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20Jun2016 Pre-Market Commentary: US Futures Sharply Higher As Brexit Fears Lessen, Pound Up, US Dollar Down, WTI Crude Higher And Rising

Written by Gary

US stock future indexes are up sharply (SPY +1.1%) as fears of a BREXIT ease. Crude prices are up higher (WTI 49.61) and climbing as the US dollar falls precipitously. World equities have their rally caps back on after weekend polls suggested Britain was more likely to vote to remain in the EU in Thursday's referendum.


Here is the current market situation from CNN Money

European markets are sharply higher today with shares in Germany leading the region. The DAX is up 3.61% while France's CAC 40 is up 3.58% and London's FTSE 100 is up 3.30%.

There's a new U.S. public stock exchange in town... The SEC has finally given approval to IEX Group's request, meaning the "Flash Boys" will be able to challenge the NYSE (NYSE:ICE), Nasdaq (NASDAQ:NDAQ), and Bats Global (BATS:BATS) as the nation's 13th national stock exchange.

IEX's "speed bump" delays orders by 350 millionths-of-a-second, but it's enough to protect investors from high-frequency trading which can front-run slower orders on other exchanges.

What Is Moving the Markets

Here are the headlines moving the markets.

With oil price near $50, resilient U.S. shale producers eye new chapter

HOUSTON (Reuters) - Two years into the worst oil price rout in a generation, large and mid-sized U.S. independent producers are surviving and eyeing growth again as oil nears $50 a barrel, confounding OPEC and Saudi Arabia with their resiliency.

Stock futures sharply higher as Brexit fears subside

(Reuters) - U.S. stock index futures rose sharply on Monday, tracking gains in European stocks, as polls over the weekend showed an increased possibility of Britain remaining in the European Union.

Apple to lose weighting in Russell index, shares could fall

NEW YORK (Reuters) - After dropping more than $200 billion in market capitalization in one year, Apple shares could fall further as they are set to lose their weighting and be reclassified in the annual reconstitution of the widely followed Russell indexes.

Wal-Mart in talks to sell China e-commerce platform to JD.com: WSJ

(Reuters) - Wal-Mart Stores Inc is in talks to sell its Chinese e-commerce platform, Yihaodian, to JD.com Inc, the Wall Street Journal reported, citing people familiar with the situation.

Oil rallies as fears over Brexit abate

LONDON (Reuters) - Oil rallied on Monday, lifted by a wave of investor confidence and a weaker dollar after polls showed a diminishing chance that Britain may vote to leave the European Union later this week.

Exclusive: Francisco Partners, Elliott near Dell software deal - sources

(Reuters) - Buyout firm Francisco Partners and the private equity arm of activist hedge fund Elliott Management Corp are in advanced talks to acquire Dell Inc's software division for more than $2 billion, three people familiar with the matter said.

Investors seeking VW reform may be disappointed at AGM

FRANKFURT (Reuters) - Investors hungry for reform at Volkswagen after the diesel emissions test-cheating scandal may be disappointed at the carmaker's annual shareholder meeting on Wednesday.

BP approves investment in Egypt gas field 15 months after discovery

LONDON (Reuters) - British oil major BP has approved investment in the first phase of developing the large Atoll gas field offshore Egypt, only 15 months after it first announced its discovery.

Six Flags Entertainment seeks to open Saudi theme parks

DUBAI (Reuters) - U.S. theme park company Six Flags Entertainment Corp plans to expand to Saudi Arabia, its chief executive told Saudi-owned Arabiya TV on Monday, bringing roller coasters and bumper cars to the ultra-conservative kingdom.

It's Not Just The "Brexit" Vote: Key Economic Events In The Coming Week

While every trader is tansfixed on this Thursday's Brexit referendum outcome, dubbed the year's biggest risk event (at least so far), there is a full docket of economic events in store.

Following on from a frantic last week, it's a quiet start to proceedings today with the latest German PPI print the only data of note on either side of the Atlantic, as DB's Jim Reid recaps.

Tuesday is a little busier for data with the German ZEW survey for June expected to show a modest increase, while UK public sector net borrowing data for May is also due to be released. Again, there's no data due out in the US.

The economic data of note on Wednesday comes in the afternoon where we will get the June consumer confidence reading for the Euro area as well as US existing home sales data and the FHFA house price index. China will also release its May leading economic index.

The data calendar finally kicks into gear on Thursday. During the Asia session we'll get the leading index out of Japan along with the Nikkei manufacturing PMI. During the European session meanwhile we'll get the flash services, manufacturing and composite June PMI's for the Euro area, Germany and France. Little change is expected for the Euro area. Also due out on Thursday morning will be French confidence indicators. Over in the US meanwhile we'll get a random splattering of data including the Chicago Fed national activity index, initial jobless claims, flash manufacturing PMI, new home sales, leading index and Kansas City Fed's manufacturing survey.

We close out the week on Friday in Europe with the final revision to the Q1 GDP report for France and German IFO survey for June. Meanwhile in the US we finish the week with the first take of the May durable and capital goods orders data, as well as the final June reading for the University of Michigan consumer sentiment survey.

Of course, as noted above, the big event next week however is away fro ...

"The Next Few Days Will Be Dominated By Fear" - Why One Trader Isn't Buying Today's Massive Stock Surge

Some thoughts on today's dramatic global "risk on" stock ramp from Mark Cudmore, a former FX trader who writes for Bloomberg

The Definition of Respite

Today's Brexit sentiment-related rally seen across global financial assets will soon dissipate. Far from being a turning point, the next few days will be dominated by fear and risk aversion.

Respite is "a short period of rest or relief from something difficult or unpleasant" according to the Oxford English Dictionary. That almost perfectly wraps up the view across global markets going into the European session.

The latest poll put the Remain vote ahead after last week showing Leave with the higher count. Bookies' odds of Brexit have also lengthened sharply. Whatever your view on the reliability of pre-referendum surveys, the important point is that the outcome remains uncertain even if it seems unlikely that Britain will leave the EU.

The referendum is the single biggest risk-event in 2016. No major money manager can afford the consequences of being wrong if they significantly increase their risk exposure this week.

The bravest and most nimble can perhaps punt on sentiment moves. But that is only day-traders and the most opportunistic of hedge funds, and they are a minority of money flows.

For the next few days, the stronger players will either be sitting on their hands or increasing their Brexit hedges.

Given the lack of liquidity in the market and reduced risk appetite, any major hedging flows will impact markets significantly. This will only add to nervousness and increase hedging pressures further yet again.

Markets will remain sensitive to all headlines and developments either for or against departure. But the relief rally will soon fade and, globally, most risky assets will trade weaker by Thursday.

Frontrunning: June 20



Britain's rival EU camps resume campaign as polls show momentum for 'In' (Reuters)

Britain's 'In' campaign wins more support, buoys markets (Reuters)

Brexit Campaigners Are Deceiving Voters, Cameron Says (BBG)

German trade body lowers export forecast: 'Brexit is poison' (Reuters)

Beyond the Turmoil, Central Bankers Dread Brexit's Shadow (BBG)

With oil price near $50, resilient U.S. shale producers eye new chapter (Reuters)

In the Birthplace of U.S. Oil, Methane Gas Is Leaking Everywhere (BBG)

Italy PM Renzi suffers vote setback as 5-Star makes breakthrough (Reuters)

Wall Street donors seek to block Warren VP pick (Politico)

Trump Holding Meeting With Advisers to Reassess Strategy (BBG)

Donald Trump, Seeing Himself Behind in Polls, Says He Hasn't 'Started Yet' (NYT)

German economy had good start to Q2 upswing to continue - finance ...

Spillovers From Brexit: How to Think About Contagion

The fear of how the U.K.'s vote to leave the EU might spread is a valid one. But how might it occur?

Why China's Developers Can't Stop Overpaying for Property

Chinese prices for land have hit record highs, even though making money from that land will prove exceedingly difficult.

Losers Abound in $7 Billion Chinese Takeover Scuffle

China Vanke has engineered a massive deal to block its largest shareholder from getting a controlling grip, leaving nothing but a mess for its investors.

Risky Business: Government Mortgage Insurance Programs

from Liberty Street Economics

-- this post authored by W. Scott Frame, Kristoper Gerardi, and Joseph Tracy

Homeownership has long been a U.S. public policy goal. One of the many ways that the federal government subsidizes homeownership is through mortgage insurance programs operated by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the USDA's Rural Housing Service (RHS). These programs facilitate home financing opportunities for first-time and low- and moderate-income homebuyers.

Why Richmond Got A Reserve Bank

from the Richmond Fed

On November 16, 1914, the Federal Reserve Bank of Richmond opened its doors, with fewer than 50 employees, in a former store building at 1109 East Main St. It was one of 12 regional Reserve Banks that were opening across the nation and that, along with the Board of Governors in Washington, D.C., made up the new Federal Reserve System. But why did Richmond get a Fed?

Robert Powell's Retirement Portfolio: Why the Brexit isn't the biggest risk investors should worry about

From volatility to inflation spikes, there are plenty of other issues facing global markets.

Mark Hulbert: How to profit from investors' obsession with Brexit

Don't be surprised if the markets react with little more than a shrug.

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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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