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22Dec2015 Pre-Market Commentary: U.S. Futures Up Fractionally, Brent Prices Higher Opening Markets Higher, Slow Session May Be A Real Possibility

Written by Gary

U.S. stock future indexes are fractionally higher after this mornings GDP and Personal Consumption reports came in without significant changes from the last report.

Brent oil prices melted up this morning after falling to 11-year lows in the previous sessions and the US dollar is continuing its trend downward, albeit slowly. Markets are expected to open fractionally higher in what may become "I wish I had stayed home' session.


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.69%, while the DAX is leading the CAC 40 lower. They are down 0.29% and 0.04% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. third-quarter growth revised lower to 2.0 percent

WASHINGTON (Reuters) - The U.S. economy grew at a fairly healthy clip in the third quarter as strong consumer and business spending offset efforts by businesses to reduce an inventory glut, underscoring its resilience despite a raft of headwinds.

Apple hits out at British plans to extend online surveillance

LONDON (Reuters) - Apple has warned that a British plan to give intelligence agencies extra online surveillance powers could weaken the security of personal data for millions of people and paralyze the tech sector.

Oil prices edge up from 11-year lows

LONDON (Reuters) - Oil prices edged slightly higher on Tuesday after falling to 11-year lows in the previous session, though bearish outlooks for 2016 capped gains.

Battered oil wins respite, lifts stocks

LONDON (Reuters) - World stock markets eked out small gains on Tuesday, lifted by a recovery in oil prices from 11-year lows as investors unwound some of their bearish bets on the battered commodity.

Global funds cut stocks, slowdown worries persist: poll

LONDON (Reuters) - Global investors cut their equity holdings in December and raised their exposure to bonds, a Reuters poll of fund managers showed on Tuesday, as worries about a global economic slowdown and uncertainty about the pace of Fed tightening persisted.

After fuelling $1 trillion Asia deal spree, China's M&A set to hit new heights in 2016

HONG KONG (Reuters) - China Inc's outbound acquisitions spree in 2015 helped push Asia-Pacific's annual deal value past $1 trillion for the first time, with 2016 set for a bigger splurge still as Chinese firms buy even more assets abroad to sidestep slowing domestic growth.

'Das Auto' no more: Volkswagen plans image offensive

BERLIN (Reuters) - Scarred by a public relations thrashing over its "Dieselgate" scandal, Volkswagen is planning an image offensive, and its "Das Auto" global advertising slogan is an early casualty.

Ford in talks with Google to build self-driving cars: Automotive News

(Reuters) - Google is said to be in talks with automaker Ford Motor Co to help build the Internet search company's autonomous cars, Automotive News reported, citing a person with knowledge of the project.

Gartman Turns "Very, Very Quietly Bullish Of Crude" Even As Stock Prices Set To "Head Materially Lower"

Last week, everyone's favorite "world-renowned commodities guru" Gartman dipped his toe in a new trade, a EUR short, to wit:

Yesterday, December 17th, we sold another unit at 1.0865 giving us an average of 1.0970 and now we shall sit tight with the EUR trading 1.0930 A move œfor an hour or so above our average price shall be our stop.

Moments ago it broke out to 1.95 and appears to be rising so we wait to see if Gartman is stopped out once again in under a week.

That was then, what about now? Well, in his latest daily letter, Gartman is now suggesting that the downtrend in stocks will continue...

Given that the markets yesterday traced out what the technicians often refer to as an œinside day where the lows and the highs of the day are bounded within the range of the previous day and given that such œinside days are almost always continuation patterns, we fear that prices are soon to head lower ¦ and perhaps materially so. Thus, it is not only wise, it is reasonable, that we shall increase the size of our derivatives positions to make quite certain that our net long position is covered completely and that we are indeed as œnet neutral as we can possibly be.

... even though in the very same letter Gartman thinks that the primary catalyst for any correlated market move, namely crude oil, is poised to rise

... we do find ourselves quietly ¦ very, very quietly ¦ turning away from being manifestly and overtly bearish of crude to being bullish as the term structures continue to shift; that is, as the contangos continu ...

Feldkamp: The Macroeconomics of Crises and Fraud

Great comment from my friend and mentor Fred Feldkamp. Happy holidays. -- Chris

The Macroeconomics of Crises and Fraud

By Fred Feldkamp

A terrific NYC business writer wrote an article on Friday explaining the alleged fraud of Martin Shkreli. It seems Shkreli is a young "master" at a VERY old game.

In macroeconomics, financial fraud is any method by which deception or duplicity induces those with money to "invest" in a scheme where they would, absent fraud, be less likely to invest.

As long as the fraud goes undetected, it reduces the otherwise applicable "risk premium" investors demand in exchange for their money. When fraud is detected, "risk premia" (also known as "credit spreads," the "cost of credit intermediation" or "CCI") rise as duped investors demand recovery. Over time, that rise subsides and reverts to its pre-fraud level, as investors realize that no "gain" comes from burdening "good" transactions by demanding CCI that is above the ability of borrowers to pay.

Since low CCI causes macroeconomic growth and rising CCI is associated with economic stagnation, schemers and scammers regularly "praise" effective defrauders and criticize those who successfully expose fraud. The schemers well-know that hidden fraud is the primary "cause" of investment "bubbles," but scammers of the world are often so thoroughly convinced that "their fraud" is "good" (or that their "special knowledge" will let them escape while others suffer), that they blame the "whistleblowers" for being effective at exposing duplicity.< ...

"Smart Money" Options Indicator Has Never Been More Bearish

Via Dana Lyons' Tumblr,

For the first time ever, S&P 100 traders are holding more than 3 put options for every call.

Most of the sentiment and position metrics that we monitor, and highlight on the pages, are viewed as contrary indicators. That is, once they reach an extreme, investors or traders would be wise to act "contrary" to the extreme. In other words, the crowd is wrong at extremes. At least that is generally the case, historically speaking. There are a few exceptions to that rule. One such exception can be found in the traders of S&P 100, or OEX, options. Historically, this group has been on the right side of the market more times than not when their collective options position is at an extreme. This may be something to take note of as OEX traders have never held more put options relative to call options as they do right now.

Specifically, when measuring the open interest in OEX options, Friday's readings marked the first time ever with more than 3 put options for every call option. Today's reading came in even more extreme at 3.3 puts for every 1 call. A look at the chart over the last 16 years illustrates truly how extreme these readings are.

image

As we noted in our last update on this indicator in April, these elevated readings have become more frequent as well as more extreme. It used to be that we viewed readings above 2.0 as extreme. From 1999-2014, there were just 15 days that registered a reading above ...

Global Stocks Steady as Oil Stabilizes

Global stocks swung between small gains and losses Tuesday, while energy shares climbed amid a stabilization in commodity prices.

SEC Pares Back Case Against SAC's Cohen

The Securities and Exchange Commission said it pared back its case against Steven A. Cohen and disclosed settlement talks with him, a reversal that reflects a major shift in the legal landscape since the government declared victory in its long pursuit of the hedge-fund billionaire's firm.

SEC Appeals Process on the Slow Track

The regulator's use of its own tribunal has coincided with longer delays in the agency's handling of appeals, according to a Wall Street Journal analysis.

Poland Takes A New Direction

from STRATFOR

-- this post authored by Adriano Bosoni

Two events last week show the direction where Poland is moving. On Dec. 15, during a visit to Kiev, Polish President Andrzej Duda promised financial, political and energy support for Ukraine. A few days later, on Dec. 19, people in Warsaw and other Polish cities protested the government's controversial appointment of five new judges to the Constitutional Court - the second protest over the issue in two weeks. These two events, though seemingly unrelated, suggest the beginning of a new political phase in the country that will be felt across Europe.

Futures Movers: Oil prices show slight recovery after Brent hits lowest level since 2004

Oil prices are higher a day after global benchmark Brent touched lows not seen since 2004.

Economic Report: Third-quarter GDP growth trimmed to 2%

The U.S. economy grew a revised 2% annual pace in the third quarter, a touch slower than previously reported. Here's why.

Earnings Summary for Today

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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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