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07Dec2015 Pre-Market Commentary: US Stock Future Indexes Fractionally Lower, WTI Oil Slipping Below 39, Lower Opening Markets Expected

Written by Gary

U.S. stock future indexes are lower this morning following the first trading of crude oil prices session after OPEC members failed to agree on output targets. Markets are expected to open fractionally lower as WTI oil slips further.


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 1.80% while France's CAC 40 is up 1.65% and London's FTSE 100 is up 0.36%.

What Is Moving the Markets

Here are the headlines moving the markets.

NXP closes deal to buy Freescale and create top auto chipmaker

FRANKFURT (Reuters) - NXP has closed its nearly $12 billion deal to acquire Freescale, doubling the proportion of auto-related revenue to 40 percent to create the world's top maker of automotive electronics, the company said on Monday. Automotive unit Chief Executive Kurt Sievers said in an interview that the deal would allow NXP to assemble a range of discreet automotive applications into more complete systems running on top of Freescale processors. It propels NXP into new application are

Oil falls towards 2015 low on OPEC inaction, strong dollar

LONDON (Reuters) - Oil prices edged closer to 2015 lows on Monday after OPEC's meeting ended without a reference to its output ceiling and a stronger dollar made it more expensive to hold crude positions.

AIG offering up to $1 billion stake in Chinese insurer PICC P&C

HONG KONG (Reuters) - American International Group (AIG) is selling a stake in PICC Property and Casualty Co Ltd worth up to $1 billion to institutional investors through a block deal, cutting its shareholding in the Chinese state-owned insurer for the second time this year.

EU plans measures to even competition with non-EU airlines

BRUSSELS (Reuters) - The European Commission is considering new measures to tackle what it sees as unfair competition from non-EU airlines as part of a package of proposals unveiled on Monday designed to boost the competitiveness of Europe's aviation sector.

Despite low oil prices, Gates looks to Gulf in anti-poverty campaign

ABU DHABI (Reuters) - Low oil prices and tight budgets in the Gulf are making it harder to raise money for a fund tackling poverty in the Muslim world, but a growing culture of philanthropy may draw in wealthy regional donors, billionaire campaigner Bill Gates said.

Electrolux's U.S. plans in tatters as GE deal falls through

STOCKHOLM (Reuters) - Shares in Sweden's Electrolux slumped more than 10 percent on Monday after a $3.3 billion deal to buy General Electric's appliance business fell through.

Europe shares rise as firm dollar takes shine off euro

LONDON (Reuters) - European shares started the week strongly on Monday, buoyed by gains on Wall Street and a weaker euro, while the dollar rose after upbeat jobs data on Friday bolstered investor confidence in the strength of the U.S. economy.

China's budget airlines spread wings, add routes

BEIJING/SINGAPORE (Reuters) - Xia Lili, marketing chief at a privately-owned Shanghai software firm switched to flying with Spring Airlines after China's first low-cost carrier took off in 2010. Her company has since made it mandatory for staff to use budget airlines when available, and has cut its travel costs by a fifth.

"Don't Believe The Hope" - When Forward Guidance Becomes Forward Mis-Direction

Submitted by Joseph Calhoun via Alhambra Investment Partners,

When a problem comes along

You must whip it

Before the cream sets out too long
You must whip it

When something's goin' wrong

You must whip it - Devo

Did anyone get the license plate of the truck that hit the bulls last Thursday? If not, maybe you managed to catch a glimpse of it when it backed over the bears on Friday. I have it on good authority the driver was an Italian by the name of Mario Draghi. Mario's German buddies managed to sober him up for a press conference Thursday but by Friday he was in New York and back on the sauce. Meanwhile, Janet Yellen spent the week explaining why she was going to take the ladle out of the punchbowl before Santa gets down the chimney. By the end of the week, traders were getting whiplash treatment and stocks were right back where they started.

The market came into last week positioned for a big new dollop of monetary easing from the ECB. With the Fed poised to hike and the ECB ready to ease, the obvious trade was short Euros and long US dollars, most often in the form of US Treasuries but with a few FANG stocks and a call on the DAX thrown in for good measure. After last month's meeting Draghi hinted that more easing was on the way and traders took him at his word. One wonders, with the benefit of hindsight, why he wasn't questioned more about why he didn't just ease at that last meeting. It seems obvious now that he wasn't having any luck convincing the rest of the ECB to go along with hi ...

A Beleaguered Wal-Mart Sues A Broke Puerto Rico For "Astonishing" Tax Hike

It's always amusing when unforeseen circumstances conspire to bring two previously disparate stories together in one hilarious boondoggle.

As regular readers are no doubt aware, Puerto Rico is broke. "Let us be clear: We have no cash left, governor Alejandro Garcia Padilla told Congress last week, after the commonwealth used an absurd revenue clawback end-around to avoid defaulting on some $345 million in debt that came due on Tuesday.

The island owes another $300 million on January 1st and what might this week's payment so important was that of the $354 million coming due, around $273 million was GO debt, and defaulting on that would mean a cascade of ugly litigation.

Of course the use of the clawback - which effectively allows the island to divert revenue earmarked for other bonds to GO debt repayments - is a bit like Greece tapping its IMF reserves to pay the IMF. That is, there's a palpable sense of desperation here and the situation is going to get immeasurably worse without some manner of federal intervention.

Ok, so that's Puerto Rico.

Regular readers are also no doubt aware that Wal-Mart has gotten itself into trouble this year after bowing to calls for increased wages for its lowest-paid employees. Those wage hikes (which are set to cost the retailer around $1.5 billion over two years) pinched margins, prompting the company to tighten the screws on suppliers with a series of measures that culminated in Wal-Mart demanding that its vendors pass on any savings they might have derived from the yuan deval.

The company also learned that when you hike wages for some employees but not others, the wage hierarchy gets thrown out of whack prompting workers higher up the ladder to either quit, or demand more money to restore the compensation pecking order. < ...

Strong Dollar Shreds Wheat Exports

The strong dollar is stifling U.S. agricultural exports, worsening the strain on farmers already dealing with a collapse in prices and weaker demand.

Dealer Positioning And Expected Returns

from Liberty Street Economics

Securities broker-dealers (dealers) trade securities on behalf of their customers and themselves. Recently, analysts have pointed to the decline in U.S. dealers' corporate bond inventories as evidence that dealers' market making capacity is impaired. However, historically such inventories also reflect dealers' risk management and proprietary trading activities.

Early Headlines: Asia Stocks Mixed, Oil Below 40, GOP Mocks Obama, Geminid Shower, Auto Loan Bubble, London Fringe Housing Boom, Right Wing Gains In France, Conservative Sweep In Venezuela And More

Written by Econintersect

Early Bird Headlines 07 December 2015

Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.

early-bird-301-180

The Wall Street Journal: Germany: 965,000 migrants seeking asylum in 11 months

About 965,000 migrants seeking asylum entered Germany this year through November, more than had been forecast, but the rate of migration has declined significantly in recent days.

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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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