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20Oct2016 Pre-Market Commentary: Wall Street Weakening At So So Job Claims Report, Previous Reports Of Improving Market Premature, Investors Remain Cautious Of Talk About Continuing Market Bullishness

Written by Gary

US stock future indexes are turning from flat to negative (SPY -0.3%) after US Jobless Claims came in worse than expected. The European Central Bank left its key refi rate at zero. Dow component Verizon and the Travelers Companies EPS topping estimates. Crude prices are lower and the US dollar is falling sharply.

Here is the current market situation from CNN Money

European markets are mixed. The CAC 40 is higher by 0.03%, while the FTSE 100 is leading the DAX lower. They are down 0.26% and 0.14% respectively.

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. jobless claims rise more than expected

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits rose more than expected last week, but remained below a level that is associated with a

Global stocks nudge higher after final U.S. presidential debate

LONDON (Reuters) - Stock markets inched higher but the Mexican peso was mixed after the third and final U.S. presidential debate, which was judged to have given no clear boost to Donald Trump's hopes of winning the White House.

California launches criminal probe into Wells Fargo account scandal

WASHINGTON (Reuters) - The California Attorney General's Office has launched a criminal investigation into Wells Fargo over allegations it opened millions of unauthorized customer accounts and credit cards, according to a seizure warrant seen by Reuters.

American Airlines profit beats estimates as fuel costs fall

(Reuters) - American Airlines Group Inc reported a slightly better-than-expected quarterly profit, helped by lower fuel costs.

Walgreens profit beats, Rite Aid deal seen closing in 2017

(Reuters) - Drugstore operator Walgreens Boots Alliance Inc reported a better-than-expected quarterly profit, helped by cost cutting and said it now expected its acquisition of Rite Aid Corp to close in early 2017.

Catwalks and Katy Perry: Alibaba starts countdown to Singles' Day

HONG KONG (Reuters) - Chinese e-commerce giant Alibaba Group Holding Ltd started the countdown to its annual shopping festival Singles' Day on Friday, promising consumers - and investors - a bonanza of fashion shows, virtual reality and U.S. pop star Katy Perry.

Gulf investors eye raising Deutsche Bank stake: Manager Magazin

FRANKFURT (Reuters) - Deutsche Bank's largest investors, investment vehicles controlled by the Qatari royal family, would be ready to take part in a capital increase, German business monthly Manager Magazin reported on Thursday, citing banking sources.

ECB Keeps Rates Unchanged

The ECB was not expected to change any of its three main refinancing rates in today's announcement and it did not disappoint, keeping the Main Refinancing Rate unchanged at 0.0%, and its marginal lending and deposit facility rates at 0.25% and -.40% respectively.

In a statement that was a carbon copy replica of the September 8 release, the ECB also added that "the Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases." Draghi also noted that QE would remain at " 80BN until March 2017 or longer if necessary."

Full press release:

At today's meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that the monthly asset purchases of 80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.


Frontrunning: October 20

Global stocks nudge higher after final U.S. presidential debate (Reuters)

Trump, Clinton Double Down: Final Debate By the Numbers (BBG)

Will Trump accept election's outcome? 'I will keep you in suspense' (Reuters)

After Sedate Start, Trump Takes the Bait (WSJ)

'Rigged' Election Charge Takes Spotlight (WSJ)

Debate highlights: Trump calls Clinton a 'nasty woman' (Reuters)

Draghi Set to Stay Tight-Lipped as Investors Look for Cues (WSJ)

Draghi Seen Keeping Up Suspense on Future of ECB Stimulus Plan (BBG)

Philippine President Duterte announces 'separation' from United States (Reuters)

Plummeting Newspaper Ad Revenue Sparks New Wave of Changes (WSJ)

The Tech Bubble Didn't Burst This Year. Just Wait (BBG)

How ISIS Used Chat Apps to Direct Attacks in West (

Will Draghi Avert A Tantrum: The Full ECB Checklist

With the ECB's press conference in less than an hour, here are the thoughts of Mark Cudmore, a former FX trader who writes for Bloomberg

The ECB today will try to provide something for all the market animals -- bulls, bears, hawks and doves -- but ultimately none of them will feel completely sated. The euro will whip around in reaction but it won't find a new trend.

Most importantly, Draghi will make clear that tapering has not yet even been considered. He will emphasize that the program runs until March, at least, and so they have plenty of time to plan the exit. There'll be no taper-tantrum today.

Far from tapering, it's likely that the Asset Purchase Program will be prolonged even further beyond March, although perhaps not formally so at this meeting. An extension will require technical adjustments that may need more time to work out.

The inflation and economic outlook make clear that it's too early to abandon the QE program unless the ECB has completely lost faith in its efficacy, and there's no sign that has happened.

Consensus forecasts put both GDP growth and consumer price inflation at 1.3% in the euro zone in 2017 -- neither figure suggests officials should be close to declaring "mission accomplished."

Draghi knows this and is likely to ensure a dovish slant to the conference. Guidance toward future QE extension is probable but unlikely to be explicitly detailed.

No matter how optimistic many analysts are getting on Europe, the fact is that there are two very large near-term risk events that overshadow the region: the Italian constitutional referendum and Brexit negotiations.

So expect no tapering, no further easing (yet), and a dovish conference. The euro may drif ...

Cybersecurity: Peace of Mind Isn't Priceless

Fortinet's recent warning is the latest sign that cybersecurity demand is moderating.

Music Labels Finally Hear the Sweet Sound of Success

Streaming services such as Spotify may have disrupted the music industry, but it is the long-suffering record labels, like Sony, who are eating their lunch.

Microsoft's Expensive Cloud Bet Is Paying Off

The software giant's continued transition to the cloud will likely dictate its stock price's next move.

15 October 2016 Initial Unemployment Claims: Rolling Averages Marginally Worsen

Weekly Initial Unemployment Claims

The market expectations for weekly initial unemployment claims (from Bloomberg / Econoday) were 240,000 to 255,000 (consensus 250,000), and the Department of Labor reported 260,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 249,500 (reported last week as 249,250) to 251,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

Economic Report: Philly Fed index pulls back modestly to 9.7 in October

The Philadelphia Fed's monthly index on regional manufacturing conditions pulled back to 9.7 in October from a 19-month high of 12.8 in the prior month.

Economic Report: Jobless claims jump 13,000 to 260,000

The number of people who applied for unemployment benefits last week climbed 13,000 to 260,000 to match a six-week high, though the pace of layoffs in the U.S. remains exceedingly low.

Deep Dive: $147 billion mutual fund's performance makes a case for active management

An overextended bull market in stocks is distorting investors' expectations, says Phil van Doorn.

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