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13Sep2016 Pre-Market Commentary: Wall Street Expected To Open Moderately Lower, Volatility Is Expected With Higher Than Usual Volume

Written by Gary

U.S. stock index futures are pointing to a moderate lower open today (SPY -0.7%), as investors continued to speculate over the timing of the next Federal Reserve rate hike. European and U.K. stocks are flipping between gains and losses in choppy mid-morning trade. Indicators are bearish and today's markets could sink into the minus one percent.


Here is the current market situation from CNN Money

European markets are higher today with shares in Germany leading the region. The DAX is up 0.38% while London's FTSE 100 is up 0.09% and France's CAC 40 is up 0.08%.

The blue-chip Dow futures were down 0.52%, the S&P 500 futures declined 0.58%, while the tech-heavy Nasdaq 100 futures retreated 0.55%.

Meanwhile, oil prices moved lower after the Organization of the Petroleum Exporting Countries said on Monday that crude output from rival producers is stronger than expected and will result in a bigger supply glut than previously believed this year and next.

What Is Moving the Markets

Here are the headlines moving the markets.

Fed looks unlikely to hike next week after Brainard warning

CHICAGO (Reuters) - The Federal Reserve should avoid removing support for the U.S. economy too quickly, Fed Governor Lael Brainard said on Monday in comments that solidified the view the central bank would leave interest rates unchanged next week.

Exclusive: Goldman team uses retail deposits for Wall Street-style profits

NEW YORK (Reuters) - As Goldman Sachs Group Inc has built its U.S. consumer bank, it has established a team to put its deposits to work on Wall Street, a telling development about Goldman's ambitions for the retail bank.

Berkshire is accused in New York lawsuit of workers' compensation 'siphoning'

NEW YORK (Reuters) - Berkshire Hathaway Inc has been sued by a New York bicycle courier company over an alleged illegal scheme to cheat employers buying workers' compensation policies.

U.S. House committee set to approve Dodd-Frank revamp

WASHINGTON (Reuters) - The U.S. House Financial Services Committee is expected on Tuesday to pass a revamp of the Dodd-Frank Wall Street reform law, but the bill is not anticipated to receive President Barack Obama's signature if it ever reaches his desk.

Former AIG chief Hank Greenberg finally goes on trial

NEW YORK (Reuters) - Opening arguments are set to begin on Tuesday in the trial of former American International Group Inc chairman Maurice "Hank" Greenberg over accounting fraud at the insurance giant some 16 years ago.

Japan's Renesas pushes into autos with $3.2 billion Intersil buy

TOKYO (Reuters) - Renesas Electronics Corp on Tuesday said it has agreed to buy U.S. chipmaker Intersil Corp for $3.2 billion, an all-cash deal that bolsters the Japanese group's efforts to refocus the company around automotive chips.

Front runner for Monte Paschi CEO job in Frankfurt for ECB meetings: source

MILAN (Reuters) - Marco Morelli, front runner to take over the helm at troubled Italian lender Banca Monte dei Paschi di Siena , was in Frankfurt on Tuesday to meet regulators at the European Central Bank, a source familiar with the matter said.

Wells Fargo to end sales goals for retail bankers

(Reuters) - Wells Fargo & Co , the largest U.S. bank by market capitalization, said on Tuesday it would eliminate all product sales goals in retail banking, starting next year.

After Public Outcry Over $125 Million Tolstedt Bonus, Wells Fargo Will End Sales Goals For Retail Bankers

As a result of the righteous outrage following news that Wells Fargo rewarded Carrie Tolstedt, the head of the group that was recently exposed as creating some 2 million fake credit card and bank accounts so it could churn late fees, and was in charge of what the bank's employees called "sandbagging", was leaving the bank with a $125 million package, this morning a panicked Wells Fargo, Warren Buffett's favorite bank and the largest U.S. bank by market capitalization, said that it would eliminate all product sales goals in retail banking, starting next year.

Wells Fargo said it had fired 5,300 employees involved in the sales practices described by the settlement; what Wells did not say is provide any explanation over the hushed departure of Tolstdet and her $125 million golden parachute.

The move comes days after the Consumer Financial Protection Bureau (CFPB) and two other regulators fined the bank $185 million over abusive sales practices. As Reuters reminds us, the bank paid another $5 million to customers for creating more than two million fake accounts for products like credit and debit cards to meet aggressive sales targets.

In an amusing statement, Chief Executive John Stumpf said that "customers should know that Wells Fargo retail bankers are always focused on their best interests." Well, except when the bank is caught not only engaging in massive fraud against its customers, but also rewarding the person directly responsible for it with a $125 million pay day.

On Monday, five lawmakers wrote a letter to U.S. Senate Banking Committee Chairman Richard Shelby calling for an investigation.

That may not be the end of it. As the FT reported overnight, the country's biggest mortgage lender was also facing calls to claw bac ...

Frontrunning: September 13



IEA Changes View on Oil Glut, Sees Surplus Enduring in 2017 (BBG)

Futures dip with oil as investors assess rate hike chances (Reuters)

Hilsenrath - Divided Federal Reserve Is Inclined to Stand Pat (WSJ)

'I didn't think it was a big deal,' Clinton says of pneumonia bout (Reuters)

Clinton's Lead Narrows Among Independents, Voters Nationally (NBC)

Libor's Reaching Point of Pain for Companies With Big Debt Loads (BBG)

Trump luxury hotel opens just blocks from the White House (Reuters)

Soaring Student Debt Prompts Calls for Relief (WSJ)

U.S. bombers fly over South Korea in show of force after nuclear test (Reuters)

Iran threatened to shoot down US Navy spy planes in the Persian Gulf (Fox)

S.Korea's biggest earthquake triggers nuclear safety concerns (Reuters)

Former DNC Chair Calls For "Contingency Plan" If Hillary's Health Forces Her Out Of The Race

After this weekend, Hillary's health has become not only a mainstream issue, it has suddenly become a topic of global concern as the following front page of a Dutch newspaper reveals:

"Is Hillary Clinton healthy?" #Amsterdam pic.twitter.com/I1Vbjr57as

— Cate Long (@cate_long) September 13, 2016

But the biggest surprise resulting from Hillary's "Medical event", is that overnight, even democrats admitted what was formerly unthinkable: the preparation of a "contingency plan" in case Hillary's health forces her out of the race.

As Politico reports, former Democratic National Committee chairman, Don Fowler, who helmed the DNC from 1995 to 1997, during Bill Clinton's presidency, and has backed Hillary Clinton since her 2008 presidential bid, said that Obama and the Democratic party's congressional leaders should immediately come up with a process to identify a potential successor candidate for Hillary Clinton "for the off-chance a health emergency forces her out of the race."

Voicing a concern that has been repeatedly uttered by the "conspiracy theorists" among the fringe media, Fowler said that "now is the time for all good political leaders to come to the aid of their party," said Don Fowler, who helmed the DNC from 1995 to 1997, during Bill Clinton's presidency, and has backed Hillary Clinton since her 2008 presidential bid. "I think the plan should be developed by 6 o'clock this afternoon."< ...

Breslow: "Why Did Brainard Need To Remind Everyone That The Economy Had Suddenly Caught Pneumonia?"

By Richard Breslow, a former FX trader and fund manager who writes for Bloomberg.

It seems clear in retrospect that Fed Governor Brainard's speech yesterday was not aimed at investors. Rather, it was meant quite pointedly at her fellow voting members of the FOMC.

After all, even with Fed speakers having been consistently hammering home a hawkish message since mid-August, the market was still only pricing about a 30% chance of a September move. The odds, by definition, were against an early move. Even as markets began very catchable moves, which have largely defined the last month of trading. Not a time to kick back, despite the time of year

Interestingly, even with a dovish Brainard and September being declared DOA, yields remain marginally higher than when Fed speak began, as is pricing for a December move. And not all that far from the magical 70%. The S&P 500, ultimate leading indicator of continued easy policy, has more work to do to reclaim previous glory

It's been busy for the big players, as well as the average trader, with any number of serious portfolio managers arguing for pre-emptive portfolio adjustment. Pimco revealed just yesterday that at the end of August it had reduced duration in its biggest fund. And going long break-evens by selling Treasuries for inflation-linked bonds. Gee, now why would someone do that?

Portfolio managers who have survived and thrived exploiting the greater fool theory and front-running the central banks have long understood something the authorities are only belatedly discovering. Monetary policy has its limits. And sovereign bond markets are backing up as a result.

The Fed continues to waffle between trusting their forecasts and needing the comfort, and cover, of seeing inflation take root before acting. Investors don't always have that luxury. When their models stop working, they eventually go out of business. Economists can keep hoping a comatose Phillips Cu ...

Markets Wag the Fed

The market's recent bout of tumult makes it that much harder for the Federal Reserve to raise rates this month.

China Economic Gloom Takes a Breather---for Now

China's economy is moving a little bit closer to the safety of the middle of the road. Unfortunately, it is likely to be back on the edge before long.

'Buy-the-Dip' Mentality Prevails

Buying the dip has taken on added importance in this bull market, a byproduct of this central-bank-driven world.

Market Extra: Why stocks and bond yields aren't moving in tandem

After Friday's market tantrum, should investors worry about losing money on both stocks and bonds?

Market Extra: Pain may be in store for the S&P 500, says Goldman

Nagging stock-market weakness could persist, according to analysts at Goldman Sachs, who wrote that the trend through the rest of the year is lower.

Berkshire Hathaway and underwriting unit sued for running 'reverse Ponzi scheme'

A New York City-based courier service is suing Berkshire Hathaway Inc. and one of its companies, saying they've been running a "fradulent scheme" by misusing premiums that were supposed to be used for workers' compensation coverage.

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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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