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17Dec2015 Pre-Market Commentary: Futures Up Fractionally, Oil And US Dollar Steady As Investors Hope For A Santa Claus Rally

Written by Gary

U.S. stock index futures are fractionally higher this morning, a day after the Fed's raised interest rates 0.25% for the first time in almost a decade. World stock markets also jumped in today as investors chose to take this as a mark of confidence in the world's largest economy. also lifting the dollar but piling on the pain for oil prices.


Here is the current market situation from CNN Money

European markets are sharply higher today with shares in Germany leading the region. The DAX is up 3.10% while France's CAC 40 is up 2.10% and London's FTSE 100 is up 1.30%.

What Is Moving the Markets

Here are the headlines moving the markets.

Volkswagen chief appoints new top management team

FRANKFURT (Reuters) - Volkswagen's chief executive Matthias Mueller announced his new management team on Thursday, including the replacement for the group's research and development chief who left earlier this month as a result of the diesel emissions scandal.

U.S. jobless claims fall from five-month high

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits last week fell from a five-month high, suggesting sustained labor market healing that could lead to further Federal Reserve interest rate hikes next year.

Oil steadies, but oversupply, strong dollar keep pressure on

LONDON (Reuters) - Oil steadied on Thursday, close to an 11-year low, pressured by a relentless build in oversupply, and as the dollar strengthened after the U.S. Federal Reserve raised interest rates for the first time in nearly a decade.

Navistar posts loss, says goal is profitability in 2016

CHICAGO (Reuters) - Truckmaker Navistar International Corp posted its 13th consecutive quarterly loss on Thursday amid declining revenue but said that it plans to further cut costs in 2016 and return to profitability.

Stock futures rise on Fed's rate hike, dovish comments

(Reuters) - U.S. stock index futures were higher on Thursday, a day after the Federal Reserve raised interest rates for the first time in almost a decade, signaling confidence in the strength of the world's largest economy.

Asia policymakers spared Fed jolt, look to support shaky economies

JAKARTA (Reuters) - Asian policymakers on Thursday applauded a historic turn in U.S. monetary policy, but analysts warned the region's economies face vulnerabilities, with Taiwan cutting interest rates, although markets took the Federal Reserve rate hike in their stride.

Lufthansa plays down report about new chairman

FRANKFURT (Reuters) - German airline Lufthansa played down a report that it could get a new chairman after Merck KGaA Chief Executive Karl-Ludwig Kley was quoted as saying he would take the job if it was offered to him.

Stocks, dollar rise in turbulence-free Fed lift off

LONDON (Reuters) - World stock markets jumped on Thursday as investors chose to take the first hike U.S. interest rates since 2006 as a mark of confidence in the world's largest economy, also lifting the dollar but piling on the pain for oil prices.

AstraZeneca buys most of Acerta for $4 billion to add cancer drug

LONDON (Reuters) - AstraZeneca is to buy 55 percent of privately held biotech firm Acerta Pharma for $4 billion to give it access to a new kind of blood cancer drug, boosting its long-term growth at the cost of a near-term hit to earnings.

Money Velocity Is Crashing - Here's Why

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The inescapable conclusion is that Fed policies have effectively crashed the velocity of money.

That the velocity of money has been crashing while the money supply has been exploding doesn't seem to bother the mainstream pundits. There is always a fancy-footwork explanation of why whatever is crashing no longer matters.

Take a look at these two charts and tell me money velocity doesn't matter. First, here's money supply: notice how money supply leaped from 2001 to 2008 as the Federal Reserve pumped liquidity and credit into the economy, and then how it exploded higher as the Fed went all in after the Global Financial Meltdown.

Now look at a brief history of the velocity of money. There are various measures of money supply and various interpretations of velocity, but let's set those quibbles aside and compare money velocity in the "golden era" of the 1950s/1960s and the stagflationary 1970s to the present era from 2008 to 2015--the era of "growth":

Notice how the velocity of money remained in a mild uptrend during both good times and not so good times. The inflationary peak of 1979-1982 (Treasury yields were 16% and mortgages were 18%) generated a spike, but velocity soon returned to its uptrending channel.

The speculative excesses of the dot-com era pushed velocity to unprecedented heights. Given the extremes in velocity, it is unsurprising that it quickly fell in the dot-com bust.

The Federal Reserve launche ...

Slump In Smallest Stocks Vs. Biggest Stocks Is Getting Worse

Via Dana Lyons' Tumblr,

Micro-cap stocks have suffered a key breakdown relative to mega-cap stocks, suggesting a "risk-off" shift on the part of investors.

One of the themes in the stock market this year has been the under-performance of small-cap stocks - and conversely, the out-performance of large-caps. Today's Chart Of The Day is a caricature of that theme as it involves a comparison between the very smallest stocks, micro-caps, and the very largest, mega-caps. Not surprisingly, the micro-caps have taken it on the chin this year relative to the mega-caps. In the past few days, however, the deterioration in micro-caps has accelerated, reaching a dubious milestone.

As measured by the ratio between the iShares Russell Micro-Cap ETF (IWC) and the Rydex Russell Top 50 ETF (XLG), micro-caps are at a 3-year low and have broken their uptrend that has been in place since 2009.

image

"So what?" you may say. "Something always has to be leading and something else has to be lagging" That is true. However, it is more bullish for the broad stock market when the smaller, more speculative issues are leading the way. When that is the case, it can be a sign of relative comfort and willingness to take on risk on the part of investors. Money will flow into stocks more readily under those circumstances.

However, when the micro-caps are lagging and the largest, seemingly most secure stocks are leading the way, it can be a sign of apprehension by investors to take risk. Money is less likely to find its way into the stock marke ...

Global Stocks Rally After Fed Decision

Global stocks surged as investors around the world reacted positively to the Federal Reserve's decision to raise interest rates and the confidence it showed in the U.S. economy.

State Street Overbilled $200 Million Over 18 Years

State Street overbilled certain clients over an 18-year period by roughly $200 million, the asset manager said, funds it intends to reimburse at the completion of its review.

Beijing Probes Architects of Stock-Market Rescue

Having already investigated investors and brokerages in connection with a bungled summer stock-market rescue totaling more than $200 billion, Beijing is now probing the rescuers.

November 2015 Sea Container Counts Continue to Be Soft

Written by Steven Hansen

The data for this series is remains soft with the rolling averages remaining in contraction year-over-year - although imports did expand year-over-year comparing this month to the same month one year ago.

The Medical Response To Armed Assaults

from STRATFOR

-- this post authored by Scott Stewart

I discussed in the Dec. 3 Security Weekly how law enforcement agencies are changing their tactics to deal with armed assaults and how citizens can take steps to protect themselves in the event they encounter such a situation. But another critical component of the response to armed assaults lies in how to mitigate such attacks, an area to which the medical response is key. This includes the training given to law enforcement personnel, changes in the deployment of emergency medical service professionals and emergency room procedures. An additional lifesaving component comes in the form of new medical technologies made available to first responders and trauma centers.

Economic Report: Philadelphia Fed manufacturing index returns to negative level for December

A measure of manufacturing activity in the Philadelphia area fell back into negative territory in December, another indicator of the difficult times facing the manufacturing sector.

Economic Report: Jobless claims drop 11,000 to 271,000

The number of Americans applying for unemployment benefits fell last week after a mini-spike earlier in December that boosted jobless claims to a five-month high.

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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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