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19May2015 Pre-Market Commentary: U.S. Futures Trading At Historic Highs, European Markets Surging Into The Green, Oil Falling, US Dollar Rising

Written by Gary

U.S. stock futures rose this morning, with the Dow industrials and S&P 500 on track to push further into record territory, on the heels of gains in Europe and Asia. Markets are expected to open higher at historic levels.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.83% while France's CAC 40 is up 1.72% and London's FTSE 100 is up 0.44%.

The euro slumped against the U.S. dollar, while European stocks and bonds surged on the prospect of the European Central Bank ramping up its asset-purchase program in May and June.

Bloomberg has pointed out that Housing starts are now at their highest since pre-financial crisis levels in Nov 2007.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. Stock Futures Higher

U.S. stock futures rose Tuesday, with the Dow industrials and S&P 500 on track to push further into record territory, on the heels of gains in Europe and Asia.

Euro Slumps, Stocks Surge

The euro slumped against the U.S. dollar, while European stocks and bonds surged on the prospect of the European Central Bank ramping up its asset-purchase program in May and June.

Merkel Faces German Parliament "Revolt" On Greece

On Monday we got the usual jawboning out of Greece's embattled leadership, with both PM Alexis Tsipras and FinMin Yanis Varoufakis swearing that a deal with creditors is imminent. Here's a sampling of the rhetoric


TSIPRAS: GREECE HAS SUBMITTED CONCRETE PROPOSALS TO CREDITORS

VAROUFAKIS: GREECE IS `VERY CLOSE' TO DEAL WITH CREDITORS

GREECE WILL NOT DEFAULT, FINANCE MINISTER VAROUFAKIS SAYS

As usual, it wasn't long before EU creditors were out telling a different story.


EU SAYS MORE TIME, EFFORT NEEDED TO BRIDGE GAPS ON GREECE

EU SAYS SLOW-PACE PROGRESS BEING MADE TOWARD GREECE AGREEMENT

Perhaps most importantly, it appears as though Tsipras' hopes of cementing a deal in Riga may be far-fetched:


JUNCKER RULES OUT POSSIBILITY OF GREECE AID DEAL IN RIGA

And while Juncker claims he is optimistic about a deal in "late May or early June", it's not at all clear that either Greece or its creditors truly appreciate the potential for the type of â€'accident' that German FinMin Wolfgang Schaeuble has been warning about. That is, a sudden, acute cash crunch â€" triggered by an ECB decision to raise the haircut on collateral pledged by Greek banks for ELA, for instance â€" could quickly push the country over the edge before a political solution is agreed upon.

Meanwhile, in Germany, Angela Merkel is attempting to head off staunch opposition from lawmakers concerning further coddling of what they perceive to be a belligerent Greek government. As ...

JPMorgan sees second-quarter slowdown in investment banking

London (Reuters) - Investment banking revenues in the second quarter for eight of the top banks could fall 15 percent from the previous quarter, as income from rates trading tumbles, JPMorgan analysts said on Tuesday.

Frontrunning: May 19


China's Record Capital Outflows Spark Financial Stability Fears (FT)

U.K. Inflation Falls Below Zero for First Time Since 1960 (BBG)

Islamic State Solidifies Foothold in Libya to Expand Reach (WSJ)

Judge sentences 11 Afghan police over lynching of woman in Kabul (Reuters)

The $18 Trillion Global Economic Boost If Everything Went Right (BBG)

Eurozone Prices Confirmed Flat Year-on-Year in April, Core Inflation Inches Higher (Reuters)

Greek Finances to Stagger On Longer Than You Think (BBG)

Athens sees EU deal soon, Greeks' approval of government stance dwindles (Reuters)

Uber Tests 30% Fee, Its Highest Yet (WSJ)

Uber Battles Locals for Future of African Taxis (WSJ)

Wal-Mart same-store sales miss estimates as shoppers cut spending

(Reuters) - Wal-Mart Stores Inc reported lower-than-expected quarterly U.S. same-store sales growth, saying its customers were using their tax refunds and savings at the pump to pay down debt rather than spend on discretionary items.

Stock futures rise after ECB says may speed up bond buying

(Reuters) - U.S. stock index futures were higher on Tuesday after the European central bank suggested it would speed up its bond-buying program.

Euro, bond yields tumble as ECB hints at faster pre-summer buying

LONDON (Reuters) - The euro tumbled on Tuesday and the region's stocks and bonds jumped after the European Central Bank signalled it would speed up its 1 trillion euro bond-buying programme for the next two months ahead of an expected summer lull.

Oil prices slip on dollar rally, ample supply

LONDON (Reuters) - Brent crude oil fell below $66 a barrel on Tuesday as the dollar strengthened and on evidence of ample supplies of Middle Eastern oil despite wars in northern Iraq, Syria and Yemen.

Walmart Sales, Comps Miss; Operating Income Tumbles; Runs Out Of Scapegoats

In what may be the most cryptic press release from Walmart yet, the company just issued an 8-K which consisted all of 5 bullet points, a few charts, and precious little else. Perhaps the reason for the pithy transmission is that WMT had nothing good to say: Revenue declined from $115 billion to $114.8 billion, missing expectations of a jump to $116.2 billion, EPS also missed at $1.03, vs $1.05 expected, operating income tumbled 8.3% from $6.2 billion to $5.7 billion, and finally comp store sales also missed at 1.0%, below the 1.5% expected. With these results, anyone would be short and to the point.

After previously providing extensive explanations for why the massive Apple Sachs Industrial Member member missed, this quarter the firm almost didn't even bother to scapegoat. This is what it said:

"Consolidated operating income declined 8.3%, due to impacts from currency fluctuations and investments in associate wages & training and e-commerce."

As if it didn't even bother to put in the effort to find a reason for the 8.3% plunge in operating income.

Finally, even the company's guidance was berely there. From Charles Holley, Executive Vice President and CFO, Wal-Mart Stores, Inc.

"Based on our views of the global macro-economic environment, and assuming currency exchange rates remain at cur ...

Athens sees EU deal soon, Greeks' approval of government stance dwindles

ATHENS (Reuters) - Greece's labor minister said on Tuesday Athens would soon conclude a deal with its foreign creditors that could unlock further loans to the cash-starved country.

Home Depot Nails It 1Q as Hints of Housing Rebound Emerge

The Home Depot on Tuesday reported fiscal first-quarter profit of $1.58 billion.

Stocks, Bonds Spike After ECB Pledge To Accelerate QE Ahead Of "Slow Season"

Less than a week ago, fresh from the aftermath of the recent dramatic six-sigma move in German Bunds, one of Europe's largest banks openly lamented that so far the ECB's QE had done absolutely nothing: "two months of QE for nothing. Well, not strictly true of course, for inflation expectations are up 30bp and Euro stocks are still up 15% since January even after investors withdrew $1.5bn last week. But look at the euro. EUR/USD yesterday returned over 1.1350, the highest level since the ECB announced QE on 22 January."

And lo and behold, as if on demand, late last night the ECB confirmed (however for some reason it took over 6 hours for the headlines to filter through to the newswires perhaps just to make it easier for hedge funds to frontrun the broader market ahead on ECB disclosures) it had heard the ECB's lament when on the evening of May 18, ECB executive board member Benoit Coeure delivered a speech at the Brevan Howard Centre for Financial Analysis (appropriately named after a hedge fund) at Imperial College Business School (not to be confused with the July 26, 2012 Mario Draghi "whatever it takes" speech which also took place in London) in which he said that the ECB intends to "frontload" i.e., increase, its purchases of euro-area assets in May and June ahead of an expected low-liquidity period in the summer.

Quotes by Bloomberg, Couere said that "We are also aware of seasonal patterns in fixed-income market activity with the traditional holiday period from mid-Ju ...

Home Depot's profit beats as sales rise after harsh winter

(Reuters) - Home Depot Inc , the world's largest home improvement chain by sales, reported better-than-expected quarterly profit and sales as customers in North America spent more on home repairs after a harsh winter.

Vodafone's return to growth hints at wider sector recovery

LONDON (Reuters) - Britain's Vodafone posted a rise in quarterly sales for the first time in nearly three years on Tuesday in the clearest sign yet that Europe's mobile market is edging towards recovery.

China Shares Rally

Chinese shares rose Tuesday on signs of fresh investment from Beijing, while Japan's Nikkei Stock Average ended above the 20000 mark.

Deutsche Bank reviews cutting UK presence in Brexit scenario

FRANKFURT (Reuters) - Deutsche Bank , the euro zone's second-largest bank by assets with large operations in Britain, has begun initial preparations for a possible UK exit from the European Union as Prime Minister David Cameron readies a referendum on the matter.

One Property Firm Doubles Down in Brazil

New York-based GTIS is now the largest hotel owner in Brazil, following a $400 million takeover of Brazil Hospitality Group. The U.S. investor plans to upgrade properties and expand the hotel operator's reach.

Shell receives $529 million offer for French LPG business from DCC

LONDON (Reuters) - Shell has received a 464 million euro ($529 million) binding offer for its Butagaz liquefied petroleum gas (LPG) business in France from DCC , marking the next step in the Anglo-Dutch oil major's drive to sell downstream assets.

Wal-Mart's Big Box Shows Cracks

Ahead of the Tape: Wal-Mart is trailing retail peers and first-quarter earnings aren't likely to change that.

Alibaba's Ma says Kering lawsuit 'regrettable'

SEOUL (Reuters) - The founder of Alibaba Group Holdings Ltd on Tuesday called "regrettable" a lawsuit by a group of luxury goods firms owned by Kering SA accusing the Chinese e-commerce giant of being a conduit for counterfeiters.

BHP Billiton Finds Single Life Tough After Split

BHP Billiton's spinoff of South32 doesn't appear to have unlocked value based on the first day's trading. It will be a longer-term grind to show the two are better off apart.

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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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