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05Oct2016 Pre-Market Commentary: US Markets To Open Fractionally Higher And Then Slip, Crude Prices Higher Working Against A Higher SP 500, US Dollar Still Testing Resistance And Gold Stopped Fall

Written by Gary

U.S. stock index futures pointed to a marginally higher open (SPY +0.7%) this morning morning and then slipping into negative territory. European and U.K. stocks are broadly lower in mid-morning trade and Asian shares ended mostly lower. Crude prices rallied to the highest level since June and Gold prices inched up.

Here is the current market situation from CNN Money

European markets are lower today with shares in France off the most. The CAC 40 is down 0.40% while London's FTSE 100 is off 0.36% and Germany's DAX is lower by 0.32%.

Tuesday's Key Earnings

Darden Restaurants (NYSE:DRI) +0.6% boosting profit guidance.
Micron Technology (NASDAQ:MU) -4.6% AH swinging to a loss.

Today's Markets

In Asia, Japan +0.5% to 16819. Hong Kong +0.4% to 23788. China closed. India -0.4% to 28220.
In Europe, at midday, London +0.6%. Paris +0.7%. Frankfurt +0.7%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq flat. Crude +1.8% to $49.58. Gold +0.5% to $1275.50.
Ten-year Treasury Yield +1 bps to 1.7%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Gallup U.S. Job Creation Index
8:30 International Trade
9:45 PMI Services Index
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
5:00 PM Fed's Lacker: "Does Federal Reserve Governance Need Reform?"

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. private sector adds 154,000 jobs in September - ADP

NEW YORK (Reuters) - U.S. private employers added 154,000 jobs in September, below economists' expectations, a report by a payrolls processor showed on Wednesday.

Oil hits highest since June on possible U.S. inventory drop

LONDON (Reuters) - Oil rose towards $52 a barrel on Wednesday, hitting its highest since June, supported by an industry report that U.S. inventories probably fell for a fifth straight week and OPEC's deal to cut supply.

Stock futures flat ahead of private-sector hiring data

(Reuters) - U.S. stock index futures were little changed on Wednesday ahead of data, including a report on private sector hiring that will give investors a glimpse into the health of the labor market.

Monsanto's quarterly loss narrows as expenses drop

(Reuters) - U.S. seeds and agrochemicals company Monsanto Co , which agreed last month to be bought by Germany's Bayer AG for $66 billion, reported a smaller quarterly loss on Wednesday, helped by higher corn seed volumes and lower expenses.

Exclusive: McDonald's set to sell Singapore, Malaysian franchise to Saudi company - sources

HONG KONG/SINGAPORE (Reuters) - McDonald's Corp is nearing a deal to sell 20-year franchise rights for its Singapore and Malaysia outlets to Saudi Arabia's Reza group, in a transaction estimated at up to $400 million, people familiar with the matter said.

BlackRock cuts ETF prices prior to Labor Dept's fiduciary rule

(Reuters) - BlackRock Inc , the world's biggest asset manager, said it would cut prices across its growing U.S. iShares Core exchange-traded funds (ETFs) to help wealth advisers transition to a new rule governing retirement products.

Once rivals, Honda, Yamaha Motor announce scooter tie-up

TOKYO (Reuters) - Japan's Honda Motor Co Ltd and Yamaha Motor Co Ltd on Wednesday said they were joining forces to develop scooters for the domestic market, burying the hatchet on a decades-old rivalry and consolidating production in response to a shrinking motorcycle market.

U.S. high court to hear closely watched insider trading appeal

WASHINGTON (Reuters) - The U.S. Supreme Court is set to hear arguments on Wednesday in a closely watched case in which the eight justices will consider whether to impose limits on prosecutors contemplating insider trading charges against hedge fund managers and other traders.

'Hard Brexit' could cost British finance firms 38 billion pounds

LONDON (Reuters) - Britain's financial industry could lose up to 38 billion pounds ($48.34 billion) in revenue in a so-called 'hard Brexit' that would leave it with restricted access to the European Union's single market, according to a report commissioned by an industry group.

Trump Gets Unexpected Momentum Boost From Pence "Debate Victory"

While we found it hard to call a winner in last night's VP "interruptionfest", others were quicker to point out that it was Trump who was the biggest beneficiary from last night's debate. As the Hill noted overnight, Donald Trump got help from an unexpected quarter on Tuesday night as Hillary Clinton's running mate, Tim Kaine, delivered an uneven performance in the year's sole vice presidential debate, adding that "stylistically at least, Trump's vice presidential nominee, Mike Pence, was the clear winner of the encounter." It notes that his superiority was especially clear in the early stages. Pence was steady and controlled in those crucial moments while Kaine interrupted and appeared overly aggressive, even to independent observers.

Bloomberg confirms as much noting that "Donald Trump's weeklong slide in the presidential race started when he showed up to the first debate unprepared and spoiling for a fight. On Tuesday evening, Mike Pence helped slow it by doing the opposite."

Calm and measured, Pence showed off his preparation for his vice-presidential showdown with Democrat Tim Kaine, fending off a slashing, interrupting opponent. The Indiana governor prepared for the debate "since the night he received the call from Mr. Trump," a campaign aide told ABC News, enlisting Wisconsin Governor Scott Walker as Kaine's stand-in during practice sessions last week.


Frontrunning: October 5

ECB 'taper' talk hits stocks, sterling hits 31-year low (Reuters)

Crude Rises to Three-Month High After U.S. Stockpiles Plunge (BBG)

Gross Says He Shortened Duration on Europe After Taper News (BBG)

Chicago Fed's Evans 'fine' with December hike if data stays firm (Reuters)

Euro zone business growth at 21-month low in September (Reuters)

Deutsche Bank Brings Too-Big-to-Fail Quandary Home to Merkel (BBG)

Twitter Is Expected to Field Bids This Week (WSJ)

Jack Dorsey Is Losing Control of Twitter (BBG)

Here's my plan to save Twitter: let's buy it (Guardian)

Five takeaways from the vice presidential debate (The Hill)

Clinton: I don't recall joking about droning Julian Assange (Politico)

EU Readies Plan for Clearing Crisis, the New Too-Big-to-Fail (

DOJ Drops Charges Against Arms Dealer Who "Threatened To Expose" Hillary Arming Islamic Extremists

In what would under other circumstances likely be a major media spectacle, Politico reported that the Obama administration is moving to dismiss charges against an arms dealer whom it had accused of selling weapons destined for Libyan rebels and who had threatened to expose Hillary Clinton's talks about arming anti-Qaddafi rebels.

According to a motion filed in federal court in Phoenix, the DOJ on Monday filed a motion to drop the case against the arms dealer, an American named Marc Turi. One potential reason for the surprising move is that as Politico writes, the deal averts a trial that threatened to cast additional scrutiny on Hillary Clinton's private emails as Secretary of State, and to expose reported Central Intelligence Agency attempts to arm rebels fighting Libyan leader Moammar Qadhafi.

Marc Turi

Turi was indicted in 2014 on four felony counts: two of arms dealing in violation of the Arms Export Control Act and two of lying to the State Department in official applications. The charges accused Turi of claiming that the weapons involved were destined for Qatar and the United Arab Emirates, when the arms were actually intended to reach Libya. Turi's lawyers argued that the shipments were part of a U.S. government-authorized effort to arm Libyan rebels. It's unclear if any of the weapons made it to Libya, and there's no evidence linking weapons provided by the U.S. government to the Benghazi attacks.

According to Politico government lawyers were facing a Wed ...

Bonds and Stocks: It's Getting Complicated

September saw unusual movements in stocks and bonds. The happy balance that has rewarded fixed-income and equity investors may be shifting.

Deutsche Bank 'Coco' Pain Isn't What it Seems

As Deutsche Bank's stock has been battered, anxiety has also gathered around its other forms of capital, notably convertible junior bonds known as cocos.

Sompo-Endurance: Japan's Insurance Shopping Spree Restarts With a Bang

Sompo's $6.3 billion deal for New York-listed insurer Endurance Specialty is sign of the negative-rate times.

Market Extra: How a more balanced S&P 500 can lead to richer returns

The equal-weighted S&P 500 or EWI over the long term significantly outperforms the cap-weighted S&P 500.

Economic Report: ADP reports 154,000 jobs added in September

Businesses added 154,000 jobs in September, the smallest increase since April, payroll processor ADP said Wednesday.

Twitter must find a buyer before Snapchat destroys it

Twitter Inc. needs to sell as soon as possible, before Snap, previously known as Snapchat, takes greater market share, Susquehanna analysts say.

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