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28Dec2016 Pre-Market Commentary: US Stock Future Indexes Point To A Higher Opening, Crude Prices On Track For A Nine Day Winning Streak, Gold Remains Weak And Short-term Indicators Are Moderately Bullish

Written by Gary

Wall Street expected to open fractionally higher (SPY +0.1%). Oil prices extended strong overnight gains amid thinning pre-New Year holiday trade, the U.S. dollar moved higher as the prior day's positive read on consumer sentiment continued to support the greenback.


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.53%, while the CAC 40 is leading the DAX lower. They are down 0.03% and 0.02% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Dollar stirs from slumber as yield gap yawns

LONDON (Reuters) - The dollar, oil and world stocks all rose on Wednesday following upbeat U.S. data that saw the gap between Treasuries and other benchmark global government bonds hit new highs.

The BOJ, QQE, YCC - explaining Japan's struggle with stagnation

TOKYO (Reuters) - The Bank of Japan has led Prime Minister Shinzo Abe's effort to stimulate the world's third-biggest economy, but its often innovative steps have yet to end decades of falling prices and feeble growth.

South Korea fines Qualcomm $854 million for violating competition laws

SEJONG, South Korea/SAN FRANCISCO (Reuters) - South Korea's antitrust regulator fined Qualcomm Inc 1.03 trillion won ($854 million) for what it called unfair business practices in patent licensing and modem chip sales, a decision the U.S. chipmaker said it will challenge in court.

Writedown fears wipe $5 billion off Toshiba's value as it weighs options

TOKYO (Reuters) - A looming writedown at Japanese conglomerate Toshiba Corp has wiped almost $5 billion off its value in two days and prompted a credit rating downgrade on Wednesday, as the company grapples to plug a potential multi-billion dollar hole.

Abbott gets U.S. antitrust approval to buy St. Jude Medical

WASHINGTON (Reuters) - Healthcare company Abbott Laboratories has won U.S. antitrust approval for its proposed $25 billion acquisition of medical device maker St. Jude Medical Inc , the U.S. Federal Trade Commission said on Tuesday.

Oil holds near annual peaks, awaiting OPEC cuts

LONDON (Reuters) - Oil prices edged up for a fourth consecutive session on Wednesday, close to their peaks since mid-2015, with the market awaiting evidence of OPEC supply reductions in the new year.

Alibaba entertainment affiliate to invest over $7.2 billion over next three years

BEIJING (Reuters) - Alibaba Digital Media and Entertainment Group, the entertainment affiliate of Alibaba Group Holding Ltd , plans to invest more than 50 billion yuan ($7.2 billion) over the next three years, the affiliate's chief executive said.

Last-minute spending surge lifts U.S. holiday shopping season

CHICAGO (Reuters) - A jump in consumer spending in the final stretch of December significantly offset a slow start to the U.S. holiday shopping season, and is likely to help many retailers beat sales forecasts, industry research groups said on Tuesday.

Delta to cancel order for 18 Boeing 787 Dreamliner aircraft

(Reuters) - Delta Air Lines Inc said on Tuesday that in agreement with Boeing Co it would cancel an order for 18 787 Dreamliner aircraft, which it assumed as a part of its merger with Northwest Airlines.

Which Comes First - Dow 20k Or $1000 Bitcoin?

For 10 straight days, progonosticators have promised that the Dow Jones Industrial Average will break gloriously above 20,000 for the first time in history, proving how great the economy must be (or will be) and leading investors to the next secular bull leg of this miracle of wall street.

So far it hasn't happened... (Dow +11.75% post-Trump)

But halfway around the world, Chinese fears (of capital controls and devaluation) have sparked an exodus into alternative currencies - most notably Bitcoin as it soars towards $1000. (BTC +42% post-Trump)

So which comes first - the greed of Dow 20,000 or the fear of $1000 Bitcoin?

Magnitude 5.9 Quake Strikes Japan, In Proximity To Fukushima

A 5.9 magnitude quake has struck northeastern Japan, 18km NNE of Daigo, and in close proximity to the infamous Fukushima nuclear power plant the US Geological Survey reported; no tsunami warning has been issued. The epicenter of the quake was given as Ibaraki Prefecture in central Japan, the same as was impacted during the 2011 Fukushima quake. The prefecture has a population of some 3 million people.

Earlier, the Japanese Meteorological Agency (JMA) earlier put the magnitude at 6.3.

The Quake had shaking intensity of 6- on Japan's scale of 7; and the shaking was felt as far as Tokyo. According to NHK, the Tokaido Shinkansen high speed train has been halted for safety checks after the quake.

According to Japan's government there are no reports of damage to nuclear plants after the quake, while Tepco quickly stated that there are "no abnormalities at its Fukushima plants" after the quake



SUGA: NO REPORTS OF DAMAGE TO NUCLEAR PLANTS AFTER QUAKE

TEPCO: NO ABNORMALITIES AT FUKUSHIMA NUCLEAR PLANTS AFTER QUAKE

NO INJURIES REPORTED AFTER QUAKE IN N.EASTERN JAPAN, NHK SAYS

A Market Update From JPM, And A Warning

As expected, global markets continue to trade very subdued with negligible volumes (overnight the Nikkei traded 40% below its 20DMA) in the quasi-holiday week in which as Nanex showed earlier, this morning the E-mini is the 8th most actively traded future (where it usually is #1 or #2).

S&P500 futures are 8th most actively traded since midnight (usually #1 or 2)
1) Crude
2) EuroFx
3) Gold
4) Copper
5) Yen
6) Brent
7) FTSE

— Eric Scott Hunsader (@nanexllc) December 28, 2016

And, as JPM's Adam Crisafulli notes in the "early look at the market", it is indeed a very quiet morning, however as JPM also warns that may change quite soon as the largest US bank reiterates a now familiar warning. To wit:

Market update - it is a very quiet morning so far w/sparse news as markets wind down for the year. Other than the Japan Nov IP data (which was strong), the QCOM South Korea fine, and solid US holiday spending indications, there were no major headlines overnight. The fate of US (and global) markets will rest on the realization of the Trump/Ryan agenda - anticipation and hope of the GOP platform continues to underpin sentiment and stocks but there appears to be stark differences between investor expectations and the likely reality (esp. as it pertains to corporate taxes and infrastructure spending) and this represents a major equity risk during the opening months of 2017.

Wait, what's a "risk"? Anyway, for now the only question on traders minds is not what happens in the opening months of 2017 but what happens first: Dow 20,000, or Bitcoin $1,0 ...

Frontrunning: December 28



Crude Rally Lifts Commodity Currencies; Bonds Rise: Markets Wrap (BBG)

Kerry Plans Middle East Speech as Israel Moves to Ease Tension (BBG)

Japan Looks to Smooth Over Past as New Threats Arise (WSJ)

Israel backs off East Jerusalem settlements (Reuters)

House Flipping Makes Comeback as Home Prices Rise (WSJ)

Airbus's A380 Woes Deepen as Top Buyer Emirates Delays Jets (BBG)

Delta Drops Boeing 787 Order Inherited From Northwest (BBG)

As Populists Won 2016 Ballots, World's Richest Made $237 Billion (BBG)

Britons Hoard Cash as Economic Uncertainties Prompt Caution (BBG)

Manhattan Luxury Co-Ops Fall Out of Favor (BBG)

Turkey and Russia have ceasefire plan for Syria, says Ankara (

Paying to Lend: The Negative-Yield Story of 2016

Bonds have been selling off in recent weeks—but the early 2016 rally that took them into uncharted territory has a legacy.

Surprise Drug Approval Is Holiday Gift for Biogen

Biotech stock Biogen gets a boost from early approval of its spine disorder drug.

The Mystery of Japan's Stagnant Wages

Despite three years of unorthodox stimulus, Japan's wage growth remains slower than expected.

Currencies: Dollar index continues march higher, trades near highest level since 2002

The U.S. dollar strengthened against its major rivals on Wednesday, advancing for a second straight day as investors continued to bet that a strengthening economy and higher inflation would support the currency.

Therese Poletti's Tech Tales: Can IPO market Snap out of its doldrums in 2017?

Snap Inc. is expected to be 2017's savior from a depressing market for initial public offerings, but the ridiculously high valuations of other so-called unicorns, as well as a market still seen as unsteady, could make the chances for a revival disappear as fast as a Snapchat message.

Market Snapshot: Dow on track to make a fresh attempt to hurdle over 20,000

U.S. stock futures on Wednesday point to a modest rise at the open, putting the Dow industrials on track to near the 20,000 milestone again.

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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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