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09May2017 Pre-Market Commentary: Wall Street Futures Point To A Fractionally Higher Opening And Climbing To New Historic Highs Again, WTI Crude Trading In The Low 46 Handle, US Dollar Stronger

Written by Gary

US stock index futures have risen this morning (SPY +0.2%) as a favorable French election outcome and a robust first-quarter earnings season has improved appetite for risk. Crude rose fractionally yesterday, but faced headwinds from concern over slowing demand and the rise in U.S. crude output


Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.74% while Germany's DAX is up 0.67% and France's CAC 40 is up 0.29%.

Monday's Key Earnings

Hertz (NYSE:HTZ) -17.7% AH on a big earnings miss.
JD.com (NASDAQ:JD) +7.7% following a surprise profit.
Marriott (NYSE:MAR) +3.9% AH beating estimates.
Pandora (NYSE:P) +2.9% AH reviewing strategic options.

Today's Markets

In Asia, Japan -0.3%. Hong Kong +1.3%. China +0.1%. India flat.
In Europe, at midday, London +0.6%. Paris +0.3%. Frankfurt +0.6%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq flat. Crude +0.2% to $46.52. Gold -0.2% to $1224.10.
Ten-year Treasury Yield +2 bps to 2.39%

Today's Economic Calendar

6:00 NFIB Small Business Optimism Index
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
10:00 Wholesale Trade
1:00 PM Results of $24B, 3-Year Note Auction

What Is Moving the Markets

Here are the headlines moving the markets.

Futures rise as risk-on sentiment improves

(Reuters) - U.S. stock index futures rose on Tuesday as a favorable French election outcome and a robust first-quarter earnings season improved appetite for risk.

Trump review of Wall Street rules to be done in stages: sources

NEW YORK/WASHINGTON (Reuters) - The U.S. government's review of a landmark 2010 financial reform law will not be complete by early June as originally targeted, and officials will now report findings piece-by-piece, with priority given to banking regulations, sources familiar with the matter said on Monday.

Office Depot profit beats estimates as costs drop

(Reuters) - Office supply chain Office Depot Inc , reported a bigger-than-expected profit for the first quarter as its operational expenses fell, in part due to a lower store count.

Allergan posts profit ahead of estimates; raises 2017 forecast

(Reuters) - Botox-maker Allergan Plc on Tuesday reported adjusted profit that beat analysts' estimates, and raised its 2017 forecast to include its $2.48 billion acquisition of Zeltiq Aesthetics.

U.S. regulators look at Volcker Rule, a sign they hear Wall Street

WASHINGTON (Reuters) - U.S. financial regulators on Monday discussed the Volcker rule governing banks' speculative trading, tackling one of Wall Street's biggest concerns and a sign President Donald Trump's administration is listening to banks' wishes about reforms resulting from the financial crisis.

Target to test next-day delivery service in Minneapolis

(Reuters) - Target Corp plans to test a next-day home delivery service called Target Restock in the Minneapolis area, the company said in a blog post on Monday.

Valeant posts first-quarter profit on tax benefit, raises full-year EBITDA forecast

(Reuters) - Canada's Valeant Pharmaceuticals International Inc reported a first-quarter profit, compared with a year-ago loss, due to an income tax benefit, and the drugmaker also raised its full-year adjusted EBITDA forecast.

Oil steadies but rattled by concern about OPEC's clout

LONDON (Reuters) - Oil rose on Tuesday but faced headwinds from concern over slowing demand and the rise in U.S. crude output that has shaken investors' faith in the ability of OPEC to rebalance the market.

Once tainted, Portugal's cork industry fights back

LISBON (Reuters) - A decade ago, shares in the world's largest cork producer, Corticeira Amorim , didn't look like a great bet.

Bitcoin Soars Over $1700 - 2017's Best-Performing Currency

Bitcoin is now up for 16 of the last 18 days, soaring over 50% in the last month and up almost 90% in 2017 - making its the year's best performing currency.

There appears to be no specitic catalyst for today's move as the surge in Japanese interest (as we detailed here) and news that Russia is considering, like Japan just did, to allow cryptocurrencies as a legal payment method are outweighing fears over 'hard forks', SEC rejections, and Chinese crackdowns.

One wonders whether this 'spurious' correlation has anything to do with Bitcoin's rise - as Venezuela's black market Bolivar plunges into hyperinflationary collapse, non-fiat currencies are bid...

We summarized the ongoing bitcoin frenzy as follows last week: "just as the Chinese bubble frenzy in bitcoin is fading, it may be replaced with a new one, in which thousands of Mrs. Watanabe traders shift their attention away from the FX market and toward digital currencies" and added that "If the transition is seamless, there is no telling just how far this particular bubble can grow."

Five days later and $250 dollar higher, we are observing first hand how accurate this prediction may have been, although like last week, we have no way of telling how long this particular mania phase will last.

Three Fast Facts About Slow Markets

From Nicholas Colas of Convergex

Today we continue our recent exploration of the ongoing low volatility in US equity markets, but with a novel twist. Instead of looking at the CBOE VIX Index, we look at the historical trends in actual S&P 500 price volatility. Not only is the dataset longer here (starting in the 1950s rather than 1990), but it is also "Stickier" than the twitchy VIX.

Three takeaways.

First: actual price volatility is running at 48% of its long run average at the moment and has been stuck around these levels for 77 days. The last recent periods of similar low-vol were in mid-2014 (75 days in duration) and late 2006/early 2007 (79 days). The 1990s had 2 long runs of low volatility: 1995/1996 (254 days) and 1992 (179 days) but the 1980s had only one (80 days in 1985).

Second: actual price volatility does correlate negatively to current returns (-44% from 1959 to today).

Third: more volatility now/soon does not have any forecasting power on returns over the next year.

Consider the following facts:

On the day before the assassination of John F. Kennedy (November 21st, 1963), the S&P 500 fell 1.3%. It had not made a similar move in over a month, and fell a further 2.8% on November 22, when the US President was shot in Dallas.

In the 10 trading days before the surprise invasion of Kuwait by Iraq on August 2, 1990, the S&P 500 saw 2 declines over 1% (1.0% loss on July 20, and a 1.7% decline on July 23) and a 0.7% decline on July 27th. Once markets saw Iraqi tanks in Kuwait City, the S&P 500 fell over 5% between August 2 and August 6.

In the three trading days before the 9/11 terror attacks in 2001, ...

Frontrunning: May 9



Yates warned Trump over Flynn blackmail fears (Reuters)

Former Trump security aide was Russia blackmail risk: ex-U.S. official (Reuters)

Visiting the White House Can Boost Your Stock Price. So Who's Visiting Trump? (BBG)

Investors Lighten Up on U.S. Stocks, Betting on Europe (WSJ)

Oil steadies but rattled by concern about OPEC's clout (Reuters)

GOP Confronts Backlash Over Health Bill (WSJ)

Macron's Next Test: Winning Control of France's Parliament (WSJ)

French ex-prime minister Valls offers to back Macron in June elections (Reuters)

Buying Spree Brings Attention to Opaque Chinese Company (NYT)

Iron Ore Sags Again as Forced-Sale Speculation Gathers Momentum (BBG)

Elliott Takes Akzo Nobel to Court to Oust Chairman in PPG Bid Battle (WSJ)

Russia showcase ...

Silver Investment Case Remains Extremely Compelling

Silver Investment Case Remains Very Compelling

Are we near a turning point in silver's relentless decline?
Avert your eyes - this is one ugly silver chart
Gold silver ratio at 75 shows real value of silver
Mining CEO explains why silver could reach $136.67
Buy silver low, sell high

Money Week

The silver price has been in sharp decline for three weeks and silver prices have fallen from $18.61 on April 16 to $16.20/oz today.

However, every cloud has a silver lining and for Dominic Frisby writing in Money Week, silver is the silver lining and the silver investment case remains compelling.

On Deck Goes From Hot Tech Startup to Dull Lender

On Deck Capital is bowing to investor pressure to slow its growth and turn a profit, but shareholders appear to hate the strategy.

Cutting Through Chinese Tech Giants' Profit Distortion

Now that Facebook has stopped issuing non-GAAP results, the spotlight is on China's big tech companies, for whom share-based compensation is a highly distorting force.

Why a Cable Deal is Bad for the Phone Industry

A wireless deal between Comcast and Charter will help them lower their costs, posing a greater threat to Verizon and AT&T.

The Tell: Gundlach makes bearish call on stock market as S&P 500, Nasdaq hit records

Prominent investor Jeff Gundlach offered a bearish call on U.S. stocks on Monday at the closely followed Sohn Conference in New York.

Need to Know: This extremely quiet market could be setting a trap for investors

The lowdown on that extremely low VIX is that while it may be tough as a single gauge for where markets are going, it could lull investors into a false sense of security, says our call of the day.

MarketWatch First Take: Pandora may be prettying itself up for a buyer

Pandora Media Inc.'s stock see-sawed in after-hours trading after the streaming music company released a lot of news just minutes before its earnings call with analysts, and most investors focused on the news that KKR is an investor and Pandora may get more serious about selling itself.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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