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14Jul2015 Pre-Market Commentary: U.S. Futures Sea-Sawing At Unchanged Line, Iran Nuclear Deal Signed And Greece Still Not Out Of The Woods

Written by Gary

U.S. stock futures indexes are sea-sawing around the unchanged line, EU and the Asian Markets are in the red. WTI oil has started to rise again having slipped fractionally after the Iran nuclear deal signed today.

Today's session looks to take a breather after a 3 day market-rally as many investors are still concerned with global financial events that are still unfolding.

Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.46% while London's FTSE 100 is off 0.16% and France's CAC 40 is lower by 0.14%.

What Is Moving the Markets

Here are the headlines moving the markets.

J.P. Morgan's Profit Rises

J.P. Morgan's second-quarter profit increased 5.2%, topping expectations, as the firm slashed costs and benefited from strong deal-making activity that helped offset weaker trading revenue.

Greek lawmakers split over bailout as vote looms

ATHENS (Reuters) - Lawmakers from Greece's ruling Syriza party and their allies were arguing behind closed doors on Tuesday about whether to back sweeping reforms the government must ram through parliament as it races to meet the terms of an unpopular bailout deal.

JPMorgan profit beats estimates as expenses drop

(Reuters) - JPMorgan Chase & Co , the biggest U.S. bank by assets, reported a stronger-than-expected rise in second-quarter profit as legal and restructuring expenses declined.

Wells Fargo profit falls on higher expenses, loan-loss reserves

(Reuters) - Wells Fargo & Co , the largest U.S. mortgage lender, reported a drop in quarterly profit for the second time in a row as it set aside more money to cover bad loans and its expenses rose.

Frontrunning: July 14

Greek lawmakers split over bailout as vote looms (Reuters)

Greek Bailout Rests on Asset Sale Plan That Already Failed (BBG)

Greece Needs $25 Billion to Get Through August, Scicluna Says (BBG)

Tsipras Enters Parliament Den to Sell Aid Deal to Greeks (BBG)

Greece makes samurai bond repayment (FT)

Iran, World Powers Have Reached Nuclear Agreement (BBG)

Janet Yellen's Fed Flounders in Political Arena (WSJ)

CFO survey shows growing concern about earnings, revenue, hiring and CapEx (Yahoo)

Obama Seeking Overhaul of U.S. Prison Sentences by End of Year (BBG)

Einhorn was right: State-Own ...

Johnson & Johnson profit rises 4 percent on pharma sales

(Reuters) - Johnson & Johnson reported a 4 percent rise in quarterly profit as sales of its mainstay older drugs managed to offset the impact of a strong dollar on overseas revenue.

Exclusive: Greece needs debt relief far beyond EU plans - Secret IMF report

(Reuters) - Greece will need debt relief far beyond what euro zone partners have been prepared to consider due to the devastation of its economy and banks in the last two weeks, a confidential study by the International Monetary Fund seen by Reuters shows.

JPM Fixed Income Revenue Tumbles As Earnings Rise; Over $100 Billion In Deposits Purged YTD

Unlike previous quarters when JPM's earnings release was a jumble of legal addbacks, MBS charge offs and loan-loss reserve releases, this time it was positively tame by comparison.

As the table below shows, while JPM's top line declined both over the quarter and over the year, declining by $806 million Y/Y to $24.5 billion, this was fractionally above the expected $24.4 billion.

On the other hand, despite the decline in revenues, reported EPS rose by $0.08 Y/Y to $1.54, above the expected $1.45, driven by two things: a $931 million decline in expenses mostly on the investment banking side, and $1 billion more in stock buybacks.

But back to revenues where we find that, for yet one more quarter, the Jefferies glimpse into Q2 fixed income trading was spot on: for JPM the weakness in bond market trading meant Fixed Income revenues tumbled by $773 million to $2.9 billion, well below what most analysts had expected. Recall what we wrote 3 weeks ago: "Bond Trading Revenues Are Plunging On Wall Street, And Why It Is Going To Get Worse" - JPM just confirmed it.

JPM's official explanation for this disappointing result: "Fixed Income Markets of $2.9B, down 10% YoY primarily driven by continued weakness in Credit and Securitized Products as well as lower revenue in Currencies & Emerging

After Chinese Stock Plunge, a Hole Shows in Xi's 'China Dream'

China's stock-market meltdown last week not only stole the thunder of President Xi Jinping's Russia trip but made it impossible to ignore the economic realities threatening his geopolitical ambitions.

WPX Energy to enter Permian basin with $2.35 billion deal

(Reuters) - Oil and gas producer WPX Energy Inc said it would acquire privately held RKI Exploration & Production LLC [REPI.UL] for $2.35 billion, the latest in a series of deals brought on by a steep drop in crude prices.

An Empire Strikes Back: Germany And The Greek Crisis


-- this post authored by George Friedman

A desperate battle was fought last week. It pitted Germany and Greece against each other. Each country had everything at stake. Based on the deal that was agreed to, Germany forced a Greek capitulation. But it is far from clear that Greece can allow the agreement reached to be implemented, or that it has the national political will to do so. It is also not clear what its options are, especially given that the Greek people had backed Germany into a corner, where its only choice was to risk everything. It was not a good place for Greece to put the Germans. They struck back with vengeance.

Stocks Get Second Thoughts About Greek Deal: Turn Red From China To Europe

One day after the Greek "pre-deal" was announced and the world breathed a sigh of relief, sending US stocks soaring and Greek halted stocks, well, tumbling (via ETFs and ADRs), things are oddly quiet and in fact quite red in Europe, with futures in the US modestly lower, following both China's first red close in several days (SHCOMP -1.2%), and a Europe which is hardly looking very euphoric at this moment: it is almost as if the algos finally got to read the fine print of the Greek deal after trading all day on just the headlines.

As Bloomberg's Richard Breslow summarizes, with so much economically important news coming tomorrow, equity markets opened today trading yesterday's events. Stock markets from Japan to Australia gapped higher on their open getting in on the rallies in Europe and North America that followed the Greece news. Interestingly, China and India, open late enough to benefit from yesterday's events, showed a lack of conviction today, mirroring E-Mini, down a bit in a tight range, and Euro Stoxx 50 futures that failed to keep an opening bid and have sagged since

Breslow notes, and we agree, that the most notable market so far today has been Italy, underperforming the rest of Europe with a .7% decline right from the get go. Peripheral bond yields are also underperforming core on the open and EURCHF flirted with 1.0400 after spiking above 1.0500 on the early Greek headlines.

Chinese equities had a bit of a roller coaster of a day with the Shanghai Composite opening down, rallying 1.6% after strong money supply figures only to sag all afternoon before a rally and swoon near the end left the index down 1.2% on the day. Money market rates also increased, with the catalyst for the equity drop according to some was the PBoC injecting less liquidity. More companies have resumed trading, leaving still about one-quarter of mainland listed companies frozen. The market closed before it was announced that China is considering al ...

June 2015 Small Business Optimism Plummets Ending Five Months of Positive Growth

Econintersect: The National Federation of Independent Business (NFIB)'s optimism index took a significant hit falling from 98.3 to 94.1. The market was expecting the index between 97.5 to 99.2 with consensus at 98.3.

World Powers Reach Landmark Nuclear Deal With Iran, Oil Slides - Full Deal Text

It is only fitting that almost exactly 24 hours after the Greek "pre-deal", which may and will end up crashing and burning in very short notice, another long expected "deal", one which has been about a decade in the making, was reached, when Iran reached a landmark nuclear agreement with the U.S. and five other world powers, a long-sought foreign policy goal of the Obama administration. However, just like with the Greek deal celebrations, these too will likely be short lived as the outcome sets the White House on course for months of political strife with dissenters in Congress and in allied Middle Eastern nations.

In the end, however, the reality is that with little oversight both Iran and the West will maintain the status quo, even if the chances of a middle-east "preemptive" war involving Israel and/or Saudi Arabia increase substantially.

Here are some of the deal highlight bullets from Reuters and Bloomberg:

Iran ballistic missile embargo seen in place for 8 years

Conventional weapon embargo seen in place for 5 years

Iran to cut 98% of enriched uranium stockpile under deal

Iran will eliminate two-thirds of centrifuges under deal

EU to lift sanctions on Iran as it meets nuclear obligations

Iran deal implementation will take months, officials say

Iran won't receive sanctions relief until it complies with terms of agreement

In terms of the next steps timeline, Bloomberg adds that oil sanctions on Iran unlikely to be lifted before December 2015, according to most optimistic assessment of steps involved in draft of nuclear agreement obtained by Bloomberg. Most analysts expect this to happen sometime in 2016.

Key steps as follows: the Joint Comprehensive Plan of Action, or JCPOA, will be adopted 90 days after endorsement by UN Security Council resolution, or sooner by unanimous consent of all parties.

After Adoption Day, U.S., EU will issue waivers, intro ...

China's Sputtering Car Sales Could Stall European Auto Rally

China's new car sales slump could slow the progress of European auto stocks, which increasingly rely on the world's largest auto market for earnings growth.

Apple Pay launches in Britain, with hiccups

LONDON (Reuters) - Apple introduced mobile payments in Britain on Tuesday, hoping to make a splash with consumers familiar with using cards for tap-and-go purchases, as resistance from hold-out banks and stores appeared to evaporate.

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