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05May2015 Pre-Market Commentary: Premarket Slips Into Negative Territory After Negative Trade Balance And Continued Global Worries Spook Investors

Written by Gary

U.S. Futures head south after U.S. Trade balance comes in negative and worries over China, Europe and tiny Greece continue to distract investors. Markets Are expected to open fractionally lower.


Here is the current market situation from CNN Money

European markets are mixed today. The FTSE 100 is up 0.33% while the CAC 40 gains 0.09%. The DAX is off 0.56%.

What Is Moving the Markets

Here are the headlines moving the markets.

Property Investors Hunt for Bargains in Brazil

Some big global real-estate investors are hunting for bargains in Brazil, even as political upheaval and economic decline send others to the sidelines.

Goldman Raises Legal Loss View

Goldman Sachs raised the top end of its range of "reasonably possible" legal expenses to about $3.8 billion.

European Commission Raises Its Economic Growth Forecast

The body said it was revising upward its prediction for eurozone growth this year to 1.5 percent from 1.3 percent previously.

German Bond Market Selloff Continues

German government bonds remained pinned at levels last seen more than two months ago.

WTI Crude Tops $60 - 5 Month Highs

WTI Crude is now up 43% from its mid-March lows (at $42), topping $60 for the first time since early December. Despite near-record US production (rose last week WoW), record Saudi production, slowing global economies, and expectations that higher prices will bring a flood of new supply as cash-starved frackers start pumping again; it appears the squeeze combined with Middle East tensions is driving the resurgence (for now).

Charts: Bloomberg

Fancy fast food shares surge in U.S. as Shake Shack draws shorts

SAN FRANCISCO (Reuters) - Investors seem willing to pay just about anything for a better burger.

Exclusive: Head of Coutts Intl set to exit following UBP deal - source

ZURICH (Reuters) - Alexander Classen, chief executive of Royal Bank of Scotland's overseas private banking arm, is set to step down shortly following a sale to Union Bancaire Privee (UBP), according to a person familiar with his thinking.

Greece steps up diplomacy to avert cash crunch

ATHENS/BRUSSELS (Reuters) - Greece stepped up diplomacy with euro zone partners on Tuesday to try to avert a potentially catastrophic funding crunch this month, when it must make a big debt repayment to the IMF as cash reserves dry up.

UBS Profit Nearly Doubles

Swiss bank's earnings boosted by wealth management and a strong bump from its pared-down investment bank.

Stock futures off ahead of service sector, trade data

(Reuters) - U.S. stock index futures were lower on Tuesday ahead of another round of earnings reports and the release of key data that will show if economic growth is gaining pace after slowing in the first quarter.
...

Blogger Sentiment Bearish Entering May 2015

Econintersect: The latest Blogger Sentiment Poll released 04 May 2015 by Ticker Sense shows bloggers have become bearish in their view of the markets - and continues the divided to negative outlook from bloggers seen in 2015.

Read more ...

Frontrunning: May 5



Fed's Yellen says met firm at heart of leak probes (Reuters)

EU Raises Growth Outlook as ECB Counters Greek Threat (BBG)

Hillary Clinton Takes Hit in WSJ Poll, but Holds Edge Over GOP Rivals (WSJ)

China stocks slump on tighter margin rules, IPOs; Hong Kong down (Reuters)

McDonald's Chief Promises Turnaround in a Restructuring (NYT)

German Bond Market Selloff Continues (WSJ)

Vanguard overtakes Pimco's Total Return following outflows in wake of Bill Gross's departure (WSJ)

EU Demands Concessions as Greece Hurtles Toward Deadlines (BBG)

Junk Bonds Are The New Haven Assets (BBG)

The Real NYC Condo Boom Isn't in Manhattan (

India's Debt Complicates Growth Plans

Debt at India's big infrastructure companies is complicating plans to boost the economy.

Buffett's Teddy Bear Image Has Tough Side

Warren Buffett, chief of Berkshire Hathaway, responded to concern that he had abandoned his company's moral compass by teaming with 3G, an investment firm known for ruthlessly cutting jobs.

Greece seeks breathing room from ECB chief Draghi

FRANKFURT (Reuters) - Greek Deputy Prime Minister Yannis Dragasakis meets European Central Bank President Mario Draghi on Tuesday, as his government seeks financial breathing room to prevent a default and stay in the euro.

U.S. Fears a European "Lehman Brothers"

U.S. Fears a European "Lehman Bros.


European complacency regarding Greek default and exit is high - Tett

Narrative to reassure investors that markets have already priced in effects of Greek default

U.S. Council on Economics is alarmed by risk being taken by European elites to bring Greece to heel

Greek default would cause a new and very "unpredictable" paradigm - huge uncertainty in markets

U.S. policy makers fear unforeseeable knock-on effects

Gillian Tett, markets and finance commentator and an Assistant Editor and former U.S. Managing Editor of the Financial Times, wrote an important and little noticed article last week questioning complacency on the part of European policy makers regarding a Greek default and potential exit or â€'Grexit'.

gillian_tett

Gillian Tett, FT Assistant Editor

Tett wrote that statements out of Germany that Europe could manage a potential Greek exit and that markets had already priced in that eventuality had alarmed certain policy makers in the U.S.

The German stance was a reflection of their frustration with the lack of progress made over three months of talks with Greece and a consequent hardening of tone. However, U.S. officials are alarmed by the risk they see in European complacency to a Greek exit.

Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles ...

China Stocks Tumble Most In 4 Months; Australia Cuts Rates To Record Low

Yesterday, when we heard that China brokers may impose tighter margin requirements to contain what is now a laughable stock bubble we said that tonight's Shanghai session could get exciting:

China may get exciting: Some China Brokers Raise Margin Trading Requirement: Sec. News

zerohedge (@zerohedge) May 4, 2015

It did: overnight the Shanghai Composite tumbled by 4.1% to under 4300, the biggest one day drop since January 19.

Additionally, the Shanghai Stock Exchange Property Index falling 8% although keep in mind that the sub-index added 52% in 3 months to end-April on relentless hopes of central bank easing the worse the economic data got. The rout also spread to Hong Kong where the HSI dropped as much as 1.9%, down 4th day in longest loss streak since March 11.

While it is too early to know if the Chinese stock bubble has finally burst, it is just as unclear what precipitated the selloff. On one hand Reuters attributes the drop to the previously noted collateral concerns saying "media reports of tougher margin requirements by some brokerages added to concerns about market liquidity ahead of a new batch of share listings." Specifically, brokerages such as CITIC Securities Co Ltd, Haitong Securities Co Ltd and Huatai Securities Co Ltd tightened requirements for margin financing this month in a bid to control risks, the Shanghai Securities News reported on Tuesday.

This is major concern for China where the unprecedented jump in margin debt coupled wit ...

HSBC to Decide on HQ Move by Year End

The lender said that it is reviewing whether to move its headquarters away from London in the face of increased taxation and bonus restrictions.

Greek debt talks progress, no breakthrough yet: Austria

VIENNA (Reuters) - Greece's debt talks with international creditors are making progress but have not yet produced a breakthrough, Austrian Finance Minister Hans Joerg Schelling said on Tuesday, adding he could not tell if a deal was in reach next week.

UBS Profit Rose 88% in First Quarter

The Swiss bank's results were bolstered by gains in its investment bank and its wealth management business despite the stronger Swiss franc.

Venezuela's Economy Suffers as Import Schemes Siphon Billions

The government's complex currency system has led to fraud that wildly inflates the value of goods brought into the country â€" or fakes shipments altogether.

European markets buck China concerns

LONDON (Reuters) - European markets opened firmer on Tuesday after an extended weekend break, bucking fears of slowing demand from China and despite debt stand-off fears depressing Greek stocks.

Square Feet: Bentonville, Ark., Hosts a Film Festival Without a Movie Theater

Bentonville, Ark., a onetime backwater that is home to Walmart, is now crammed with new storefronts and tourist attractions, one of which is the Bentonville Film Festival.

China's Resurgent Property Market Isn't So Grand

China's property market has perked up of late. But a rally in developer China Evergrande's stock factors in thisâ€"and a whole lot more.

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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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