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29Jul2016 Pre-Market Commentary: US GDP Falls Sharply, US Dollar Drops Precipitously, Gold And Crude Prices Remain Steady, Markets Expected To Open Lower

Written by Gary

US stock future indexes are down and slipping (SPY -0.2%) after the disappointing GDP report. The US GDP for the second quarter came in below what economists expected (-0.6%) and the US dollar dropped like a rock going below the 96 handle, while crude and gold remained steady. Merck topped analysts estimate this morning, while United Parcel matched its estimate.

Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.19% while the CAC 40 gains 0.09%. The FTSE 100 is off 0.18%.

What Is Moving the Markets

Here are the headlines moving the markets.

Exxon Mobil profit tumbles 59 percent in second quarter

HOUSTON (Reuters) - Exxon Mobil Corp, the world's largest publicly traded oil producer, said on Friday its quarterly profit tumbled 59 percent due to the slump in crude prices.

Yen, bond yields rise as Bank of Japan action underwhelms

LONDON (Reuters) - The yen jumped on Friday and Japanese government bond yields rose the most in eight years, lifting global sovereign borrowing costs, after the Bank of Japan's latest steps to boost growth and inflation fell short of investor expectations.

U.S. economy grows 1.2 percent in second quarter as inventories fall

WASHINGTON (Reuters) - The U.S. economy grew far less than expected in the second quarter as inventories fell for the first time since 2011, but a surge in consumer spending pointed to underlying strength.

Euro zone economic growth slows in quarter before Brexit

BRUSSELS (Reuters) - Economic growth in the euro zone slowed in the second quarter as uncertainty before the British vote to leave the European Union swirled, data showed on Friday, and economists said it could be a sign of future weaker growth.

Credit Suisse to create U.S. banking business for billionaire

(Reuters) - Credit Suisse Group AG , which exited its U.S. private wealth business last year, is building out a new investment banking group in the region to serve billionaires.

Oil rally to resume later this year, demand to offset glut: Reuters poll

(Reuters) - Oil analysts still expect a rise in the crude price this year, thanks to improving demand growth that should help offset any bearish headwinds from a stubborn supply surplus, a Reuters poll showed on Friday.

UPS quarterly profit climbs on revenue growth, cost cuts

CHICAGO (Reuters) - United Parcel Service Inc reported a higher quarterly net profit on Friday as revenue grew across all its business units and the company benefited from cost-cutting measures.

AB InBev clears China hurdle in SABMiller takeover deal

BRUSSELS/BEIJING (Reuters) - Brewer Anheuser-Busch InBev cleared a major hurdle toward its takeover of SABMiller with regulatory approval from China on Friday, leaving the acquisition's future in the hands of the British company's board.

Xerox's profit tops estimates on lower restructuring costs

(Reuters) - Xerox Corp reported a higher-than-expected quarterly profit as the printer and copier maker recorded lower restructuring charges.

ExxonMobil Tumbles To 2-Month Lows After Earnings Miss Worst Analyst Expectation

But, but, but the dividend yield, the oil recovery? ExxonMobil is down almost 3% in the pre-market to 2-month lows as it misses earnings expectations drastically (+41c vs 64c exp.. below the lowest expectation of +55c). Production levels also missed expectations as it appears the oil glut has trickled down to motor fuels, dragging refinery margins notably lower.



The market is not happy...

Is The BOJ About To Overhaul Its Entire QE Program: Wall Street's Take On The "Comprehensive Assessment" Clause

As previously reported, the yen soared more than 2.4% in an extremely volatile session, and the Nikkei plunged then soared, completing a stunning 1,000 point move, after BOJ's stimulus disappointed watchers and failed to match expectations, with just an increase in ETF purchases and a doubling of a dollar-lending program to $24b.

Crazy ~1000pt price swings in Nikkei futures last night (across all exchanges, this one from SGX) $NK_F

— Eric Scott Hunsader (@nanexllc) July 29, 2016

The summary

Kuroda expands ETF target purchases to 6t yen, and orders assessment of effectiveness of BOJ policy for Sept. meeting

The BOJ maintained policy interest rate at -0.1%

USD/JPY just under 2% to 103.30 after falling as low as 102.71. Yield on 10-year JGB jumps 9.5 bps to -0.18%, set for the steepest advance since 2013

USD/JPY 3-mo. basis swap climbs 5.6 bps to -65 bps

Macro accounts sold USD/JPY after a muted rally following BOJ's decision, with some clients already expecting BOJ to disappoint beforehand, trader says

For those confused by the unexpected letdown by the BOJ, here is a summary of Wall Street reactions to the central bank's announcement, courtesy of Bloomberg

Jun Kato (fund manager, Shinkin Asset Management)

BOJ's decision was at the minimum end of what investors were expecting, disappointing them

Decision leaves some room for further easing after seeing details of the economic stimulus package by PM Abe

USD/JPY will probably see profit-taking and move gradually toward 100

Sim Moh Siong (FX strategist, Bank of Singapore)

Frontrunning: July 29

Yen, bond yields rise as Bank of Japan action underwhelms (Reuters); Bank of Japan Takes Modest Easing Action (WSJ)

Hong Kong shares end lower as BOJ disappointment sweeps Asia (Reuters)

Accepting White House nomination, Clinton offers 'clear-eyed' vision (Reuters)

Two Conventions, Two Distinct World Views (WSJ)

Democrats Emphasize American Exceptionalism at Convention (BBG)

Clinton's Image Among Democrats at a Historic Low (WSJ)

The Number of Black C-Suite Executives Has Shrunk Under Obama (BBG)

Global funds cut share holdings to five-year lows as Brexit bites (Reuters)

Here's a Reason Baby Boomers Will Curb U.S. Growth this Decade (BBG)

Facebook May Owe Billions More in Taxes (WSJ)

Chinese Banks With Global Dreams Eye Middle East Mega Bonds (

Why Bank of Japan Dipped Into Bag of Small Tricks

The Bank of Japan underwhelmed overexcited expectations for yet another big bang of monetary stimulus. But the BOJ did promise some needed introspection.

Sony Gets to Next Level With PlayStation Help

Sony's videogame segment reported its best quarter ever. That could get another boost with the introduction of a virtual-reality gadget in October.

Past Mistakes Still Haunt Lender CIT

Midsize lender CIT is struggling to find the right size and business mix, even as it divests a profitable air leasing business.

Market Extra: Facebook just passed Buffett's Berkshire Hathaway in market value

Mark Zuckerberg has put Warren Buffett in his rearview mirror.

The Tell: Here's the key factor pushing oil prices to $35 a barrel

After enjoying a stellar run-up, crude futures head south again, treading into bear-market territory. However, the fundamentals of supply and demand may not be the key reason behind the recent bout of weakness in crude futures.

The Wall Street Journal: Sony posts surprise profit despite yen pressure

Sony reported a quarterly profit on strong PlayStation 4 sales.

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