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28Sep2016 Pre-Market Commentary: Wall Street Flat Again This Morning, Crude Prices Rise, US Dollar Down And Prospects Are Dim To Cut Oil Output, GS Says Crude Prices Going Down No Matter What

Written by Gary

US stock future indexes are flat again this morning (SPY +0.04%), as investors focused on the highly-anticipated meeting of major oil producers scheduled later in the day. Crude prices rebounded to the low 45 handle after plunging 3% earlier. Indicators are neutral with a bearish slant.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.16% while Germany's DAX is up 1.01% and London's FTSE 100 is up 0.85%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wells Fargo CEO forfeits millions as board orders review

(Reuters) - Wells Fargo & Co said on Tuesday that Chief Executive Officer John Stumpf will forfeit unvested equity awards worth about $41 million and will not get a salary while the company's board investigates the bank's sales practices.

Deutsche helps lift European stocks before Yellen, Draghi

LONDON (Reuters) - A recovery in Deutsche Bank shares helped push European stocks higher on Wednesday, easing concerns over Germany's financial sector that had hit equities in Asia and drove investors into safe-haven government bonds and the dollar.

Germany denies preparing Deutsche Bank rescue plan

FRANKFURT (Reuters) - The German government denied it was working on a rescue of Deutsche Bank as Germany's biggest lender boosted its balance sheet by selling its British insurance business on Wednesday.

Saudis soften oil stance on Iran but OPEC deal still elusive

ALGIERS (Reuters) - OPEC might still agree an oil output-limiting deal later this year as the economic problems of its de-facto leader Saudi Arabia force Riyadh to cede more ground to arch-rival Iran.

China's COSCO Shipping may consider buying Hanjin Shipping's port assets: Caixin

BEIJING (Reuters) - China's COSCO Shipping Co Ltd may consider buying the port assets of troubled South Korean firm Hanjin Shipping Co Ltd, Chinese online finance magazine Caixin reported on Wednesday.

SABMiller shareholders comfortably back AB InBev takeover offer

LONDON (Reuters) - SABMiller shareholders backed the brewer's $100-billion-plus takeover by rival Anheuser-Busch InBev by a large majority on Wednesday, paving the way for one of the biggest corporate mergers in history.

Takata in talks with DoJ to resolve criminal allegations: WSJ

(Reuters) - Japan's Takata Corp is in talks with the U.S. Department of Justice to resolve allegations of criminal wrongdoing related to its faulty air bags, the Wall Street Journal reported on Wednesday.

Oil climbs after industry data shows U.S. inventory draw

SINGAPORE (Reuters) - Oil prices rose in mixed trading on Wednesday, after sharp losses in the previous session, as industry data showed a surprise draw in U.S. crude stocks, although worries over a lack of agreement among producers to curb output kept a lid on gains.

Exclusive: U.S. seeks accused Manila banker's help to crack Bangladesh heist

MANILA (Reuters) - The FBI is negotiating with a former branch manager of a Philippines bank for information relating to $81 million that she handled after it was stolen from the Bangladesh central bank's account at the New York Federal Reserve, her lawyer said.

Not Even An OPEC Deal Will Stop Oil Going Lower, Goldman Warns

Having been bullish for nearly half a year, yesterday Goldman's flipped again, when it cut its Q4 oil price target from $50 to $43, admitting the previously anticipated rebalancing will take longer to achieve, and now expects "a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously." Moments ago, the same Goldman analyst released a follow up note, confirming what we have been saying for the past year, namely that OPEC is increasingly irrelevant as a marginal supply-setter in a world in which it is the lack of demand that is a far bigger threat.

In "OPEC won't stop oil going", Damien Courvalin writes that "an OPEC deal to curb oil production, either today or at the November meeting, is thought more likely than at any point in the past two years." That said, he notes, "we remain sceptical of its impact. For one, our production forecast continues to reflect a seasonal Saudi production decline into year-end, with no growth elsewhere. Second, even with this OPEC help, our updated oil supply-demand forecast now points to a renewed build in inventories in 4Q 2016 vs. a forecast for a draw only last month. This weaker oil outlook into year-end led us yesterday to lower our year-end WTI oil price forecast to $43/bbl, from $51/bbl previously. Given a well-supplied market and a crude curve in contango (with limited spot upside)."

Here are the details behind Goldman's pessimism:

Intraday oil price volatility has picked up over the past week and ahead of today's OPEC advisory meeting in Algiers. Statements by participants suggest a deal to curb production today or at the next meeting in November is more likely than at any point over the past two years. We remain sceptical of its impact, for two reasons: (1) independent of today's outcome, our production forecast continues to reflect a seasonal Saudi p ...

Will Yellen Resign If Trump Wins

Perhaps the most memorable aspect of Monday's presidential debate from a policy standpoint, was Donald Trump's latest attack on the Fed, and its chair, Janet Yellen. As a reminder, Trump repeated a claim he has made before, saying the economy was in a "big, fat, ugly bubble" and went straight for Yellen when he said: "And we have a Fed that's doing political things. This Janet Yellen of the Fed." He also gave his version about what might happen next at the Fed.

"On the day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you're going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton."

This puts Yellen in a bind. As AFR's Philip Baker writes, "Trump's attack on the Fed chairwoman during this week's presidential debate was so vicious that Paul Ashworth, chief US economist at Capital Economics, now thinks it's possible Yellen will have to resign if Trump ends up becoming president."

While Trump has criticised Yellen in the past on numerous occasions, on Monday night be upped the ante "big league" - Ashworth argues that the "veracity" of the claims are "irrelevant" and it doesn't even matter if Trump himself doesn't really believe what he said.

"It's all to do with how voters react to his comments", Ashworth notes, adding that "if those claims are made publicly to a viewing audience of up to 100 million Americans, and a majority of those Americans then go on to vote for Trump in November's election, then what choice does Yellen have? It's true that Yellen might still have the support of Congress, but she could not argue that she enjoys the confidence of the American people" he wrote in a n ...

Frontrunning: September 28



Stocks Rally as Deutsche Bank Slump Ends, Oil Gains Before Talks (BBG)

German government prepare Deutsche Bank rescue plan (Reuters)

German financial watchdog not working on emergency plan for Deutsche Bank (Reuters)

Saudi Arabia Signals Openness to Future Oil Compromise With Iran (BBG)

Anheuser-Busch InBev Clinches $103 Billion SABMiller Deal (BBG)

Will Congressional Face-off Over Flint Lead to a Government Shutdown? (NBC)

Shimon Peres, Israel's last founding father, dies at 93 (Reuters)

Elon Musk Outlines Plans for Missions to Mars (WSJ)

Crowds gather after police fatally wound unarmed black man in southern California (Reuters)

Five arrested on suspicion of forming European Islamic State cell (Reuters)

It's Paul Singer Versus Citigroup in High-Stakes Bankruptcy Feud (BBG)

UniCredit ...

Futures Fail To Rebound As Deutsche Bank Tries To Comfort Markets That It Is "Fine"

After yesterday's broad "Hillary rally" gains in the US, overnight's session has seen more risk-on sentiment as European stocks advanced, ignoring some weakness in Asia and especially Japan (Nikkei was down 1.3%) as investors followed every twist of shares of beleaguered lender Deutsche Bank, whose CEO last night assured Bill readers that the bank is not seeking a bailout, which however was contradicted by a Zeit article this morning reporting that Germany may seek as much as s 25% "bailout" stake in a worst case scenario. This report, too, was promptly denied by the German finance ministry, however not before push US equity futures back into the red.

Beyond banking sector worries, investors were looking ahead to U.S. Federal Reserve Chair Janet Yellen's appearance before a Congressional committee, a speech by European Central Bank President Mario Draghi and a meeting of oil producers in Algiers.

Crude oil climbed before a meeting of major producers in Algiers, even thought Saudi Arabia and Iran have said there's little chance of an immediate agreement. Nonetheless, Saudi Arabia gave the strongest indication yet it's ready to compromise with regional rival Iran, potentially paving the way for the first limit on oil production in two years, although a deal is unlikely until OPEC's next meeting in November. In other words, algos will now be focusing only on OPEC headlines about the November meeting. Khalid Al-Falih, who inherited a chronically oversupplied oil market when he was appointed Saudi energy minister in April, appeared to show more flexibility toward Tehran, saying that Iran, Libya and Nigeria s hould be allowed to "produce at the maximum levels that makes sense". "The gap between OPEC countries is narrowing in terms of what are the levels at which we will freeze," Al-Falih said after a long day of ...

Drones: DJI's Liftoff Needn't Ground GoPro

Action-camera maker's Karma drone can still find a niche in the fast-expanding market.

Chip Boom Helps Erase Toshiba's Bad Memories

Toshiba has more than doubled its operating profit forecast on strong memory prices, but it has to stay focused to compete.

Chinese Insurers' Short-Term Strategy Is Getting Old

China's life-insurance industry has been turbocharged by billions of dollars worth of short-term products. It's a peculiar trend.

90% Rally In Sugar Prices Since Late 2015

from Elliott Wave International

Imagine that the world's leading commodity markets were cars speeding down a two-lane highway. Who do you think is in the driver's seat controlling which direction prices go?

Four things to know before Nutanix goes public

Nutanix, an enterprise cloud company and a tech unicorn, could debut on the public market as soon as this week.

Economic Report: Durable-goods orders lose steam in August

Orders for durable or long-lasting goods flattened out in August after a sizable gain in the prior month, pointing to ongoing difficulties for American manufacturers.

The Wall Street Journal: Wells Fargo CEO forfeits $41 million in pay in wake of scandal

Wells Fargo Chief Executive John Stumpf will cede $41 million ahead of Congressional hearings about the bank's sales scandal.

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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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