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06Feb2017 Pre-Market Commentary: Wall Street To Open Fractionally Lower, Gold Highest In 12 Weeks, Investor Fret Over Fed Interest Rate Hikes This Year

Written by Gary

US stock index futures were little changed this morning (SPY -0.3%) as investors looked for fresh trading catalysts after a strong jobs report last week. The US dollar bounced back from its lows on Friday as WTI crude takes a nose-dive into the 53 handle.


Here is the current market situation from CNN Money

What Is Moving the Markets

Here are the headlines moving the markets.

Futures flat as investors seek fresh catalysts

(Reuters) - U.S. stock index futures were little changed on Monday as investors looked for fresh trading catalysts after a strong jobs report last week. U.S. stocks climbed on Friday, with the S&P 500 closing just short of a record high, boosted by gains in financial shares as President Donald Trump moved ahead with deregulation action and a strong payrolls report.

U.S. tech firms file legal brief opposing Trump's immigration ban

(Reuters) - Several technology giants, including Apple, Google and Microsoft, banded together on Sunday to file a legal brief opposing President Donald Trump's temporary immigration ban, arguing that it "inflicts significant harm on American business."

Iran says U.S. sanctions stop American oil firms taking part in projects

DUBAI (Reuters) - Iran has imposed no restrictions on U.S. oil firms willing to participate in energy projects in the country but American sanctions make such cooperation impossible, Iran's deputy oil minister said on Monday.

Hasbro bucks glum holiday trend with strong profit, sales beat

(Reuters) - Hasbro Inc , the No. 2 U.S. toymaker, bucked the glum holiday-quarter trend, as it reported better-than-expected quarterly revenue and profit, helped by strong demand for Disney princess dolls and board games.

Toyota, Suzuki courtship intensifies as partnership talks begin

TOKYO (Reuters) - Toyota Motor Corp and Suzuki Motor Corp said on Monday they plan to trade expertise in parts supplies and R&D, in an agreement that will aid expansion in emerging markets and help them cope with rapid technological sophistication.

Tyson Foods revenue, profit beat; company gets SEC subpoena

(Reuters) - Tyson Foods Inc reported better-than-expected quarterly revenue and profit, helped by higher beef and pork exports and lower livestock costs, and the company said it received a subpoena from the U.S. Securities and Exchange Commission.

Electrolux buys Anova to tap into connected products growth

STOCKHOLM (Reuters) - Swedish home appliance maker Electrolux said on Monday it was buying precision cooker maker Anova in the United States as it looks to accelerate its development of connected devices for kitchens and homes.

JPMorgan gets China corporate bond underwriting license

HONG KONG (Reuters) - JPMorgan Chase & Co < JPM.N> said on Monday it had received approval and license to underwrite corporate bonds in China's interbank bond market, making it the first U.S.-headquartered bank to do so.

Samsung Group to disband its corporate strategy office after probe ends

SEOUL (Reuters) - Samsung Group said it will disband its corporate strategy office after a special prosecution probe ends, setting a timeline on a pledge to wind up a power center that has been criticized for its role in South Korea's graft scandal.

Gross: "Without QE From ECB And BOJ, The U.S. Economy Would Sink Into Recession"

Back in November, when describing the perverse global fund flows in which record money creation out of the BOJ and ECB amounting to roughly $200 billion per month was being used indirectly, via spread differentials, to create demand for US Treasuries by foreign official and private investors - an observation first made by Deutsche Bank - we dubbed it "global helicopter money", and were surprised that "nobody has noticed" what is going on. Three months Bill Gross has made this phenomenon the topic of his latest letter titled "happiness runs" in which he writes that central banks remain stuck in a "QE-forever cycle", and explains that "a client asked me recently when the Fed or other central banks would ever be able to sell their assets back into the market. My answer was "NEVER". A $12 trillion global central bank balance sheet is PERMANENT - and growing at over $1 trillion a year, thanks to the ECB and the BOJ."

He then observes something we have pounded the table on repeatedly in recent years, namely that without the Trasury backstop bid from central banks, there would be a sharp sell off in rates, which would eventually catalyze a sharp contraction in financial conditions, leading to a recession, to wit:

A 2.45%, 10-year U.S.Treasury rests at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB's and 45 basis point Bunds into 2.45% U.S. Treasuries. Without that financial methadone, both bond and stock markets worldwide would sink and produce a tantrum of significant proportions. I would venture a guess that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5% and the U.S. econo ...

Frontrunning: February 6



The Patriots' Insane Comeback: One for the History Books (WSJ)

Euro fades in face of French election risks (Reuters)

Legal battles to test Trump and his travel ban (Reuters)

Standoff Looms Over Travel Ban; Trump Rips Judge (WSJ)

Trump Set to Attend NATO Summit in May (WSJ)

Trump Administration Aims to Sever Russia's Iran Ties (WSJ)

Draghi Takes the Case for QE to Brussels (BBG)

Tiger Hedge Funds Become Wall Street Prey (WSJ)

Iran's missile test 'not a message' to Trump (Reuters)

U.K. Business Says Brexit Already Having a Negative Effect (BBG)

Dodd-Frank Rollback Sets Up $100 Billion Windfall for Bank Investors (WSJ)

Tiffany Abruptly Drops CEO Just Before First-Ever Super Bowl Ad (

London Gold Bullion Banks To "Open Vaults" In Transparency Push?

London Gold Bullion Banks To "Open Vaults" In Transparency Push

London's gold bullion market, which is centuries old, is said to be seeking transparency with plans to reveal how much gold bullion is held in vaults in and around London city according to gold bullion banks. These include gold bullion bars held and controlled by the Bank of England, as reported by Henry Sanderson in the Financial Times.

The move is being led by the London Bullion Market Association and it is said that it will provide data for the first time on how much gold is traded in the London gold bullion market in the Square Mile.

Tech Giants Could Make Visa Reform Work

Big tech companies could benefit from H-1B reform—if they can make their economic case stick.

Siemens Narrows Gap with GE, But Now It Gets Harder

Betting on a further re-rating of German industrial giant Siemens is no sure thing

Trump and Japan: A Contentious Friendship for Investors

Donald Trump lambasted Japan for manipulating its currency last week, ahead of a meeting this week with Prime Minister Shinzo Abe.

The Wall Street Journal: Trump updates Obamacare repeal-and-replace timetable in O'Reilly interview

Watch for a "wonderful" replacement of the Affordable Care Act later this year or in 2018, he tells Fox News host in Super Bowl Sunday interview.

8 things you didn't realize were in Obamacare

People associate the 2,409-page law with the things they like least about it. But there's plenty more in there.

In One Chart: 'Trump On, Trump Off' trades are rocking markets and unraveling, Citi says

The Trump-on trade, which replaces the risk-on trade, could be running out of time if the U.S. president's team doesn't hurry up with its economic plans.

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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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