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04Feb2016 Pre-Market Commentary: Futures Fractionally In The Red, Crude Slips And The US Dollar Is Headed South Looking For Support

Written by Gary

US stock future indexes are down, but seem to be seeking a new water-level and unsure where they should be at the opening. Crude slid fractionally, but is currently melting higher while in the low 32's and the US dollar is still loosing ground, currently in the mid 96's and falling. US markets are poised to open in the red and then climb into the green - but for how long is the question?


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.31%, while the DAX is leading the CAC 40 lower. They are down 0.98% and 0.69% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. accuses London trader of helping cause 2010 "flash crash"

LONDON (Reuters) - A London-based trader's market manipulation helped cause the 2010 Wall Street "flash crash" which netted him some $878,000 profit, a prosecutor for U.S authorities seeking his extradition said on Thursday.

U.S. jobless claims rise more than expected

Washington - The number of Americans filing for unemployment benefits rose more than expected last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and stock market sell-off.  Â

Poland scraps $3 billion Airbus heli deal, launches Lockheed talks: report

WARSAW (Reuters) - Poland has decided to scrap the $3 billion deal for 50 Airbus utility helicopters and will buy only a few aircraft from the European company, the daily Rzeczpospolita reported on Thursday citing defense sources.

Futures rise as oil prices steady, dollar weakens

(Reuters) - U.S. stock index futures were higher on Thursday as oil and commodities got a boost from a weakening dollar.

Shell ready for more cost cuts as earnings fall 87 percent on weak oil prices

LONDON (Reuters) - Royal Dutch Shell, Europe's largest oil company, reported its lowest annual income in over a decade on Thursday and said it would take further steps to cut costs to cope with weak oil prices if needed.

Global stocks rise as weak dollar, U.S. rate outlook keep oil strong

LONDON (Reuters) - Stocks advanced in Europe and Asia on Thursday, with the focus on energy companies as speculation U.S. interest rates may not rise at all this year left the dollar nursing hefty losses and oil held most of the previous day's big gains.

Dunkin' Donuts reports surprise drop in U.S. store sales

(Reuters) - Dunkin' Brands Group Inc reported a surprise drop in sales at established U.S. Dunkin' Donuts restaurants as price increases and intensifying competition reduced customer visits.

Beefed up: McDonald's edging out KFC, Pizza Hut in China revival battle

SHANGHAI (Reuters) - Yum Brands Inc , the home of KFC and Pizza Hut, is falling behind rival McDonald's Corp as the pair battle to revive flagging sales in China - a headache for Yum as it looks to spin off operations in its biggest market.

Credit Suisse posts first loss since 2008, sees tough markets

ZURICH (Reuters) - Credit Suisse reported its first full-year loss since 2008 after booking a big impairment charge at its investment banking business, sending its share price tumbling and piling pressure on new Chief Executive Tidjane Thiam.

Starting 2016 With A Bang: Challenger Reports Highest January Layoffs Since 2009

While we await the heavily massaged Initial Claims report from the DOL, moments ago we got the report of actual job layoff announcements tracked by Challenger Gray, and it was quite grim: in the first month of 2016, US-based employers reported 75,114 planned job cuts. Not only was this a 218% increase from the 23,622 in December, it was 42% higher than the same month a year ago, when employers announced 50,041 job cuts. According to Challenger, "heavy downsizing in the retail and energy sectors pushed monthly job cut announcements to their highest level since last summer."

January represents the highest monthly tally since July 2015, when cuts reached 105,696. Most troubling, it was the largest January total since 241,749 job cuts were announced during the first month of 2009.

Despite relatively strong holiday sales to close out 2015, retailers led all other industries in January job cuts, announcing plans to cut 22,246 jobs from their payrolls. That was the highest retail total since January 2009, when retailers announced 53,968 planned layoffs.

Retail cuts were dominated by Walmart, which announced plans to close 269 stores worldwide, which is expected to impact 16,000 workers. Macys is also planning to close stores in 2016, a move that will affect 4,820 employees.

In addition to increased retail job cuts, January also saw the return of heavy job cuts in the energy sector. Overall, these firms announced plans to reduce headcounts by 20,246, up from 1,682 in December.

The January total for the energy sector was higher than month since the decline in oil prices began in late 2014. The previous high was J ...

Credit Suisse Plunges To 25 Year Lows After Posting Enormous $5.8 Billion Q4 Loss

Seven days ago, Deutsche Bank turned in what various sellside desks described as œhorrible , œgrim results for both Q4 and 2015 as a whole.

The bank posted its first annual net loss since the financial crisis, reporting red ink that totaled more than $7 billion as investment banking revenue fell plunged by some 30%.

On Thursday, we learn that Credit Suisse lost nearly $6 billion in the fourth quarter. The 2015 net loss came to nearly $3 billion.

Shares in the Swiss bank plunged 13% to their lowest levels since 1991 as Tidjane Thiam's œturnaround hit a rather large bump in the road.

The shares are down 32% this year alone.

The $5.8 billion quarterly loss is the largest since the crisis and it would certainly appear that the focus on wealth management (as opposed to investment banking) comes at a rather inopportune time, given the emphasis placed on AsiaPac where Thiam plans to double pretax income in just two years.

"The latest report is the first to reflect Credit Suisse's new structure under Chief Executive Tidjane Thiam, who took over in July and announced his strategic plans for the bank in October," WSJ writes. "Those plans include bolstering wealth management, particularly in regions such as Asia, while reducing the resources directed to its investment bank."

Some of the loss was attributable to a CHF3.8 billion impairment charge tied to the costly 2000 acquisition of investment bank Donaldson, Lufkin & Jenrette for $11.5 billion which The Journal reminds us was œa price widely viewed at the time as expensive.

< ...

How The Fed Unwittingly Confirmed A Recession And A Default Cycle Are Now Inevitable

While everyone was focused on the "front end" of central bank announcements in the form of Draghi jawboning, Yellen hemming and Kuroda panicking, something more troubling took place on Monday afternoon on the "back end", when the FED released its latest quarterly senior loan officers survey.

What it showed was that in Q4, lending standards tightened for the second consecutive quarter.

This is problematic because as DB's Jim Reid writes, two consecutive quarters of tightening standards "has never happened before without it signalling an eventual move into recession and a notable default cycle. Once we have 2 such quarters lending standards don't net loosen again until the start of the next cycle."

If there is any silver lining, it is that as DB points out, so far the tightening of standards are still only mild, especially relative to recessionary levels. So although it does continue to feel like we're late cycle, it could still be a number of quarters for the full cycle to unravel.

In other words the countdown is on, not only for the Fed to admit policy error, which Bill Dudley hinted at yesterday, but also a countdown to the admission that the US is in a recession and the long overdue collapse in the world's most crowded (if only until recently) trade, being long the US Dollar.

Frontrunning: February 4



EU Slashes 2016 Inflation Forecast to 0.5% as Growth Seen Slower (BBG)

Bank of England cuts UK growth forecasts (FT)

Investors Cast Wary Eye on Fed Rate Increases (WSJ)

U.N. halts Syria talks as government closes in on Aleppo (Reuters)

Credit Suisse Drops as Investment Bank Slump Deepens Losses (BBG)

Six OPEC states ready for emergency meeting with non-OPEC members " Venezuela's minister (TASS)

Redstone seen resigning as Viacom chair after stepping down at CBS (Reuters)

A Divided Libya Struggles Against Islamic State Attacks (WSJ)

Shell Profit Drops 44%, Matching Estimates, as Crude Tumbles (BBG)

Delta Names Bastian CEO as Anderson Departs After Merger Success (BBG)

WikiLeaks' Assange 'unlawfully detained' in Ecuador embassy, U.N. panel to rule, BBC s ...

Global Stocks Pare Early Gains

Global stocks erased early gains Thursday, while the U.S. dollar remained under pressure after posting its sharpest decline in months

Credit Suisse Shares Plunge on Huge Loss

Shares in Credit Suisse dropped more than 11% after the bank reported a hefty fourth-quarter loss as it makes a transition away from investment banking toward wealth management. It also said it would cut 4,000 jobs.

Investors Cast Wary Eye on Fed Rate Increases

The shift in sentiment by investors was evident in a broad decline in the dollar on Wednesday and in the sharp drop this year in U.S. Treasury yields.

How Do Central Bank Balance Sheets Change In Times Of Crisis? - Part Four Of Four

from Liberty Street Economics

-- this post authored by Emily Eisner, Antoine Martin, and Ylva Sovik

The 2007-09 financial crisis, and the monetary policy response to it, have greatly increased the size of central bank balance sheets around the world. These changes were not always well understood and some were controversial. We discuss these crisis-induced changes, following yesterday's post on the composition of central bank balance sheets in normal times, and explain the policy intentions behind some of them.

January 2016 Job Cuts Surge - Heavy Layoffs in Energy and Retail Drive Increase.

from Challenger Gray and Christmas

Heavy downsizing in the retail and energy sectors pushed monthly job cut announcements to their highest level since last summer with monthly job cuts surging 218%.

Deep Dive: 10 dividend stocks that probably will give you a raise this year

Despite the turbulent stock market, these companies have plenty of excess cash to increase dividends, says Phil van Doorn.

Economic Report: U.S. productivity sinks 3% in fourth quarter

The productivity of U.S. businesses fell at a 3% annual pace in the fourth quarter, marking the biggest decline since the start of 2014.

Economic Report: Jobless claims rise 8,000 to 285,000 but still very low

Initial jobless claims rose in the last week of January but remained at a very low level, suggesting the labor market is still sound despite a rocky start to 2016 for the U.S. economy.

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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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