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27Mar2017 Pre-Market Commentary: Fasten Seat Belts As The DOW Is Set To Open Down Triple Digits, Crude Prices Slipping Along With The US Dollar, Not A Good Day On Wall Street

Written by Gary

U.S. futures point to triple-digit drop in Dow ($DJI -0.8%), global stocks and the dollar are under pressure amid rising doubts over President Trump's ability to pass legislative reforms. Crude prices fell into the low $47 a barrel and the US dollar has slipped to the high 98's.


Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.95% while London's FTSE 100 is off 0.82% and France's CAC 40 is lower by 0.50%.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. stock futures hit six-week low on failed healthcare bill

(Reuters) - U.S. stock index futures hit six-week lows on Monday after President Donald Trump failed to push through his healthcare bill, raising concerns about his ability to deliver on his economic agenda.

EU antitrust regulators clear $130 billion Dow, DuPont merger

BRUSSELS (Reuters) - Dow Chemical and DuPont gained conditional EU antitrust approval on Monday for their $130 billion merger by agreeing to significant asset sales, one of a trio of mega mergers that will redraw the agrochemicals industry.

Toshiba wants Westinghouse to file for bankruptcy as early as Tuesday: source

TOKYO (Reuters) - Toshiba Corp wants its U.S nuclear unit to file for Chapter 11 protection from creditors as early as Tuesday, according to a source with direct knowledge of the matter, seeking a quick ringfencing of losses before the Japanese parent's financial year ends.

Once golden, Robert Rubin's hedge fund proteges lose some luster

BOSTON/NEW YORK (Reuters) - Learning to invest on Goldman Sachs' risk arbitrage desk, made famous by leader Robert Rubin, was once seen as a fast track to fortune. But the band of hedge fund protégés who mastered their trade under the former Wall Street star and U.S. Treasury Secretary have stumbled in recent years.

Plateau in U.S. auto sales heightens risk for lenders: Moody's

DETROIT (Reuters) - As U.S. auto sales have peaked, competition to finance car loans is set to intensify and drive increased credit risk for auto lenders, Moody's Investors Service said in a report released on Monday.

Morgan Stanley ups European earnings forecasts, says financials in 'sweet spot'

LONDON (Reuters) - A stronger-than-anticipated economic recovery, the return of inflation and the region's financial sector in a "sweet spot" has spurred Morgan Stanley to lift its earnings forecasts and targets for European benchmark indexes.

China state firms eye land around Panama Canal: waterway authority

SHANGHAI (Reuters) - Chinese state firms have expressed an interest to develop land around the Panama Canal, the chief executive of the vital trade thoroughfare said, underlining China's outward push into infrastructure via railways and ports around the world.

Hyundai suspends China plant for a week amid diplomatic stand-off

SEOUL (Reuters) - South Korea's Hyundai Motor on Monday said it had suspended production at one of its Chinese factories for a week, fuelling concern that a diplomatic standoff may be hurting sales in the automaker's top market.

VW's Audi halts A4, A5 production at Ingolstadt over parts shortage

BERLIN (Reuters) - German luxury carmaker Audi will halt production of the A4 and A5 luxury models at its Ingolstadt base this week until Thursday due to a parts shortage after a fire at a supplier, it said on Monday.

It's "Judgment Time": Goldman Sees Three Options For Traders

From Goldman's Tony Pasquariello

Judgment Time ... Options Include:


  1. get bearish S&P for a trade.

    don't fight the primary trend -- this is a melt-up, and there are good (macro) reasons behind it.

    simplify the portfolio; wait for better location to re-load length.


A case for door #1:

US equities are OWNED right now. positioning metrics look very stretched (particularly for the levered community and retail money) and the options market smells of complacency.

the second derivative of global growth will likely turn lower; see first chart below on why that could really matter.

plot crude oil, high yield, small cap or the banks -- all of these assets are encountering some turbulence.

coming out of this week, policy expectations surrounding the new administration need to be reconsidered.

A case for door #2:

in February, the Current Activity Index printed its best month in a decade and financial conditions ... got easier (as. the dollar and the bond market were well behaved; link). in English: the interplay between global growth and financial markets is a stock operator's dream.

a global cyclical upswing was taking shape before the US election; that narrative remains intact today and will underpin cyclical assets irrespective of DC headlines.

failure to pass healthcare reform doesn't necessarily doom tax reform nor other pro-cyclical policy ambitions (deregulation, fiscal expansion).

unless you foresee a recession, it's unlikely that stocks will trade lower; see very last chart at bottom. again, don't ignore the history book.

A case for door #3:

some blend of the previous points, principally tha ...

As Market Tumbles, Investors Rush Into Safe Haven SNAP After Mass Wall Street Upgrade

While US equity markets are shuddering under the uncertainty of President Trump's agenda, it appears investors have found a safe haven for their hard-gambled retirement funds. Following a series of upgrades, overweights, and "buy" recommendations from Wall Street's biggest and brightest commission-takers, SNAP shares are soaring - back to their post-IPO open at $24.

Why SNAP is up: GS: Initiate Buy, $27 PT Citi: Buy, $27 PT MS: Overweight, $28 PT RBC: Outperform, $31 PT Jefferies: Buy, $30 PT

Goldman initiates a "buy"...

Morgan Stanley is a huuge fan now...

But Morgan Stanley's outlook seems more like a coin toss?

With a bear case of a 50% drop from here...

Kremlin Rejects US, EU Call To Free Detained Protesters As Court Fines Opposition Leader Navalny

One day after snap protests against corruption and Russia PM Medvedev broke out across numerous Russian cities, leading to the detention of hundreds of protesters as well as opposition leader Aleksey Navalny, the Russian opposition activist was found guilty of staging an unsanctioned rally, and will be fined 20,000 rubles (US$350) for his role in organizing what the authorities said was an illegal protest in Moscow on Sunday.

The Russian protests, estimated to be the biggest since a wave of anti-Kremlin demonstrations in 2011/2012, come a year before a presidential election that Vladimir Putin is expected to contest, running for what would be a fourth term.

The same court was due, later on Monday, to consider a separate charge against Navalny of disobeying a police officer.


The Russian opposition activist Aleksey Navalny

"Those who claimed on the previous day in pseudoacademic language that the event was lawful and in no way violated the law - they were telling blatant lies," Russian presidential spokesman Dmitry Peskov said Monday, referring to the organizers of the event.

As reported on Sunday, Navalny was detained shortly after arriving at an anti-corruption protest in downtown Moscow on Sunday. He was charged with violating a law on public gatherings and faced a fine, community service, or administrative detention. Moscow police have officially confirmed that they detained some 500 demonstrators.

Approximately 8,000 people took part in the protest in Russia's capital, law enforcement officials reported. As the rally continued, police used l ...

Frontrunning: March 27



Markets Slide on Doubts that Trump Can Deliver (BBG)

Dollar hits four-month low as Trump trade deflates (Reuters)

These Charts Show Alarm Bells Ringing on Trump Trade (BBG)

White House may court Democrats on tax reform (Reuters)

Republicans Could Have Another Fight Over Tax Overhaul (WSJ)

'Religious left' emerging as U.S. political force in Trump era (Reuters)

Democrats Weigh Next Steps on Gorsuch Nomination (WSJ)

Iraq Military Rejects Claim U.S. Airstrike Killed Civilians (WSJ)

Deutsche Bank in Bind Over How to Modify $300 Million Trump Debt (BBG)

'Project Scalpel': Behind Big Banks' Plan to Save $2 Billion (WSJ)

Trump to sign order on Tuesday easing energy regulations: officials (Reuters)

United Airlines bars teenage girls in leggings from ...

China Tanked Oil Once, It Can Do It Again

In late 2013, oil was range trading, U.S. drillers were ramping up and China was entering a tightening cycle—much like today. Six months later, the oil market collapsed.

Spoiled-Milk Lending Flows to a Chinese Insurance Giant

Bank owned by big insurer Ping An is exposed to the plunge in China Huishan Dairy's shares.

Walking Back 'Forward Guidance' Could Leave Investors Lost

Forward guidance was a useful tool to reassure markets that rates would stay low for a long time. But now policy is tightening, the potential for market confusion has risen.

Wage Growth After The Great Recession

from the Cleveland Fed

-- this post authored by Roberto Pinheiro and Meifeng Yang

Nominal wage growth since the Great Recession has been sluggish. We show that the sluggishness is due mostly to weak growth in labor productivity, as well as lower-than-expected inflation. We also find that wage growth since late 2014 has actually been above what would be consistent with realized labor-productivity growth and inflation, and this trend in wages reflects an increase in labor's share of income. We show evidence that this increase in the labor share may be due to a reversal of the trend to replace labor with capital.

Is OPEC Losing Its Ability To Influence Oil Prices?

from the St Louis Fed

-- this post authored by Michael Owyang

The Organization for Petroleum Exporting Countries (OPEC) has exerted a great deal of control over world-wide oil production and prices since 1960.1 The figure below shows the percentage of oil production by country for 2015.

Market Extra: Stock-market fear threatens a return, as Dow stares at longest losing streak in 6 years

Measures of risk are rearing their heads back up, with the CBOE Volatility Index trending higher.

What Trump can do to undermine Obamacare, now that the GOP health bill has failed

Democrats, Obamacare supporters and opponents of the American Health Care Act quickly hailed the demise of the GOP health plan. But what was a legislative battle now is likely to move into the executive realm and the Department of Health and Human Services, led by longtime ACA opponent Dr. Tom Price.

How you can still be broke with $500,000 in income

The average American family is sliding inexorably into the red

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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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