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04Jan2017 Pre-Market Commentary: Wall Street Opened Fractionally Higher, US Dollar And Crude Prices Same As Yesterday, Fed To Publish Minutes Later Today

Written by Gary

US stock markets opened higher (SPY +0.3%) and initially climbed to yesterday's highs and have backed off. The US dollar is weak trading in the low 102's, while Crude prices remain depressed for now.


Here is the current market situation from CNN Money

European markets are mixed to lower. Shares in Germany are off as the DAX drops 0.16%. The CAC 40 is down 0.08% while the FTSE 100 in London is unchanged.

The Federal Reserve is to publish the minutes of its December 13-14 meeting at 14.00 ET.

Fed officials decided to raise the benchmark interest rate by a quarter of a percentage point at the meeting, the first rate hike in a year.

Analysts will be examining the minutes for any indications that officials are more upbeat on growth than the quarterly economic projections released following the meeting showed.

Analysts will also be looking for what Fed officials said about potential fiscal policy changes under the incoming Trump administration and how they may react to measures that could spur growth and inflation.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall St. opens higher, Fed minutes awaited

(Reuters) - U.S. stocks opened slightly higher on Wednesday, the second trading day of the new year, with investors awaiting the minutes of the Federal Reserve's December meeting, where the central bank raised interest rates.

Automakers could post record 2016 U.S. sales on Wednesday: poll

DETROIT (Reuters) - Major automakers in the U.S. market are expected to show robust December auto sales on Wednesday, perhaps high enough for 2016 results to break the record high set the previous year, according to a poll by Thomson Reuters.

Chided by Trump, Ford scraps Mexico factory, adds Michigan jobs

FLAT ROCK, Mich./WASHINGTON (Reuters) - Ford Motor Co on Tuesday scrapped a planned Mexican car factory and added 700 jobs in Michigan following criticism by Donald Trump, as the U.S. president-elect turned his attention toward rival General Motors Co with the threat of a "big border tax" over compact cars made in Mexico.

Exxon Mobil, Tillerson agree to cut all ties

(Reuters) - Exxon Mobil Corp and Rex Tillerson agreed to sever all ties to comply with conflict-of-interest requirements as the company's former chairman and chief executive awaits confirmation as U.S. secretary of state.

U.S. banks gear up to fight Dodd-Frank Act's Volcker rule

(Reuters) - Big U.S. banks are set on getting Congress this year to loosen or eliminate the Volcker rule against using depositors' funds for speculative bets on the bank's own account, a test case of whether Wall Street can flex its muscle in Washington again.

Televisa says FCC approves higher Univision stake threshold

MEXICO CITY (Reuters) - Mexican broadcaster Televisa said on Wednesday the U.S. Federal Communications Commission (FCC) had given approval for Televisa to own up to 40 percent of U.S. Spanish-language peer Univision's voting stock and up to 49 percent of its common shares.

U.S. LIBOR breaks above 1 percent for first time since 2009

(Reuters) - The rate banks charge each other to borrow dollars for three months rose above 1 percent on Wednesday for the first time since May 2009 as global interest rates extend their climb on expectations of accelerating growth and inflation.

Delta Air Lines forecasts smaller drop in key revenue measure

(Reuters) - Delta Air Lines Inc said on Wednesday it expected a smaller decline in fourth-quarter passenger unit revenue, a closely watched revenue measure, than it had previously forecast.

Prices rise and businesses grow, but ECB probably not for turning

FRANKFURT (Reuters) - A sharp rebound in euro zone inflation and a better-than-expected business outlook are certain to fire up demands from some hardliners for the European Central Bank to choke off it ultra-generous monetary policy.

Art Cashin On The "Multiple Personalities" Of 2017's First Market Session

There was some confusion for those trading yesterday's first session of the year, which started off in euphoric fashion with the Dow Jones printing once again just shy of 20,000, then slumped after crude inexplicably tumbled, prompting even JPMorgan to chime in with the following snyde commentary: "the question isn't why stocks have come in from their highs but instead why they were so strong to begin with."

An even better question then, is not why stocks were strong to begin with, but why did they surge in the last hour of trading, closing near session highs as they tend to "mysteriously" do so very often in past few years.

While few know the specific reasons behind yesterday's odd market moves, here is everyone's favorite market commentator, UBS' Art Cashin, sharing his take on the "multiple personalities" of stocks in the first session of 2017.

From today's Cashin's Comments:

Stocks Show Multiple Personalities In First Session Of 2017 - As anticipated, stocks spiked sharply on the opening and held those gains for nearly an hour. Then crude suddenly began to reverse and reverse sharply. Bids in stocks began to disappear as I noted in an email to some friends:

"The equity rally seems to fade in reaction to a similar fade in the crude rally. Volume shrinks on the equity fade."

Then, shortly after 11:00, the other shoe fell. Ford announced that they were canceling a planned factory in Mexico. This appeared to be a response to a critical tweet from Mr. Trump, issued a few days ago.

The Transports suddenly turned negative, led by Norfolk-Southern on the assumption of less cargo to and from Mexico. A p ...

LIRR Train Derails In Brooklyn; 32 People Injured - Live Feed

A LIRR train has derailed in the Atlantic and Flatbush Avenue area of Brooklyn, with initial reports suggesting 32 people were being treated for injuries. The derailment happened at the Atlantic Terminal according to NBC and WPIX11.

Pictures on twitter showed the derailment took place on track 6, and that the train was tipped slightly at an angle.

My #LIRR train crashed at #AtlanticTerminal in #Brooklyn. Crazy. Seems only a few people are lightly injured. pic.twitter.com/oXHvy2yxDL

— Aaron D. Neufeld (@Aaron_D_Neufeld) January 4, 2017

The platform also appeared to be smoky.

Photo shows damage after LIRR train crashes at Atlantic Terminal in Brooklyn. pic.twitter.com/3ZedJFdxHR

— NBC Nightly News (@NBCNightlyNews) January 4, 2017

As of 8:50 a.m. the MTA did not have any information on its website, NBC reported.

.@MTA LIRR train derailment: emergency personnel/traffic & transit delays/road closures near Atlantic Ave & Flatbush Ave, BK

— NYCEM - Notify NYC (@No ...

Prosperity = Abundant Work + Low Cost Of Living

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

An economy that only serves the prosperity of the protected top 5% is an economy doomed to rising inequality, stagnation and widespread social discontent.

If we seek a coherent context for the new year, we would do well to start with the foundations of widespread prosperity. While the economy is a vast, complex machine, the sources of widespread prosperity are not that complicated: abundant work and a low cost of living.

When work is abundant, there are opportunities for many skill levels, and employers must bid for the most productive, reliable workers. This supports wages and widespread employment.

When the cost of living is low, even low-wage households can not only get by but put a little aside if they are prudent and thrifty.

This may seem obvious, but the conditions required for work to be abundant and the cost of living to be low are not so obvious. For work to be abundant, it must be easy to start a business, easy to operate the new business, easy to make a profit so the business can survive the first few years and easy to hire employees.

All these factors require an environment of low-cost compliance with regulations, low tax rates, low costs of transactions, reasonable transport costs, reasonable cost of money (but not near-zero), reasonable availability of capital for small enterprises, local and national governments that actively seek to smooth the path of new enterprises and existing enterprises seeking to expand, and a transparent marketplace that isn't dominated by politically dominant cartels and subservient-to-cartels government agencies.

This matters because the number one cause of the high cost of living is artificial scarcity created and maintained by mono ...

Trump Rally Darkens Skies for All-Weather Portfolio

All-weather and risk-parity portfolios designed to produce smooth returns have hit a rough patch since the U.S. election.

The Bumpy Road Ahead for Bonds

The battle lines are being drawn for the bond market in 2017.

How China's Insurance Crackdown Spawns More Risks

Following a year of Chinese insurers aggressively building risky and illiquid portfolios, under loose regulation, China's insurance regulator has taken to severe tightening measures in recent weeks.

Bond Report: Treasury yields tick higher as inflation outlook brightens

Treasury yields edged higher on Wednesday as expectations for an aggressive pickup in consumer prices weighed on fixed-income markets.

The Wall Street Journal: Jay Clayton said to be top contender for Trump's SEC chief

Wall Street lawyer Jay Clayton has emerged as the leading candidate to be chairman of the Securities and Exchange Commission and could be announced as the nominee as soon as Wednesday, according to an official working with the transition team of President-elect Donald Trump.

NewsWatch: This techie 'Dog of the Dow' is about to get unleashed

The Trump rally is trying to resume this week after taking time off, and today we'll see if the latest Fed minutes can help. Rates aren't going to a lot, and investors still are going to have to search for yield in stocks, such as the "Dogs of the Dow."

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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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