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10Oct2016 Pre-Market Commentary: Wall Street Open For Business Today, Expect Major Indexes To Open Higher, Crude Prices Creeping Upwards And Gold Appearing To Be Rolling Over

Written by Gary

Today is Columbus Day, and for those looking to take a day off will be disappointed to find out that the stock markets are open. U.S. stock index futures pointed to a higher open on Monday morning, with the Dow, SPY and SP 500 futures each up +0.5%. Trading volumes were expected to remain low.


Here is the current market situation from CNN Money

European markets are mixed today. The FTSE 100 is up 0.39% while the DAX gains 0.16%. The CAC 40 is off 0.13%.

What Is Moving the Markets

Here are the headlines moving the markets.

Mexican peso rises after Trump-Clinton debate, pound vulnerable again

LONDON (Reuters) - The Mexican peso and U.S. stock futures rose as investors saw less chance of Republican nominee Donald Trump winning next month's presidential election, while sterling was under pressure after Friday's "flash crash" in the British currency.

Samsung halts Note 7 production after new fire scare: source

SEOUL (Reuters) - Samsung Electronics Co Ltd has suspended production of its flagship Galaxy Note 7 smartphones, a source said on Monday, after reports of fires in replacement devices added to the tech giant's worst ever recall crisis.

Deutsche Bank fails to score Justice Dept. deal, shares fall

FRANKFURT/LONDON (Reuters) - Deutsche Bank shares fell more than 3 percent on Monday after Chief Executive John Cryan failed to secure a speedy deal with the U.S. Department of Justice (DoJ) over the weekend over the misselling of mortgage-backed securities.

U.S. stock futures rise after Clinton seen winner of debate

(Reuters) - U.S. stock index futures rose on Monday after Democrat Hillary Clinton was widely seen as the winner of the second presidential debate.

Far from stepping back, top central banks are set to double down

WASHINGTON (Reuters) - Central banks' repeated warnings that there are limits to what they can do to bolster the sputtering world economy could suggest they are about to pull back and pass the baton to governments.

Religious investors lose faith in Wells Fargo after scandal

BOSTON(Reuters) - A group of nuns and other religiously-affiliated investors have lost faith in embattled Wells Fargo & Co and filed a shareholder resolution calling on the bank to report on the root causes of a fake accounts scandal that led to a $190 million settlement struck with regulators last month.

U.S. top court to hear Apple-Samsung feud over iPhone designs

NEW YORK (Reuters) - After five years of litigation, the U.S. Supreme Court will hear arguments on Tuesday in the bitter patent dispute between the world's two top smartphone manufacturers over the amount Samsung should pay Apple for copying the iPhone's distinctive look.

Financial markets continue to price in Clinton win after debate

NEW YORK (Reuters) - Wall Street stock index futures were little changed throughout Sunday's highly contentious presidential debate, indicating that markets continue to view that Democrat Hillary Clinton holds an edge in the Nov. 8 election against her Republican rival, Donald Trump.

Oil approaches one-year high as speculators buy into output cut deal

LONDON (Reuters) - Oil prices rose around one percent on Monday, approaching one-year highs, as speculators raised bets that oil prices would gain on the back of a landmark agreement among OPEC producers to rein in record output levels.

Frontrunning: October 10



Rancorous Debate Gets Personal (WSJ)

In debate, Trump signals aggressive close to his campaign (AP)

Trump Ends Nightmare Weekend With Over-the-Top Debate (BBG)

Trump vs Clinton: He calls her a devil, she says he abuses women (Reuters)

Ryan discussed revoking Trump endorsement (Politico)

Trump's body language during debate raises social media eyebrows (Reuters)

Mexican peso rises after Trump-Clinton debate, pound falls again (Reuters)

Pound Fails to Shake Off Wounded Image After Week of Flash Crash (BBG)

$60 Oil Not 'Unthinkable' This Year, Saudi Energy Minister Says (WSJ)

OPEC's Quiet Man Is at Center of Cuts Deal Nobody Saw Coming (BBG)

Yemen's Houthis lash out after air strike with missile attack (

Gold Trading COT Report "Means Lower - Then Much Higher - Prices Coming"

The gold trading Commitment of Traders (COT) report, released Friday, shows the peculiarly timed gold sell off and much needed wash out of speculative longs out of the gold futures market last week sets gold up for lower prices, prior to moving higher again.

COTs-Gold

The timing of the sudden sell off, when Chinese gold markets and the Shanghai Gold Exchange (SGE) were closed for the five days of the Chinese Golden Week, has rightly raised a lot of eyebrows. China is now a powerful force in the gold market, and is influencing global gold prices through the physical gold exchange, the Shanghai Gold Exchange and indeed the Shanghai Futures Exchange. China also has four gold-backed ETFs that are growing in popularity.

Concerns that the sell off was manipulative in nature are again widespread. The sell off was once again another purely paper or electronic futures market sell off with little or no liquidations of actual gold bullion and no important gold data or news or wider market data. Indeed the sell off came at a time of very robust physical demand - especially in mainland Europe - due to concerns ...

ECB Allowed Deutsche Bank To Cheat In Latest Stress Test, FT Reports

In the latest scandal to emerge involving Deutsche Bank, earlier today the FT reported that German's largest lender was allowed to cheat, pardon was given "special treatment" by the ECB in the July stress tests. As part of the July stress tests results, which "promised to restore faith in Europe's banks by assessing all of their finances in the same way" Deutsche Bank's result was boosted by a "special concession" agreed to by Mario Draghi: DB's results included the $4 billion in proceeds from selling its stake in Chinese lender Hua Xia even though the deal had not been done by the end of 2015, the official cut-off point for transactions to be included.

While the Hua Xia sale was agreed in December 2015, it has still not been completed and now faces a delay after missing a regulatory deadline last month, though the bank is still confident of completion this year.

As the FT notes, the Hua Xia treatment was disclosed in a footnote to Deutsche's stress test results, and adds that "none of the other 50 banks in the stress tests had similar footnotes, even though several also had deals agreed but not completed at the end of 2015."

As disclosed in the central bank's summer stress test, Deutsche's common equity tier one capital fell to 7.8% after it was "subjected to the stress tests' imagined doomsday scenario of fines, low interest rates and low economic growth." However, without the Hua Xia boost, the ratio would have been 7.4%, a level comfortably above regulatory minimums. Why the speal treatment? Because the higher published result helped reassure investors who were growing increasingly nervy about the bank's capital adequacy.

Other banks were not as lucky:

In one case, Spanish lender Caixabank completed the 2.65bn ...

Stocks Levitate After Dramatic Debate; Yuan Tumbles To 6 Year Low; Bonds Closed For Columbus Day

While the entire nation was transfixed on last night's latest, and most scandalous yet "debate", in which there was little actual debating and a lot of talking points and character assassination attempts, index futures were little changed throughout Sunday's 90 minutes event, suggesting that no clear winner had emerged on either side.

While the two candidates focused on each other's personal failings for much of the early part of the debate, investors said there was not enough in terms of policy substance in Sunday's debate to change the market's perception of the direction of the race according to Reuters. "I don't think it changed people's opinions in the investing community that Clinton is more likely to win, as she was before the debate, certainly after Friday," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

"The market declared tonight's debate a draw and has no more clue after debate than before, at least not in watching the S&P futures. Once again the debate was great theater, but did not give the market any insight," said JJ Kinahan, chief market strategist at TD Ameritrade. "Despite the night's civil ending, it was hard to glean much information, as a good part of the debate was simply a name-calling fest."

Steven Englander, global head of G10 currency strategy at CitiFX in New York, said: "Both Trump and Clinton supporters expected that emerging market currencies and U.S. equities would go down and the VIX would go up if Trump were to win and vice versa if Clinton wins," he added. And indeed, as noted last night, the kneejerk reaction of the most accurate, real-time proxy of debate performance, the Mexian Peso, showed that once the debate started, the mood shifted mostly in Trump's favor, leading to modest losses after this weekend's Trump Tape fiasco.

Where Virtual Meets Reality

Virtual reality got a slow start with Oculus. PlayStationVR should broaden the small market.

Brexit Turns Ugly for Pound, Gilts

The pound is tumbling and U.K. government bond yields are rising. Political risk is arriving in style.

The Job Market: Any Which Way But Tight

The way the job market continues to draw in new workers suggests the Federal Reserve has little to worry about on the inflation front.

The Margin: New symbol of America? This eagle, caught in Hurricane Matthew

By Sunday, this bald eagle was recovering at a Florida wildlife rescue after a losing run-in with Hurricane Matthew.

How Apple could bring overseas cash home to help fix America's crumbling infrastructure

Standard & Poor's argues that a program that would allow companies bring back cash on a tax-free basis but invest 15% in infrastructure bonds would help the economy and create jobs.

Earnings Outlook: Earnings recession expected to extend to sixth straight quarter

Companies are living in a world of uncertainty and that will be reflected in numbers and on conference calls.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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