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11Feb2016 Pre-Market Commentary: US Future Indexes Lower Over 1.5%, WTI Crude Slips To Low 26's, Fed's Send 'Caution' Message To Investors, Gold And Bonds Looking Good

Written by Gary

US stock future indexes are down over 1.5% as new financial 'issues' plunge the Global markets into further gloom. A cautious tone from the Federal Reserve, falling crude prices are continuing to upset investors about the world economy.

The Hang Seng index tumbled almost 4% to levels not seen since mid-2012, adding to a 12% plunge since the beginning of the year. Markets are expected to open lower.


Here is the current market situation from CNN Money

European markets are sharply lower today with shares in France off the most. The CAC 40 is down 3.64% while Germany's DAX is off 2.17% and London's FTSE 100 is lower by 1.87%.

What Is Moving the Markets

Here are the headlines moving the markets.

PepsiCo revenue beats estimates as North America sales rise

(Reuters) - PepsiCo Inc reported better-than-expected quarterly net revenue as higher sales of snacks and beverages in North America helped reduce the impact of a strong dollar.

HSBC drops plan for 2016 pay freeze in speedy backpedal

LONDON (Reuters) - HSBC , Europe's largest bank, has dropped plans to freeze pay this year, according to a memo by Chief Executive Stuart Gulliver seen by Reuters, reversing a cost-cutting decision made less than two weeks ago.

Futures slump as global growth worries resurface

(Reuters) - U.S. stock index futures plunged on Thursday, with risk-averse investors piling into safe haven assets as another sharp fall in oil prices and cautious comments from Federal Reserve Chair Janet Yellen raised fresh doubts about the health of the economy.

Thomson Reuters beats EPS forecast, sees 2016 revenue growth

(Reuters) - Thomson Reuters Corp reported higher-than-expected quarterly profit on Thursday and said it expects its revenue to grow by low single digits in 2016.

Dollar, stocks plunge sparks scramble for safety

LONDON (Reuters) - The dollar hit a 16-month low against the yen on Thursday and headed for its worst week since the Lehman crisis as investors scrambled for relative safety, buying up gold and top-rated bonds and dumping stocks.

Nokia leaves investors in dark over outlook

HELSINKI (Reuters) - Finnish telecom gear maker Nokia warned that demand for new mobile networks would slow this year in China and said it would not give a financial outlook until April following its acquisition of Alcatel-Lucent.

JetBlue sets up VC unit to fund startups in travel, hospitality

(Reuters) - JetBlue Airways Corp said on Thursday it launched a venture capital unit that would invest in technology startups in the travel and hospitality industry.

Twitter disappoints investors as user growth hits wall

(Reuters) - Twitter Inc reported its first quarter with no growth in users since it went public, stoking fresh concerns on how long it will take for the company to reverse the trend.

Walgreens threatens to pull out of Theranos partnership: WSJ

(Reuters) - Walgreens Boots Alliance Inc , the largest U.S. drugstore chain, threatened to terminate its relationship with Theranos Inc unless the blood-testing company quickly fixes the problems found by federal inspectors at its laboratory in California, the Wall Street Journal reported.

Deutsche Bank Is Back: 5 Year Sub CDS Soar To Record High

"Worse than Lehman" is how one European bond market trader described the carnage this week as the brief respite that ECB monetization and debt-buyback rumors provided yesterday have morphed into utter destruction this morning. European (and US) banks are a sea of contagious red with Deutsche Bank the tip of the collapse spear. Credit risk on Deutsche has exploded this morning with Sub CDS trading up 85bps to a record high 540bps... eerily reminiscent of the pre-Lehman bankruptcy week in 2008.

Time to panic now?

We've seen this kind of stress before for a financial institution...

and it did not end well...

Frontrunning: February 11



Gold Roars to One-Year High as Turmoil Drives Safe Haven Demand (BBG)

Banking Stocks Pummeled in Europe (WSJ)

Dollar, stocks plunge sparks scramble for safety (Reuters)

Nymex Crude Slips Below $27 a Barrel (WSJ)

No Respite for S&P 500 as U.S. Stock Futures Join Global Selloff (BBG)

Walgreens Threatens to End Theranos Agreement (WSJ)

Next Task for Clinton, Sanders: Securing the Minority Vote (WSJ)

Yen Advances to 15-Month High as Korean Tensions Stoke Haven Bid (BBG)

Meet the Man Who Helps Trump Be Trump (WSJ)

FBI tightens grip on final occupiers at Oregon wildlife refuge (Reuters)

SocGen Slumps as Quarterly Profit Hurt by Securities Drop (BBG)

HSBC CEO Gulliver Said to End Pay Freeze After Staff Revolt (

Sweden Slides Further Into NIRP, Cuts Rates To -0.50%

Ever since the BoJ took the plunge into NIRP late last month analysts and commentators alike have begun to express a high degree of skepticism about the wisdom of adopting negative interest rates.

Once seen as a kind of peculiar policy experiment confined to Switzerland, Denmark, and Sweden, NIRP has escaped the lab so to speak and now that Kuroda is negative and Draghi is contemplating another depo rate cut in March, people are starting to realize that the entire developed world might be about to go Keynesian crazy. Even the US.

Indeed it was just yesterday that we brought you the latest from JP Morgan, where analysts made the following rather shocking predictions about how low rates could go under tiered implementation system:

As we've explained on a number of occasions, this is becoming a never-ending race to the bottom. It's an all-out currency war and when one central bank eases, so too must the others or risk seeing their inflation targets jeopardized. That's especially true for Sweden where governor Stefan Ingves is concerned about what the Riksbank sees as excessive krona strength and still sluggish inflation.

On Thursday, in an effort to get out ahead of the ECB, the Riksbank cut again, taking the repo rates by 15bps to -0.50% in a move that Nordea calls œa bit more than expected. QE will continue as planned and the Riksbank œwill reinvest maturities and coupons from the government bond portfolio until further notice.

œUncertainty regarding global de ...

Global Stocks Slide After Fed Sparks Investor Concerns

Investors around the world fled stocks and piled into gold and government bonds as a cautious tone from the Federal Reserve, downbeat company news and a fresh fall in oil prices fueled anxiety about the global economy.

What's Going On in the Markets? 5 Theories to Explain the Chaos

Price moves across asset classes and the rise of volatility have left investors grasping for an overarching thesis, leading to the rise of multiple explanations.

Yen Surges Again as Investors Rush to Safe-Haven Assets

The yen rose sharply Thursday, compounding its recent gains as investors poured into the asset widely seen as a safe haven amid continued turmoil in global financial markets.

Economic Report: Low jobless claims show no sign of rising layoffs

The number of people who applied for unemployment benefits in early February fell to the lowest level in almost two months, a reassuring sign that few workers are losing their jobs despite a slowdown in hiring.

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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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