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05Feb2016 Pre-Market Commentary: Unusual Volatile Pre-Market Trading Sending Futures Sliding, Expect Markets To Open Lower

Written by Gary

U.S. stock future indexes fell this morning after data showed the American economy created fewer jobs than expected in January. Traders in interest rate markets have essentially priced out the chance of a rate hike in 2016 and the 10-year Treasury yield has fallen all the way to 1.85%. Gold is poised for its largest weekly gain in a month with a 3% jump for the week. The strength of the metal is attributed to a weaker U.S. dollar and fading expectations for U.S. rate hikes.


Here is the current market situation from CNN Money

European markets are mixed. The CAC 40 is higher by 0.06%, while the DAX is leading the FTSE 100 lower. They are down 1.10% and 0.15% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. job growth slows, unemployment rate at eight-year low

WASHINGTON (Reuters) - U.S. employment gains slowed more than expected in January as the boost to hiring from unseasonably mild weather faded, but surging wages and an unemployment rate at an eight-year low suggested the labor market recovery remains firm.

VW postpones 2015 results, AGM as scandal effects unclear

BERLIN (Reuters) - Volkswagen said it would push back publication of 2015 results and its annual shareholders' meeting as the carmaker continues to grapple with effects of its emissions test-rigging scandal.

J.C. Penney looking to sell headquarters in Texas

(Reuters) - Department store operator J.C. Penney Co Inc said it is pursuing a potential sale and partial leaseback of its headquarters in Plano, Texas.

Tyson Foods raises profit forecast on lower costs

(Reuters) - Tyson Foods Inc , the biggest U.S. meat processor, raised its full-year profit forecast, helped by a sharp drop in feed and livestock costs.

Mercedes not chasing volume at any price: Daimler CEO

FRANKFURT (Reuters) - Daimler Chief Executive Dieter Zetsche insisted on Friday the German carmaker would not sacrifice margins in its quest to overtake arch rival BMW and become the best-selling luxury car brand.

Estee Lauder raises 2016 sales forecast as makeup sales shine

(Reuters) - Estee Lauder Cos Inc reported better-than-expected quarterly sales and profit and raised the low end of its 2016 sales forecast, helped by strong demand for makeup brands such as Smashbox and Tom Ford.

Top U.S. economy forecaster holds steely confidence in job market: Reuters poll

(Reuters) - The U.S. unemployment rate will fall well below 5 percent, spawning a faster pickup in wage inflation and a series of Federal Reserve interest rate hikes this year, according to the top U.S. economic forecaster in Reuters polls for 2015.

Sweden's IKEA loses right to use its own name in Indonesia

JAKARTA (Reuters) - Swedish furniture giant IKEA has lost the right to use its own brand name in Indonesia after a legal battle with a local company that claimed the trademark, court documents released earlier this week showed.

USDJPY Entirely Ignores Yet More Jawboning From Japanese Offcials

Peter Pan(ic) policy has apparently reached its limit. USDJPY continues to slide despite Kuroda unleashing NIRP, dropping the "whatever it takes" and "no limits" tape bombs, and today's Abe advisor Honda headlining with BoJ's next steps may include more NIRP and more QQE... It's over!

Every time they open their mouths USDJPY drops further...

How do you say "impotent" in Japanese?

PBOC Wins The Battle: Yuan Surges To Highest In 2016, Currency War Not Over

With China now closed for all intent and purpose for a week as Golden Week arrives, it appears The PBOC wanted to leave the market a message. Clear and direct intervention in offshore Yuan has ripped it 800 pips higher in the last 2 days to its highest since mid-December and stronger than onshore Yuan. However, while PBOC may have won this battle, surging CDS suggest the currency war is far from over.

Offshore Yuan has ripped higher (just as it did in early Jan)...

This is the strongest offshore Yuan against onshore Yuan since September...

But out of the reach of PBOC direct intervention, CDS markets are still implying a dramatic devaluation looms...

So while PBOC may have won this brief battle into Golden Week, the speculative war on their currency is far from over.

Oil Bulls Beware: Gartman Is No Longer "Manifestly Bearish Of Oil"

There was hope for oil bulls that following yestrday's report that "legendary oilman" T. Boone Pickens had just capitulated and liquidated all his oil holdings (days after predicting on CNBC oil would double) that the revulsion phase in oil had finally arrived and that oil had only upside from here. Those hopes however were dashed overnight when the "world renowned" commodity guru Dennis Gartman flipflopped for the latest time, and has made a call (one which he is "certain the blogs shall have a field day with") that oil prices have bottomed.

To wit:

Crude Oil Prices Have Soared since yesterday and we shall make a bold statement here this morning that we are certain the blogs shall have a field day with: Having been manifestly bearish of crude oil over the course of the past many, many months we are moving to the sidelines in light of the œreversal to the upside staged by WTI and Brent crude yesterday and in light of the sharp move lower on the part of the contangos in both crude types. We do not make this change easily, for we've been known and we've made ourselves known as having been manifestly bearish of crude for quite some long while. But as Keynes noted, when the facts changed he changed, and the œfacts in the crude oil market have changed.

Fair enough, we just wonder how Gartman is hedging his "no longer manifestly bearish" oil call: is he buying Dennis Gartman CDS?

Recall that just one week ago on CNBC he said "we won't see crude above $44 again in my lifetime."

U.S. Stock Futures Slip After Jobs Report

U.S. stock futures fell Friday after data showed the American economy created fewer jobs than expected in January.

Rate Expectations: Not So Fast, Fed

Wall Street is increasingly skeptical about the pace of Federal Reserve interest-rate increases this year, the latest blow to the central bank's yearslong efforts to unwind its easy-money policies and return the economy to a normal footing.

Asia's Investment Banks Face Year of Living Cautiously

Global investment banks in Asia are pruning ranks, eliminating units and holding down bonuses as they brace for a potentially tough year.

Fed's Balance Sheet 03 February 2016 Almost Unchanged

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,445 trillion..

Economic Report: U.S. jobs growth slows to 151,000 as jobless rate hits eight-year low

The pace of hiring in the U.S. tapered off in January, but wages rose sharply and the unemployment rate dipped below 5% for the first time since 2008 to reflect a tightening labor market.

Economic Report: U.S. exports fall in 2015 for first time since recession

The nation's trade deficit rose 2.7% in December as exports fell again, capping the first year since 2009 in which U.S. exports have declined.

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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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