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02Dec2016 Pre-Market Commentary: US Stock Futures Flat, Crude Prices Slipping, US Dollar Falls Below 101, Gold Steady, Trump Rally Set To Fizzle

Written by Gary

US stock index futures are flat (SPY -0.07%) and expected to open flat. Investors took profits in crude today after an aggressive agreement among OPEC members to cut production and tackle the global supply glut. WTI crude is trading flat and on track for weekly gains of around 10%. Today's main market event, nonfarm payrolls (NFP), came in higher than expected.


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.

Payrolls rise solidly; jobless rate at nine-year low

WASHINGTON, Dec 2 (Reuters) - - U.S. employers boosted hiring in November and the unemployment rate dropped to a more than nine-year low of 4.6 percent, making it almost certain that the Federal Reserve will raise interest rates later this month.

U.S. stock futures dip after strong jobs data raises rate hike odds

(Reuters) - U.S. stocks index futures dipped further on Friday, pointing at a weak open on Wall Street, after a strong November jobs report added to the already high prospects of an interest rate hike in the coming weeks.

Ahead of promised cut, Russia's oil output hits record high

MOSCOW (Reuters) - Russia plans to use its post-Soviet era record high November oil production as its baseline when it cuts output under this week's deal with OPEC, Deputy Energy Minister Kirill Molodtsov said on Friday.

Peaks, black swans and bonanzas: Market tips, bold calls and eyecatchers for 2017

LONDON (Reuters) - Politics, economics and finance have all been turned on their head in 2016, and investors are already looking ahead to 2017 with anticipation and trepidation.

Starbucks CEO steps down to focus on high-end coffee, shares fall

(Reuters) - Starbucks Corp co-founder Howard Schultz will step down as chief executive to focus on new high-end coffee shops, handing the top job to Chief Operating Officer Kevin Johnson, a long-time technology executive.

Aixtron will have to cut costs, jobs if U.S. blocks China deal

FRANKFURT (Reuters) - Aixtron will have to take action to balance income and costs, including potential job cuts, if U.S. President Barack Obama blocks its takeover by China's Fujian Grand Chip Investment Fund (FGC).

As winter nears, Dakota Access faces frigid weather and costly delays

HOUSTON (Reuters) - Delays to the Dakota Access Pipeline have added millions of dollars to Energy Transfer Partners' construction tab - but even if the line is approved, the freezing temperatures will bring their own challenges to finishing the drilling process.

Oil softens after OPEC decision prompts big weekly rally

LONDON (Reuters) - Oil prices fell 1.5 percent to steady at around $53 a barrel on Friday after the biggest weekly rally since 2009 following OPEC's decision this week to cut crude output in order to rein in a global glut.

Investors may look to ECB for comfort after high-risk votes

FRANKFURT (Reuters) - With Italy's constitutional referendum and Austria's presidential vote on Sunday both potentially underlining growing anti-establishmentism, the European Central Bank is preparing to set to try to bring some calm to the mix.

"A Watershed Month" - November Sees Greatest "Asset Rotation" Since 2013

The final November fund flow numbers are in, and as BofA's Michael Hartnett puts it, November, it was a "watershed" month for fund flows with the largest 5-week
bond outflows in three and a half years at $10 billion...

... the largest 3-week precious metals outflows
in 3.5 years...

... and the largest 5-week equity inflows since October 2013 at $34.5 billion.

Focusing on just the last week, the "Trumpflation rotation" out of bonds and into stocks continued, with $4.4 billion in bond outflows, $0.6 billion precious metals outflows vs $1.2 billion in equity
inflows according to Bank of America, which writes that investor flows have stabilized following violent post-US election flows; In fact, a mini revulsion may already be forming with the first TIPS outflows in 6 months, first EM equity inflows in 5 weeks, first HY bond inflows in 5 weeks and first utilities inflows in 5 weeks.

Some further observations from Hartnett who notes that while November was "Fast & Furious" there was no Euphoria: despite the strongest 4-week equity inflows in 2 years, a sharp drop in FMS cash to 5.0% and a big US equity rally, our sentiment signals have actually sh ...

Gross Echoes Gundlach, Says Trump Rally Is Misguided: "Move To Cash"

On the heels of Jeff Gundlach's "there's going to be a buyer's remorse period" warnings yesterday, the other 'bond king' has raised similar fears that the Trump rally is overdone (as are the prospects for growth behind it). Putting aside the book-talking as their bond portfolios suffer, Gross echoes Gundlach's "Trump's not the wizard of oz" comments, noting that the next president faces serious structural headwinds and warns investors "should move to cash," as any fiscal stimulus gains will be temporary at best.

As we noted yesterday, speaking to Reuters, Gundlach, who went "maximum negative" on Treasuries on July 6 when the yield on the benchmark 10-year Treasury note hit 1.32 percent and bottom-ticked what may have been a generational low in rates, said that markets could reverse the recent momentum in equities, and at the very latest by U.S. President-elect Donald Trump's Jan. 20, 2017 inauguration.

The "new bond king" said that the strong U.S. stock market rally, surge in Treasury yields and strength in the U.S. dollar since Trump's surprising presidential victory more than three weeks ago look to be "losing steam," Gundlach told Reuters in a telephone interview.

"The bar was so low on Trump to the point people were expecting markets will go down 80 percent and global depression - and now this guy is the Wizard of Oz and so expectations are h ...

Gold and Silver Will Protect From Coming Financial Crash - Rickards

Gold and silver coins will protect from the coming financial crash - James Rickards, author of The Road to Ruin told Sean O'Rourke in a must listen to RTE Radio interview this week.

gold-and-silver-coins
Rickards is the best selling author on finance and money and advises the US intelligence community on international economics and financial threats.

His advice to people with savings or investments to protect from the coming crash? Buy gold and silver coins.

"For savers and investors at any level, modest or wealthier - put 10% of your invest-able assets in physical gold or silver, for smaller amounts, silver might do very well."

"It's the future of money... Here is why . First of all it is non-digital. Everyone thinks they have money; what they have are electr ...

Frontrunning: December 2



Jobs Report to Give Federal Reserve Final Data Points (WSJ)

Futures fall ahead of jobs report (Reuters)

Obama to Block Second Chinese Deal on Security Concerns (BBG)

Trump Exults in Victory and Mocks Critics at Ohio Rally (BBG)

China's Central Bank Is Facing a Major New Headache (BBG)

Trump considering Goldman Sachs COO Cohn for energy secretary (Reuters)

Trump considering Senator Heitkamp of North Dakota for Cabinet (Reuters)

Italy Referendum to Set Renzi's Fate (WSJ)

OPEC Deal Hinged on 2 a.m. Phone Call and It Nearly Failed (BBG)

Trump camp moves to block Michigan recount (BBG)

Iran says U.S. extension of sanctions act violates nuclear deal (Reuters)

Russia Says Foreign Spy Agencies Preparing Cyberattacks on Banks (

Passive Investors Get Sucked Into Hong Kong Market Failures

Multibillion-dollar bubbles like Fullshare may end up fitting a pattern: stocks with small floats that get added to major benchmarks and then plunge.

Baby Boomers vs. Millennials: The Uneven Jobs Recovery

Ahead of Friday's jobs report, the economic recovery has produced uneven results and unintended consequences for baby boomers and millennials.

India's Cash Dash Stuffs Banks With Problems

India's demonetization has ended up squeezing banks, eroding their role as agents of monetary policy.

Rail Week Ending 26 November 2016: Another Positive Week

Week 47 of 2016 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. Long term rolling averages remain in contraction - but the 4 week rolling average remains in positive territory.

Economic Report: U.S. jobless rates hits nine-year low of 4.6% in November

The U.S. economy added 178,000 new jobs in November and the unemployment rate dropped to 4.6%, the Labor Department said Friday.

Europe Markets: European stocks trade at 3-week low as Italy's referendum looms

Stocks in Europe on Friday are rounding off what's likely to be a losing week with oil prices falling and investors bracing for Italy's constitutional-reform referendum.

Market Snapshot: Dow set to drop from record high as Trump rally fizzles

U.S. stocks are on track to wrap up the week in the red, as the 'Trump trade' that has rallied equity markets in recent weeks shows signs of losing steam.

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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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