Today Peter Boockvar sent King World News a powerful piece about the continued trouble in Europe and Art Cashin noted the critical level to watch on the S&P.

Peter Boockvar:  While the markets called a do over on the year last week with the S&P 500 in particular getting back all of what it lost, the same can’t be said for US corporate earnings and GDP growth. Expectations for both are both lower than they were on December 31st. In early January, the estimate for S&P 500 earnings in Q1 was expected to be flat y/o/y and up 2.5% y/o/y ex energy…

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Peter Boockvar continues:  As of Friday, those estimates are now for earnings to fall by 9.5% y/o/y and lower by 4.7% ex energy. There will be no doubt that actual earnings will beat estimates by about 70% as they always do but that shouldn’t be considered good as it is just normal. The 70% estimate beat rate should be the baseline in determining what is good and what is not during the reporting season. Alcoa reports one week from today.

For all the daily focus on the correlation with oil and the stocks, the front month crude contract is down 8.2% year to date (but of course well off its lows). Some days they trade together and some days they don’t. The major release valve for the US market in Q1 was really the US dollar falling (as the Janet Yellen backed off from the four rate hike consensus within the dots) but at the cost of market trouble for Europe and Japan notwithstanding more rounds of easing from the ECB and BoJ. Even after today’s rally, the Euro STOXX 600 is still down 8% year to date led by a 21% drop in the banks. The Nikkei is down 15% ytd.

The eurozone unemployment rate for February was 10.3%, in line with the estimate and down from 10.4% in January which was revised up from 10.3% initially. The current level is the lowest since August ’11 as the glacial but positive pace of declines continues. This figure got as high as 12.1% in 2013 but remains well off its pre recession low of 7.2% in March 2008. Germany continued to be the bright spot with an adjusted unemployment rate of 4.3% as they face trying to place all those migrants into jobs. The French rate remains stuck above 10% at 10.2%. Spain’s rate is down to a still whopping 20.4% but that is the lowest since December ‘10. The pre recession low for Spain was 7.9%.

It’s a pretty boring week on the US economic release calendar but the highlight will be tomorrow’s ISM services index where the March figure is expected to rise to 54.1 from 53.4 which was the lowest since February ’14. February factory orders get released today where the durable goods component will get revised from the initial look two weeks ago.

Also of importance…

This is a portion of today’s note from Art Cashin:  Overnight And Overseas – In Asia, Shanghai and Hong Kong were closed for a holiday. Tokyo rolled over and closed with small losses. Australia also dipped but India rose slightly.

European markets are mostly higher with the financials showing some life. London is underperforming as the miners drag.

The dollar is a touch firmer, which has put some pressure on gold and the base metal group. Crude is a bit firmer and U.S. futures are up a smidge.

Consensus – We’ll look to the first resistance band at 2075/2082. The focus will likely be on crude again. Stick with the drill – stay wary, alert and very, very nimble.

KWN has now released the outstanding audio interview with Stephen Leeb and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.

KWN Leeb mp3 4:2:2016

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