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31Mar2016 Pre-Market Commentary: US Futures Flat, Unemployment Figures Climb, US Dollar Sliding, Markets To Open Flat

Written by Gary

US stock future indexes are flat and on the negative side on the last day of an extremely volatile first quarter. Ms. Yellen's dovish speech Tuesday has hammered the dollar and has pushed gold higher in a massively over bought market. European markets are in the red and the US markets are expected to open flat and drift lower.


Here is the current market situation from CNN Money

European markets are lower today with shares in France off the most. The CAC 40 is down 0.98% while Germany's DAX is off 0.59% and London's FTSE 100 is lower by 0.24%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. jobless claims unexpectedly rise; labor market still strong

WASHINGTON, (Reuters) - The number of Americans filing for unemployment benefits unexpectedly rose last week, but remained below a level associated with a strong labor market.

GE Capital asks U.S. government to lift 'too big to fail' designation

WASHINGTON (Reuters) - General Electric Co's GE Capital financing arm on Thursday asked the U.S. government to stop designating it as a "systemically important financial institution," a label given to companies considered "too big to fail."

AIG CEO says MetLife ruling an opportunity for AIG

(Reuters) - A judge's ruling that MetLife Inc is not a "too big to fail" opens up an opportunity for American International Group Inc to also apply for exemption, AIG Chief Executive Peter Hancock said in an interview on CNBC on Thursday.

Foxconn's $3.5 billion bet to keep up with Apple

SEOUL (Reuters) - With its acquisition of Japan's Sharp Corp , Foxconn aims to gain access to promising technology for high-end OLED screens likely to be used in future devices from Apple Inc , the electronics assembler's biggest customer.

McDonald's to add more than 1,500 outlets in China, HK, Korea

(Reuters) - McDonald's Corp said on Thursday it planned to add more than 1,500 restaurants in China, Hong Kong and South Korea over the next five years as it focuses on high-growth markets to boost sales.

HK tribunal upholds action against Moody's for report on China companies

HONG KONG (Reuters) - A Hong Kong tribunal upheld on Thursday disciplinary action against Moody's Investor Services for a report it published on Chinese companies, in a landmark decision that could curtail the services rating agencies can offer in the financial center.

Roller-coaster first quarter ends with shares, dollar under pressure

LONDON (Reuters) - World stocks fell for the first time in four days on Thursday, the final day of a roller-coaster first quarter that has hammered the dollar and the pound but has proven the best in decades for gold and bonds.

Impatient with Yahoo, some investors cheer Starboard effort

BOSTON/SAN FRANCISCO (Reuters) - Activist hedge fund Starboard Value LP's campaign to replace Yahoo Inc's board of directors is being welcomed by some investors who have grown impatient with the faded Internet pioneer's drawn-out process of selling its Web business.

Decline in financial settlements with U.S. Big Pharma: report

WASHINGTON (Reuters) - The amount of money big U.S. pharmaceutical manufacturers have paid to settle charges for violating federal health care laws has declined sharply in recent years, prompting a non-profit watchdog group to call for an increase in enforcement efforts.

Europe Remains Stuck In Deflation For Second Month

The last time Europe had at least two consecutive months of deflation was in late 2014/early 2015 when the ECB launched its sovereign QE, and when prices staged a modest rebound into the rest of the year. One year later, it's more of the same, and as Eurostat revealed earlier today, after a headline price drop of -0.2% in February, March prices declined once more, this time by -0.1% in line with expectations, driven by a -8.7% plunge in energy prices.

The good news for the ECB, which earlier this month unleashed the first instance of corporate bond QE, is that if stripping out "volatile food and energy prices", core inflation accelerated in what Reuters dubbed mildly positive news for the European Central Bank as it struggles to revive anemic price growth.

As shown below, core inflation, a figure closely watched to gauge underlying trends, picked up to 0.9% from 0.8%, also in line with its recent trend and with expectations, alleviating some fears that low energy prices are feeding into the cost of other goods and services.

According to Reuters, the core inflation tick-up, presaged by surprisingly high German figures on Wednesday, is the latest in a string of slightly positive data for the 19-nation currency bloc, indicating that the euro zone's tepid domestic recovery remains on track despite headwinds fro ...

Frontrunning: March 31



Roller-coaster first quarter ends with shares, dollar under pressure (Reuters)

Oil prices slide as U.S. crude stocks hit record (Reuters)

GE Files to End Fed Oversight After Shrinking GE Capital (WSJ)

FDA Eases Rules for Abortion Pill, Making Access Simpler (BBG)

Kremlin denies report of Russia-U.S. deal on Assad's future (Reuters)

Thirst for Gasoline Fuels Oil Rally (WSJ)

Landlords in last-minute rush to beat stamp duty rises (BBG)

CEO of SunEdison's Spinoffs Leaves (WSJ)

Zuma Counts on ANC Protection After Court Says He Violated Law (BBG)

Hong Kong Retail Sales Plunge the Most in 17 Years (BBG)

U.K. Economy Shows More Momentum; Current-Account Gap Widens (BBG)

Hong Kong Appeal Tribunal Fines Moody's $1.4 Million for Report (

China Sees First Offshore Default By State-Owned Firm In Two Decades

œ[It] contains exaggerations.

That's what Guosen Securities (China's eighth-largest investment bank) had to say when asked about FT's assertion that the investment bank's Hong Kong affiliate has defaulted on a dim sum bond. Apparently, an affiliated SPV issued the debt back in 2014 and according to Bank of New York Mellon (the offering's trustee), Guosen HK is in violation of some part of the bond's keepwell agreement.

One of the provisions œis not in full force and effect, which constitutes an Event of Default , reads a document seen by FT, who notes that this would mark œthe first debt breach by a state-owned enterprise in China's offshore market in nearly two decades.

œThe technical default by Guosen's Hong Kong affiliate puts at risk a Rmb38m ($5.9m) coupon payment due April 24 on Rmb1.2bn in dim sum bonds sold in 2014, FT continues. œMissing that payment would set a precedent for the offshore units of Chinese SOEs, whose creditors widely assume the onshore parent will always stand behind its affiliates.

Needless to say, this comes at a particularly sensitive time. Defaults in China have been mounting over the past 12 months as the decelerating economy conspires with the country's massive debt burden to push all but the healthiest companies towards the precipice. SOEs are especially problematic and how Beijing handles a sweeping effort to restructure insolvent state-owned firms will ultimately determine whether investors' previously unshakable faith in China's unwillingness to allow SOE defaults was misplaced.

œAfter years in which investors reliably assumed that China's government would not permit any corporate default, missed payments ...

Shale Is the Odd Man Out in Oil Reckoning

After delaying the inevitable, rapid decline rates are poised to catch up with shale crude producers, giving them a big role in balancing the global crude market.

Chinese Banks Define Success Down by Keeping Profit Flat

Chinese banks have managed to keep profits flat by managing provisions, but rising bad loans will make this harder.

Finding Microsoft's Voice in Mobile

Voice-controlled 'bots' may be an alternative to the mobile-app world that software giant has largely missed.

26 March 2016 Initial Unemployment Claims Rolling Average Again Worsens. But Still the Longest Streak Of Claims Under 300,000 Since 1973.

Weekly Initial Unemployment Claims

The market expectations (from Bloomberg) were 260,000 to 275,000 (consensus 266,000), and the Department of Labor reported 276,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 259,750 (reported last week as 259,750) to 263,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

March 2016 Job Cuts Fall But Q1 Up 31%. Heavy Layoffs in Energy and Retail.

from Challenger Gray and Christmas

Job cuts declined for the second consecutive month in March, as US-based employers announced plans to trim payrolls by 48,207 during the month.

Capitol Report: Jobless claims rise to 276,000, highest in two months

The number of Americans who applied for unemployment benefits in late March rose by 11,000 to 276,000 and hit the highest level in two months, but the pace of layoffs in the U.S. remains exceedingly low.

Capitol Report: Valeant may get bank waivers but risks default with SEC and NYSE

Valeant must successfully juggle several deadlines if it wants to stay listed on the New York Stock Exchange and stay out of bankruptcy court

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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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