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11Mar2016 Pre-Market Commentary: WTI Crude About To Hit $39 Clinging On Gains, US Futures 0.8% Higher, High Volatility Expected On Investors Choosing Sides

Written by Gary

US stock future indexes are up fractionally amid investor concerns of an eventual China meltdown and rising crude prices. Analysts on both sides of the Bull/Bear spectrum are singing their song with abandon. Tea leaves here are indicating at least a short-term run for the gold ring watching the Spooz reach 2044 at least. Crude prices are expected to top out in the very near term. Markets are expected to open higher.


Here is the current market situation from CNN Money

European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 3.21% while Germany's DAX is up 3.03% and London's FTSE 100 is up 1.61%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. import prices fall for eighth straight month

WASHINGTON, March 11 (Reuters) - U.S. import prices fell in February for an eighth straight month, weighed down by declining costs for petroleum and a range of other goods, but the pace of decline is slowing as the dollar's rally fades and oil prices stabilize.

Volkswagen Group February sales dip 1.2 percent

FRANKFURT (Reuters) - The Volkswagen Group said deliveries in February reached 693,300 vehicles, a drop of 1.2 percent compared with the year-earlier month, in the wake of revelations that the carmaker cheated on exhaust emissions tests.

Jessica Alba's Honest Co rejects report on detergent ingredients

(Reuters) - Honest Co, the shopping startup co-founded by actress Jessica Alba, rejected a Wall Street Journal report that the company used ingredients in its laundry detergent it had pledged to avoid.

Shares bounce, euro fades after savage ECB reaction

LONDON (Reuters) - The euro steadied and European shares and bonds rebounded on Friday after being savaged on Thursday when the European Central Bank signaled it was unlikely to cut its negative interest rates further in the wake of a huge new stimulus plan.

Malware suspected in Bangladesh bank heist: officials

DHAKA (Reuters) - Investigators suspect unknown hackers managed to install malware in the Bangladesh central bank's computer systems and watched, probably for weeks, how to go about withdrawing money from its U.S. account, two bank officials briefed on the matter said on Friday.

Futures rise as oil prices cling on to gains

(Reuters) - U.S. stock index futures rose on Friday as oil prices held on to gains, a day after the European Central Bank announced a new stimulus program.

Exclusive: Ethics watchdog for Norway's $830 billion wealth fund sees increase in bans on firms

OSLO (Reuters) - The ethics watchdog for Norway's $830-billion wealth fund will focus this year on identifying corruption in telecoms, arms and energy companies and expects to recommend that an increasing number of firms across all sectors be barred from investment.

Munich Re CEO won't renew contract: manager magazin

FRANKFURT (Reuters) - Munich Re is set to get its first new chief executive in more than a dozen years when Nikolaus von Bomhard's contract expires at the end of this year, Germany's manager magazin reported on Friday, citing company sources.

Kia eyes steady sales, increased market share in Russia

MOSCOW (Reuters) - Kia Motors plans to maintain sales in Russia this year and build on its position as the country's third-largest carmaker by increasing its share of the ailing market, the company's Russian managing director told Reuters.

The Good, The Bad, And The Petulant Child: Three "Morning After" Reactions To The ECB's All-In Gamble

As can be seen by the violently volatile markets themselves, over the past 24 hours there has been substantial confusion about the implications of the ECB's "all in" gamble, with the initial kneejerk euphoria leading to a rapid selloff and surge in the USD, followed by an overnight levitation in all risk assets as virtually the entire ECB move has now been faded on both sides.

Still, much confusion remains as can be seen by the following three reactions by financial pundits, two of whom even work for the same company.

First, here is Bloomberg's Mark Cudmore with "The Good":

œThe euro is stronger, therefore the European Central Bank's new policy measures have failed. That seems to be the dominant sentiment after Thursday's expansion of stimulus. But far from disappointing, the ECB's shift to focus on the credit channel over the FX channel is a master-stroke - " if only markets can catch up with them.

It seems to have been forgotten that exchange rates are not the ultimate target of central bank policy - " even by some central banks themselves. A weaker exchange rate is a means to an end, not the end itself. And it's just one of several tools a central bank has at its disposal, not the only one

Analysts' misplaced focus on the currency means they're confusing the bigger picture. They spend weeks criticizing negative rates and then bemoan the fact the ECB says it won't go even more negative

European banks have been in a bad place the last few months, not least due to struggling with negative rates. As of yesterday and the advent of the ECB's new four-year T-LTROs (targeted longer-term refinancing operations), banks will now be paid to both borrow and lend. That's one problem solved. And with a simultaneous boost to lending

Draghi Warns About Rising Inequality Hours After Boosting QE, As BIS Warns QE Leads To Inequality

Just hours after Mario Draghi unveiled another ‚¬20 billion in monthly QE, bringing the total in "unconventional monetary policy" asset purchases to ‚¬80 billion per month, and entering the market for corporate bond purchases for the first time, the ECB released the text of an interview that was conducted with the Guardian on February 18, in which the central banker not only lamented youth unemployment but said he is "worried about increasing inequality."

Here are the selected excerpts:

Are you worried about the position of young adults in Europe and is this an increasingly urgent issue?

Youth unemployment is a tragedy and prevents people from playing a full and meaningful part in society. If every second young person is out of work " as is still the case in some countries in Europe " it seriously harms the economy, because people willing to work cannot work and skills are not developed. And it threatens social harmony. Unemployment can lead in the long run to increased social problems and ill-health.

What might be the forces at work here - demographics / changing workplaces / fiscal-monetary policy - that mean that young adults appear to be receiving little of the rewards of two and half decades of average economic growth?

Nobody stays young forever. The crucial question is whether a person can participate fully in the economy over his or her life-time " get a good education, find a job, buy a home for the family. Income and wealth follow. What makes me worry is that increasing inequality might prevent people from doing that. This is an issue all our societies need to look at carefully. The ECB's ro ...

Frontrunning: March 11



Shares bounce, euro fades after savage ECB reaction (Reuters)

Trump's Islam comments draw attacks as Republicans discover civility (Reuters)

IEA Says Oil Price May Have Bottomed as High-Cost Producers Cut (BBG)

Oil Prices Rise on Hopes Glut Will Ease (WSJ)

Why Euro-Area Inflation Will Be Low for Years, According to Draghi (BBG)

Calmer markets, positive data prime Fed to push ahead with rate rises (Reuters)

Key powers mulling possibility of federal division of Syria (Reuters)

Deutsche Bank Cut Overall 2015 Bonus Pool by 17% (WSJ)

JPMorgan, Goldman Said to Discuss Buying Deutsche Bank Swaps (BBG)

MLP Investors Face Tax Hit On Top of Big Losses (WSJ)

Mystery 'Dude' Rattles Turkish Stock Traders With Massive Bets (BBG)

China angere ...

Oil Rebounds After IEA Says Price "Bottomed" As Goldman Warns Of "Sharply Lower" Prices As Storage Fills

In its latest monthly market report released early on Friday, the International Energy Agency forecast that oil prices may have bottomed as shrinking supplies outside OPEC and disruptions inside the group erode the global surplus. This comes just one month after it had a far gloomier assessment of oil prices, warned on excess supply, and asked if the market was witnessing a "false dawn."

œThere are signs that prices might have bottomed out, the Paris-based adviser said. "For prices there may be light at the end of what has been a long, dark tunnel as market forces are œworking their magic and higher-cost producers are cutting output."

It predicted that production outside the Organization of Petroleum Exporting Countries will decline by 750,000 barrels a day this year, or 150,000 barrels a day more than estimated last month, the agency said. Markets are also being supported by output losses in Iraq and Nigeria, and as Iran restores production more slowly than planned following the end of international sanctions, Bloomberg reports.

As a reminder, on February 9, the IEA said "supply may exceed consumption by an average of 1.75 million barrels a day in the period, compared with an estimate of 1.5 million last month." Curious since then prices are far higher, and are now pushing into territory where even shale companies are considering resuming production.

As shown in the chart below, oil prices have recovered 50 percent from the 12-year lows reached in early February when news of possible oil production cuts by OPEC unleashed a dramatic ...

Global Stocks Bounce Back After Volatile Session

Global stocks rebounded Friday and the euro gave back gains as investors reassessed the impact of the European Central Bank's latest stimulus measures.

IEA Sees Signs Oil Prices Might Have Bottomed Out

Crude-oil prices may have œbottomed out as Iran's return to the market has been less dramatic than the country promised, the IEA said.

Deutsche Bank Cuts Bonus Pool by 17%

Deutsche Bank cut its overall bonus pool by 17% last year, as calculated on a constant-currency basis, the company said in its annual report.

Need to Know: This asset keeps shining for investors as markets get riskier

Gold is floating to the top of investor radars again, even as stocks are looking at a recovery on Friday as the market still tries to digest Draghi's big day.

Economic Report: U.S. import prices fall 0.3% in February

The prices the U.S. paid for imported goods dropped 0.3% in February and lower energy prices were once more the cause.

Market Extra: Goldman doesn't buy ECB rate hint and sticks to its euro/dollar parity call

Goldman Sachs is sticking to its euro/dollar parity call, arguing that Thursday's Mario Draghi-fueled euro rally is œunjustified as the European Central Bank will struggle to stave off another interest rate cut.

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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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