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12Oct2016 Pre-Market Commentary: Wall Street Flat After Steep Nose Dive From Yesterday's Session, Markets Expected To Open Lower, Crude Prices Higher

Written by Gary

US stock market future indexes are down fractionally (SPY - 0.1%)(DOW - 0.3%) with the FED due to release minutes this afternoon. Asian markets fell again today as investors stayed edgy after a disappointing start to the U.S earnings season and fears of a Federal Reserve interest rate hike. Indicators are fractionally bearish.

Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.47% while London's FTSE 100 is off 0.37% and France's CAC 40 is lower by 0.33%.

Today's Economic Calendar

MBA Mortgage Applications
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $24B, 3-Year Note Auction
1:00 PM Results of $20B, 10-Year Note Auction

What Is Moving the Markets

Here are the headlines moving the markets.

Global shares fall, battered pound fights back, dollar firm

LONDON (Reuters) - Shares fell worldwide towards three-week lows on Wednesday after a dour start to the U.S. earnings season, while Britain's battered currency rose for the first time in five days.

Samsung slashes third quarter profit estimate by a third after pulling plug on Note 7

SEOUL (Reuters) - Samsung Electronics Co slashed its quarterly profit estimate by a third on Wednesday, soaking up a $2.3 billion hit from ditching its flagship smartphone in what could be one of the costliest product safety failures in tech history.

Energy ministers from OPEC and Russia hold informal talks in Istanbul

ISTANBUL (Reuters) - Energy ministers from Qatar, the United Arab Emirates, Algeria, Venezuela and Russia began informal closed-door talks with the secretary general of OPEC in Istanbul on Wednesday as they try to coordinate efforts to rebalance the oil market.

Futures slightly lower ahead of Fed minutes

(Reuters) - U.S. stock index futures were slightly lower on Wednesday as investors eyed finer details of the Federal Reserve's September policy meeting.

Wells Fargo faces costly overhaul of bankrupt sales culture

(Reuters) - Embroiled in a scandal over unauthorized customer accounts, Wells Fargo & Co faces a steep challenge in overhauling its hard-charging sales culture without gutting profits.

Lloyds Banking Group cuts 1,230 jobs as part of strategic overhaul

LONDON (Reuters) - State-backed Lloyds Banking Group said on Wednesday it planned to ax 1,230 jobs as part of a three-year restructuring plan aimed at cutting costs and improving returns for shareholders.

Apple to set up R&D center in Shenzhen, bolster China ties

HONG KONG (Reuters) - Apple Inc will set up a research and development center in China's manufacturing metropolis Shenzhen, the U.S. tech giant said on Wednesday, as the firm looks to spur growth in the world's second largest economy amid growing competition.

Sprint plans to raise $3.5 billion via sale, lease-back of airwaves

(Reuters) - Sprint Corp , the No. 4 U.S. wireless carrier, said on Wednesday it planned to raise an initial $3.5 billion by mortgaging about 14 percent of its wireless airwaves.

Toyota recalls 340,000 Priuses globally to fix parking brake issue

TOKYO (Reuters) - Toyota Motor Corp said on Wednesday it was recalling around 340,000 of its latest Prius gasoline hybrid model in Japan and overseas to fix a parking brake issue.

Please Assume Crash Positions

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

That few believe Mr. Market can possibly stumble only increases the odds of a stumble.

You know how to get into crash positions, correct? Here's your guide:

Very few punters expect a real downturn here in stocks. The reasons for confidence are many: the Fed has our back, buy the dip has worked great and will continue to work great, the Fed won't raise rates until December (if ever), the Powers That Be will keep the market aloft lest a plunging market upset the election of the status quo candidate, and so on.

This confidence that the market will be on cruise control into the November post-election rally is the ideal set-up for a crash to SPX 1,850. While we can argue technicals all day, the fact is gaps get filled, usually sooner rather than later. There are two big open gaps in the S&P 500 around 2.040 and 1,860 that have been begging to get filled for months.

The question arises: after months of going unfilled, why not fill them now with a pleasantly unexpected little October crash? Technically, there are a couple of features that suggest the market would really, really like to plummet, if only the Plunge Protection Team would stand aside for a few days.

First, there are the open gaps that ache to be filled.

Then there's the peculiar Zombie Market of July and August, when volatility vanished and trading ranges fell as close to zero as is possible. A sign of strength? Hardly.

Third, the SPX has struggled mightily to claw its way above the 50-day moving average, and has failed to surmount this important technical target des ...

Deutsche Bank Sells Another $1.5 Billion In Debt At Junk Bond Terms

We were surprised when, just after the close on Friday, Deutsche Bank announced it would issue $3 billion in five year paper carrying a nosebleeding coupon of 4.25%, and a spread of 300 bps over Treasuries. By issuing debt at such a high yield - indicatively 300 basis points is close to the average for highly-rated junk debt in dollars and more than twice the 143 basis points Deutsche Bank paid for similar notes in August 2015 - DB management confirmed it had liquidity concerns (the issue did nothing to help the bank's ailing capitalization).

As we said on Friday, "some have wondered why the need to sell new paper at such a wide concession: after all as we reported before, DB has no current liquidity constraints courtesy of substantial ECB generosity, which backstop DB's existing liquidity reserves of just over 200 billion" leading to the question: "does DB know something investors don't?."

While the question remains unanswered, a similar question emerged last night when taking advantage of the still open issuance window, Deutsche Bank raised another US$1.5 billion in bonds, tapping last Friday's $3 billion 5-year issue. The self-led tap of its 4.25% October 2021s priced at similar terms, at 100.263 and a spread of 290bp over Treasuries for a yield of 4.191%, and a coupon of 4.25%. According to Bloomberg, the German lender targeted mostly the same investors who bought last week's $3 billion private deal. The deal was priced at a premium of 290 basis points, once again suggesting that at least from the perspective of investors, DB is effectively a junk rated credit.

The two-day issuance was

Frontrunning: October 12

UK's May offers lawmakers scrutiny of Brexit process, no Article 50 vote (Reuters)

For or Against Trump, GOP Fears Intensifying Civil War If He Loses (BBG)

Podesta: 'Reasonable Belief' WikiLeaks Tipped Off Trump Campaign (BBG)

Obama says Trump's comments on women disqualifying (Reuters)

Samsung slashes third quarter profit estimate by a third after pulling plug on Note 7 (Reuters)

OPEC says it raises oil output, despite deal to cut (Reuters)

Yet Another Stock Market Speed Bump Divides Top Traders (BBG)

Turkish army says Islamic State putting up 'stiff resistance' in Syria (Reuters)

Wells Fargo Lays Out Strategy to Move Past Scandal (WSJ)

Power Fully Restored After Outage Across Wide Area of Tokyo (BBG)

Amazon to Expand Grocery Business With New Convenience Stores (WSJ)

Turkey purges NATO military envoys after failed coup (

"We Didn't Know Things Were This Bad" - Ericsson Shares Plunge 17% After Shocking Profit Warning

Our condolences to anyone long Swedish telecom giant Ericsson, who will observe the following chart first thing upon waking up today.

The reason for Ericsson's 17% crash, is that the Swedish network maker reported a surprising slump in third-quarter sales and profitability, warning investors that its business was deteriorating faster than expected, with no turnaround in sight. Unexpectedly, the company said sales in the third quarter had dropped by 14% while its operating profit was all but wiped out, falling from SKr5.1bn a year ago to SKr300m. The sales drop was the biggest in 13 years, going back all the way to 2013.

Cited by Bloomberg, Mathias Lundberg, an analyst at Swedbank said that "we knew that the business climate was weak, and that would show in the numbers, but we didn't know that things were this bad," Lundberg said by phone. "That was a surprise both to us and the market."

Jan Frykhammar, the acting chief executive, said: "Our result is significantly lower than we expected, with a particularly weak end of the quarter, and deviates from what we previously have communicated regarding market development."

Hardly encouraging for mobile companies (elsewhere Samsung had a just as ugly morning after the Korean handset maker slashed its quarterly profit forecast by a third), according to the FT, Ericsson blamed a "further deterioration in demand for mobile broadband and said the current trends were likely to continue in the short term." Since ...

Mainland China's Property Bubble Leaks Into Hong Kong

Owning property in Hong Kong has an added benefit for mainland Chinese: an escape from the constant cheapening of the yuan.

Smart or Lucky, Google Can Feast on Samsung's Misfortune

Google's new Pixel phones can benefit from demise of Galaxy Note 7 and take on Apple in high-end market.

Who Wins Big When Macau Gamblers Return

Macau is rebounding, but it's a whole new crowd.

October 2016 Blogger Sentiment Mixed

The latest Blogger Sentiment Poll released 10 October 2016 by Ticker Sense sees a decline of bullish sentiment since the beginning of September.

Need to Know: Hiding in cash during the Trump-Clinton clash? Why that won't work

The new lows in U.S. politics might make you want to go hide — and yesterday's one-month low for U.S. stocks could be adding to that "Gimme Shelter" feeling. But today's call says it's a mistake to plan on hiding in cash until after the election.

GM buys stake in Chinese car-sharing company

General Motors Co. has invested in Chinese car-sharing company Yi Wei Xing (Beijing) Technology Co., the latest foray by the U.S. auto giant into alternative transportation services.

Beer Goggles: New York cares more about craft beer than Portland

Reporter Jason Notte lives in Portland, Ore., a pioneering beer city, but he argues that New York City taprooms offer a broader array of options for craft-beer drinkers.

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