who runs the Janus Global Unconstrained Bond Fund, said central banks are “running out of time” to reflate global economies as their aggressive policies including quantitative easing and low, even negative, interest rates are losing their effectiveness.

In his April Investment Outlook, Gross wrote that markets and the capitalistic business models based upon them and priced for them “will begin to go south” if global economies do not produce growth.

Given massive monetary stimulus, Gross said nominal gross domestic product growth rates for the U.S. should be between 4 percent and 5 percent by 2017 while that for the euro zone should be between 2 percent and 3 percent, respectively.

On Monday, the Federal Reserve Bank of Atlanta’s GDPNow model predicted U.S. growth at a 0.6 percent pace in the first quarter, marked down from an earlier estimate of 1.4 percent.

In Japan, nominal GDP should be between 1 percent and 2 percent while China should be between 5 percent and 6 percent by 2017, Gross added.

“Capital gains and the expectations for future gains will become Giant Pandas – very rare and sort of inefficient at reproduction,” Gross said. “I’m saying that developed and emerging economies are flying at stall speed and they’ve got to bump up nominal GDP growth rates or else. Cross your fingers.”

Gross warned against investing in negative-yielding securities.

“The real market and the real economy await a different conclusion as losses from negative rates result in capital losses, not capital gains,” he said. “Investors cannot make money when money yields nothing. Unless… nominal GDP can be raised to levels that allow central banks to normalize short-term interest rates, then south instead of north is the logical direction for markets.”

(Reporting By Jennifer Ablan; Editing by Chizu Nomiyama)

Oil prices fall as investors faith in rally wanes

By Amanda Cooper

LONDON (Reuters) – Oil prices fell on Tuesday, reflecting growing concerns that a two-month rally may be in danger of fizzling, while analysts forecast another rise to record levels for U.S. crude stockpiles.

The oil price has risen by more than 45 percent since mid-February ahead of a meeting next month of the world’s major producers to discuss an output freeze to support prices. But there is growing scepticism about the outcome of the meeting.

“The amount of verbal intervention, which has obviously helped the market greatly over the past two months, combined with a production slowdown in the U.S., has probably taken (oil) as far as it can, now the market really wants to see some action,” Saxo Bank senior manager Ole Hansen.

“We’re seeing more and more commentators raise the flag and saying ‘have we seen too much, too soon?’ in terms of the rally across the sector.”

Brent crude futures <LCOc1> fell by $0.96 to $39.31 a barrel by 1124 GMT (7.24 a.m. ET), having lost some six percent in the last six trading days, while U.S. crude <CLc1> fell 78 cents to $38.60.

OPEC and other major suppliers, including Russia, are to meet on April 17 in Doha to discuss an output freeze aimed at bolstering prices.

But with ballooning global inventories, signs some OPEC members are losing market share, plus little evidence of a strong pick-up in demand, analysts said oil is likely to trade in a range.

“There is a rebalancing on the way, but we are still running a surplus and stocks are building up as far as we can see,” SEB commodities analyst Bjarne Schieldrop said.

“There is a clear risk for a pull-back in Brent crude oil with a return to deeper contango again. Long positioning in Brent is at record high and vulnerable for a bearish repositioning.”

Data on Monday from the InterContinental Exchange showed speculators hold the largest net long position in Brent futures on record. [O/ICE]

U.S. commercial crude oil stockpiles were expected to have reached record highs for a seventh straight week, while refined product inventories likely fell, a preliminary Reuters survey showed late on Monday. <API>

Barclays said in a note on Monday net flows into commodities totaled more than $20 billion in January-February, the strongest start to a year since 2011, and prices could fall 20 to 25 percent if that were reversed.

(Additional reporting by Aaron Sheldrick in TOKYO; Editing by Jane Merriman and Susan Thomas)

Oil set for weekly loss as huge supplies cut short rally

A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma

By Barani Krishnan

NEW YORK (Reuters) – Oil prices fell to below $40 a barrel on Thursday, on track to their first weekly loss in over a month, pressured by record high U.S. stockpiles, weakening equity markets and a strong dollar.

With crude futures losing as much as 6 percent since Tuesday’s settlement – their biggest slide in two days since mid-February – analysts said the oil rally of the past five weeks that brought prices up from mid-$20 levels may be unraveling.

U.S. government data on Wednesday showed crude stockpiles jumped 9.4 million barrels last week – three times more than forecast by analysts in a Reuters poll.

A senior executive from the International Energy Agency, meanwhile, said a deal among a few OPEC producers and Russia to freeze production was likely to be “meaningless” as Saudi Arabia was the only one with the ability to raise output.

Brent crude’s front-month contact <LCOc1> was down 61 cents, or 1.5 percent, at $39.86 a barrel by 11:08 a.m. EST. It was on track to a 3 percent drop on the week, its biggest weekly slide since mid-January.

U.S. crude’s front-month <CLc1> fell 90 cents to $38.89. For the week, it was poised to lose about 2 percent, its first weekly loss since mid-February.

Earlier this week, both the benchmarks were up more than 50 percent from multi-year lows hit in January.

“A dose of reality (has) derailed the current perception (of a) rally, at least for the time being,” said Dominick Chirichella, analyst at New York’s Energy Management Institute.

The market will look out for a weekly reading on the U.S. oil drilling rig count due after 1:00 p.m. EST. A production indicator, the rig count rose last week after 12 weeks of cuts.

Shares on Wall Street <.SPX>, trading in tandem with crude most of this year, headed for their first weekly drop in six weeks. Financial markets were broadly risk averse with volumes thin ahead of the Good Friday and Easter break.

The dollar’s <.DXY> first weekly gain since late February also made oil and other commodities denominated in the greenback less affordable to holders of the euro and other currencies.

Trading houses were betting on oil being oversupplied at least two more years, while Russia looked to export more crude to Europe in April than any month since 2013.

Scott Shelton, energy broker at ICAP in Durham, North Carolina, feared of big builds in U.S. distillates, which include heating oil and diesel, as refineries emerge from maintenance. “We need to export large quantities of distillate,” he said. “Production has not fallen enough.”

(Additional reporting by Simon Falush in LONDON; Editing by Marguerita Choy)

Wall Street rally fizzles out as oil, materials fall

(Reuters) – Wall Street closed lower on Wednesday as oil and materials share prices dropped while investors remained cautious a day after deadly bombing attacks in Belgium.

The benchmark S&P 500 index fell back into negative territory for the year after closing positive on Friday for the first time in 2016.

U.S. stocks’ fading five-week rally was further diminished by comments over the past two days by Federal Reserve officials, who expressed views that suggested an appetite for more U.S. interest rate hikes than investors had anticipated.

The possibility of more than the two expected rate hikes through December has sent the dollar higher, pushing down commodity prices.

“That’s basically what’s leaning on the market today,” said Peter Cardillo, Chief Market Economist at First Standard Financial in New York. “It’s all about commodities.”

Gold and metals prices fell as the dollar strengthened.

U.S. oil prices also were also damaged after data showing a rise in U.S. stockpiles last week rekindled worries about a global glut.

Eight of the 10 major S&P sectors were lower, led by a 2.1-percent fall in the energy sector. Chevron and ConocoPhillips were among the biggest decliners. Utilities rose 0.7 percent and was the best performing sector.

The Dow Jones industrial average closed down 79.98 points, or 0.45 percent, to 17,502.59, the S&P 500 lost 13.09 points, or 0.64 percent, to 2,036.71 and the Nasdaq Composite fell 52.80 points, or 1.1 percent, to 4,768.86.

Adding to the downturn, investors were deterred by the shortened trading week ahead of the Good Friday holiday and uncertainty tied to Tuesday’s bombings in Brussels, Cardillo said.

Earnings weakness has been another concern for investors, with first-quarter S&P 500 earnings forecast to fall 6.9 percent from a year ago, according to Thomson Reuters data.

Nike shares were down 3.8 percent at $62.44 after the world’s largest footwear maker reported quarterly revenue below estimates.

Gilead Sciences was down 3.9 percent at $90.08 while Merck was up 0.09 percent. A federal jury upheld the validity of two Merck patents in a high-profile dispute over Gilead’s blockbuster cure for hepatitis C.

Gilead was the biggest drag on the S&P 500 and the Nasdaq.

Vertex Pharmaceuticals fell 7.6 percent to $80.15 after Goldman Sachs cuts its price target on the stock.

Yum Brands was up 2 percent at $80.55 after the Wall Street Journal reported that the fast-food chain’s owner was in talks with KKR about a possible sale of a 19.9-percent stake in its China business.

Volume was lighter than in recent sessions. About 6.8 billion shares changed hands on U.S. exchanges, compared with the 8.1 billion daily average for the past 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by 2,257 to 771, for a 2.93-to-1 ratio on the downside; on the Nasdaq, 2,221 issues fell and 579 advanced for a 3.84-to-1 ratio favoring decliners.

The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq recorded 21 new highs and 40 new lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski and James Dalgleish)

IEA says OPEC, Russia oil output freeze deal may be ‘meaningless’

SINGAPORE (Reuters) – A deal among some OPEC producers and Russia to freeze production is perhaps “meaningless” as Saudi Arabia is the only country with the ability to increase output, a senior executive from the International Energy Agency (IEA) said on Wednesday.

Brent crude futures are up more than 50 percent from a 12-year low near $27 a barrel hit early this year, bouncing back after Russia and OPEC’s Saudi Arabia, Venezuela and Qatar struck an agreement last month to keep output at January levels.

Qatar has invited all 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers to Doha on April 17 for another round of talks to widen the production freeze deal.

“Amongst the group of countries (participating in the meeting) that we’re aware of, only Saudi Arabia has any ability to increase its production,” said Neil Atkinson, head of the IEA’s oil industry and markets division, at an industry event.

“So a freeze on production is perhaps rather meaningless. It’s more some kind of gesture which perhaps is aimed … to build confidence that there will be stability in oil prices.”

Libya has joined Iran in snubbing the initiative, and the absence of the two OPEC producers – both with ample room to increase output – would limit the impact of any success in broadening the freeze at the April meeting.

The rise in output from Iran in the first quarter post-sanctions has been in line with IEA’s expectation of 300,000 barrels per day (bpd), Atkinson said, adding that Tehran’s output could rise again by the same amount by the third quarter.

“Iran has not exactly been flooding the market with lots more oil. It seems to be far more measured,” Atkinson said.

It will take a while for Iran to regain its pre-sanctions share in Europe, where markets have been taken over by Saudi Arabia, Russia and Iraq, he added.

The IEA, energy watchdog for the Organisation for Economic Co-operation and Development (OECD), expects the wide gap between supply and demand to narrow later this year, paving the way for an oil price recovery in 2017.

“We think the worst is over for prices … Today’s prices may not be sustainable at exactly $40 a barrel, but in this mid-$30s and upward range, we think there will be some support unless there’s a major change in fundamentals,” Atkinson said.

(Reporting by Florence Tan; Editing by Tom Hogue)

Global stocks recover from early selloff following Brussels attacks

NEW York (Reuters) – Global equity markets were little changed, regrouping from early losses while safe-haven gold and government bonds eased from higher levels on Tuesday following attacks on the airport and a rush-hour metro train in Brussels.

Islamic State claimed responsibility for suicide bomb attacks in the Belgian capital that killed at least 30 people, with police hunting a suspect who fled the air terminal.

Travel sector stocks, including airlines and hotels, were among the hardest-hit, although equities managed to recover from sharp losses and bonds and gold eased from their early highs.

On Wall Street, the NYSEArca airline index lost 0.9 percent and was on track for its first decline in five sessions. Cruise ship operators Royal Caribbean, down 2.9 percent and Carnival Corp, down 2.1 percent, were among the worst performers on the S&P 500.

Those declines were offset by gains in Apple, up 0.8 percent to $106.72 and a 0.9 percent gain in the healthcare sector.

“The news obviously has been dominated by what has gone on in Brussels, but experience tells us not only is it the morally right thing to do to basically not overreact, it also turns out to be the most profitable thing to do,” said David Kelly, chief global strategist at JPMorgan Funds in New York.

“The objective of terrorists is to disrupt and, to the extent that they can, do horrible things but at least we have the small victory that they have not disrupted global financial markets today.”

The Dow Jones industrial average fell 41.3 points, or 0.23 percent, to 17,582.57, the S&P 500 lost 1.8 points, or 0.09 percent, to 2,049.8 and the Nasdaq Composite added 12.79 points, or 0.27 percent, to 4,821.66.

The FTSEuroFirst 300 index of leading shares closed down 0.12 percent at 1,338.20, rebounding from a 1.6 percent drop. Belgian stocks rose 0.17 percent after having been down as much as 1.4 percent. MSCI’s index of world shares edged down 0.03 percent.

In Europe, the STOXX Europe 600 Travel & Leisure index was down 1.8 percent. Shares in major European airlines like Ryanair and Air France-KLM also fell.

Volume is expected to continue to diminish ahead of the Easter holiday, and investors were beginning to think about cashing in on a steep rally in stocks over the last few weeks.

Gold was up 0.31 percent at $1,248.10 an ounce after hitting a high of $1.259.60 earlier.

Benchmark U.S. 10-year notes were last down 6/32 in price to yield 1.9403 percent after falling as low as 1.879 percent as Chicago’s Federal Reserve president struck a bullish tone on the U.S. economy.

In currency markets, the Japanese yen, regarded by investors as a shelter from turbulence, pulled back from early gains, notably against the euro. The euro was last up 0.14 percent at 126.01 yen and the dollar turned positive, up 0.3 percent at 112.27 yen.

The euro fell 0.16 percent against the dollar to $1.1221. The dollar was up 0.33 percent to 95.606 against a basket of major currencies.

Oil prices also steadied after the initial rush to safer assets, with U.S. crude settling down 0.17 percent to $41.45 a barrel while Brent rebounded from a low of $40.97 to settle up 0.6 percent at $41.79.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Dan Grebler)

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