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19Mar2015 Pre-Market Commentary: Markets To Open Down Fractionally, WTI Oil Headed South, U.S. Dollar Trending Up

Written by Gary

Markets are expected to open initially down and may stay that way for the remainder of the session depending on how many 'sheeples' can be rounded up and the mood of the HFT algo computers.

Many investors are very leery of any further gains that supersede the previous highs made by the SP500 at the beginning of march.

Yes, we may see the 'test' in of the previous highs, but without an outright rejection of this resistance, we will have a sideways trading until the interest of further gain fades.

By the opening bell, FoxNews reports that the number of Americans filing for first-time unemployment benefits rose last week to 291,000 from an upwardly revised 290,000 the week prior. Wall Street expected claims to rise to 292,000 from an initially reported 289,000.


Here is the European Market Open from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.64% while London's FTSE 100 is off 0.03% and France's CAC 40 is lower by 0.01%.

Lately, bad news has done nothing to significantly move the markets, but oil has. Watch the price of oil for the ultimate direction of the equities. Here the daily chart of WTI at the opening and it doesn't look good now after dropping into the high 44's once again.

What Is Moving the Markets

Here are the headlines moving the markets.

Rail Week Ending 14 March 2015: Weak Growth Continues

Econintersect: Week 10 of 2015 shows same week total rail traffic (from same week one year ago) weakly improved according to the Association of American Railroads (AAR) traffic data. Intermodal traffic, which accounts for half of movements, is now strongly growing year-over-year - but railcar counts are in contraction. Rail traffic still appears very soft.

GoDaddy's IPO to value Web hosting company at up to $2.87 billion

(Reuters) - Web hosting company GoDaddy Inc's initial public offering is expected to value the company at up to $2.87 billion and comes at a time when there has been a steep fall in the number of companies going public in the United States.

Gold Surges â€" Fed Loses "Patience" and Signals Loose Monetary Policies to Continue

Gold Surges: Fed Loses "Patience" and Signals Loose Monetary Policies to Continue

Gold rose over 2% Fed signals ultra loose monetary policies to continue

Fed dampens expectation of a rate hike in June

Yellen no longer "patient" notes weakness in recent US economic data

Fed knows that fragile, debt laden U.S. economy cannot handle higher rates

Despite recent dollar strength, dollar vulnerable in long term

Sole reserve currency status threatened in currency wars

Gold rose sharply following yesterday's Fed announcement in which it was indicated that the Fed are unlikely to raise rates in June although the possibility was not ruled out due to the poorer economic data that has been emerging this year.

‘Helicopter Janet’

'Helicopter Janet'

Gold rose after Fed Chair Yellen said that economic growth had "moderated somewhat" which means that ultra loose monetary policies look set to continue. The Federal Reserve dropped the word "patience" from its policy statement, stoking expectations for a mid-year rise in U.S. ...

U.S. jobless claims rise modestly; continuing claims fall

WASHINGTON (Reuters) - The number of Americans filing new claims for unemployment benefits rose only modestly last week, indicating the labor market remained on solid footing despite slowing economic growth.

Kuwait "Over-Supply" Concerns Send WTI Tumbling Back To $42 Handle

Reversing all of yesterday's FOMC-inspired idiocy, WTI has plunged back to reality this morning. Following comments by Kuwait's comments that OPEC had no choice but to keep production steady, refocusing the market on global oversupply, April WTI is back down to a $42 handle.

All of yesterday's idiocy unwound...

As Reuters reports,

Kuwait's oil minister said on Thursday he was concerned by the 50 percent drop in oil prices since June because of its impact on the Gulf Arab state's budget, but said OPEC had no choice but to keep output steady

"We don't want to lose our share in the market," Ali al-Omair told reporters.

A 3-D View of a Chart That Predicts The Economic Future: The Yield Curve

The current flatness of the curve shows investors expect mediocre growth.

14 March 2015 Initial Unemployment Claims Rolling Average Worsens But Weekly Claims Improve

Blue Line 4 Week Average

The market was expecting the weekly initial unemployment claims at 275,000 to 305,000 (consensus 293,000) vs the 291,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 302,500 (reported last week as 302,250) to 304,750. The rolling averages have been equal to or under 300,000 for most of the last 6 months, but this week again exceeded this number.

Initial Claims Hold Worst Levels In 6 Months As Shale State Joblessness Re-Surges

After some 'stability' in the last few weeks, initial jobless claims in the major shale states has started to rise again with Texas the most impacted for now. Overall initial jobless claims rose very modestly to 291k, but leaves the 4-week average above 300k for the 2nd week in a row - the first time in over 6 months. Contonuing claims rose modestly also, confirming the change in trend from improving to stable-to-deteriorating again.

Overall initial claims hovering at its worst level in over 6 months...

Texas Initial Claims are starting to ramp up again

Charts: Bloomberg

EU to tell Greece time, patience running out

BRUSSELS/BERLIN (Reuters) - Euro zone leaders will tell Greece on Thursday that time and patience are running out for its leftist-led government to implement agreed reforms to avert a looming cash crunch that could force it out of the single currency.

U.S. Jobless Claims Rise Modestly; Continuing Claims Fall

The number of Americans filing new claims for unemployment benefits rose only modestly last week, indicating the labor market remained on solid footing despite slowing economic growth.

Target Offers $10 Million Settlement for Data Breach Lawsuit

Target has proposed to pay $10 million to settle a class-action lawsuit brought against the retailer following a massive data breach in 2013.

Stock futures flat after Fed cuts growth, inflation projections

NEW YORK (Reuters) - U.S. stock index futures were little changed on Thursday after the Federal Reserve on Wednesday removed a reference to being "patient" on interest rates out of its policy statement but indicated that it was in no rush to hike borrowing costs.

Trick Question Of The Day: How Can The Fed Be Both Forward-Looking And Data-Dependent?

Via Scotiabank's Guy Haselmann,

Yellen would never admit it, but the FOMC is (and has been) on a pre-set course to hike rates in June. However, a pre-set course is not a guarantee. Any deviation from this path has required a significant change in financial, economic, or geo-political conditions, particularly as 'mid-2015' has approached. Markets will, therefore, have to contend with one of two evils: worsening conditions, or an interest rate hike in June. In a worst case scenario, markets could be hit by both at the same time.

The first time that 'mid-2015' was introduced as part of the Fed's calendar-based guidance was back in 2012. How could the FOMC have been able to target a date three years in the future with any accuracy, particularly given the Fed's dismal forecasting record? What the Fed knew back in 2012 was that Operation Twist replaced short-dated bonds with securities due to mature beginning in 2016. In other words, the Fed knew in 2012 that because its balance sheet would begin shrinking quickly in early 2016, they would be forced near mid-2015 to make a few decisions.

How can the FOMC be both forward looking and data dependent?

A declining balance sheet is a defacto tightening. Therefore, it is hard to imagine the FOMC beginning the normalization process of lifting rates at the same time the Fed's balance sheet is shrinking. Since the FOMC has appeared highly sensitive and concerned about the market's reaction to 'lift-off', the last thing the Fed would want is to have two policy changes at the same time. This is why the Fed has been on a pre-set course for quite some time, i.e., a mid-2015 rate hike prior to the 2016 maturities. If they don't hike in &l ...

GoDaddy Sets Price Range for I.P.O.

The Internet services provider, which is known for its provocative television commercials, plans to sell shares between $17 and $19 a share.

Honda Expands Recall for Takata Air Bags by Over 100,000 Vehicles

Honda Motor Co said on Thursday it will add more than 100,000 vehicles to a U.S. recall related to potentially defective air bags made by Takata Corp that can deploy with too much force and spray occupants with metal shards.

Fed opens door wider for rate hike but downgrades economic outlook

WASHINGTON (Reuters) - The Federal Reserve on Wednesday moved a step closer to hiking rates for the first time since 2006, but downgraded its economic growth and inflation projections, signaling it is in no rush to push borrowing costs to more normal levels.

After Pillaging Pensions, Greece Raids Utilities To Repay Troika; Bonds Plunge As Bank Run Accelerates

Following yesterday's news that the ECB is now running simulations on what a Grexit would mean for Greek bond prices (spoiler alert:
"fundamentals" suggest a 95% loss), overnight we got more confirmation that Mario Draghi continues to tighten the screws on the Greek sovereign corpse, when Bloomberg reported that the ECB once again raised the maximum amount of emergency liquidity available to Greek lenders by €400 million, but less than the Greek central bank requested, people familiar with the decision said.

The increase was approved by the ECB's Governing Council on Wednesday, the people said, asking not to be identified as the council meeting was private. Greece requested about 900 million euros, one of the people said. The increase should take ELA to about 70 billion euros. Policy makers raised the limit by 600 million euros on March 12, after a boost by 500 million euros to 68.8 billion euros on March 5. Greek banks haven't used all their ELA and have a total of about 3 billion euros in liquidity available, one of the people said.

However, not a single penny from this additional emergency "liquidity" would enter the economy, as all of it was merely provided to offset the ever faster Greek bank run because as Reuters reported, on Wednesday Greek banks saw deposit outflows of €300 million, the highest in a single day since a February deal with the euro zone that staved off ...

Stock futures flat after Fed cuts growth, inflation projections

NEW YORK (Reuters) - U.S. stock index futures were little changed on Thursday after the Federal Reserve on Wednesday removed a reference to being "patient" on interest rates out of its policy statement but indicated that it was in no rush to hike borrowing costs.

U.S. firms use cheap euros to access dollars, but window closing

LONDON (Reuters) - The stark divergence between U.S. and euro zone monetary policy has made it more attractive than ever for U.S. companies to raise cash in euros and swap it back into dollars this year, but that window of opportunity could be closing.

Frontrunning: March 19

Fed May Not Hit Neutral Until 10th Anniversary of Lehman Collapse (BBG)... make that never

Global stocks and bonds roar Fed approval, dollar fights back (Reuters)

EU to tell Greece time, patience running out (Reuters)

U.S. likely to delay planned closure of two Afghanistan bases (Reuters)

Norway Signals Reduction After Unexpectedly Holding Rate (BBG)

Oil Falls to $55 as Kuwait Comments Refocus on Oversupply (Reuters)

Tsipras Heads to Summit as Merkel Tries to Defuse Greek Crisis (BBG)

Yahoo Pulls the Plug on China Operations (WSJ)

Democratic support for Hillary Clinton softens: Reuters/Ipsos poll (

French retailer Carrefour returning to Algeria - source

PARIS (Reuters) - Carrefour is preparing to return to Algeria after a six-year absence, as part of a drive to tap booming consumer demand in Africa.

Dollar Regains Most Of Yesterday's "Flash Crash" Losses. Oil Resumes Slide; 10Y Under 2%

If it was the Fed's intention to slow down the relentless surge in the dollar with yesterday's "impatient" removal which blamed the dollar strength on the "strength" in the US economy, it promptly failed after algos and a few carbon-based traders looked at the Atlanta Fed and realized that a 0.3% Q1 GDP print is anything but "strong." As a result the EURUSD, after soaring by nearly 400 pips yesterday in a market reminiscent of a third-world FX pair's liquidity especially following the previously noted USD flash crash, the dollar has recoupped nearly all losses, and the DXY is once again on the way up and eyeing the resistance area of 100.

Of course, the only Fed intention was to push stocks higher, where it certainly succeeded compliments as usual of Citadel, and the S&P futures are flat since yesterday's epic surge, which saw the market move from red to the year to just shy of all time highs. So as Larry Kudlow said "Just enjoy it: stocks are going up."

One place where the resumption in dollar strength, however, has promptly manifested itself, is the price of crude, which soared yesterday as EURUSD rate differentials sent it soaring, At last check, WTI had fallen back to $43/bbl as focus returns to U.S. supply glut that saw prices fall to 6-yr low yday before FOMC policy statement gave prices a boost in U.S. afternoon. Yesterday's gain ended a six-day losing streak. Today, Brent futures down less, allowing premium to WTI to widen toward $10. U.S.

Target agrees to pay $10 million to settle lawsuit from data breach

WASHINGTON (Reuters) - Target Corp has agreed to pay $10 million in a proposed settlement of a class-action lawsuit related to a huge 2013 data breach that consumers say compromised their personal financial information, court documents show.

Obama to Order Cuts in Federal Greenhouse Gas Emissions

The executive order represents the latest use of presidential power to address climate change, as Congress resists passing legislation.

Factbox: How low can they go? Central bank policy easing in 2015

(Reuters) - Sweden's central bank surprised markets on Wednesday by cutting interest rates further below zero and increasing its bond-buying stimulus program, reflecting its determination to prevent the crown's recent rise from snuffing out a pick-up in inflation.

Global stocks and bonds roar Fed approval, dollar fights back

LONDON (Reuters) - World shares rose back towards all-time highs and a slump then jump in the dollar triggered wild moves in currency markets on Thursday, as investors priced in a later start and a slower pace for future U.S. rate rises.

EU's Schulz warns before summit Greek finances are 'dangerous'

BERLIN (Reuters) - European Parliament President Martin Schulz said on Thursday, shortly before EU leaders meet in Brussels, that Greece's financial situation was "dangerous" and it needed two to three billion euros in the short term to avoid bankruptcy.

Corner Office: Nancy Dubuc of A&E: Mixing Doers, Thinkers and Feelers

Ms. Dubuc, the chief executive of A&E Networks, tries to get the best out of her teams by balancing them with three types of people. (With video.)

SNB keeps deposit charges and interest rates unchanged, signals franc intervention

ZURICH (Reuters) - The Swiss National Bank kept a charge on some cash deposits steady at -0.75 percent on Thursday, but said it would remain active in foreign exchange markets to weaken what it sees as a "significantly overvalued" franc.

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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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