The government/Fed/big banks have achieved quite an accomplishment in getting the stock market at the highest level it can right before April 15th and earnings season which began today with Alcoa’s less than stellar performance.

Today’s rabbit out of a hat were reports that both Saudi Arabia and Russia agreed to an oil production freeze, even though the official meeting is this coming Sunday in Doha, Qatar. Keep in mind this supposed freeze was nothing more than Saudi Arabia agreeing that it would continue to produce oil at its maximum rate and that nothing would stop Russia from producing as much as oil as it wants as well. Freezing oil production is simply a term for producing as much oil as they can at current maximum production rates.

However, Iran can produce as much oil as it wants, as well. So, Sunday they are supposedly going to agree to all this.

Never mind that neither the Russians nor the Saudi oil minister confirmed this story. Yet this is the story that was reported to the media and oil prices shot up $1.81 today to close at $42.17 a barrel. March’s high was $42.49 – so, just under that resistance level.

Earnings take focus

Naturally, such an oil pump, whether it was rigged or not will trigger a bounce in the stock market during this crucial tax week.

However, now that we are in the earnings season, analysts are bracing for the biggest overall decline in earnings since the great recession. Corporate earnings have been falling since the second quarter of last year but you wouldn’t know that judging by the Fed’s jacking up of stock prices.

Last year, energy companies led the plunge in earnings, but the financials are set to take the biggest hit this year or so the stock market is suspecting.

We have been warned by the big banks themselves first quarter’s earnings are going to be down. The big banks will report earnings Wednesday (JP Morgan)…which will set the tone, then Thursday (Wells Fargo and Bank of America) and Friday (Citigroup).

Given that the stock market bounced back in March to recoup much of the January losses thanks to the Fed, it is hard to say what these banks are going to report or more importantly how they want to report their earnings, given their creative accountants. Still, you would think given the massive losses occurring globally to banks, especially in Europe and Asia that this has got to spill over to US banks which have huge investments overseas. We are about to see this week, which will set the tone for the entire earnings season.

I can’t help but believe that many of these concerns were discussed between Federal Reserve Chairwoman Janet Yellen and President Obama.

Consider the following that must have been considered.

1. China continues to devalue its currency faster than it would otherwise hoping to “slow” the rapid deterioration China’s industrial’s exports. Still economists believe the China would have to devalue its currency another 15%, immediately, to bring some sort of order back to its economy.
2. Japan doesn’t seem to be able to stop its currency from skyrocketing causing the cost of goods from soaring and setting the stage for another collapse in its economy.
3. Europe is a total mess. Austria just made a historical first with its first bank “bail-in” amidst hurried meetings in Europe. The failed Hypo Alpe Adria bank – the Heta Asset Resolution AG – was forced by creditors into an involuntary “bail-in” after an $8.5 billion capital hole in its balance sheet became apparent. Italy is having its own banking crisis – actually one that has been dragging on for years and is reaching its ultimate conclusion. On Monday, Italy’s finance minister Pier Carlo Padoan presided over a meeting in Rome with bank officials from Italy’s largest financial institutions to finalize a “last resort” bailout plan. Germany’s yields are falling below zero! I could go on and on here with Brexit, France, immigrants, Greece and whether the euro zone can make it past this year.
4. Brazil, the seventh largest economy in the world has fallen into a “depression” and is looking to impeach its president for corruption charges. Venezuela is on the brink of total socioeconomic collapse. Canada is in recession.

I have no idea what the President and Janet Yellen discussed yesterday but you have to believe that an oncoming global recession has to be first and foremost priority, with the President keen on not seeing a total collapse in the stock market or economy before he leaves office.

The problem is we are falling into recession now even if it takes a couple of quarters to be confirmed.

Recently, Bank of America noted that credit and debit card spending data revealed sales were notable weak! Today we get further confirmation of what Retail ETF investors have been seeing for a while as Johnson-Redbook reported a 2.8% plunge in Same-Store-Sales – the worst start to an April since 2005.

In the past, recessions in corporate earnings have been accompanied by economic recessions but who knows with this President who has grown accustom to making things look better than they really are.