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Need to Know: Here comes what could be the ugliest earnings season since 2009

The markets have been caught in a rather limp stretch here. Like we saw to end the week, there just hasn’t been anything meaty enough to sustain these rallies.

That could change this week as Alcoa AA, +0.75%  ushers in another earnings season.

More important than Alcoa is what we see from the first crop of big banks, including J.P. Morgan Chase JPM, +0.33%  and Bank of America BAC, +0.00% in the coming days. Analysts are telling investors to gird for some nasty numbers out of financials, which have been the worst performing sector this year, with an 8% drop.

Expectations for the S&P as a whole are running low — the lowest in a long time — and that should, at least, give hope for some upside potential, if results manage to hurdle the lowered bar.

Oil will also continue to be in focus after the latest spike was triggered by an unexpected drop in domestic crude inventories. A continued push for oil could bode well for stocks, considering how tightly the two have been correlated of late. Of note, that relationship cracked some last week, and going forward, Greg Guenthner of the Daily Reckoning blog hopes it stays that way.

“The last thing we need is for oil to plunge lower and drag stocks down the tube. But their recent breakup —if it lasts — could be a sign of things to come,” he said. “If the major averages are going to attempt a legitimate run at their highs, they’ll need to break the oil shackles.”

But the promise of volatility doesn’t end there.

The yen’s recent push to 17-month highs and the Bank of Japan’s inability to contain it also has some investors fearing the ripple effect it could have around the world.

So, for the rather scary indicator world, this is, for all intents and purposes, the signal of disaster. FWIW https://t.co/Gku7uHIDMM

— Ophir Gottlieb (@OphirGottlieb) April 11, 2016

Clearly, confidence in the ability of central banks to stoke economic growth is eroding. It’s costing Japan a massive amount of investment dollars, as you can see from our “chart of the day” below.

Key market gauges

Stocks are heading toward a stronger open, with futures on the Dow YMM6, +0.47% S&P ESM6, +0.50%  and Nasdaq NQM6, +0.58%  all in the green. Gold GCM6, +0.63%  is looking relatively strong this morning, while crude CLM6, +1.00% has given up some ground.

Asia was a mixed bag, with the Nikkei NIK, -0.44%  getting hit and the Shanghai Composite SHCOMP, +1.64%  gaining ground. In Europe SXXP, +0.63%  , banks are mostly driving some stronger action.

The dollar USDJPY, +0.22%  was getting hit again in Asia, but has since clawed back some ground against the yen.

The economy

Federal Reserve Chair Janet Yellen and President Barack Obama get together today for a chat at a time when the U.S. central bank is weighing potential interest-rate hikes against the impact they could have on the fragile global economy. Other than that, no big economic reports to focus on today, but we’ll get a look at March retail sales on Wednesday.

The buzz

The parent company of the Daily Mail DMGT, +0.50%  is in talks with private-equity firms about a possible bid for Yahoo YHOO, +0.91% the Wall Street Journal reported. Of course, the Daily Mail is just one of about 40 players — including front-runner Verizon — that have expressed interest in Yahoo. There’s an April 18 deadline for preliminary offers, so the field of serious bidders should be thinning in the coming days.

For what it’s worth, The Fly, a colorful blogger for iBankCoin, doesn’t quite see it playing out that way. “No. I don’t think so. Yahoo is f**king 15x bigger than the Daily Mail, an offal of a newspaper, the supreme sh*t of Great Britain,” he wrote. “This isn’t a serious news story; because it will never happen. That’s the way it should be reported.”

Valeant VRX, +2.64%  has asked its CEO to cooperate with a Senate committee investigating increases in the prices of certain prescription drugs.

Meanwhile, PulteGroup PHM, +1.06%  founder Bill Pulte has sent another letter Monday to the home builder’s board, asking for the removal of CEO Richard Dugas.

The chart

As you can see by this chart, the tide is going out in Japan. Since early 2016, the Tokyo stock market has seen foreign investors pull out for 13 straight weeks, the longest such streak since 1998, according to Bloomberg. In total, $46 billion has been dumped amid Japan’s weakening economy. The Topis index has shed 18% this year, the worst in the world behind only Italy.

Earnings

Alcoa AA, +0.75%  is slated to kick off the first-quarter earnings reporting season after Monday’s close, with analysts expecting a third straight quarter of declines in both earnings and revenue, thanks to weakness in aluminum prices. Weak numbers could set an ominous stage for what is expected to be a fourth straight quarter of earnings declines for S&P 500 companies. Read: Why the worst earnings season since 2009 could turn out to be a good thing.

Hertz HTZ, -7.94%  stock tumbled 6% in premarket after warning of disappointing earnings and car-rental revenue.

The call
Getty Images

Apple AAPL, +0.38% which trades at a deep discount to the broader S&P 500, is poised for a potential 40% surge this year, according to Barron’s. Apple trades at 11.5 times trailing earnings, while the S&P SPX, +0.38%  is all the way up at 23. But that’s only part of the case made by Barron’s, which pointed to a Credit Suisse report claiming that investors don’t seem to fully appreciate Apple’s ability to ramp up profits from its services like music, apps, online storage, etc. That’s why, as Barron’s states, Apple is worth $150 a share. Read the full bullish take.

What about the Apple Watch? Well, it’s a year later, and as Quartz explains, it’s pretty clear that nobody really needs one.

The quote

“He’s threatening. You go to these county conventions, and you see the tactics, Gestapo tactics, the scorched-earth tactics” — Donald Trump’s new convention manager, Paul Manafort, in an interview Sunday on NBC’s “Meet the Press.”

The stat
Getty Images

$18 billion — that’s how much China invested in Australian real estate in the year ending June 30, 2015, and it’s three times what the U.S. invested there.

Random reads

Donald Trump inspires fans to chant “build that wall” at high school girls soccer game. Meanwhile, the Boston Globe envisions a Trump presidency.

The good news: The wild tiger count is on the rise for the first time in a century. The bad news: Cuba is running out of beer.

Workers admit that these jobs make the world a worse place.

Maybe “fun weekend mom” isn’t something to strive for.

Finally, “bioweapon defense mode” for your Tesla TSLA, -0.38%  Model S.

Then there’s this conversation starter from ESPN (correct answer is so very obviously the latter):

You can get a free courtside seat to Kobe’s final game or the Warriors going for 73 wins. Which one you going to?

— Jemele Hill (@jemelehill) April 11, 2016

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Need to Know: Here comes what could be the ugliest earnings season since 2009 Reviewed by on . The markets have been caught in a rather limp stretch here. Like we saw to end the week, there just hasn’t been anything meaty enough to sustain these rallies. The markets have been caught in a rather limp stretch here. Like we saw to end the week, there just hasn’t been anything meaty enough to sustain these rallies. Rating:
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