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18Feb2016 Pre-Market Commentary: Crude Holding Higher Prices, FOMC May Raise Interest Rates, Iran's Cap Agreement Meaningless, Three Gaps And You Are Out

Written by Gary

US stock future indexes are fractionally higher this morning but the major averages are NOT expected to gap up at the opening after doing so for the past three sessions. The market is more than overbought in the short-term, this makes any further push into resistance a point of selling interest given the overwhelming momentum seen thus far, it might take a little time to exhaust the current level of buyers however.


Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 1.50% while the CAC 40 gains 0.75%. The FTSE 100 is off 0.46%.

The Fed's January meeting minutes also reflected a dovish tone, boosting equities sentiment on a likely delay to upcoming rate hikes.

Despite the recent gains, Standard & Poor's has downgraded the credit ratings of several Middle East nations, in its second mass cut of large oil producers in almost exactly a year. Citing pressures from the drop in crude prices, the ratings agency lowered Saudi Arabia by two notches to A- stable.

The monster rally puts the top-side resistance close to 1950 into focus and should momentum continue its strength we may have to look to a prior parallel from the November to January top. That level comes in just over 1960 at this time.

Yesterday, on the Real-time Trader's Feed, it was pointed out that it was the third gap higher in a row and that it should get filled in the near-term (days).

What Is Moving the Markets

Here are the headlines moving the markets.

Oil extends rally to $35 after Iran welcomes output freeze

LONDON (Reuters) - Oil rose to $35 a barrel on Thursday after Iran welcomed plans by Russia and Saudi Arabia to freeze output and an industry report showed a surprise drop in U.S. inventories.

Wal-Mart quarterly earnings fall; stock slides

(Reuters) - Wal-Mart Stores Inc on Thursday reported a decline in quarterly earnings and a smaller-than-expected increase in sales at existing stores, sending its shares down more than 4 percent.

Daimler CEO's pay jumped 16 percent to $10.8 million last year

FRANKFURT (Reuters) - Daimler Chief Executive Dieter Zetsche's total pay leapt 16 percent to 9.68 million euros ($10.75 million) last year, when the German car and truck maker posted a 36 percent rise in operating profit.

Bombardier eyes new CSeries win after Air Canada deal

SINGAPORE (Reuters) - Bombardier is in talks with more potential buyers including United Airlines after winning a lifeline $3.8 billion order for its struggling CSeries jet from Air Canada , its sales chief said on Thursday.

Uber losing $1 billion a year to compete in China

SHANGHAI (Reuters) - Uber Technologies Inc is burning through more than a billion dollars a year in China as it wages a fierce price war against local rival Didi Kuaidi, its chief executive said.

Futures rise as oil prices extend rally

(Reuters) - U.S. stock index futures were higher on Thursday, fresh on the heels of a three-day rally, as oil prices continued to rise.

Satellite TV company Dish swings to loss

(Reuters) - Satellite TV company Dish Network Corp swung to a quarterly loss as it surrendered wireless spectrum licenses that were held ineligible for small-business discounts.

Zafgen's obesity drug succeeds in mid-stage trial

(Reuters) - Drug developer Zafgen Inc said on Thursday that its drug to treat obesity in diabetic patients met the main goal of reducing body weight.

Puma sees 'female future' helped by Rihanna designs

HERZOGENAURACH, Germany (Reuters) - Strong demand for sneakers designed by singer Rihanna helped Puma achieve higher-than-expected sales growth in the fourth quarter and the German sportswear firm said on Thursday a busy sports calendar should help it in 2016.

First Iran, Now Iraq Refuses To Commit To Oil Production Freeze

For all the euphoria about the proposed OPEC oil production freeze deal, the reality is that nothing has been actually decided. As readers will recall, the only "decisions" agreed to between the Saudi and Russian oil ministers were to cap production at already record high levels of output, however contingent on everyone else voluntarily joining said production cap.

Then yesterday, as part of its own meeting, Iran made it clear that while it supports efforts to push the price of oil higher, it would certainly not limit its output at current levels, and instead requires an explicit loophole granting it a production limit from the pre-sanctions period. This put OPEC in a bind: if it grants Iran special treatment, then who else will have a similar request.

The answer was revealed just hours later when Iraq earlier today stopped short of saying it would curb production of oil to prop up sagging prices, saying negotiations are still ongoing between members of the Organization of the Petroleum Exporting Countries.

According to the WSJ, Iraq oil minister Adel Abdul Mahdi said his country supports any decision that will serve producers, prop up prices and achieve balance in the crude markets. However, just like Iran he didn't explicitly say whether Iraq would curb its own output but said any rapprochement between all sides to restrict crude output is a step in the right direction.

As the WSJ summarizes, his comments "came a day after Iran's oil minister didn't commit to limiting production, throwing into question the future of a plan brokered by Saudi Arabia and Russia this week for major oil producing countries to limit their output to last month's levels."

œThe deterioration of the oil prices has directly impacted the global economy and the historical responsibly of the ...

Frontrunning: February 18



Oil extends rally towards $35 after Iran welcomes output freeze (Reuters)

Overproduction Swamps Smaller Chinese Cities, Revealing Depth of Crisis (WSJ)

House Flipping Is Making a Comeback in Las Vegas (BBG)

Trump leads Republican field nationally by more than 20 points (Reuters)

Turkey blames Kurdish militants for Ankara bomb, vows response in Syria and Iraq (Reuters)

Brexit nerves knock FTSE as oil rally cools (Reuters)

Fed's Kashkari: 25% Capital Requirement May Be Right for Banks (WSJ)

Russia Sues Ukraine in London Court Over $3 Billion Default (BBG)

China's Banks May Be Getting Creative About Hiding Their Losses (BBG)

Chinese Money Keeps Coal Mines Humming (WSJ)

Anglo Cut to Junk for Third Time This Week as S&P Downgrades (BBG)

Global Stocks Extend Rally as Oil Climbs

Global stocks extended a rally as oil prices climbed and investors sought out bargains following a bruising start to the year.

Freddie Mac to Send $1.7 Billion Payment to Treasury

Freddie Mac said it would send a $1.7 billion payment to the Treasury in March as it reported a higher profit for the fourth quarter, driven by increased interest rates.

Bankers' Bonuses Lose Value as Stock Portion Takes Hit

Compensation tied to restricted shares is taking a hit amid the swoon in stock markets this year.

Rail Week Ending 13 February 2016: Contracting But Insignificant Short Term Improvement

Week 6 of 2016 shows same week total rail traffic (from same week one year ago) only marginally declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic continued to improve year-over-year, which accounts for approximately half of movements but the weekly railcar counts remained in contraction.

Matthew Lynn's London Eye: The eurozone can't survive another banking crisis

The worries about the health of the big European banks is troubling, because the eurozone can't survive another banking crisis politically, writes Matthew Lynn.

Need to Know: Investors can expect more risk for less reward due to central banks, says Ray Dalio

Our call of the day finds one big hedge-fund manager giving some frank talk about central bankers and their futile efforts to get investors to stay in this market.

Economic Report: Philly Fed index shows manufacturing contracts for sixth straight month

The Philadelphia Fed index improved a bit but stayed in negative territory for the sixth straight month in February.

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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