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21Sep2016 Pre-Market Commentary: Wall Street To Open Higher, Crude Prices Steady In The 44 Handle Ahead Of Inventory Data At 10:30 EST, US Dollar Falling, Gold Rising Ahead Of Fed Meeting Today

Written by Gary

US stock future indexes are higher this morning (SPY +0.3%) after Japan's central bank held rates steady at -0.1% and the BOJ said it would introduce yield curve controls. Traders are now shifting their focus to the Fed, which is scheduled to release its policy statement and updated summary of economic projections at 2 p.m. EST.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.05% while France's CAC 40 is up 1.03% and London's FTSE 100 is up 0.23%.

The blue-chip Dow futures are up 3%, the S&P 500 futures have risen 3%, while the tech-heavy Nasdaq 100 futures climbed 4%, meanwhile, oil prices moved higher (1.8%).

What Is Moving the Markets

Here are the headlines moving the markets.

BOJ overhauls policy focus, sets target for government bond yields

TOKYO (Reuters) - The Bank of Japan made an abrupt shift on Wednesday to targeting interest rates on government bonds to achieve its elusive inflation target, after years of massive money printing failed to jolt the economy out of decades-long stagnation.

Over to the Fed after world stocks get a lift from BOJ

LONDON (Reuters) - World stocks rose on Wednesday, led by a surge in bank shares, after the Bank of Japan overhauled its monetary policy to target interest rates, though the yen recovered initial losses against the dollar on scepticism those moves would stoke inflation.

Fed expected to keep rates unchanged, may signal year-end hike

WASHINGTON (Reuters) - The U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday amid tepid inflation and recent weak economic data, but could signal an increased likelihood of a hike by the end of the year.

Volkswagen investors seek $9 billion in damages over emissions scandal: court

BERLIN (Reuters) - Volkswagen faces 8.2 billion euros ($9.1 billion) in damages claims from investors over its emissions scandal in the legal district where the carmaker is based, a German court said on Wednesday.

Doubts raised on Hanjin rehab plan as ships clog Busan port

SEOUL (Reuters) - The South Korean court handling Hanjin Shipping's receivership cast doubt on the container carrier's ability to survive a restructuring, news reports said, as 13 Hanjin ships crowded waters outside the country's biggest port.

Target to buy back $5 billion shares

(Reuters) - Target Corp on Wednesday announced a new $5 billion share buyback plan.

Yum China files to issue 10 million shares to Yum Brands shareholders

(Reuters) - Yum China Holdings Inc, which is being spun off from KFC owner Yum Brands Inc , filed with regulators on Wednesday to issue 10 million common shares to Yum Brands shareholders.

Exclusive: How EU firms skirt sanctions to do business in Crimea

SIMFEROPOL, Crimea/MOSCOW (Reuters) - Products for sale in the Crimean stores of two European retailers are being shipped there from Russia via a ferry and port that are subject to EU sanctions, people involved in the transportation said, suggesting companies are finding ways around the punitive economic regime facing Moscow since 2014.

U.S. carrier Verizon starts taking orders for new Samsung Note 7 phones

SEOUL (Reuters) - U.S. carrier Verizon Communications Inc has begun taking orders for Samsung Electronics Co Ltd's new Galaxy Note 7 smartphones, after having stopped sales of the device earlier due to fire-prone batteries.

FX & Bond Markets Ain't Buying What The Bank Of Japan Is Selling

Equity markets are stronger on the back of financials - helped by BoJ's plan to steepen the Japanese bond curve - but judging by the strengthening in the Yen, FX markets are non-believers. The lack of additional easing is largely being heralded as a disappointment (no lower NIRP and no increased buying) and many are questioning the kneejerk bounce in stocks (as bank balance sheets face trauma from the 'reverse twist' effect on the long bonds).

Japanese stocks decoupled (but are rolling over...)

and US equities decoupled...

and not even the JGB curve held its steepening...

even as bank stocks kneejerk hiugher...

What happens next?

...

JPM Downgrades Wells Fargo; Expects More Probes "Following Tough Senate Hearings"

One day after what was a rather disastrous hearing for Wells CEO John Stumpf, which culminated with a Senator telling the embattled chief executive he may want to consider going to prison, the bad news continued overnight when the bank that overtook Wells in the "biggest US bank by market cap" category, JPMorgan, downgraded Wells to Netural, cutting its price target from $53.50 to $48.00 as a result of "tough Senate hearings and mounting public scrutiny following the opening of fraudulent accounts" and because the "senate hearings are likely to expand probes."

Here is the full note:

Senate Hearings Likely to Expand Probes; Uncertainty About Timing, Expenses - Downgrade to Neutral

We are downgrading Wells Fargo to Neutral following tough Senate hearings and mounting public scrutiny following the opening of fraudulent accounts. We expect these will result in additional investigations which would likely pressure expenses and revenues and continued media scrutiny with an election year - there is significant uncertainty about how much some issues will cost and how long they will take.

In our view: 1) Wells will need to spend a lot more on litigation, examining past violations in additional areas, and responding to requirements from more hearings, investigations and lawsuits; 2) revenues will likely face some slowdown in growth including potentially impact on cross-sell in Retail brokerage, a key focus in that area; 3) this is a material reputational hit given the large number of unauthorized accounts (2 million) and how long it went on; and 4) this will likely result in a shift to greater earnings growth from areas such as investment banking which carry lower multiple. Impact on earnings is hard to determine because of uncertainty about likely total expenses - no comparable lawsuit as this matter is very di ...

Larry Summers Lashes Out At The Fed: "Tweetstorms" Why Yellen Should Not Raise Rates

There was a time when former Harvard head and Democratic administration darling, Larry Summers, would draw out a crowd at every public appearance. Those days are gone, however, and now the formerly corpulent cogitator is forced to resort to Twitter for his rants, such as the one he unleashed early this morning when in "tweetstorm" of 11 consecutive tweets he slammed Yellen for even daring to think about tightening, and why a rate hike in September, or any other month, would be a big mistake.

This is what he said:

There are many reasons, each of which would be reason enough alone, for the Fed not to raise rates today 1/11

— Lawrence H. Summers (@LHSummers) September 21, 2016

The Fed should not raise rate because total hours worked in US are flat to down over last 6 months 2/11

— Lawrence H. Summers (@LHSummers) September 21, 2016

The Fed should not raise rates because inflation expectations are falling not rising 3/11

— Lawrence H. Summers (@LHSummers) September 21, 2016

The Fed should not raise rates because in the 8 year of recovery it should be targeting inflation above 2% so inflation averages 2%. 4/11

— Lawrence H. Summers (@LHSummers) September 21, 2016

Frontrunning: September 21



Bank of Japan's policy reset muddies markets' risk mood (Reuters)

BOJ overhauls policy focus, sets target for government bond yields (Reuters)

BOJ Shifts Policy Framework to Targeting Japan's Yield Curve (BBG)

Fed Focus Turns to Dots as Hike Odds Fade: Decision-Day Guide (BBG)

Oil jumps after surprise drop in U.S. crude inventories (Reuters)

Hedge funders pony up for Hillary Clinton super-PAC (The Hill)

Bill Clinton's Speaking Fee Overlaps With Foundation Business (WSJ)

AC Milan's Chinese Buyer Said to Show False Bank Letter in Talks (BBG)

Top Earners Back Clinton in Bloomberg Poll After Decades With GOP (BBG)

Why Canadians Are Being Offered Cash to Abandon Their Homes (BBG)

U.S. Charges N.Y. Bombing Suspect, Cites Views in His Notebook (

Bank of Japan Makes Yield Curve Maneuvers in the Dark

The BOJ's moves alter the calculus for investors—there is no longer a willing buyer of bonds, but instead a price setter.

UniCredit: Italy's Biggest Bank on High Wire to Redemption

Italy's UniCredit is making headway with plans to shore up its balance sheet but problems at Banca Monte dei Paschi di Siena could hinder progress.

As Comcast Hits the Airwaves, T-Mobile Looks Interesting

Comcast's new wireless service may prompt it to consider buying its own network one day and T-Mobile US looks like an obvious choice.

Trucking Data Improved But Still Soft in August 2016

Written by Steven Hansen

Truck shipments improved in August - even the BLS truck employment data improved. But there remains a disconnect between reporting sources.

Market Snapshot: U.S. stock futures climb on Fed day; BOJ's stimulus shift rallies banks

U.S. stock futures are pushing higher ahead of the Fed's interest-rate decision and as the Bank of Japan spurred gains for global equities after tweaking monetary policy.

The Ratings Game: At $300,000 a year, Sarepta's new drug is considered a steal

Eteplirsen could have been more than twice the price, an analyst said.

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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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