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17Jul2015 Pre-Market Commentary: Futures Flat, Nasdaq Near Historic High, Oils Ready For Breakout Down, U.S. Dollar Toying With Pushing Through Resistance

Written by Gary

This morning U.S. stock futures index was 'steady' at the unchanged line as WTI oil clearly trying for a breakout downward as the U.S. dollar is headed for its biggest weekly rise since May today as economic data reinforced expectations of a U.S. interest rate hike this year.

While futures remain flat ahead of a Greek bridge loan approval, Nasdaq Composite Index was on track to push further into record territory today, boosted by strong earnings from Google Inc.


Here is the current market situation from CNN Money

European markets are mixed. The CAC 40 is higher by 0.18%, while the FTSE 100 is leading the DAX lower. They are down 0.22% and 0.10% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Recovery Narrative Breaks As Real Wage Growth Slowest Since November

Following a small dip in May CPI ex Food & Energy YoY, June saw a rise of 1.8% (as expected), hovering near the highest since October. Headline CPI continues to trot along the flatline (printing +0.1% YoY as expected) enabling monetary policy to run amock hyperinflating financial assets whicl standards of living continue to drop. However, all of this pales when compared to the continuing slide in real wage growth which has slowed almost every month since its peak in January and now stands at 7 month lows. Not what the 'narrative' wants to see...

There's no inflation, right...

And now wage growth is slowing...

So what data - apart from The Fed - is Yellen dependent on... because these do not scream raise rates.

Charts: Bloomberg

Gasoline, eggs lift U.S. consumer prices in June

WASHINGTON, July 17 (Reuters) - U.S. consumer prices rose for a fifth straight month in June as the cost of gasoline and a range of other goods increased, further signs of firming inflation that strengthen the case for an interest rate hike this year.

June 2015 CPI Annual Inflation Rate Is Now 0.1%

by Doug Short and Steven Hansen

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate rose from ZERO to 0.1%. The year-over-year core inflation (excludes energy and food) rate cycled up 0.1 to 1.8% (reversing last month's decline), and continues to be under the targets set by the Federal Reserve.

Strong U.S. groundbreaking, building permits boost housing outlook

WASHINGTON, July 17 (Reuters) - U.S. housing starts rebounded strongly in June and building permits surged to a near eight-year high, pointing to a rapidly strengthening housing market.

More Job Losses Coming To U.S. Shale

Submitted by Gaurav Agnihotri via OilPrice.com,

With the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downward on sentiments that Iran's crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, OPEC's high production levels and China's market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future.

So, with the prices of both Brent and WTI moving towards $50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the U.S. shale sector which is already dealing with rising debt and the ever-increasing risk of default.

A recent Bloomberg report stated that U.S. driller's debts stood at $235 billion at the end of first quarter of 2015, which is quite worrying. Does this mean that the U.S. oil sector is likely to witness a lot more layoffs than we have seen so far? Surprisingly, a recent IHS study had revealed that the U.S. shale sector has been boosting job creation in addition to supporting around 1.7 million jobs in U.S.

All this as the overall unemployment rate in U.S. has been declining since previous years. But with rising negative sentiment pertaining to oil prices, is U.S. the ...

German lawmakers back Greek bailout talks after Merkel's chaos warning

BERLIN (Reuters) - German lawmakers gave their go ahead on Friday for the euro zone to negotiate a third bailout for Greece, heeding a warning from Chancellor Angela Merkel that the alternative to a deal with Athens was chaos.

Bits Blog: The Debut of Beme, a Social App That Aims for Authenticity

Casey Neistat, a social media celebrity, is releasing Beme, an app intended to strip away the glossy layers of social media identities.

Deutsche Bank disputes regulator's Libor report allegations

FRANKFURT (Reuters) - Deutsche Bank has disputed allegations by Germany's financial watchdog, sources close to the lender said, in its official response to a preliminary report into interest rate manipulation which threatens sanctions against the bank and individuals.

Germany Approves Third Greek Bailout By Wide Margin Despite Surge In "Nein" Votes

Following Wednesday's Greek vote approving the draconian terms of the Third Greek bailout, the next biggest hurdle for the implementation of another round of Greek aid was Germany's parliamentary vote whether to endorse the terms cobbled together over last weekend. Moments ago it did just that in a vote which had been widely expected to pass without complications, when 439 members of the lower house of parliament voted in favor Berlin to starting negotiations on a third bailout program for Greece, 119 voted against and 40 abstained. A total of 598 votes were cast.

The passage was assured when Chancellor Angela Merkel essentially gave German MPs an ultimatum, and called on German lawmakers on Friday to back negotiations for a third Greek bailout or face chaos, saying suggestions Athens might temporarily leave the euro wouldn't work.

Schaeuble himself has suggested that Greece might be better off taking a "time-out" from the euro zone to sort out its daunting economic problems, although this morning he too said the vote must pass and Greece has a chance of success with the latest bailout package.

Nonetheless, the size of the 'No' vote was far larger than when German lawmakers voted on the extension of a second bailout package in February. On that occasion, 32 lawmakers voted 'No.'

This unlocks the process on finalizing what the Third Greek bailout will look like and grants passage of the €7 billion Greek bridge loan, the bulk of whose proceeds will be used to repay the ECB and the IMF.

Honeywell profit beats estimates as cost controls pay off

(Reuters) - Honeywell International Inc , a U.S. manufacturer of aerospace parts and climate control systems, reported a better-than-expected rise in quarterly profit, helped by cost controls.

Google boosts Nasdaq futures; Dow, S&P flat

(Reuters) - Nasdaq stock futures rose on Friday after strong results from Google overnight, while the S&P and Dow futures were little changed ahead of a raft of economic data that could give clues on the timing of an interest rate increase.

Dollar, stocks look set for biggest weekly gains in months

LONDON (Reuters) - The dollar headed for its biggest weekly rise since May on Friday as economic data reinforced expectations of a U.S. interest rate hike this year. European shares steadied on the view that Greece will secure a bailout.

Frontrunning: July 17



Back Greek talks or face chaos, Merkel tells German lawmakers (Reuters)

Fear of the Unknown Binds a Greek Deal With Few Believers (WSJ)

Grexit Still on the Table Even With EU's Latest Band-Aid (BBG)

Donald Tusk warns of extremist political contagion (FT)

Germany, Not Greece, Should Exit the Euro (BBG)

Sabine Files Bankruptcy in New York as Oil Prices Fall (BBG)

Markets Bow to Central Bankers as Bonds Rise, Pound Strengthens (BBG)

China Unleashes $483 Billion Margin Trader to Stem Stock Rout (BBG)

Venture Capital Investments Hit $19.2 Billion in Second Quarter (WSJ)

Happy Meals make way for hear ...

Exclusive: Monsanto says any hostile bid for Syngenta some way off

ST. LOUIS, MO (Reuters) - Any hostile bid by Monsanto Co for Swiss rival Syngenta AG is some way off, the U.S. seed company's president and chief operating officer told Reuters, adding he was focused on trying to secure a negotiated deal.

China banks lend $209 billion to margin lender to lift stock prices: media

BEIJING (Reuters) - China's biggest banks have lent 1.3 trillion yuan ($209.4 billion) to the country's state-backed margin lender to halt a meltdown in Chinese shares, local media said on Friday, underlining the government's determination to support stock prices.

The Effect Of The Strong Dollar On U.S. Growth

by Liberty Street Economics

-- this article authored by Mary Amiti and Tyler Bodine-Smith

The recent strengthening of the U.S. dollar has raised concerns about its impact on U.S. GDP growth. The U.S. dollar has appreciated around 12 percent since mid-2014, rising against almost all of our trading partners, with the largest gains against Japan, Mexico, Canada, and the euro area. There was far less movement against newly industrial Asian economies and hardly any change against China.

Futures Flat Ahead Of Greek Bridge Loan Approval

After weeks of overnight turbulence following every twist and turn in the Greek drama, this morning has seen a scarcity of mostly gap up (or NYSE-breakding "down") moves, and S&P500 futures are unchanged as of this moment however the Nasdaq is looking set for another record high at the open after last night's better than expected GOOG results which sent the stop higher by 11% of over $40 billion in market cap. We expect this not to last very long as the traditional no volume, USDJPY-levitation driven buying of ES will surely resume once US algos wake up and launch the self-trading spoof programs. More importantly: a red close on Friday is not exactly permitted by the central planners.

Light newsflow has failed to provide European equities with any substantial direction (Euro Stoxx: -0.1%). Market attention will be on today's German parliamentary vote on Greek reforms which is said to conclude at around 1200BST/0600CDT and is widely expected to be approved: after all the ECB needs to be paid with money effectively from the ECB.

Bunds have outperformed their US counterparts during the European session, undertaking a bid tone this morning as some desks attribute the move to the aforementioned German vote, despite expectations for the vote to comfortably pass.

Asian equities traded mostly higher taking a positive lead from Wall Street , where the Nasdaq-100 reached 15-yr highs following strong earnings from Netflix and Google, with latter rising by 12% in after-market trade. Hang Seng (+1.0%) and Shanghai Comp. (+3.5%) outperformed following reports that China Securities Finance Co. won CNY 2trl worth of credit to support Chinese stocks. Nikkei-225 (+0.3%) rose, with the index now on course to post its best week since Nov'14. Finally, JGBs gained overnight with the BoJ conducting its large purchase program.

In FX, central bankers remain in focus heading into the final session of the week, as has been the case throughout the week, with ...

General Electric posts 5 percent rise in industrial profit

(Reuters) - General Electric Co said on Friday that its quarterly industrial profits rose 5 percent, as stronger performance in its power division offset weak oil segment results, and the company raised its 2015 outlook for its industrial manufacturing businesses.

Germany Blasts Deutsche Bank Over Culture

German regulators accused a half-dozen current Deutsche Bank executives of failing to stop or tell regulators about years of attempted market manipulation, according to a confidential report.

China Increases Gold Holdings By 57% "In One Month" In First Official Update Since 2009

Back in April we wrote that "The Mystery Of China's Gold Holdings Is Coming To An End" as a result of China willingness to add the Yuan to the IMF's SDR currency basket which would require the disclosure of China's gold holding ahead of an IMF meeting on SDR composition which may be held in October.

By way of background, the reason why everyone has been so focused on Chinese official gold holdings is that there has been no official update to the gold inventory of the world's biggest nation, which have been fixed at 33.89 million oz since April 2009, a little over 1000 tons. In other words, the PBOC's gold inventory has been "unchanged" for over 6 years which is in stark contrast to the ravenous buying of physical gold China has been engaging in for the past 5 years.

As we further noted in April, "with China disclosing so little about its hoard, finding out how much the central bank has in its vaults is of increasing interest to traders. Confirmation of bigger holdings would signal the importance of the metal as a reserve asset and boost market sentiment, TD Securities' Melek said. At a time when prices are languishing, the buying could give support, said Suki Cooper, director of commodities at Barclays Plc in New York."

In a rare comment on gold, Yi Gang, the central bank's deputy governor, said in March 2013 that the country could only invest as much as 2 percent of its foreign-exchange holdings in gold because the market was too small. The press office of the People's Bank of China in Beijing didn't respond to a fax seeking comment sent on April 14.

Well, the long awaited moment has finally arrived and this morning, after a 6 year delay when, China finally admitted that it had been misrepresenting its gold holdings for a very long time, when it announced that its gold holdings had in ...

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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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