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16Mar2016 Pre-Market Commentary: US Futures Fractionally Lower Ahead Of Fed FOMC Meeting, WTI Crude Trending Up

Written by Gary

U.S. stock index futures were down fractionally (SPY -0.3%) this morning ahead of the outcome of a Federal Reserve meeting on monetary policy. Oil prices trended up this morning (+0.3%) on an announcement that producers will meet next month to discuss a proposal to freeze output. Markets are expected to open lower.


Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.29% while the FTSE 100 gains 0.06%. The CAC 40 is off 0.17%.

What Is Moving the Markets

Here are the headlines moving the markets.

Oil rises as producers announce meeting on output freeze

LONDON (Reuters) - Oil prices firmed on Wednesday on an announcement that producers will meet next month in Qatar to discuss a proposal to freeze output and on growing signs of a decline in U.S. crude production.

BMW shifts focus towards harnessing technology

MUNICH (Reuters) - German carmaker BMW said it will focus on electric vehicles and automated driving and develop its software and technology services as part of a new strategy for the 100-year-old carmaker.

Frankfurt and London seal $30 billion trading tie-up to counter U.S. threat

FRANKFURT/LONDON (Reuters) - Deutsche Boerse AG and London Stock Exchange Group Plc (LSE) agreed to combine in a $30 billion deal to create a European trading powerhouse better able to compete with U.S. rivals encroaching on their turf.

Fed seen holding rates steady as it faces fine balancing act

WASHINGTON (Reuters) - The U.S. Federal Reserve is expected to hold interest rates steady on Wednesday as it balances continued concerns about the health of the global economy with fresh signs that domestic inflation is starting to rear its head.

Exclusive: Noble Group in talks with banks for $1.5 billion unsecured loan - sources

SINGAPORE/HONG KONG (Reuters) - Noble Group is in advanced talks to raise a large unsecured loan from banks that will help repay its debt maturing in May, the loss-making commodity trader's head of treasury said, a move that could help it win back investor confidence.

Oil lifts European shares, caution reigns ahead of Fed

LONDON (Reuters) - Shares were mixed and the dollar rose on Wednesday as markets awaited the outcome of the U.S. Federal Reserve's policy meeting, seen leaving interest rates on hold but the door open for further increases later in the year.

Drugmaker Valeant faces debt default risk; shares plunge 50 percent

(Reuters) - Valeant Pharmaceuticals International Inc's shares plunged 50 percent on Tuesday after the company said a delay in filing its annual report put it in danger of a default on its $30 billion in debt.

Deutsche Bank Tumbles After CEO Says Bank Won't Be Profitable This Year

Back in January, Deutsche Bank reported what were variously described as œhorrible, œgrim results.

The net loss for 2015 came in at roughly $7 billion, the first annual loss since the crisis. The abysmal year was capped off by ‚¬2.1 billion of red ink in Q4 of which some ‚¬1.2 billion was attributable to litigation.

The Q4 breakdown - which came a few days after CEO John Cryan initially reported how bad 2015 truly was - was a nightmare. Revenues plunged 30% in corporate banking and securities where provisions for credit losses jumped from just $9 million in Q4 2014 to $115 million. Citi questioned whether the bank's investment bank model is in œstructural decline.

œWe think that the bank is in for another difficult year in that guidance is that '2016 peak restructuring year'," BofA said, adding that "it looks like revenues are under a lot of pressure, yet adjusted costs are guided to be flat with another ‚¬1bn of restructuring costs."

Citi sees an additional ‚¬3.6 billion in litigation for 2016.

Cryan - who took the reins from Anshu Jain and Jürgen Fitschen (who is still hanging around) last summer - has cut thousands upon thousands of jobs as part of a desperate attempt to restructure the German behemoth which some say is in very real trouble.

Underscoring that assessment are comments out today from Cryan who spoke at a conference in London.

œWe've said this year is not going to be a profitable year, we may make a small profit, we may make a small loss, we don't know, he stammered.

But then again, maybe he does know, because moments later he said this: œThere's a lot of stuff we have to get done this year, so this year w ...

Largest U.S. Coal Producer Skips Interest Payment, Warns Of Bankruptcy; Stock Crashes

One of the more impressive short squeezes in recent history took place in the first two weeks of March, when the stock of distressed Peabody Energy, the largest U.S. coal producer which employs 8,300 workers, exploded higher from just $2.50 per share at the start of the month to a whopping $6.50 just last week.

Many scratched their heads at this move as nothing fundamental had changed in the company's deteriorating operations, and its bonds are among the most distressed issues trading currently (with upcoming interest payments as we profiled last night).

Alas Peabody missed its narrow window to sell stock, and things were promptly normalized this morning, when the stock crashed back to earth plunging by nearly 40% back to $2.50 in the pre-market, wiping out all recent gains, after Peabody announced in its just filed 10-K, reported that it may have to join its peers Arch Coal and Alpha Natural in 11 bankruptcy protection, after it delayed $71 million in interest payment due on March 15.

As caught first by Bloomberg, Peabody's auditor said there's uncertainty about the company's ability ...

Frontrunning: March 16



Trump knocks Rubio out of race, Republicans in turmoil (Reuters)

Fed to Signal Worst Is Over, Hikes Coming: Decision-Day Guide (BBG)

Four Economists See a Surprise from the Fed This Week (BBG)

Global Stocks Muted Ahead of Fed Announcement (WSJ)

Stop-Trump Groups Make One Last Bet on Rubio, and Lose (BBG)

China's Li Seeks 'Win-Win' for Growth-Reform Plan Analysts Doubt (BBG)

President Obama to Announce Supreme Court Pick Wednesday Morning (WSJ)

Japan's major firms, in blow to Abenomics, offer smaller 2016 pay hikes (Reuters)

New Guard Rises in Saudi Arabia as Oil Crisis Forces Rethink (BBG)

London Stock Exchange, Deutsche Börse Agree to Merge, Creating $30 Billion Operator (WSJ)

Stiglitz to Abe: Don't Raise Japan's Sales Tax, Stimulate Growth (

Oil Jumps After Latest Output Freeze Meeting "News"

One of the most farcical instances of report-it-then-promptly-deny-it headline hockey since last summer's Greek bailout drama has been the incessant barrage of œnews surrounding the oft-celebrated oil output freeze deal struck last month by the Saudis, Qatar, Venezuela, and Russia.

At the time, the market was hoping against hope for an agreement to cut production. After all, Russia and Saudi Arabia are pumping at record levels. As we put it at the time, œit was not exactly clear how 'freezing' output at a record level will 'stabilize and improve' the market. Still, this market will take what it can get at this point and since the œagreement on February 16, prices have indeed risen and some of the gains have - rightly or wrongly - been attributed to the œfreeze.

Casting a pall over the entire thing is Iran who, having just begun to ramp up production after the lifting of international sanctions, isn't particularly excited about the prospect of taking its foot off the pedal. Asked about participating in the freeze, Oil Minister Bijan Zanganeh said last week that Tehran should œjust be left alone, until production reaches 4 million b/d. At that point, Zanganeh says, œwe will join them.

Of course that's a non-starter for the likes of Kuwait, whose own oil minister Anas al-Saleh recently warned that his country will œgo full power if everyone (and œeveryone includes the Iranians) isn't on board with the deal.

On Monday, Russian Energy Minister Alexander Novak spoke with Zanganeh on the phone and once the call was over, indicated that Moscow œunderstood its ally in ...

LSE, Deutsche Börse Agree to $30 Billion Merger

London Stock Exchange and Deutsche Börse agreed to merge, creating a pan-European exchanges powerhouse worth more than $30 billion.

To Entice Millennial Bankers, Citigroup Serves Up New Perk: Take a Year Off

Attitudes toward young bankers have shifted so strongly on Wall Street that Citigroup has a new plan to keep them happy: Give them a year off. ‹The bank on Wednesday plans to unveil new programs meant to appeal to younger workers, including faster paths to promotion and the chance to take a year off to do charitable work.

February 2016 CPI: Inflation Moderates

by Doug Short and Steven Hansen

According to the BLS, the Consumer Price Index (CPI-U) year-over-year inflation rate was 1.0 % - a decline from last month's 1.4 %. The year-over-year core inflation (excludes energy and food) rate grew 0.1% to 2.3 %, and remains slightly above the target set by the Federal Reserve.

Economic Report: U.S. single-family housing starts hit 9-year high

Construction on new houses rose in February to a five-month high, led by the biggest increase in single-family units in nine years.

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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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