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09Mar2017 Pre-Market Commentary: Wall Street To Open Flat, Crude Prices Extended Steep Declines Into The 49 Handle, Gold Recedes For Eighth Session, Fed Expected To Raise Rates

Written by Gary

US stock market future indexes pointed to a flat open this morning (SPY +0.02%), as investors digest U.S. jobs data. Continuing Jobless Claims came in 2 K lower while Initial Jobless Claims was higher at 8 K.

Here is the current market situation from CNN Money

European markets are lower today with shares in London off the most. The FTSE 100 is down 0.77% while France's CAC 40 is off 0.30% and Germany's DAX is lower by 0.21%.

Looking at the last three columns (below), 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.

U.S. crude was down $1.25, or around 2.5%, to $48.81 a barrel, a level not seen since December 1, while Brent slumped $1.20 to $51.84 a barrel. The risk is now tilted to the downside. Lower numbers are not a foregone conclusion yet, but bears are in control.

Gold futures extended a slump into an eighth consecutive session Thursday, sending the yellow metal to the lowest level since the start of February amid increasing confidence the Federal Reserve will raise interest rates at its upcoming policy meeting next week.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. crude slumps below $50 after stocks build

LONDON (Reuters) - Oil prices fell on Thursday, extending the biggest falls this year as record U.S. crude inventories kept sentiment weak, pointing to a global glut despite supply cuts.

AIG CEO Peter Hancock to resign

(Reuters) - American International Group said Chief Executive Peter Hancock has informed the board that he plans to resign.

No matador in sight as bull market in U.S. stocks turns eight

NEW YORK (Reuters) - The run of gains on Wall Street turns 8 years old on Thursday and, despite its advanced age, is expected to rage on, with perhaps a few hiccups, based on a combination of stronger company earnings, lower taxes and a corporate-friendly administration in Washington.

Bayer, Monsanto start $2.5 billion asset sale to get merger clearance: sources

FRANKFURT (Reuters) - German drug and crop chemical maker Bayer and U.S. seeds company Monsanto are launching asset sales worth roughly $2.5 billion as they seek regulatory clearance for their $66 billion merger, people close to the matter said.

Bill Gross says investors should not be 'allured' by 'Trump bull market'

NEW YORK (Reuters) - Bond investor Bill Gross warned on Thursday that investors should not be tempted into buying high-flying equities and corporate bonds, given the possibility that U.S. President Donald Trump might fail to enact policies that fuel economic growth.

Futures slip as U.S. crude falls below $50

(Reuters) - U.S. stock index futures dipped slightly on Thursday as U.S. crude prices fell below $50 and investors remained cautious ahead of Friday's nonfarm payrolls data that could move the needle on an interest rate hike next week.

Akzo Nobel rejects $22 billion PPG bid, looks to spin off chemicals

AMSTERDAM (Reuters) - Dutch paints and coatings maker Akzo Nobel NV rejected a 21 billion euro ($22 billion) bid from larger U.S. rival PPG Industries Inc on Thursday, saying instead it wanted to "unlock value" by spinning off its chemicals business.

Trump to meet with U.S. community bankers on regulatory costs

WASHINGTON (Reuters) - President Donald Trump will meet with Main Street community bankers on Thursday to learn more about their difficulties in complying with the tougher Dodd-Frank financial regulations enacted after the 2007-2009 financial crisis.

Toshiba's Westinghouse brings in bankruptcy lawyers; disclosure deadlines loom

NEW YORK/TOKYO (Reuters) - U.S. nuclear firm Westinghouse Electric Co LLC has hired bankruptcy attorneys, in a sign that owner Toshiba Corp is more seriously weighing a Chapter 11 filing as an option to help it rein in a multibillion dollar financial maelstrom.

Energy Credit Risk Soars As Crude Carnage Continues

Just when you thought it was safe to go all-in on energy stocks, credit, and commodities because, well, what could go wrong; crude's collapse in the last few days (amid record long speculators) has smashed Energy credit markets and sent high-yield bond prices cratering.

WTI Crude collapsed to a $48 handle at its lows today...

Sending yields on Energy bonds to 3 month highs (and prices tumbling)

And the result for high yields bonds is the year's gains evaporated in 5 days...

Amid massive fund outflows...

"We Failed Miserably": Gartman Stopped Out Of Latest Oil Long

One week ago, when oil dropped for the first time in 2017 below $52.80 - Gartman's sell threshold - we said that Dennis Gartman had been stopped out of his February 21 Brent/WTI crude long trade reco. After all, that was the price level Gartman had said would trigger the liquidation. It turns out he was being somewhat "generous" with this number, and Gartman somehow kept his position on. In retrospect, he should have sold, especially after yesterday's 5.5% plunge, oil continued to tumble this morning, sliding another 2.5% below $49.

So where is Gartman now? Well, as per his official overnight letter, he is now really and truly out:

We are out of crude oil as our stops were hit, costing us, on average a bit more than a percent and one half

And some more visual commentary on the topic of oil's plunge:

CRUDE OIL PRICES COLLAPSED YESTERDAY and we can blame that weakness upon any number of fundamental reasons; however, far too many are pointing to the supposedly sizeable increase in crude oil inventories as reported out yesterday by the EIA. This is nonsense. The crude oil inventory had little if anything to do with the crude oil market's weakness for although crude inventories rose 8.2 million barrels as reported by the EIA, this was well below the 11.6 million barrels reported the day previous b the API.

Further, those blaming the increase in the EIA crude inventory for the energy market's weakness have to explain away the far more surprising declines in gasoline and distillate inventories, which l ...

ECB Keeps Rates On Hold, Keeps Dovish "Extended Period Of Time" Forward Guidance

Moments ago the ECB kept all three rates on hold, however in a dovish addition, it kept its current forward guidance which some analysts had expected may be scrapped, by noting that "the Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases." As a result, the EURUSD has sign a modest drop on the announcement while Bunds futures gained once algos noticed that contrary to some expectations, the forward guidance would remain.

Full statement below:

At today's meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that it will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of 80 billion until the end of this month and that, from April 2017, the net asset purchases are intended to continue at a monthly pace of 60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP. If the outlook becomes less favourable, or if financial condit ...

Silver Bullion Massively Undervalued From Historial Perpective

Silver Bullion Massively Undervalued From Historial Perpective

- What wages in ancient Athens can tell us about the silver price today
- Wages paid in silver in ancient Athens compared to wages today
- Silver massively undervalued compared to the past few thousand years

The cost of building the Parthenon was 469 silver talents, or about £5.6m.

by Dominic Frisby

Today we look at the wages paid to oarsmen on warships in ancient Athens in 450BC.

I bet you've never read a Money Morning that began like that before.

The New Exxon: Fewer Risks, Lower Returns

Exxon's Gulf Coast investment says more about the changed company than it does about new U.S. spending.

How World's Largest Tech Fund Can Set SoftBank Stock Free

Softbank can sell more assets, including Sprint, to prepare for its $100 billion Vision Fund.

Commodity Rally Stumbles Back Into Reality

Last year's rally had strong fundamental underpinning, but investors have been ignoring growing warning signs from Chinese demand and U.S. supply.

04 March 2017 Initial Unemployment Claims Rolling Average Marginally Worsens

The market expectations for weekly initial unemployment claims (from Bloomberg / Econoday) were 234 K to 240 K (consensus 238,000), and the Department of Labor reported 243,000 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 234,250 (reported last week as 234,250) to 236,500. The rolling averages generally have been equal to or under 300,000 since August 2014.

February 2017 Job Cuts Fall and Hiring Explodes

from Challenger Gray and Christmas

The shortest month of the year saw a decline in layoff announcements, as US-employers announced plans to cut 36,957 jobs in February, 19 percent fewer than the 45,934 cuts announced in January.

Market Extra: The unrelenting stock-market bull run demands some respect at its 8th anniversary

Since March 9, 2009, the S&P 500 index of large-cap shares has risen 250%, while delivering a total return of 316%.

Economic Report: Jobless claims surge 20,000 to 243,000

The number of Americans who applied for unemployment benefits jumped by 20,000 to 243,000 in early March, but layoffs remained near a 45-year low.

Economic Report: U.S import prices surge again, but this time it's not oil

The price of imports rose in February for the third month in a row, and in a potentially worrisome sign, the increase spread beyond oil into other industrial and consumer goods.

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