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19Dec2016 Pre-Market Commentary: Wall Street To Open Modestly Higher, Crude Down, US Dollar UP And The Trump Rally Goes On . . . And On, And On

Written by Gary

US stock future indexes are pointing towards a fractionally higher opening this morning (SPY +0.2%) Dow inching closer to the 20,000 mark. The dollar index was down 0.1% earlier, now at 103.06, and crude prices edged higher. Short-term indicators are bullish, but could turn neutral by session end.


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.05%, while the CAC 40 is leading the DAX lower. They are down 0.15% and 0.08% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Dollar, yields, stocks all cool their jets

LONDON (Reuters) - Stocks, the dollar and bond yields all drifted lower on Monday as investors cashed in on some of their recent bets that the anticipated fiscal boost from the incoming Trump administration will support riskier assets at the expense of bonds.

Oil prices rise on more balanced market, weaker dollar

LONDON (Reuters) - Oil prices rose on Monday as a weaker dollar and the delay of new Libyan oil exports boosted benchmarks, amid expectations of tighter crude supply going into 2017.

Apple appeals EU tax ruling, says it was a 'convenient target'

CUPERTINO, Calif./BRUSSELS (Reuters) - Apple has launched a legal challenge to a record $14 billion EU tax demand, arguing that EU regulators ignored tax experts and corporate law and deliberately picked a method to maximize the penalty, senior executives said.

Lennar profit beats as housing market shows steady recovery

(Reuters) - Lennar Corp , the No. 2 U.S. homebuilder, reported higher-than-expected quarterly profit and revenue and said the housing market continued to make a "slow and steady recovery."

Exclusive: Iran to land first Airbus jet within weeks under sanctions pact

PARIS (Reuters) - Iran expects to get its first new jet within weeks under a multi-billion-dollar deal with Airbus for 100 planes, a senior official said on Monday, as Tehran and Western firms race to reopen trade almost a year after sanctions were lifted.

Fairfax Financial to buy Allied World for $4.9 billion in cash and stock

(Reuters) - Toronto-based insurance group Fairfax Financial Holdings Ltd has agreed to buy Swiss insurer Allied World Assurance Company Holdings AG for $4.9 billion in cash and stock, the companies said on Sunday.

Banks may be able to sue EU if denied transitional deal: document

LONDON (Reuters) - Banks in Britain are being advised they may be able to sue the European Union if it fails to grant them a staggered departure from the trading bloc using rights from an arcane treaty that usually governs international law.

Digital currency sales take off, but with no regulation questions abound

NEW YORK (Reuters) - A small, but rapidly growing number of digital technology start-ups is raising cash by creating and selling their own currencies in offerings that bypass banks or venture capital firms as intermediaries and are outside the reach of financial regulators.

China set for slower growth, tighter policy in 2017 as government targets asset bubbles

BEIJING (Reuters) - China's economic growth is expected to cool in 2017 as its top leaders flag tighter monetary policy and further curbs to clamp down on asset price bubbles, especially in the property market, even as a sharp drop in the yuan has fed fears of markets turmoil.

Are You A Deplorable?

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Regardless of your ethnicity, class or religion, if you perceive the institutions that govern American life as corrupted, riddled with favoritism and spin or as broken, you're a Deplorable.

Are you a Deplorable? The answer might surprise you. Take this short quiz to find out.

1. If you agree with this characterization of American Elites: "The self-satisfied cosmopolitan culture that sprang up among the affluent 20% or so of the industrial world's population, who became convinced that the temporary ascendancy of policies that favored their interests was not only permanent but self-evidently right and just." (The Fifth Side of the Triangle The Archdruid Report)

You're a Deplorable.

2. If you question whether globalization is actually in the national interest: You're a Deplorable.

3. If you question whether endless wars of choice, drone strikes and foreign interventions that cost the lives of countless civilians are actually in the national interest: You're a Deplorable.

4. If you see the major institutions of American life as corrupt, ineffective, and blatantly favoring the financial/social elites: You're a Deplorable.

5. If you think it's wrong that some immigrants (the illegal ones) get to "jump the queue" ahead of the millions of legal immigrants who have waited patiently for years and paid the costs of following the rules: You're a Deplorable.

6. If you see the concentration of media ownership as a threat to democracy:

"This Is Stupid" - Pennsylvania Electors To Get Police Protection

While today's Electoral College vote is not expected, by most, to lead to any surprises, and Donald Trump will almost certainly be selected as the next president in a vote that is usually routine but takes place this year amid allegations of Russian hacking to try to influence the election, some states are not taking any chances and following last week's report that Trump electors have seen a flurry of death threats, the Pittsburgh Post-Gazette reports that electors in Pennsylvania will have police protection as they cast their ballots on Monday.

One Pennsylvania elector, Ash Khare, told the Gazette that he receives thousands of emails a day trying to sway his vote.

"I'm a big boy," said Khare, an India-born engineer and a longtime Republican from Warren County, who estimates he receives 3,000 to 5,000 emails, letters, and phone calls a day from as far away as France, Germany, and Australia. "But this is stupid. Nobody is standing up and telling these people, 'Enough, knock it off.' "

As a reminder, Pennsylvania allows its electors to vote for someone other than the candidate who won the state.

The messages have escalated to death threats, and so the 20 electors will have state troopers escorting them to cast their votes Monday.

As reported previously, GOP electors have been under pressure over the past month from anti-Trump groups to not vote for President-elect Donald Trump.

"I take my job as an elector very seriously, and in Pennsylvania, Donald Trump won," said Mary Barket, a Northampton County resident and president of the Pennsylvania Federation of Republican Women. "So any argument thereafter, especially about the nature of him being a preside ...

Frontrunning: December 19



Electoral college expected to officially select Trump (Reuters)

China says discussing return of undersea drone with U.S. military (Reuters)

Neutral PBOC Sets Up First U.S.-China Tightening Since 2006 (BBG)

Wall St sleepwalking into Trump volatility surge (FT)

Ukraine's largest bank rescued by state, prompts call for calm (Reuters)

U.S. Factories Are Working Again; Factory Workers, Not So Much (WSJ)

Senators call for probe of cyber attacks (Reuters)

Koch escalates tax reform battle with report on gasoline prices (Reuters)

As yuan weakens, Chinese rush to open foreign currency accounts (Reuters)

China house price growth slows as lending curbs take hold (FT)

Russia, Iran and Turkey to hold Syria talks in Moscow on Tuesday (Reuters)

Japan eyes record spending, less new debt in financial year 2017/18 budget (

China's True FX Outflows Since August 2015 Are $1.1 Trillion, Double The Official Number

Two months ago, when looking at an alternative measure of Chinese capital outflows using SAFE data, Goldman found that contrary to official PBOC reserve data, "China's Capital Outflows Are Soaring Again", having hit $78 billion in September.

Over the weekend, and following the latest PBOC data which revealed an outflow of $56 billion in November (which was only $34 billion when FX adjusted), Goldman repeated its FX flow calculation using SAFE data, and found the China continues to mask the full extent of its outflows, which in November spiked to $69 billion, and that "since June, this data has continued to suggest significantly larger FX sales by the PBOC than is implied by FX reserve data", once again suggesting that China is eager to mask the true extent of reserve outflows, perhaps in an attempt to not precipitate the feedback loop of even further panicked selling of Yuan and even more outflows, and thus, even more reserve depletion.

According to Goldman's MK Tang, money has been leaving in yuan payments for 14 consecutive months, while the central bank's yuan positions have slumped the most since January. The situation could get worse, said Banny Lam, head of research at CEB International Investment Ltd, cited by Bloomberg.

"Capital outflows and yuan depreciation will continue or even worsen by the end of this year and the first quarter of 2017, as investors are getting increasingly concerned about a stronger dollar and China's economic conditions," said Hong Kong-based Lam. "The yuan will reach 7 very soon. Policy makers will keep tight capital control in the near term but will continue to internationalize the currency in the long term."

Back to Goldman's analysis, which demonstrates just how serious China's ongoing FX outflow problem is, an oddity considering the market's rather obliv ...

Auto Companies: Better With Batteries Not Included

Tesla and others should leave battery making to the experts. Powertrain technology may not be such a big selling point in the car of the future.

Chinese House Speculators Curb Their Enthusiasm

Chinese upmarket housing is rapidly cooling as regulators turn to risk control.

Home Builders Are Confident: Why That's Problematic for Lennar

Rising optimism about the housing market might be an ominous sign for Lennar.

Why Are Long-Term Interest Rates So Low?

from the San Francisco Fed

-- this post authored by Michael D. Bauer and Glenn D. Rudebusch

Despite recent increases, long-term interest rates remain close to their historical lows. A variety of structural factors, notably slower productivity growth and a surplus of global saving, likely have lowered expectations of steady-state interest rates and pushed down long-term yields through the expectations component. In addition, accommodative monetary policy in the United States and abroad appears to have lowered the term premium on long-term bonds.

Outside the Box: Hillary Clinton supporters need to quit whining about the Electoral College

Consider this: Hillary Clinton's 2.3-million-popular-vote plurality over Trump depends on the votes in a single state.

Deep Dive: How you can bottom-feed for stocks left behind in the Trump rally

Twenty companies have 12-month upside potential of more than 20%, according to analysts, writes Phil van Doorn.

Key Words: Dig, baby, dig, says an Elon Musk with tunnel vision

Did American infrastructure rebuilding just move a step forward thanks to Elon Musk, or was this the musing of a mere mortal stuck in traffic?

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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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