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17Apr2015 Pre-Market Commentary: U.S. Market Futures Dow Half Percent, Averages Expected To Open Lower

Written by Gary

U.S futures were down 0.5% before the opening volley of U.S. Financial reports. The futures fell slightly after the mixed reports and a opening market is expected to be lower.

Here is the current market situation from CNN Money

European markets are sharply lower today with shares in Germany off the most. The DAX is down 1.85% while France's CAC 40 is off 1.32% and London's FTSE 100 is lower by 1.08%.

What Is Moving the Markets

Here are the headlines moving the markets.

Volkswagen CEO Winterkorn to stay in defeat for chairman

BERLIN/HAMBURG (Reuters) - Martin Winterkorn will stay on as chief executive of Volkswagen in an unprecedented defeat for Ferdinand Piech, the German carmaker's powerful chairman and patriarch of its founding family.

Gasoline, shelter costs lift U.S. consumer prices

WASHINGTON (Reuters) - U.S. consumer prices rose for a second straight month in March as the cost of gasoline and shelter increased, signs of some inflation that should keep the Federal Reserve on course to start raising interest rates this year.

Shares hit by China trading clampdown fears

LONDON (Reuters) - Global equities lost ground on Friday as traders grappled with an outage of Bloomberg financial terminals and fears of a regulatory clampdown on trading in China.

Bonds Drop, Dollar Pops After Hotter-Than-Expected Inflation

Stocks - for now - are ambivalent to the highest core CPI in 5 months; but the grown-up markets in bonds and FX are taking notice. The Dollar has surged (led by EUR weakness) and long-bond yields are up 5bps (back to unchanged on the week).

Charts: Bloomberg

Rolls-Royce wins $9.2 billion order from Emirates for A380 engines

LONDON (Reuters) - Rolls-Royce has won a $9.2 billion deal to supply engines for 50 A380 aircraft for Dubai's Emirates airline [EMIRA.UL], the largest order in its history and giving it a boost after a torrid year of profit warnings.

Core Inflation Jumps Most Since October Due To Rent, Healthcare Costs

Following February's big bounce back MoM, Consumer Prices in March rose 0.2% MoM (less than the expected 0.3% rise) but it is YoY that is the great news for Americans. CPI fell 0.1% YoY in March (below expectations of unch) which means Consumer Prices haven't risen YoY in 3 months. However, while this clear disinflationary signal is peersisrtent, Core CPI continued to rise 1.8% from last year (above the 1.7% consensus) driven by big jumps in the cost of shelter (thank you Fed) and healthcare (thank you Govt); which should send shivers through the risk-bulls as The Fed may be forced to pull rate hikes forward.

Consumer prices have not risen in 3 months..

The monthly change:

On an annual basis, there is now a huge divergence between Core and Headline CPI, mostly as a result of dropping energy prices impacting the headline data:

The full breakdown...

March 2015 CPI Annual Inflation Rate Is Now In Deflation!

by Doug Short and Steven Hansen

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate is now marginally deflating - and this was despite rising energy prices month-over-month. The year-over-year core inflation rate rose from 1.7% to 1.8%, and continues to be under the targets set by the Federal Reserve.

Read more ...

GE industrial first-quarter profit rises, revenue falls on stronger dollar

(Reuters) - General Electric Co's quarterly industrial earnings rose 9 percent, helped by cost cuts that expanded profit margins, as the U.S. conglomerate banks on manufacturing of jet engines, turbines and other big-ticket products as it unloads most of its finance business.

Honeywell first-quarter revenue falls due to strong dollar

(Reuters) - Honeywell International Inc , a major manufacturer of aircraft electronics and climate control systems, reported a 5 percent fall in quarterly revenue on Friday, hurt by the sale of its friction materials business and a strong dollar.

Greece starts assets sales with horse racing gambling license

ATHENS (Reuters) - Greece's privatization agency (HRADF) has invited OPAP to sign a deal next week to acquire the country's sole license for horse racing betting, the first state asset sale to be completed by the new leftist-led coalition government.

Wealth Matters: Gritty Details Are Behind the Glitter at Fund-Raising Galas

The people who organize these benefits attend to details like ordering special meals for attendees, and managing egos.

Airbus chief lambasts cabin equipment makers over delays

PARIS (Reuters) - The head of planemaker Airbus hit out at suppliers of cabin equipment on Friday, saying their failure to get to grips with chronic production delays was "unacceptable".

Coke to buy China multi-grain drinks maker for $400 million

HONG KONG (Reuters) - Coca-Cola Co has agreed to buy the beverage business of China Culiangwang Beverages Holdings Ltd for $400.5 million including debt, to get a foothold in the fast growing multi-grain drinks category.

Greek Bank "Quarantine" Abroad Sparks European Selloff

A large number of European countries have effectively quarantined Greece in a bid to minimize the consequences on their credit systems in case of a Greek "accident." As ekathimerini reports, the actions are being taken in order to shield themselves and minimize the danger of contagion in case the negotiations between the Greek government and the eurozone do not bear fruit. This has sparked broad-based selling across global risk assets but particularly in Europe. Stocks from Germany to Spain are having their worst day of the year, European sovereign bond risk is exploding higher (contagion Mr. Schaeuble?), and Greek bank bonds and stocks are getting crushed.

European stocks plunged...

and sovereign boind risk has contagiously exploded!!

After news broke (as ekathemerini reports) that neighboring countries have effectively quarantined Greece in a bid to minimize the consequences on their credit systems in case of a Greek "accident.

General Electric Reports Strong Growth in Industrial Businesses

The impact of shedding GE Capital, its finance unit, was reflected in an overall loss of $13.6 billion for the quarter.

Bloomberg Terminals Suffer Widespread Failures

Some banks were reporting that their terminals appeared to be coming back online in London by midmorning on Friday.

Alibaba inks deal with Shanghai GM to finance car purchases

BEIJING (Reuters) - Alibaba Group Holding Ltd deepened its push into the automotive business on Friday, saying it had struck a partnership with Shanghai General Motors (GM) to offer online sales and financing for GM cars.

Frontrunning: April 17

Fed Shies Away From June Rate Hike (Hilsenrath)

Europe Stocks Fall Most in Three Weeks Amid Greece as Banks Drop (BBG)

China Futures Tumble on Trust Curbs, Expansion of Short Selling (BBG)

Oil slips below $64 as ample supplies weigh (Reuters)

Fed officials lean all ways on rate hikes, data in focus (Reuters)

Eurozone deflation eases in March (FT)

U.K. Jobless Claims Hit 40-Year Low as Pay Growth Picks Up (BBG)

Lawmakers Introduce â€'Fast Track' Trade Bill, Triggering Democratic Discord (WSJ)

Greek Bond Yields Climb Most Since Aftermath of Syriza Election (BBG)

Millionaire Turned Politician Poised to Take Power in Finland (

Futures drop after weak results; inflation data due

(Reuters) - U.S. stock index futures retreated on Friday ahead of the release of inflation data following a string of weak corporate results and some disappointing U.S. economic reports.

This Is China's Short Selling Announcement Which Sent Chinese Futures Plunging

As noted earlier, while tens of thousands of Bloomberg terminal users were twiddling their thumbs during an outage that lasted several hours, China futs crashed.

There was some confusion about the cause of the rapid move, but it appears the catalyst was an announcement by the China Securities Regulatory Commission in which it allowed fund managers to lend shares for short-selling, and will also expand the number of stocks investors can short sell, in a bid to raise the supply of securities in the market.

Reuters has more:

Investors now face difficulties borrowing stocks for sale, even with some companies trading at lofty valuations.

China's shares posted seven weeks of gains, reaching seven-year highs on Friday, as retail investors rushed to open stock accounts and borrow a record amount of money to buy shares, pushing trading turnover to ...

Oil slips below $64 as ample supplies weigh

LONDON (Reuters) - Oil eased below $64 a barrel on Friday as evidence this week of rising crude supplies from OPEC members outweighed signs of a slowdown in U.S. output and Middle East tensions.

Global Futures Slide After Worldwide Bloomberg Outage, China Tumbles On Short Selling Boost

Just as China was closing for trade and Europe was opening, something previously unseen happened: no, not another another GPIF or Virtu inspired marketwide stop squeeze, those are quite recurring these days. It was virtually every Bloomberg terminal around the globe suddenly going dark.

This promptly led to widespread panic among traders mostly in Europe, who were flying blind and unable to chat with other, just as clueless colleagues (the one function used predominantly on the terminal is not charts, nor analytics, but plain old chat).

It got so bad that in a world in which everything has become automated, Europe was forced to delay or cancel pricing various bond deals.

As the WSJ observed, the U.K.'s Debt Management announced in a statement Friday morning that it was postponing a scheduled buy-back of government debt "due to ongoing technical issues with the third party platform supplier," and that bids already submitted would be declared null and void. A spokesperson confirmed that the supplier is Bloomberg.

In short if the "terrorists" want to take down the financial world, all they have to do is crash the chat system used by global bond traders. As a reminder, equity "traders" speak in nanosecond bursts of binary, and don't need Bloomberg.

The WSJ continued: "It's scary how dependent we have become on our Bloomberg screens," said Anthony Peters, a strategist at London-based capital markets adviser SwissInvest. "We had [bond] deals which are not going ahead due to this," one London-based banker said, other bankers said that trading volumes had fallen as a result of the outage.

EU prepares rules for tackling failed financial firms outside banking

LONDON (Reuters) - The European Union is looking at creating rules on how to deal with financial firms outside the banking industry that run into trouble, including clearing houses, insurers and asset managers, the EU's financial services chief said on Friday.

Volkswagen CEO Winterkorn to Stay in Defeat for Chairman

Martin Winterkorn will stay on as chief executive of Volkswagen, the German carmaker said on Friday, in an unprecedented defeat for its powerful chairman, Ferdinand Piech.

Emirates says still waiting to hear from Airbus on A380 revamp

LONDON (Reuters) - Emirates [EMIRA.UL] president Tim Clark said on Friday the airline is still waiting for a decision from Airbus over whether the planemaker will proceed with a revamp of the A380 superjumbo.

The Minimum Price for Gold, Part II

.......... Written independently by Jeff Nielson


April 16, 2015

In the first part of this series; several fundamental principles of economics (and markets) were stressed. Supply/demand analysis is not merely objective, and logically/mathematically irrefutable; it is the only basis upon which the market for any hard asset can be analyzed. Conversely the price-analysis constantly parroted by the Corporate media is utterly devoid of any significance or legitimacy â€" in the corrupted crime-scenes of today which we call our markets.

Part I explained, through a simple and unequivocal hypothetical example, how supply/demand fundamentals would (and must) assert themselves, in spite of even the most extreme or relentless manipulation of a sector (by any means). This is based upon the elementary reality that in a world of physical goods, there are fixed production costs, and thus a minimum price for that good.


For Lucasfilm, the Way of Its Force Lies in Its 'Star Wars' Fans

At a time when creating fan communities has become crucial to the success of all kinds of movies, Lucasfilm remains the most skilled at this art.

Scenarios That Can Impact GameStop's Stock

The company's technology brands (Simply Mac, Spring Mobile) deals with sales of Apple products and other consumer electronics. If the company aggressively expands the technology brands in the next 5-6 years, we might see a jump in revenue growth, since these stores deal with high priced electronic accessories. In that case, the segment's revenue per square foot might jump to $300 by the end of our forecast period, and the number of total stores owned by the company might decline to just 6,500 over the same period. Technology brands, being a high margin driver, might also boost up the segment's gross margins to 43%. This scenario might lead to a 12% upside to our price estimate for the company.

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