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07May2015 Pre-Market Commentary: U.S. Futures Flat, Opening Expected To Be In The Red

Written by Gary

U.S. Futures are trending fractionally down towards the opening with oil falling off yesterday's highs and the U.S. Dollar trending upwards off its lows.

The selloff in equity and debt markets picked up pace yesterday, partly fueled by comments from U.S. Federal Reserve Chairwoman Janet Yellen who suggested the yearslong stock rally may have driven prices too high. Those pressures are still evident in this morning premarket activity and the markets are expected to open in the red and at best, flat.


Here is the current market situation from CNN Money

European markets are mixed. The DAX is higher by 0.44%, while the FTSE 100 is leading the CAC 40 lower. They are down 0.61% and 0.27% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Did Gartman Just Give The All Clear: "1890 On The S&P Shall Be Our Target"

On one hand the Chair of the Federal Reserve now says that the entire market is overvalued (not just biotechs), but on the other, that perpetual real-time heatmapper and uber contrarian signal Dennis Gartman, says "stocks are in for a bit of trouble." Will Yellen Capital Management LP be right, or will Gartman's uncanny ability to be always wrong at just the right time, provide the bounce the market so desperately needs?

From Gartman:

This trend line is so well developed and so long in duration that it shall be like Siren's Songs and attract share prices to it to put the market to test. Discretion in the far better part of investing/trading valor then.

Look then at the chart at the lower left of p.1 this morning of the S&P in monthly terms going back into early '11, when the bull market was already two years old. The trend line drawn across the lows in early '12 and again last October projects to 1900-1940 compared to the current 2075 level, and a 10% correction from the high projects to 1890 on the S&P. Those shall be our targets to the downside and all the while we shall argue that the bull market is still in effect and that at the most severe we are to be neutral of shares until such time as those targets are high or until such time as there is a clear indication that the correction has run its course and has turned for the better.

In our retirement funds here at TGL we have simplified our positions rather dramatically, taking ...

Lumber Liquidators Suspends Sales of Chinese-Made Flooring

Lumber Liquidators is suspending the sale of all laminate flooring made in China a week after disclosing that the Justice Department is seeking criminal charges against the specialty retailer in an investigation over imported products.

Job Cuts Surge to 3-Year High in April 2015

from Challenger Gray and Christmas

Falling oil prices contributed to a 68 percent surge in job cuts last month, as US-based employers announced workforce reductions totaling 61,582 in April, up from 36,594 in March.

Adidas under fire from investors despite recovery signs

FUERTH, Germany (Reuters) - Adidas shareholders took aim at the management of the German sportswear company on Thursday, not convinced a new strategy would be enough to challenge the dominance of rival Nike .

Alibaba revenue beats estimates, CEO Lu to step down

(Reuters) - Alibaba Group Holding Ltd's quarterly revenue rose 45 percent, beating analysts' expectations, as the Chinese e-commerce company reported a jump in gross merchandise volume.

Alibaba Names New Chief Executive and Reports Revenue Rise

The Chinese e-commerce giant said its chief operating officer would replace its chief executive, Jonathan Lu, who will remain on the board.

Apollo Management Profit Drops 57%

Apollo Global Management LLC on Thursday said its first-quarter profit fell 57% from a year ago.

Frontrunning: May 7



Fed's Yellen: Stock Valuations â€'Generally Are Quite High' (WSJ)

Britain's dead-heat election 'down to the wire' on polling day (Reuters)

European Markets Roiled by U.S. Fed Chief Janet Yellen's Comments (WSJ)

Stocks Drop With German Bonds to Extend $2 Trillion Global Loss (BBG)

Oil heads toward 2015 highs despite ample supply (Reuters)

Wary of bond 'cliff,' Fed plans cautious cuts to portfolio (Reuters)

Saudi Arabia mulling land operations on Yemen border (Reuters)

Buffett Climbs From Derivative Hole That Swallowed Berkshire AAA (BBG)

NFL says Patriots probably deflated the balls in AFC title game (Reuters)

The End of Mark Mobius's Reign as King of ...

Stock futures track global markets lower as bond rout continues

(Reuters) - U.S. stock index futures were lower on Thursday, following global markets, as the global bond rout continued and ahead of the release of weekly jobless claims numbers.

European Derivative Market Breaks

Usually when markets break, we learn about it only after the fact. This time, however, we get a heads up in advance that Europe's critical derivatives market - especially critical today with massive bond derivatives volumes coming through as a result of this morning's latest rout which has managers scrambling to reposition - is about to break, courtesy of the Euronext Derivatives Market.

To wit from Euronext:

Members are advised that due to technical issues with CCG configurations, members might experience a disconnection as from 13:10 CET during a shorty period of time.

This operation will be conducted over a short period of time, and customers should be automatically reconnected at the end of the process.

And by short period, it is likely that they mean the usual: until the selling stops.

Needless to say, expect this morning Bund rout to halt and/or reverse as a result of this market "intervention"

* * *

Update: the "shorty" period of time is over, and the selling has ended. Time to go back online:

Stocks, dollar swept lower as bond rout rocks markets

LONDON (Reuters) - World financial markets were unsettled again on Thursday as a week-long sell-off in benchmark government bonds, stocks and the dollar and a race up in oil prices showed little sign of relenting.

Airbus aircraft orders surged in April

PARIS (Reuters) - Airbus appeared to take the lead in the order race with Boeing last month, leapfrogging its rival with confirmation of a major Latin American order as Boeing prepared to issue its own final data for the first four months of 2015.

SEC Wins With In-House Judges

The SEC prevails against around 90% of defendants when it sends enforcement cases to its administrative law judges rather than to federal courts.

Global Bond Rout Sends Futures Tumbling, Bund Has Sharpest Weekly Selloff In History

To get a sense of why futures are sliding right now, and what every global trader of any asset class is looking at right this moment, look no further than the chart below which shows what is going on with German Bunds yields.

As DB and Reuters conveniently point out, this is the biggest and fastest weekly drop in Bund history.

Bund future -450 ticks this week (-700 in last two weeks), biggest fall since German reunification: pic.twitter.com/jLvcDDeZhy

â€" Jamie McGeever (@ReutersJamie) May 7, 2015

The catalyst for today's plunge was weak French OAT auction, which saw yields rise and bid/cover ratios decline at 2023 and 2025 bond actions. "The big fallout in core fixed income occurred after a very soft French auction with a large tail which collapsed the market again," according ED&F Man head of U.S. rates Tom Di Galoma writes in note. But while there was an immediate cause, what really happened was a continuation of the selling momentum seen in the past two weeks.

Now it is no secret that three weeks ago when the Bund was on the verge of sliding under 0.00%, the ECB wanted nothing more than to have a controlled selloff because at this rate of "frontrunning" Draghi's purchases, the central bank would soon be left with nothing to monetize above its -0.20% deposit rate hard limit.

However, the epic rout it has since gotten following some serious public and private sector jawb ...

Treasury Plans More Short-Term Debt

The U.S. Treasury Department said it plans to increase the supply of short-term debt, in a bid to ease investors' concerns about difficulty trading in global bond markets.

Investors Should be Jonesing for Indian Stocks

A pullback in Indian stocks presents a more reasonably priced opportunity for investors to benefit from the country's recovery.

'Spoofing' Debate: Devious Or Deft?

In his first comments since being arrested for allegedly contributing to the 2010 "flash crash," trader Navinder Sarao said he had "not done anything wrong apart from being good at my job."

Common Sense: Not to Be Stopped, Google Takes On the Wireless World

Google's foray into cellular and broadband is a strategic move aimed at enhancing its position in search and exploiting new profit opportunities.

Alcatel-Lucent defends Nokia deal as weathers U.S. slowdown

PARIS (Reuters) - Telecom equipment maker Alcatel-Lucent , which is set to be bought by larger rival Nokia , improved profit margins in the first quarter despite a marked sales slowdown in its biggest market, the United States.

Thomas Piketty on Politics, the Euro, Debt, Elections & Stupid Policies

For someone who is not a member of a political party, French economics professor Thomas Piketty thinks politicians should pay a bigger a role in European economic policy. And these days there are plenty of scenarios: the Greek debt crisis, threatening the 17-nation common Eurozone currency; the UK elections, threatening Britain's membership in the 28-nation European Union.

Importance of Place: Transportation Emerges as Crucial to Escaping Poverty

The effect of transportation on social mobility is stronger than factors like crime, test scores or the percentage of two-parent families.

Earnings Summary for Today

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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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