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12Mar2015 Pre-Market Commentary: Markets Expected To Gap Up On The Opening, US Financial Data Not Very Good

Written by Gary

The dollar index is up and worrying the Feds, Brent is testing its resistance made 2 sessions ago and gold appears to be trending down. Retail sales is once again soft as consumers are not spending.

Premarkets are up as high as +0.5% indicating a gap up this morning.


Here is the European Market Open from CNN Money

European markets are mixed. The FTSE 100 is higher by 1.03%, while the DAX is leading the CAC 40 lower. They are down 0.15% and 0.04% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Retail Sales Again Soft Again In February 2015. Consumers Are Not Spending.

Written by Steven Hansen

Retail sales again slumped according to US Census and was below expectations. Our analysis agrees that this was a weak month for retail sales - and consumers continue to not spend the money saved by lower fuel prices. Overall the rolling averages are yielding a declining growth trend.

U.S. retail sales fall in February, weather likely a factor

WASHINGTON, March 12 (Reuters) - U.S. retail sales unexpectedly fell for a third straight month in February likely

U.S. import prices rise, but inflation pressures still muted

WASHINGTON (Reuters) - U.S. import prices rose in February after seven months of declines as the cost of petroleum increased, but there was still little sign of imported inflation pressures.

U.S. jobless claims fall, unwind prior weeks' increases

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits fell more than expected last week, offering fresh signs of a rapidly strengthening labor market.

Lumber Liquidators says products safe, offers free tests

(Reuters) - Lumber Liquidators Holdings Inc , facing U.S. government probes over claims of dangerous levels of a cancer-causing substance in its flooring products, stood by the safety of its products and said it would offer free indoor air quality testing for qualifying customers.

Asia Rushes to Lower Rates, but Not Fast Enough

Deflationary forces are starting to weigh on broader economic growth across the region.

Fed Will Open "Pandora's Box" With Rate Hike, UBS Warns

On common theme we've been building on lately as central banks work to monetize all net (and sometimes gross) government bond issuance in their respective jurisdictions, is that QE is destabilizing markets by sapping liquidity which in turn inhibits price discovery and creates volatility. This is on display in Japan, where 2 out of 3 dealers think the JGB market is impaired thanks to BoJ asset purchases and where many officials are beginning to get more vocal about the possibility that a lack of liquidity could have "dire consequences." Similarly, market financing via shadow banking conduits has declined by nearly half since 2008 in the US, and with dealers unwilling to hold inventory of corporate paper thanks to tougher capital requirements, the stage is set for what the Center for Financial Stability recently called "an accident." As a reminder, here's what the SEC's Daniel Gallagher had to say recently about liquidity in the US corporate bond market (via Bloomberg):

Lack of liquidity in corporate bond market is "systemic risk" not addressed by regulators, SEC Commissioner Daniel Gallagher says in public remarks.

Gallagher cites 80% decline in corporate bond inventori ...

Dollar General forecasts full-year profit below estimates

(Reuters) - Dollar General Stores Inc forecast full-year earnings below analysts' expectations, as the company plans to open more stores ahead of a merger of its rivals Family Dollar Stores Inc and Dollar Tree Inc .
...

Futures edge up after recent declines; data on tap

NEW YORK (Reuters) - U.S. stock index futures edged higher on Thursday, suggesting a partial rebound following recent declines, as investors looked ahead to data for indications of how soon the Federal Reserve is likely to raise interest rates.

Frontrunning: March 1


As reported here first: The U.S. Has Too Much Oil and Nowhere to Put It (BBG)

Dollar Drops From 12-Year High as S&P Futures, Bonds Gain (BBG); Dollar Bulls Retreat From 12-Year High to Euro With Fed in View (BBG)

ECB Bond Buying Not Needed With Economy Improving, Weidmann Says (BBG)

China Feb new yuan loans well above forecast (Reuters)

U.S. probing report Secret Service agents drove car into White House barrier (Reuters)

PBOC Pledges to Press on With Rate Liberalization Amid Slowdown (

Spanish Lender Offers to Buy TSB Banking Group of Britain

Banco de Sabadell of Spain has made a preliminary offer to pay about $2.6 billion for TSB, which was spun out of Lloyds Banking Group last year.

Futures edge up after recent declines; data on tap

NEW YORK (Reuters) - U.S. stock index futures edged higher on Thursday, suggesting a partial rebound following a string of declines, as investors looked ahead to data for indications of how soon the Federal Reserve is likely to raise interest rates.

Brent oil climbs above $58 on weaker dollar, Iraq fighting

LONDON (Reuters) - Brent oil futures rose above $58 a barrel on Thursday as the dollar weakened and Iraqi security forces battled Islamic State fighters in Tikrit.

ITV to Pay Up to $1.2 Billion for â€'The Voice' Producer

The acquisition of Talpa Media, established by John de Mol, the "Big Brother" creator, is the latest move by the British broadcaster to bolster its content and sell shows globally.

FX Volatility Spikes As More Countries Enter Currency Wars; Euro Surges On Furious Squeeze After Touching 1.04

The global currency wars are getting ever more violent, following yesterday's unexpected entry of Thailand and South Korea, whose central banks were #23 and #24 to ease monetary conditions in 2015, confirming the threat of a global USD margin call is clear and present (see "The Global Dollar Funding Shortage Is Back With A Vengeance And "This Time It's Different"). But the one currency everyone continues to watch is the Euro, which the closer it gets to parity with the USD, the more volatile it becomes, and moments after touching a 1.04-handle coupled with the DXY rising above 100 for the first time in 12 years, the EURUSD saw a huge short squeeze which sent it nearly 150 pips higher to 1.0643, before the selling resumed.

Indeed, FX markets have been the main source of focus so far with once again the USD-index being the main source of price action. Overnight, the USD posted a fresh 12yr high after briefly breaking above the key 100.00 level, sending EUR/USD below 1.0500 for the first time since Jan'03. However, heading into the European open and a failed sustained break of 100.00 for the USD-index, the USD saw a bout of weakness which subsequently provided a lift to its major counterparts with EUR/USD and GBP/USD temporarily breaking back above 1.0600 and 1.5000 respectively, with RANsquawk sources noting Asian buyers in EUR/USD. One wonders if the BOJ is now also intervening on behalf of the ECB when things gets serious. However, this momentum for EUR/USD failed to sustain at the USD-index pared some of its initial losses, while GBP remained at its highs after the latest UK trade balance report showed a narrower deficit th ...

Euro pulls out of dive, stocks edge higher

LONDON (Reuters) - The euro pulled out of its recent dive and the dollar eased off the accelerator pedal on Thursday, as markets took a breather after a week of breakneck moves in the world's two biggest currencies.

Target pressured on wages by group with focus but little to spend

(Reuters) - With shallow pockets but a deep commitment to promote "living wages", women's advocacy group UltraViolet has peppered Target Corp with cheap location-focused online ads, challenging it to match Wal-Mart Stores Inc's promise of $10-an-hour base pay.

Bits Blog: Zuckerberg Lawsuit Documents Show Animosity With Would-Be Neighbor

Documents filed Wednesday accuse the Facebook chief executive of reneging on a promise to introduce a would-be neighbor to powerful Silicon Valley friends.

The Mystery Of America's Missing Wage Growth Has Been Solved

One of the biggest conundrums, one that has profound monetary policy implications, and that has been stumping the Fed for the past year is how can it be possible that with 5.5% unemployment there is virtually no wage growth. The mystery only deepens when the Fed listens to so-called economist experts who tell it wage growth is imminent, if not here already, and it is merely not being captured by the various data series. Friday's jobs data merely confirmed that since the Lehman crash there has been virtually no real wage growth, as the increase in nominal average hourly earnings is right on top of the Fed's inflation target, instead of where Yellen would like to see it: somewhere in the vicinity of 4%.

And yet, when sophisticated, erudite pundits, usually from a paid leadership position, look at the data, they say wages are growing.

How is that possible?

Actually, the mystery only deepens when one looks not at the wages for the set of All Employees as shown above, but for the 80% or so classified by the BLS as "production and non-supervisory employees" who "account for approximately four-fifths of the total employment on private nonfarm payrolls." The Bureau of Labor Statistics defines them as follows:

Production and related employees include working supervisors and all nonsupervisory e ...

Reform Is The Only Way Out for China Economy

Written by Yuhua Zhang, GEI Associate

This is a key year for China's economy. Facing lower economic growth, decline of productivity and escape of domestic capital, China has to make reasonable marco-control adjustments to stablize economic operations while nurturing innovative small businesses, achieving an "economic new normal" and accomplishing a difficult economic transition. In all, China has to walk on long, slow road to reform.

Read more ...

Are U.S. Stocks Overvalued?

The question as to whether U.S. stocks are currently overvalued continues to trouble global markets. This is especially true as stocks have seen much higher volatility so far in 2015. Here's a quick answer: on an abstract and historical basis, stocks seem to be overvalued. The most common analytical tools for measuring stock market attractiveness continue to be price-to-earnings ratio and the discount cash flow analysis (DCF). As tried and tested as these tools are, without understanding the context of the investment atmosphere, any determination of stock market valuations is apt to be wrong.

Rate Hikes Already Priced into the US Dollar Index

By EconMatters

Buy the Rumor, Sell the News

All those bemoaning what rate hikes could potentially portend for the US Dollar need to get a grip, the rate hik ...

New Credit Suisse boss faces stiff challenge in Asia

HONG KONG/LONDON (Reuters) - Incoming Credit Suisse boss Tidjane Thiam is expected to focus on private banking in Asia while aggressively cutting jobs at its investment bank, as he aims to repeat the success in the region of his old employer, Prudential.

KFC faces pressure after McDonald's says no antibiotics in chicken

LOS ANGELES/CHICAGO (Reuters) - KFC, the world's largest chain of fried chicken restaurants, may face pressure from consumer and environmental groups to change how its poultry are raised after McDonald's Corp said it would switch to chicken raised without human antibiotics.

Currency Carnage Continues In Asia, EURUSD 1.04 Pushes DXY Over 100

As the world's dollar funding shortage continues to unwind, EURUSD has re-collapsed to a 1.04 handle in the Asia session and dragged The USD Index above 100 for the first time since 2003. This is now the fastest surge in the USD since records began and EM FX is getting monkey-hammered. Swissy has almost retraced the entire post-SNB de-peg surge. USD strength has weakened JPY and thus miraculously lifted US equity futures (just as it did last night before the dead cat bounce collapsed to lower-lows).

EURUSD 1.04 (600 pips lower since payrolls)... and USD Index 100.00 (highest since 2003)

Swissy dumping...

EM FX is getting slayed...

EUR has weakened more than twice as much as the Ruble this year...

Big Banks Struggle to Clear Fed Tests

Four of the biggest names on Wall Street struggled to pass the Federal Reserve's 2015 "stress tests," and the U.S. units of two foreign banks fell short.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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