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02Mar2017 Market Commentary: Wall Street Opened Fractionally Lower, Crude Prices Plummet Into The High 52 Handle, US Dollar Climbs Higher, Economic Growth Appears To Have Remained Moderate In The First Quarter

Written by Gary

Major US stock index were little changed at the opening bell this morning, SP500 down fractionally and the DOW down -0.1% (SPY -0.1%). The number of Americans filing for unemployment benefits fell to near a 44-year-low last week.


Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 0.08% while the DAX gains 0.07%. The FTSE 100 is off 0.02%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. jobless claims near 44-year-low as labor market tightens

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits fell to near a 44-year-low last week, pointing to further tightening of the labor market even as economic growth appears to have remained moderate in the first quarter.

Snap's sought-after shares set for market debut after $3.4 billion IPO

NEW YORK (Reuters) - Snap Inc's in-demand shares are set to start trading in New York on Thursday after the owner of the popular Snapchat messaging app raised $3.4 billion in its initial public offering (IPO) on Wednesday, above its price expectations.

Exclusive: SEC advisory committee to question Snap's transparency for investors

BOSTON (Reuters) - An investor committee that advises the U.S. Securities and Exchange Commission will next week review if Snap Inc's decision to deny shareholders voting rights might also reduce the social media company's public disclosures on executive pay and other governance matters, the head of that committee told Reuters on Wednesday.

Abercrombie's Hollister posts first comp sales rise in a year

(Reuters) - U.S. teen apparel retailer Abercrombie & Fitch Co said on Thursday quarterly comparable sales of Hollister, its largest brand, increased for the first time in a year.

U.S. Senators draft bill to boost employee private stock ownership

WASHINGTON (Reuters) - A bipartisan pair of lawmakers on the U.S. Senate Banking Committee are planning to introduce a bill that aims to entice private corporations to give their employees larger equity stakes in their companies and promote longer-term investing.

Boeing to sue Denmark over lack of access to jet deal documents

COPENHAGEN (Reuters) - Boeing will take Denmark to court over a lack of access to documents used in a decision to select Lockheed Martin's F-35 over Boeing's F/A 18 Super Hornet in a fighter jet contract awarded last year.

Electrolux buys U.S. coffee machine maker Grindmaster-Cecilware for $108 million

STOCKHOLM (Reuters) - Swedish home appliance maker Electrolux said on Thursday it was buying U.S. firm Grindmaster-Cecilware, a maker of coffee machines and beverage dispensers, for $108 million in cash.

Deutsche Telekom core profit growth to halve as U.S. motor slows

BONN, Germany (Reuters) - Deutsche Telekom forecast its core profit growth would halve this year as earnings engine T-Mobile US slows, strengthening the case for a U.S. mobile merger that Deutsche Telekom has long desired.

Cudmore: "Now Only A Severe Market Correction Will Stop The Fed From Hiking In March"

From Mark Cudmore, a former FX trader who writes for Bloomberg

March Hike Is Now Base Case as U.S. Data Game Shifts: Macro View

Lael Brainard's hawkish comments confirm that a March rate rise must now be the base case for investors, and it's unlikely the upcoming data even matters.

Brainard is not only part of the Fed's core, she's arguably the most dovish member of it. When she sends a hawkish message, you need to pay attention.

I didn't believe a March hike was coming. I was wrong. Brainard's speech wasn't an anomaly -- Dudley had laid the groundwork already on Tuesday.

It's not a completely done deal, but investors must now be studying the calendar to see what could derail a March hike. How quickly things change. Only a week ago, we were debating what could be the catalyst to make March likely.

The key inflation data came out last night and hardly presented a compelling case for monetary-policy tightening. In fact, the broad data picture has been more indicative of an economy that could probably cope with a hike rather than one at risk of overheating and in need of tightening.

This implies that the Fed's motivation for tightening is more related to the resilient sentiment of markets rather than data-driven. Perhaps annoyed by its failure to raise rates by more earlier in the economic cycle, it is now keen to hike whenever it's confident it can get away with it.

The corollary is that any data disappointment in the next two weeks will be unlikely to stop the Fed from tightening, and only a severe market correction will stop them acting now. And we haven't seen one of those in more than a year.

The consequences of a March hike are not yet fully priced. Many in the market will wait for Janet Yellen's Friday message to confirm the plan. That may be prudent, but don' ...

Initial Jobless Claims Collapse To Lowest In 44 Years

Initial jobless claims plunged 19k last week to 223k. This is now the lowest level of initial jobless claims since March 1973, and is very close to the lowest levels since 1969.

This is now the longest period of declining initial jobless claims in US history (from March 2009 to March 2017)

Last week's drop was a 4 standard deviation beat of expectations...

The question is - is this as good as it gets?

The Best And Worst Performing Assets In February And YTD

The month of February was a mixed to positive among a broad sample of assets.

On the one hand the month saw those assets more sensitive to Trump's proposed policies continue performing solidly despite some uncertainty still about what to expect from the new President. On the other hand, Euro assets have largely underperformed likely reflecting some concern about the upcoming European elections and particularly those in France and Italy. That's despite economic data holding up relatively well. Another theme which has been consistent through much of the month has been the incredibly low level of volatility across the vast majority of asset classes even with the political uncertainty.

According to Deutsche Bank, it has seen 35 of its 39 assets finish the month with a positive return in local currency terms, but just 26 assets in dollar terms with the weaker Euro (-2%) and Pound (-2%) helping to prop up local currency returns.

Looking closer at performance during the month, the top 6 performers in the sample in dollar terms are the Bovespa (+4%), Silver (+4%), S&P 500 (+4%), Greek equities (+3%), Gold (+3%) and EM equities (+3%). It's interesting to see that despite 4 of those 6 assets being equity markets (and 2 of which being EM), the fact that Gold and Silver have still done well this month suggests that there is still a desire to have flight to quality and tail risk (or relation) hedges in place.

Equity markets in Asia have also had a reasonable month with the Shanghai Comp (+3%), Hang Seng (+2%) and Nikkei (+1%) all up. It's a slightly mixed story in Europe though. While the Stoxx 600 (+1%) and DAX (+1%) have just about stayed onside European Banks, French equities and Italian equities are all in the 0% to -4% range.

A similar theme has played out in bonds too. In dollar terms Gilts (+2%) and Treasuries (+1%) have evidently benefited from the relative safety flight while BTP's (-1%), Spanish Bonds (-2%) a ...

OSCaR NiGHT 2017...

OSCAR NIGHT 2017

Why Platinum Can't Beat Sapphire

Big banks have advantages over American Express in the credit-card rewards race.

Trump Faces the Tyranny of High Expectations

Every day stocks go up, investors are pricing in greater success for president's agenda.

How Google Does TV

Google's bet on web TV with YouTube involves a much smaller wager than AT&T's with DirecTV.

25 February 2017 Initial Unemployment Claims Rolling Average Now At Lowest Level Since 1973

The market expectations for weekly initial unemployment claims (from Bloomberg / Econoday) were 240 K to 250 K (consensus 245,000), and the Department of Labor reported 223,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 240,500 (reported last week as 241,000) to 234,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

'Rich Dad' Robert Kiyosaki says every entrepreneur should read this book

A "spiritual' book" recommendation from "Rich Dad" author Robert Kiyosaki.

The Fed: Fed's Brainard says economy can handle an interest-rate hike 'soon'

Fed Gov. Lael Brainard, who has been wary of interest-rate hikes in the past, said the economy could now handle gradual tightening.

Capitol Report: GDP estimate cuts show divergence between economic activity and optimism

There's a growing divergence between the optimism seen by stock market traders, business executives and consumers, and actual economic activity.

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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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