Commodities, Global Stocks Lower Again

Commodities and European equities are again weaker today. China reported on Wednesday that industrial output increased 13.4 percent in April year-over-year, still respectable but lower than last month.

The Shanghai Composite Index, down 1.3 percent, closed at its lowest level since February.

Is a market top in crude oila leading indicator for a top in stocks? Traders noting to me this morning that crude started selling off a month before the market drop 2 years ago...and topped this April.

As for stocks, energy and materials hit highs in the beginning of April. Bulls note there is no real selling of the overall market...the S&P 500 is a little more than 1 percent from its old highs, and overall volume remains on the light side. True. And, they note, there's rotation: into healthcare, utilities, and other defensive names. Utilities at new highs, many drugs at new highs.

But don't let that make you complacent: bears argue that rotation eventually leads to a broader selloff when the rotations stops.


1) the cooloff in the Chinese IPO market continues. China Zenix Auto International (ZX), the largest commercial wheel manufacturer in China, finally did price this morning...but well below expectations. 77.4 million shares priced at $6, down from $9.50-$11.50 price talk.

Phoenix New Media (FENG), which provides premium content on an integrated platform across Internet, mobile and TV channels in China, priced 12.768 million shares at $11, also below the price talk of $12-$14.

I will have the CEO of Phoenix New Media, Shuang Liu, First on CNBC at 9:35am ET (time approx.) this morning.

2) Gee thanks...a day after a big plunge in oil, the International Energy Agency informs us that high gas prices is likely to act as a deterrent to summer driving: "At $3.7 a gallon in April, retail prices are now well in the $3-$4 gallon threshold that typically triggers a fall in vehicle-miles travelled," it said in its monthly report.

Meanwhile, crude oil is down another $2 today, hovering just above $96 — its lowest level since February as well. That's sending airlines up 1 to 2 percent pre-open. US Airways and United Continental are approaching 2.5-month highs.


3) Kohl's falls 2 percent after reporting inline Q1 earnings. Comps were up just 1.3 percent in the quarter, but margins held steady from a year ago.

Guidance for the full-year has been raised ($4.25-$4.40 vs. $4.34 consensus) on expectations for a strong first half of the year. The department store sees higher comps from "pent-up demand for seasonal business" in the current quarter and expects Q2 earnings of $0.96-$1.02, inline with $0.99 consensus.

4) Silver stocks First Majestic (AG), Coeur D'Alene (CDE) fall 2 percent after silver continues its pullback, falling 6 percent in early trade. The metal now sits its lowest level since February.

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