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22Mar2017 Pre-Market Commentary: Look Out Below!

Written by Gary

Global markets and USA futures are very solidly in the red following yesterday's selloff. The pundits claim this is due to a reality check on what President Trump can accomplish on getting the USA economy moving. My take is that markets completely disconnected from economic reality during the rise of stocks following the election - and now reality is setting in.


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 0.82% while France's CAC 40 is off 0.66% and Germany's DAX is lower by 0.56%.

What Is Moving the Markets

Here are the headlines moving the markets.

Trump tax cut doubts hit stocks, lifts yen vs. dollar

LONDON (Reuters) - Growing doubts U.S. President Donald Trump will be able to deliver on a promise of tax cuts that has powered stocks markets to record highs pushed shares lower on Wednesday and drove investors to seek safety in government debt, gold and the yen.

Fannie, Freddie revamp plan unlikely this year, dividends in focus

WASHINGTON (Reuters) - An overhaul of Fannie Mae and Freddie Mac is highly unlikely to make it into this year's legislative calendar, Congressional staffers say, possibly shifting the new administration's immediate focus to allowing the mortgage financing institutions' to rebuild depleted capital.

Markets fret as Trump agenda shows signs of cracks

NEW YORK (Reuters) - The steepest pullback in stocks since the U.S. presidential election reveals investor angst about President Donald Trump's ability to push through major reforms, leaving stocks vulnerable to a long-anticipated correction.

Asia firms' confidence hits near two-year high on U.S., China pick-up: Thomson Reuters/INSEAD

BEIJING (Reuters) - Business sentiment at Asia's top companies rose to its highest in almost two years in the first quarter of 2017, buoyed by positive economic signs from the United States and China that underpinned improved global demand, a Thomson Reuters/INSEAD survey showed.

Uber board backs CEO Kalanick, still looking for chief operating officer

SAN FRANCISCO (Reuters) - Uber Technologies Inc plans to keep co-founder Travis Kalanick as chief executive following a series of damaging events at the ride services company, a member of its board said on Tuesday in a rare call with reporters.

Hot U.S. real estate a potential red flag: Fed's Rosengren

(Reuters) - The run-up in U.S. real estate prices could potentially amplify any future economic downturn, a Federal Reserve official said on Tuesday, urging regulators globally to consider tools beyond interest rates that could help cool the sector.

Clearly no time for ECB to stop easy monetary policy: Villeroy

FRANKFURT (Reuters) - It is clearly not yet time for the European Central Bank to stop pursuing accommodative monetary policies, even as inflation is moving towards its target, French central bank chief Francois Villeroy de Galhau said on Wednesday.

Protectionism may raise, not cut, trade deficits: ECB

FRANKFURT (Reuters) - Protectionist trade policies may increase, rather than reduce, a country's trade deficit, the European Central Bank said in a study on Wednesday, just days after finance chiefs of the world's top 20 economies dropped their pledge for open trade.

Chinese supermarkets pull Brazil meat from shelves as food safety fears grow

BEIJING (Reuters) - Some of China's largest food suppliers have pulled Brazilian beef and poultry from their shelves in the first concrete sign that a deepening scandal over Brazil's meat processing industry is hitting business in its top export market.

MUZZLED: Breitbart WH Correspondent Ordered Not To Ask Televised Question Discrediting DNC Russian Hacking Story

On Monday, Breitbart investigative reporter and White House correspondent Lee Stranahan published a huge story on Breitbart.com, the facts of which should unravel the entire foundation for the Russian election hacking narrative. Stranahan based his report on increasingly discredited evidence, as well as a tweet made by President Trump on March 5th regarding the hacked DNC server:

What about all of the contact with the Clinton campaign and the Russians? Also, is it true that the DNC would not let the FBI in to look?

— Donald J. Trump (@realDonaldTrump) March 20, 2017

It's true... the DNC did not allow the FBI to inspect the allegedly hacked servers; instead they used a Google-funded cybersecurity firm called CrowdStrike - which FBI director James Comey referred to in testimony Monday as a "highly respected private company" despite several reports casting serious doubt on their analysis. Furthermore, CrowdStrike was accused of using false information

Bill Blain: "Markets Are Waking Up To The Reality Of The Trump Hangover"

As excerpeted from today's edition of Bill Blain's Morning Porridge

"Americans can always be counted upon to do the right thing.. after they have exhausted all other possibilities.."

So finally I got something right(ish) when I wrote about the imminent Trump Dump y'day.

It was hardly rocket science: the over-inflated expectations on his deliverables have been crystallised by the farce developing around the "repeal and replace" of Obamacare. Taken together with The Donald's increasingly bizarre behaviour, the paranoid denials, the tweets and all the other issues, the realisation we've probably bought a pup is coming into a disappointing inevitability.

However, it's not the end of the world. The sun will come up tomorrow.. But... Markets are waking up to the reality of the Trump hangover.. which is going to mean a renewed focus on all the complacencies we've let build up in recent months.

No surprise the mood has gone more than a little bit Risk Off.

My list of stuff we've been ignoring includes, but is not limited to: expectations and sentiment wibbles, overbought stocks, the long term consequences of QE, the rise of protectionism, Dollar wobbles, Credit bubbles, and rising inflation vs bond markets. Overlay that with the political issues: Europe (in all its multihued wonder), the UK and Brexit, China and Russia... More about all of these in coming days...

I spoke with my stock picking guru, Steve Previs, y'day and again this morning. (Steve wears special wizard robes and a pointy-hat to do his chartist stuff. We've built him a special darkened room emblazoned with star-charts and the bones of mythical beasts hidden in the bowels of the building.) He was telling me y'day: "we are in the early stage of a distribution top... don ...

Here Are The 26 People Responsible For Today's Market Plunge

As we noted first thing this morning, and as we, and others, have been warning since December, the passage of Trump's tax plan is conditional on the effective repeal (and/or replace) of Obamacare, which is set for a vote on Thursday. And yet, it was only today that the market, and the press, appeared to notice that the biggest threat for the market - a market which has long ago priced in the successful passage of Trump's tax cuts - is that Trumpcare may not pass not only the Senate, but also the House, which in turn would stall Trump's tax plan schedule well into fiscal 2018 (if not later) as the following Reuters headlines confirms: "Worries about Trump tax plan sink stocks."

And, unfortunately for Trump and bulls, despite the president's trip to the Capitol this morning, he failed to whip holdout Republicans. In fact, according to the latest NBC News roll call, there are at least 26 Republicans who as of this moment, 48 hours before the House vote to repeal Obamacare, are either opposed, or lean "strongly against" the health bill despite its recent revisions.

So, for all those who are looking for someone - or someones - to blame for today's selloff, which is shaping up as the worst of 2017, here is the list of 26 Republican house members who are jeopardizing Trump's entire domestic agenda. As a reminder, the GOP can only afford to lose 21. If the list below holds, Trump's biggest legislative push will be a failure on Thursday.

Sweden Readies Network Of Nuclear Fallout Bunkers As Fears Grow Of Russian Attack

It's difficult to argue that international geopolitical tensions aren't somewhat elevated at the moment. Russia, and it's army of 'hackers', has suddenly become the convenient enemy of every political party around the world that once enjoyed majority support among voters but can't quite come to terms with the fact that their own actions, rather than a well-orchestrated Russian propaganda campaign, may be the cause of the wave of nationalism sweeping across the globe. Not to mention the fact that it's almost impossible to predict the daily provocations that will come from leaders in Iran and North Korea.

And while most of us are simply making note of the heightened international tensions, before more or less going on with our usual daily routines, the Swedes are preparing for the worse and readying a vast system of nuclear fallout bunkers just in case Russia decides to invade over the next couple of months.

Bunker

According to The Sun, Sweden is home to a system of 65,000 bunkers that were established in the Cold War to protect the population from nuclear war with the Soviet Union and, as of right now, they're all being prepped for immediate usage.

According to MSB, the bunkers currently protect against blast and radiation as well as chemical or germ warfare.

But with fears growing over threat posed by Vladimir Putin and his resurgent Russia they are being rev ...

As Trump Trade Withers, China's Markets March On

Faltering expectations for Trump hurt U.S. markets but have helped ignite simultaneous rallies in Chinese equities, real estate and debt—for now.

Why Trump's Tax Cut May Disappoint Investors

With Republicans' health-care overhaul threatening to chew up the legislative calendar, their tax-reform plans risk getting pushed back.

Why Winnebago Can Keep Riding the RV Boom

Americans are buying motor homes at a record pace, making Winnebago one of the big beneficiaries of this recent surge. The favorable conditions and a reasonable price/earnings multiple heading into Wednesday's quarterly results suggest the good times should roll on.

Bank Supervision And The Central Bank: An Integrated Mission

from the St Louis Fed

-- this post authored by Julie Stackhouse

The Federal Reserve's bank supervision and regulation duties are many and varied, and they reflect the depth and breadth of the nation's financial institutions landscape.

How Might Changes In Federal Policies Boost Innovation And Productivity?

from the Congressional Budget Office

-- this post authored by Nathan Musick

At the beginning of February, while testifying to the House Budget Committee about the outlook for the federal budget and the economy, CBO's Director was asked how federal policy might affect economic productivity. Because answers during Congressional hearings must be brief, this blog post provides some additional information on the subject. The post also complements yesterday's discussion of infrastructure spending, which mentioned the effects of that spending on productivity.

Europe Markets: Bank stocks lead selloff in Europe on "Trump trade" worries

European stocks fell to a two-week low Wednesday, as investors questioned whether the Trump administration can soon deliver the fiscal and regulatory changes needed to support the "Trump trade" that's lifted global equities in recent months

Market Snapshot: Selloff in U.S. stocks set to pick up again as 'Trump trade' dwindles

Wall Street is set for another day in red on Wednesday, building on the prior day's sharp selloff as investors grew concerned the Donald Trump administration will fail to deliver on its pro-business promises.

London Markets: FTSE 100 retreats from record-setting rally as 'Trump trade' fades

U.K. stocks are falling Wednesday, with the "Trump trade" that has driving a global stock rally seeming to fade as investors turned more pessimistic about the chances of the new U.S. president driving through planned reforms.

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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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