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30Sep2016 Pre-Market Commentary: Worries Over Failing Deutsche Bank Overshadow Green US Market Open, WTI Crude Prices Recover Somewhat, Investors Concerned That Japans Deflation Will Spread To US

Written by Gary

Wall Street futures pointed to a positive open today (SPY +0.3%) as concerns over Deutsche Bank were firmly in the minds of investors. Japan slips further into deflation, China's factory sector struggles and crude prices slumped more than 1% after two-day rally.

Here is the current market situation from CNN Money

Looking at the last three columns, the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. consumer spending falls unexpectedly in August

WASHINGTON, Sept 30 (Reuters) - U.S. consumer spending unexpectedly fell for the first time in seven months in August but inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates.

Asia stocks slide as Deutsche sours mood, oil pulls back

SINGAPORE (Reuters) - Asian stocks extended losses on Friday as worries about the health of Deutsche Bank weighed on financial shares and as oil prices inched back from near-one month highs on scepticism over OPEC's new plan to curb output.

Deutsche CEO tries to reassure staff as shares plunge

FRANKFURT/LONDON (Reuters) - Deutsche Bank's chief executive sought to reassure his staff on Friday that Germany's largest lender remained robust after its shares again fell to record lows, sending tremors through global financial markets.

Oil falls on firmer dollar and profit-taking after OPEC rally

LONDON (Reuters) - Oil prices fell as the dollar strengthened on Friday and investors cashed in on crude's 6 percent one-day rise after OPEC members agreed on output cuts for the first time in eight years to stifle a two-year price slide.

Global M&A drops in third quarter, companies wary of overpaying

(Reuters) - The value of announced mergers and acquisitions (M&A) worldwide fell 27 percent year-on-year to $753 billion in the third quarter of 2016, as apprehension among corporate executives about overpaying prevented a repeat of last year's deal-making frenzy.

Japan's Mitsubishi Motors to resume sales after latest cheating scandal

TOKYO (Reuters) - Japanese automaker Mitsubishi Motors Corp will resume domestic sales of eight vehicle models on Oct. 1, the company said on Friday, after correcting overstated mileage readings in its second cheating scandal this year.

Russia says will be able to freeze oil output in case of deal with OPEC

SOCHI, Russia (Reuters) - Russia will find mechanisms and instruments needed to freeze oil production should the country reach an agreement with the Organization of the Petroleum Exporting Countries on limiting output, the Russian Energy Minister said on Friday.

Samsung slammed by Chinese state TV over Note 7 recall 'discrimination'

HONG KONG (Reuters) - Chinese state broadcaster CCTV has slammed South Korean tech giant Samsung Electronics Co for what it said was "discrimination" against China consumers in its handling of a global recall of Galaxy Note 7 smartphones to replace batteries.

After Nissan ultimatum, Jaguar Land Rover says Brexit must be fair for all

LONDON (Reuters) - Jaguar Land Rover will "realign its thinking" on investment after Britain's vote to leave the EU and if Nissan gets a Brexit compensation deal then other automakers would need a level playing field, Britain's biggest carmaker said.

Philippines President Compares Himself To Hitler, One Week After Telling Brussels "F**k You"

The world's most entertaining, Tourette syndrome-plagued president, Philippines Rodrigo Duterte has just sparked another scandal.

As a reminder, one week ago, in his latest outburst, Duterte stunned reporters and officials when he responded to Europe's condemnation of his government's brutal anti-crime crackdown, when after an EU statement urged Duterte to put an end to the "extrajudicial killings" and launch an alternative campaign in line with international human rights laws, the president did not hold back in his response to Brussels and during a speech said: "I read the condemnation of the EU against me. I will tell them: 'Fuck you.' "You're doing it in atonement for your sins."

He accused the bloc of hypocrisy, saying a rudimental check of the history books showed European countries had killed thousands of people in the past. "He added: And then the EU has the gall to condemn me. I repeat: "Fuck you."

Fast forward one week, when Duterte compared himself to Adolf Hitler on Friday, and said he would "be happy" to exterminate three million drug users and peddlers in the country.

In yet another rambling, disjointed speech on his arrival in Davao City after a visit to Vietnam, Duterte told reporters that he had been "portrayed to be a cousin of Hitler" by critics. Explaining that Hitler had murdered millions of Jews, Duterte said: "There are three million drug addicts (in the Philippines). I'd be happy to slaughter them.

"If Germany had Hitler, the Philippines would have...," he said, pausing and pointing to himself. "You know my victims. I would like (them) to be all criminals to finish the problem of my country and save the next generation from perdition."

Duterte was voted to power in a May election on t ...

Frontrunning: September 30

Asia stocks slide as Deutsche sours mood, oil pulls back (Reuters)

Deutsche Bank Drops to Record as Some Clients Reduce Exposure (BBG)

Deutsche CEO tries to reassure staff as shares plunge (Reuters)

Oil falls as investors cash in on OPEC deal rally, dollar rises (Reuters)

Three Chinese fishermen killed in confrontation with South Korea coastguard (Reuters)

Och-Ziff Plea Stalls Rise of Hedge-Fund Billionaire's Protege (BBG)

Qualcomm in Talks to Acquire NXP Semiconductors (WSJ)

Syrian army, rebels wage fierce battles in Aleppo (Reuters)

Euro-Area Inflation Accelerates to Fastest Rate Since 2014 (BBG)

Pakistan 'completely rejects' Indian claim of cross-border strikes (Reuters)

Clinton says Trump may have violated U.S. law on Cuba (Reuters)

Promontory Financial Group Signs Up With IBM (

Largest Dutch Bank To Fire Thousands

One day after Germany's second largest lender confirmed reports of a massive restructuring when it announced it would lay off nearly 10,000 employees, or about 20% of its entire workforce while slashing the bank's dividend for the rest of the year, the Dutch newspaper Het Financieele Dagblad reported that ING Groep, the largest Netherlands lender, will announce thousands of job cuts at its investor day on Monday.

The reorganization will result in more central management and may generate billions of euros in savings, the paper said cited by Bloomberg. Raymond Vermeulen, a spokesman for the Amsterdam-based bank, declined to comment on the report. The bank employs about 52,000 people, according to its website.

ING sees opportunities in Belgium, the Netherlands, Germany and Poland, Het Financieele Dagblad said. The lender has doubts about its presence in Turkey, where it lacks scale, according to the report.

Chief Executive Officer Ralph Hamers has transformed ING into a bank focused on Europe and is seeking to expand lending to consumers and companies outside its home market as record-low interest rates and regulatory demands to bolster capital threaten to erode profit.

With all European banks struggling to generate profits under Europe's NIRP policy which makes net interest margin-based revenue virtually non-existent, we expect many more banks will be forced to lay off tens of thousands of more high paying jobs in the months ahead, leading to further declines in consumption, which in turn will pressure Europe's deflationary forces, even though earlier today Eurostat reported that inflation in the European Union rose to 0.4% in September, in line with expectations,

Global Stocks Slide As Deutsche Bank Fears Rise: Flight To Safety Boosts Bonds, Bullion

Global stocks continued their selloff this morning, driven by surging speculation about the liquidity, solvency and viability of Deutsche Bank, which plunged 9% after opening in German trading today, dropping to a new all time single-digit low of 9.90, its credit default swaps soared to new all time highs, and its Additional Tier 1 notes fell to record lows (the 1.75BN of 6% bonds dropped five cents on the euro to 70 cents), although losses were cut in half after yet another memo by CEO John Cryan sought to reassure the bank's employees and investors...

Morning Note: 1. Some DB clients reduce exposure. 2. Cryan says everything is ok. 3. Investors remain clueless

— Jonathan Ferro (@FerroTV) September 30, 2016

... although we doubt this latest pep talk will lead to a sustained rebound, since there has been no talk yet of what the undercapitalized (by as much as 8 billion according to Citigroup) Deutsche Bank) need most of all, namely a capital raise. "Deutsche certainly weighs on sentiment, and the declines are concerning," said James Woods, a strategist at Rivkin Securities in Sydney. "Being named the number one bank for global systemic risk, it's entwined with everyone."

"Following the report about clients moving to reduce exposure on Deutsche Bank, the possibility of other financial institutions facing similar moves has surfaced," said Hideyuki Ishiguro, a senior strategist at Daiwa Securities Co. in Tokyo. "Investors, especially foreigners, are moving to cut down on positions in the face of risks arising from European banks."

The rebound in DB also helped US equity futures rise from session lows, when they slid as much as h ...

NXP Can Help Qualcomm Shift Its Gears

Qualcomm remains too reliant on smartphone chips; a deal with NXP would add diversity.

Japan's Long and Winding Detour to Inflation

The Bank of Japan may have shaken up its strategy to jump start inflation, but on the ground, there's little sign change is coming.

Japan Buyback Boom Fails to Leave Mark

Japanese companies need to do a lot more share buybacks to shed their cash hoarder nature.

Economic Report: Consumer spending softens in August while inflation rises

Consumers spending was barely changed in August as lower sales of new cars and trucks offset an increase in services such as education and health care.

In One Chart: Deutsche Bank crisis threatens to roil global markets

Deutsche Bank's shares were sinking on Thursday on a report that a group of hedge funds were reducing their exposure to the giant financial institution.

Capitol Report: Share of mortgages going to blacks has tumbled nearly 40% from the peak

African-Americans were also denied at twice the rate of whites in 2015, according to data from the Home Mortgage Disclosure Act.

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