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18Jan2017 Pre-Market Commentary: Wall Street Opening To Be Higher, But For How Long As The Trump Rally Runs Out Of Steam, Crude Prices Fall To The 51 Handle And The US Dollar Recovers Fractionally

Written by Gary

US stock market index futures are pointing to a higher opening (SPY +0.2%) as Citigroup and Goldman Sachs reported 4Q profits topping estimates. Analysts have warned that while earnings growth is accelerating, the beat rate has gone down and estimates are going lower.


Here is the current market situation from CNN Money

European markets are mixed today. The FTSE 100 is up 0.25% while the DAX gains 0.21%. The CAC 40 is off 0.38%.

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.

Futures flat ahead of Goldman results, Yellen speech

(Reuters) - U.S. stock index futures were little changed on Wednesday ahead of another set of big bank earnings and Federal Reserve Chair Janet Yellen's speech.

Business euphoria over Trump gives way to caution, confusion

WASHINGTON (Reuters) - Early optimism among business lobbyists and executives that Donald Trump's election heralded better days has slowly given way to uncertainty as the president-elect fires off mixed and sometimes confusing messages on healthcare, taxes and trade.

Citigroup's quarterly profit rises 7 percent

(Reuters) - Citigroup Inc reported a 7 percent rise in quarterly profit on Wednesday, wrapping up a strong quarter for big U.S. banks, as trading in bonds and currencies surged following the U.S. presidential election.

Global growth outlook shaky on trade protectionism fears: Reuters poll

(Reuters) - The global economic outlook remains shaky, despite recent pockets of resilience, according to the overwhelming majority of economists polled by Reuters who said a rise in protectionist trade policies would hamper growth.

Goldman Sachs profit soars on post-election surge in trading

(Reuters) - Goldman Sachs Group Inc reported a nearly four-fold rise in quarterly profit on Wednesday as it benefited, like other big banks, from a surge in trading following Donald Trump's surprise win in November's presidential election.

Target cuts fourth-quarter forecast due to weak holiday sales

(Reuters) - Target Corp lowered its comparable store sales and earnings forecasts for the fourth quarter, citing "softer-than-expected" holiday sales due to, what the retailer called, disappointing traffic and sales trends.

U.S. lobby says China protectionism fueling foreign business pessimism

BEIJING (Reuters) - More than 80 percent of members of a U.S. business lobby in China say foreign companies are less welcome than in the past, a survey released on Wednesday showed, with most saying they have little confidence in China's vows to open its markets.

Alaska Air to record $82 million as merger-related costs in fourth quarter

(Reuters) - Alaska Air Group Inc said on Wednesday it expects to record $82 million in the fourth quarter in costs related to the $2.6 billion acquisition of Virgin America Inc.

Deutsche Bank CEO looks to future after mortgages settlement

FRANKFURT (Reuters) - Deutsche Bank will be free to focus on a new growth strategy instead of devoting most of its energy to cleaning up past mistakes, Chief Executive John Cryan said after settling its most costly legal headache.

Goldman Beats, Profits Surge As Trading Revenues Jump; Average Banker Comp Hits $338,600

Unlike the other big banks, Goldman's earnings release is a breeze: since the bank has virtually no balance sheet to use as a source of income (or loss), it is all about the income statement. And it was here that for yet another quarter, Goldman surprised to the upside, reporting Q4 Revenues of $8.17BN, higher than the $7.76BN estimated, translating to EPS of $5.08, also above the $4.73 estimate, and nearly 4 times the $1.27 reported a year ago.

Like other banks, Goldman benefited from a big pick-up in trading activity during the period, as investors reset portfolios in anticipation of an interest-rate increase from the US Federal Reserve, and as the election of Donald Trump spurred big bets on stocks that stood to benefit. Net revenues from the institutional client services division were up 25% from a year earlier to $3.6bn, led by a 78% jump in revenues from the fixed-income, currencies and commodities unit.

"After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved," said Lloyd C. Blankfein, Chairman and Chief Executive Officer. "We continued to manage our expenses carefully and we enter the new year with industry leading positions across our businesses, as well as strong capital and liquidity."

Broken down by key operating group, most segments reported numbers that beat expectations with the exception of Equities sales and trading, which came in at $1.59BN, fractionally below the $1.61BN expected.

Other segments performed better in Q4:

FICC sales & trading revenue was $2.00bn, well above the estimate of $1.59bn

Investment banking revenue of $1.49bn beating estimates of $1.47bn.

Investment and Lending, formerly known as prop, reported $1.48bn in revenue, higher than a year ago.

OVerall trading revenue of $3.60billion was also better than the estiamte $3.28b.

The full breakdown of Goldman's vari ...

Gold Up 5.5% YTD - Hard Brexit Cometh and Weaker Dollar Under Trump

GOLD PRICES UP 5.5% YTD - CONCERNS OF "CALAMITOUS SELF-HARM" TO EU FROM BREXIT AND TRUMP DOLLAR COMMENTS SUPPORT GOLD

Gold prices extended their run of gains to a seventh session and added another $12 to $1,215 an ounce yesterday. Gold prices have consolidated on those gains today and are now up 5.5% in dollar and sterling terms and 5% in euro terms year to date.

gold-prices-ireland-2017Gold in USD - 1 Year

Gold bullion has risen every day except one so far in 2017, building on the 8.1 percent gain in 2016. Investors are concerned about the huge uncertainty facing us from a 'Hard Brexit' and the potential for political and financial contagion in the EU as we head into the new year.

Frontrunning: January 18



Business euphoria over Trump gives way to caution, confusion (Reuters)

Biden Lashes Out at Trump Over Comments on NATO (WSJ)

Number of House Democrats Skipping Inauguration Grows (WSJ)

Rising U.S. shale-oil output threatens OPEC's production pact (MW)

China urges U.S. to bar Taiwan delegation from Trump inauguration (Reuters)

IEA Sees Significant Gains in U.S. Shale Oil as Prices Rise (BBG)

Tom Price to Face Questions on Stock Trades, Obamacare (WSJ)

Trump commerce nominee Ross to tell senators: 'I am not anti-trade' (Reuters)

HSBC CEO Says Bankers Generating 20% of London Revenue May Move (BBG)

FTC Sues Chip Maker Qualcomm (WSJ)

As caliphate crumbles, Islamic State lashes out in Iraq (Reuters)

' ...

Trump Warns Canada, Mexico He Will Begin NAFTA Renegotiation "Within Days Of Inauguration"

In the latest unexpected and ad hoc announcement on North American trade arrangements, the Globe and Mail reports that Trump's Commerce Secretary pick, Wilbur Ross, has informed Canadian officials that he plans to reopen NAFTA talks within days of his inauguration, and that rules of origin and independent dispute tribunals will be central in negotiations of North American Free Trade Agreement. Ross has indicated new administration will send a formal letter notifying Canada and Mexico of plans to renegotiate Nafta within days of Trump's inauguration.

According to the G&M, Trump "want to discuss country of origin rules and the independent dispute-settlement mechanism that are key features of the 1994 NAFTA pact, officials say."

Country of origin rules, which govern how much content from outside NAFTA a product can contain and still qualify to be shipped duty-free, are specific to each product and spelled out in writing. They cover every kind of good and service, from suits to cars. The Trump administration is expected to take a harder line on exactly what can cross the border duty-free.

NAFTA's tripartite dispute panels are also on Mr. Ross's radar, officials say. The United States has long complained these independent panels are unaccountable and give too much power to Mexico and Canada.

However, in what is modest good news for Canada, a senior government official told The Globe and Mail the signals from Mr. Trump's trade team indicate the trade focus will largely be aimed at Mexico, essentially cutting the United States' southern neighbour out of many NAFTA benefits.

The clear indication we have gotten from that side of the operation is that they are targeting Mexico and n ...

Eyeballs Are No Longer Enough for Netflix

Netflix should be able to meet subscriber targets, but investors may start demanding profits.

Bond Trading Wave Gets Harder for European Banks to Catch

The capital markets business is back. While U.S. investment banks are taking advantage, it is less certain that Europeans can.

Trump vs. CEOs vs. Shareholders

President-elect Donald Trump's tweets could force money-losing business decisions, which executives will struggle to explain to investors.

Earnings Outlook: Netflix earnings: What to expect from the streaming giant

Netflix Inc. is scheduled to report its fourth-quarter earnings results after the market closes on Wednesday.

Economic Report: Inflation climbs in 2016 at fastest pace in 5 years, CPI shows

Consumers aren't paying higher prices for most goods and services, but a rise in gas, rent and medical care has raised overall inflation.

Earnings Outlook: General Electric earnings: Here's what to expect

General Electric is scheduled to report earnings for the latest quarter before the market opens on Friday, just as optimism over the potential benefits of President-elect Donald Trump's policies has begun to fade.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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