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05Aug2016 Pre-Market Commentary: US Futures Trending Up, NFP Reported Higher Figures Than Expected, Gold Gaps Down, US Dollar Gaps Up, Markets To Open Higher

Written by Gary

US stock future indexes are trending up fractionally (SPY +0.3%) after this mornings NFP came in significantly higher than predicted although unemployment rate misses. Gold immediately dropped like a rock, the US dollar took off like a rocket and WTI crude remained steady in the high 41's, but appears to be trending upwards.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in London leading the region. The FTSE 100 is up 1.68% while France's CAC 40 is up 0.47% and Germany's DAX is up 0.24%.

What Is Moving the Markets

Here are the headlines moving the markets.

Oil prices slip as supply strains storage

LONDON (Reuters) - Oil prices dipped on Friday, ending a two-day rally, as a glut of crude and refined products weighed on markets and investors eyed a possible stutter in China's imports.

New U.S. mortgage rules aim to stop wrongful foreclosures

WASHINGTON (Reuters) - The U.S. agency charged with protecting consumers' finances approved rules on Thursday that will help prevent wrongful home foreclosures, as the regulator continues to press on with reforming the country's massive lending market.

Bangladesh says Philippines President commits to return heist money funneled via Manila

MANILA (Reuters) - Philippine President Rodrigo Duterte has given a commitment that $81 million stolen by cyber criminals from the account of Bangladesh Bank in New York and funneled through bank accounts in Manila would be returned, the Bangladesh ambassador to the Philippines said on Friday.

Toyota developing new taxi for Japan, ties up with hire-taxi body

TOKYO (Reuters) - Toyota Motor Corp is developing a next-generation taxi for the Japanese market and it has formed a partnership with the country's hire-taxi federation to explore uses for new technology, the company said on Friday.

Wal-Mart's new scheduling system looks to improve peak-hour staffing

CHICAGO (Reuters) - Wal-Mart Stores Inc has implemented a new system for scheduling workers at 650 U.S. stores, the company said, as it aims to improve staffing levels during peak shopping times and offer more certainty over hours for employees.

Nissan says Brexit deal will determine future UK plant investment: BBC

LONDON (Reuters) - The chief executive of Japanese carmaker Nissan said future investment decisions about Britain's biggest car plant will depend on the terms of a Brexit deal struck with the European Union on customs, trade and free movement of goods.

Iran nuclear pact opponents lobby in U.S. against Boeing, Airbus deals

WASHINGTON (Reuters) - As the U.S. Treasury Department decides whether to license sales of Boeing Co and Airbus commercial aircraft to Iran, opponents of last year's nuclear pact with the Islamic republic have launched a lobbying campaign against the deals.

Could Inflation Break The Back Of The Status Quo?

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Political resistance to the oligarchy's financialization skimming operations will eventually cripple central bank giveaways to the financial sector and corporate oligarchs.

That inflation and interest rates will remain near-zero for a generation is accepted as "obvious" by virtually the entire mainstream media. The reasons for this are equally "obvious": central banks have the power to suppress interest rates indefinitely by creating money out of thin air and using this new cash to buy bonds in unlimited quantities; and the commoditization/ globalization of labor, capital and production has generated a global backdrop of over-capacity and near-zero pricing power.

But suppose for a moment that this confidence in near-zero interest rates and inflation as far as the eye can see is wrong. As I have demonstrated this week, rising interest rates and inflation would break the back of the status quo.

What makes inflation difficult to grasp is its multi-faceted character. Inflation is a monetary dynamic, to be sure, as creating new fiat currency in excess of increasing production / productivity reduces the purchasing power of the currency.

But as I have shown this week, inflation is also one result of cartel capitalism, in which politically powerful cartels can raise prices and reduce quantity and quality without fear of consumers going elsewhere because the cartels have effectively eliminated competition via regulatory capture, lobbying and the immense advantages of unlimited credit from central banks.

Inflation is also tied to the incentives for fraud in our system: lowering quality as a means of

Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE

Gold in sterling was 2.2% higher yesterday and was marginally higher in dollar terms after the Bank of England cut interest rates to all time, 322 year record low at 0.25% and surprised markets by renewing and aggressively expanding quantitative easing or QE.

Sterling fell sharply on markets and gold rose from £1,014/oz to over £1,036/oz where it remains this morning. Ultra loose monetary policies are now even looser after the BOE cut interest rates for the first time in more than seven years and launched a bigger-than-expected package of monetary measures.

Gold_GBP_BOEGold in GBP (10 Years)

The Bank cut official interest rates to a new record low of 0.25% from 0.5% and signalled they would be reduced further in the coming months. The deepening of ultra loose monetary policies is bullish for gold, especially in sterling terms.

Support For Merkel Plunges After German Terrorist Attacks

After the recent surge in terrorist attacks on US soils conducted by ISIS-affiliated refugees following Chancellor Merkel's "Open Door" policy, we expected that popular support for Merkel would once again drop in the polls, but not even we expected such a dramatic move.

According to a just released ARG polls, popular support for the Chancellor has plunged by a whopping 12 points, with her approval rating crashing to just47%, and almost two-thirds of Germans unhappy with her refugee policy. This marked her second-lowest score since she was re-elected in 2013. In April last year, before the migrant crisis erupted she enjoyed backing of 75 percent. Meanwhile, approval for her "ally", who in recent weeks has voiced stark disagreement with the Chancellor over the future of German immigration policy, soared: support for Bavarian Prime Minister Horst Seehofer, rose 11 points to 44%.

Seehofer, who heads the Bavarian sister party to Merkel's CDU, said he may break with party unity and run a separate campaign in next year's German election. He's demanding a cap on the number of refugees allowed into the country after last year's number surpassed 1 million.

Merkel's campaign was quick to engage in damage control.

"We won't allow terrorists and violent criminals to change our European-western way of life," Peter Altmaier, Merkel's chief of staff, said in an interview with Berliner Zeitung published Friday. "This includes the protection of human dignity and help for people in need. We need to check security measures but the fact remains that Ge ...

The Bookies Would Stop Taking Bets On This NFP

From Bloomberg's Richard Breslow

For today's non-farm payrolls number, analysts have apparently taken the advice that, "When in doubt, punt. But don't be a punter." After two big misses in a row left everyone wondering just how scientific forecasting this number can be, there's a remarkable clustering of estimates around the "consensus." Safety in numbers. Even so, the whisper number is for a beat.

There's a general acceptance that with December a long way off, this number may just not be all that important. Experience has shown that the time horizon for accurately predicting the economy, let alone financial conditions, is a lot shorter than anyone thought in their worst imaginations.

And if it influences "Fedspeak," well, not everyone's opinion was created equal. Janet Yellen, rather smartly, isn't talking until the end of the month.

Even with futures pricing only a 37% probability of a raise by the last meeting of the year, if you asked most traders they'd tell you that, yeah, the Fed will probably slip one hike in come year-end. Why? Because they'd like to. That's known as low conviction and hard to position for.

When the BOE ramped its liquidity provisions yesterday, bonds the world over leapt. The MSCI emerging markets index is loving it. Showing once again, as if we need to be reminded, that the notion of decoupling is fantasy.

The world is easing. On a strong number, is Fed hawkishness to be believed? Is the Fed planning on filling in Carney's bids? And on a weak number, hibernation stasis.

For this number to be impactf ...

Why All Eyes Are on Bank of Japan's 'Comprehensive Assessment'

Everything the BOJ has done so far—asset purchases, negative rates, and lending programs—has helped only in the short run.

Annuity Loss Adds to MetLife Drama

A $2 billion charge in the second quarter adds to the layers of uncertainty around MetLife.

BOE Moves Expose Risks of Aggressive Monetary Policy

The Bank of England upended investor expectations, cutting rates and restarting bond purchases to counteract the shock of Brexit. Markets risk ever greater distortions.

Economic Report: U.S. gains 255,000 jobs in July

The U.S. generated 255,000 new jobs in July, furnishing fresh proof that companies are still hiring plenty of workers even though the economy is operating at a lower speed.

Market Extra: Investors pouring money into commodities at the fastest rate since 2009

Commodity investments are off to the best start since the financial crisis, but Barclays expects the fever to cool later this year.

Bond Report: Treasurys hold steady ahead of jobs report

Treasury prices were mostly unchanged Friday, with yields hovering at a one-week low reached a day earlier, as investors braced for the release of July's jobs report.

Earnings Summary for Today

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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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