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20Dec2016 Pre-Market Commentary: DOW On Track To Hit 20K Again, US Dollar Up, Crude Prices Higher, Markets Open Fractionally Higher, But Will They Stay Elevated

Written by Gary

U.S. stock markets opened higher today (SPY +0.3%), with the Dow inching closer to the 20,000 mark in pre-holiday trade ahead of a slew of earnings. The dollar was bouncing back toward its 14-year high and crude prices held below 17-month highs.


Here is the current market situation from CNN Money

European markets are higher today with shares in France leading the region. The CAC 40 is up 0.52% while London's FTSE 100 is up 0.33% and Germany's DAX is up 0.21%.

What Is Moving the Markets

Here are the headlines moving the markets.

Dollar hits new 14-year high, Dow sets sights on 20,000

LONDON (Reuters) - The dollar hit a 14-year high on Tuesday as the yen fell after the Bank of Japan stuck to its ultra-loose monetary policy and the euro weakened following deadly attacks in Germany and Turkey.

EU accuses Facebook of giving misleading information during WhatsApp takeover

BRUSSELS (Reuters) - The European Commission has charged Facebook Inc with providing misleading information during its takeover of the online messaging service WhatsApp, opening the company to a possible fine of 1 percent of its turnover.

Linde, Praxair agree on outline of 50-50 merger

FRANKFURT (Reuters) - Linde AG , the German company that earlier this month revived merger talks with U.S. rival Praxair Inc , has come to an agreement with its counterpart on key aspects of the deal to create a $65 billion industrial gases giant.

Apple's new AirPods tough to recycle: report

SAN FRANCISCO (Reuters) - Apple Inc's new wireless headphones could be a problem for recyclers, according to an electronics firm that took apart the device to review its component parts.

UK PM and Murdoch did not discuss Sky bid at September meeting: minister

LONDON (Reuters) - Prime Minister Theresa May did not discuss with Rupert Murdoch the proposed takeover of UK pay-TV group Sky by the tycoon's Twenty-First Century Fox at a September meeting, Britain's media minister said on Tuesday.

U.S. investigates one million Fiat Chrysler vehicles for roll-away crashes

WASHINGTON, (Reuters) - The U.S. National Highway Traffic Safety Administration is launching an investigation into about 1 million newer Fiat Chrysler Ram pickup trucks and SUVs after receiving complaints the vehicles rolled away after being parked, it said on Tuesday.

Exclusive: Top French banks sue ECB to reduce capital demands

FRANKFURT/PARIS (Reuters) - France's top lenders are suing the European Central Bank to get an exemption from holding capital against deposits parked with a state-owned fund, the most high-profile challenge to supervision from Frankfurt to date.

Lloyds banks on credit card growth with $2.4 billion MBNA buy

LONDON (Reuters) - Lloyds Banking Group is buying the MBNA UK credit card business from Bank of America for 1.9 billion pounds ($2.4 billion) in an effort to increase profit and reduce its reliance on mortgage lending.

BlackBerry ups outlook, adjusted earnings beat; shares rise

TORONTO (Reuters) - BlackBerry Ltd on Tuesday posted an adjusted profit that beat expectations even as revenue dropped sharply, as the software growth it is relying on failed to fully make up for its retreat from handsets and lost service fees.

Buying Panic Resumes As Dollar Surges To Fresh 14 Year Highs, Gold Dumped

After a brief respite yesterday amid global terror attacks and weak data, The BoJ's lack of action overnight appears to have spurred more panic-buying in stock futures (near record highs, Dow testing towards 20k), VIX-slamming, and a surge back into the dollar (back at Dec 2002 highs). Gold (and silver) and getting monkeyhammered once again and bonds are being sold.

The Dollar Index broke its post-Fed highs to 14 year highs...

As EURUSD hits fresh 13 year lows (amid chatter of European stabiity after Merkel's political prospects look troubling following yesterday's terror attacks)

Dollar strength - for now - means precious metal weakness...

But silver is worse...

And buyers are back in stocks (dumping protection)...Is today the day for Dow 20k?

Ray Dalio Praises Trump: Predicts "Huge" Changes; It Will Be "Glorious To Be Rich"

In one of the most euphoric praises for Donald Trump and the president-elect's fledgling administration to date, overnight Bridgewater founder Ray Dalio said economic changes under the Trump administration may be more dramatic than shifts from "the socialists to the capitalists" in the U.K., U.S. and Germany from 1979 to 1982, and predicted that "we are about to experience a profound, president-led ideological shift that will have a big impact on both the US and the world."

Comparing Trump to Margaret Thatcher, Ronald Reagan and Helmut Kohl, Dalio said the incoming administration may have a much bigger impact on the U.S. economy than can be measured by tax changes and fiscal spending. The Trump era could "ignite animal spirits" and attract productive capital.

In his summary of Trump's economic policies, Dalio urges readers to read Ayn Rand "as her books pretty well capture the mindset. This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers. It wants to, and probably will, shift the environment from one that makes profit makers villains with limited power to one that makes them heroes with significant power."

The shift from the past administration to this administration will probably be even more significant than the 1979-82 shift from the socialists to the capitalists in the UK, US, and Germany when Margaret Thatcher, Ronald Reagan, and Helmut Kohl came to power. To understand that ideological shift you also might read Thatcher's "The Downing Street Years." Or, you might reflect on China's political/economic shift as marked by moving from "protecting the iron rice bowl" to bel ...

What Have The "Experts" Got Right? In the Real Economy, They're 0 For 5

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

If the "experts" were assessed on results, they'd all be fired.

The mainstream media continually hypes the authority of "experts," i.e. people with a stack of credentials from top institutions.

But does the mainstream media ever check on whether the "experts" got anything right? Let's compare the "experts" (conventional PhD economists) diagnoses and fixes with the results of their policies.

Let's stick to the big issues: inflation, productivity, near-zero interest rate policy (ZIRP), employment and "growth". If you get these wrong, you get the entire economy wrong.

If you can't get the big issues right, your "expertise" has failed: your "expertise" is not just worthless, it's counter-productive, because if common-sense policies had been put in place instead of the "experts'" fixes, we'd have made progress rather than digging a deeper hole.

1. Inflation. Conventional "experts" believe inflation has been near-zero for the past decade and will continue to be near-zero as far as the eye can see.

Did they get this right? No. Households exposed to healthcare, higher education and rental expenses have seen staggering increases in costs for the same (or diminished) services. In other words, the purchasing power of their earnings has plummeted.

If we measure these "Big Ticket" items, we find inflation rates of 100+% over the past decade. I laid this out in detail in The Burrito Index: Consumer Prices Have Soared 160% Since 2001

Berlin Police Says It Arrested "The Wrong Man": Truck Attacker Is "Armed, Still At Large"

In the latest gaffe for German authorities, one which could further impact Merkel adversely if confirmed - something the Euro confirmed when it just tumbled to fresh 13 years lows - moments ago Die Welt reported that according to German police, the man from Pakistan who was arrested as a suspect in the attack on a Berlin Christmas market that killed 12 people on Monday was not the actual perpetrator.

Police in the German capital questioned a suspect arrested near the scene who they believed was the driver of the truck that rammed into crowds on a square in the heart of west Berlin. The individual denied any involvement and the investigation by Germany's federal prosecutor, who steps in on terror cases or other major crimes targeting state security, is ongoing, according to Interior Minister Thomas de Maiziere

"We have the wrong man," said a senior police chief. "And therefore a new situation. The true perpetrator is still armed, at large and can cause fresh damage," the paper quoted the source as saying.

The source said that all police and special forces units in Berlin have been informed and put on high alert.

Police urged Berlin residents "not to follow dangerous developments on your own," asking them to report any suspicious activity to law enforcement officers.

Shortly after, Berlin police chief Klaus Kandt admitted the mistake, saying the suspect apprehended in truck attack on Berlin Christmas market may not have been the driver. "It's not yet certain whether this is really the driver," Kandt tells reporter ...

Property Investors Need to Step Out of Their Comfort Zone

The future of property could be niche. Specialist buildings typically offer higher returns than the old staples of commercial property investment.

Dow 20000: Nike Is Missing Out

Retail giant Nike is one of only two Dow Jones Industrial Average components that are down this year.

German Economy Gets in Festive Mood

Germany's widely watched Ifo index posted a strong showing in December, painting a hopeful picture for early 2017.

Bond Report: Treasury yields renew climb as flight to safety diminishes despite terror attack uncertainty

Treasury prices softened on Tuesday, pushing yields higher, a day after the U.S. sovereign debt market notched its strongest one-day gain since August following a string of attacks in Turkey and Germany.

Market Snapshot: U.S. stock market set to rise as dollar, oil push higher

U.S. stock-index futures trade modestly higher Tuesday, implying another session of slight gains as the market's recent uptrend continues, though moves were expected to be muted ahead of the holiday season

Japan plans to curb drug spending with more-frequent pricing review

Japan said Tuesday it plans to review drug prices annually instead of once every two years in an attempt to curb rising health care spending, rebuffing criticism from the U.S. government and pharmaceutical companies.

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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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