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11Dec2015 Pre-Market Commentary: U.S. Stock Future Indexes Sharply Lower As Investors Concerns Of Crude Oil Falling And China's Woes

Written by Gary

U.S. stock future indexes edge lower as crude oil prices hit 7-year lows on growing oversupply concerns. Concerns of China's financial woes remain a problematic investing for remaining long. Needless to say, the markets are expected to open lower this morning.


Here is the current market situation from CNN Money

European markets are sharply lower today with shares in Germany off the most. The DAX is down 1.83% while France's CAC 40 is off 1.50% and London's FTSE 100 is lower by 1.30%.

What Is Moving the Markets

Here are the headlines moving the markets.

Renault-Nissan in preliminary deal to end dispute with France: sources

PARIS (Reuters) - Renault-Nissan struck a preliminary deal with France on Friday to end an eight-month power struggle, with the government agreeing to measures aimed at balancing its increased influence over the carmaking alliance, sources close to the matter said.

VW brand sales slip 2.4 percent in November

FRANKFURT (Reuters) - Sales of Volkswagen's namesake brand fell 2.4 percent to 496,100 vehicles in November as Europe's biggest carmaker grappled with a scandal over rigged emissions tests.

Futures down sharply as oil hits seven-year low

(Reuters) - U.S. stock index futures were sharply lower on Friday as crude oil prices hit 7-year lows on growing oversupply concerns.

Glencore to sell Optimum Coal Mine in South Africa for $136 million: administrators

JOHANNESBURG (Reuters) - Glencore has provisionally agreed to sell its troubled South African coal mine for 2.15 billion rand ($136 million), narrowly avoiding closing the operation and saving hundreds of jobs, the unit's business rescue practitioners said on Friday.

Dow, DuPont to merge in deal valuing chemical giants at $130 billion

(Reuters) - U.S. chemical giants DuPont and Dow Chemical Co agreed to merge in an all-stock deal valuing the combined company at $130 billion, with plans to eventually split into three.

Jaguar Land Rover seals deal for $1.5 billion Slovak car plant

LONDON/BRATISLAVA (Reuters) - Luxury carmaker Jaguar Land Rover (JLR) confirmed on Friday it will build a car plant in Slovakia, beginning a 1 billion pound ($1.5 billion) project which will be one of the biggest ever foreign direct investments in the central European nation.

Coca-Cola India says may have to shut factories if new sin tax passed

NEW DELHI (Reuters) - The Indian subsidiary of Coca-Cola Co said on Friday it may have to close some bottling plants if the government pushes through a proposal that would subject fizzy drinks to a 40 percent "sin" tax, as part of a broader fiscal overhaul.

No cheer as China yuan hits four-and-a-half-year low, oil at seven-year low

LONDON (Reuters) - World stocks were on the brink of a two-month low on Friday, as beaten-down oil prices and a slide in China's yuan to 4-1/2 year lows left markets in a somber mood.

Rabobank to cut 9,000 jobs and shed assets to boost profit

AMSTERDAM (Reuters) - Dutch cooperative bank Rabobank [RABO.UL] plans to lay off nearly a fifth of its workforce to boost profit and prepare for tougher European banking guidelines, it said on Wednesday.

Which "Junk" Fund Liquidates Next? After Third Avenue, Here Are The Unusual Suspects

The shocking fate of Third Avenue's junk bond fund, which as we reported yesterday, announced it would gate investors and proceed to liquidate over the next several months as it sought to unwind its illiquid positions at a leisurely pace "without resorting to sales at prices that would unfairly disadvantage the remaining shareholders" is made just modestly less shocking when one considers that the $789 million fund (down from $2.4 billion earlier this year) was the worst performing YTD fund tracked by Morningstar, tumbling 27% YTD, but only after placing in the top 1%-percentile in 2013.

It is made less shocking when one considers that the fund, or rather its holdings, may have been the target of coordinated selling by other hedge funds who had smelled blood in the water, and decided to short all of Third Avenue's top holdings, holdings which were particularly illiquid and thus any attempts to sell in size would very likely be met by either gaping bid/ask spreads or, more likely, a bidless market.

This is the essence of the WSJ article which explains that "part of the reason the Third Avenue fund ran into deep problems, traders said, is because it purchased investments that have become much harder to trade and have been steadily losing value as investors fled energy and other kinds of riskier debt in recent months. That squeezed the fund as redemption requests rose sharply this year."

Among the Focused Credit Fund's largest holdings is a bond from media company iHeartCommunications Inc., formerly known as Clear Channel Communications Inc., according to Morningstar data. The bond ...

Rand Crashes, EM Stocks Plunge As Trader Warns, Absolutely Ignore The "It's-Priced-In" Meme

Extending its losses from yesterday, following the untimely sacking of a fiscally responsible finance minister, South Africa is in freefall - Rang crashed above 16 (record lows), stocks have crashed, and bond yields exploded:

China's Yuan hit a fresh 4 year low...

EM Stocks are plunging...

And of course US High Yield Bonds...

And as Bloomberg's Richard Breslow notes, there's nothing chauvinistic in saying that, after a slew of monetary policy meetings by major economies, the opening acts are over.

It's time to focus on the only one that matters. Since the financial crisis exploded in the face of the global economy, we have been living in an age ...

Dow Dumps Over 300 Points From Thursday Highs After IEA Warns Oil Glut To Worsen

'As goes oil, so goes the US equity market' appears to bethe new mantra. Just as yesterday's pump-and-dump tracked oil, so in the pre-market, WTI Crude plunged back to fresh 7-year lows after IEA warned that the oil glut will worsen, with prices lower for longer as demand remains subdued through at least 2017. This in turn sent US equities tumbling with Dow futures down 200 points (down 330 from Thursday highs).

Spot the difference...

As Crude's plunge was triggered when the International Energy Agency (IEA) warned global oversupply could worsen in the new year. As Reuters reports,

Brent slipped below $39 per barrel for the first time since December 2008 as the IEA, which advises developed nations on energy, warned that demand growth was starting to slow.

Prices have tumbled this month after OPEC failed to impose a ceiling on output. OPEC producers pumped more oil in November than in any month since late 2008, some 31.7 million barrels per day.

"Consumption is likely to have peaked in the third quarter and demand growth is expected to slow to a still-healthy 1.2 million bpd in 2016, as support from sharply falling oil prices begins to fade," the IEA said in its monthly report.

Should sanctions on Iran be lifted, its exports could rise, adding to the market's oversupply.

"The next quarter is going to be particularly tough as we go from a high-demand to a low-demand ...

DuPont, Dow Unveil Mega-Merger Plan, Will Split in Three

Dow Chemical and DuPont announced Friday that they have agreed to merge, fusing two of the U.S.'s oldest companies into a chemical giant currently worth about $130 billion.

Global Stocks Slide on Falling Oil Prices

Global stocks fell as low oil prices and nervousness ahead of next week's U.S. Federal Reserve meeting continued to weigh on risky assets.

Junk Fund's Demise Fuels Concern Over Bond Rout

Third Avenue Focused Credit Fund is barring investor withdrawals while it liquidates its high-yield bond fund, an unusual move that highlights the severity of the monthslong junk-bond plunge.

Fed's Balance Sheet 09 December 2015 Again Nearly Unchanged

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,442 trillion..

Economic Report: U.S. producer prices rise 0.3% in November, biggest gain since June

Producer prices rose 0.3% in November, the biggest gain since June, the Labor Department said Friday.

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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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