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10May2017 Pre-Market Commentary: Wall Street Has Taken A Dip On Comey's Firing, Crude Prices Climb, Investors Sit On Hands While Washington's Political News Settles

Written by Gary

US stock market futures down fractionally (SPY -0.01%) following the abrupt firing of FBI Director James Comey. Safe havens are getting a bid, with gold up $0.8% to $1225/ounce and crude up ahead of inventory reports.


Here is the current market situation from CNN Money

European markets are mixed today. The FTSE 100 is up 0.56% while the DAX gains 0.13%. The CAC 40 is off 0.04%.

Tuesday's Key Earnings

Allergan (NYSE:AGN) -1.4% despite beating estimates.
Electronic Arts (NASDAQ:EA) +6.7% AH after a big rise in revenues.
Nvidia (NASDAQ:NVDA) +11% AH riding an AI and gaming boom.
Plug Power (NASDAQ:PLUG) -7.5% missing estimates.
Valeant (NYSE:VRX) -2.2% as analysts remain wary.
Priceline (NASDAQ:PCLN) -3.8% on sluggish sales.
Walt Disney (DIS) -2.4% AH with concerns at ESPN.
Whole Foods (NASDAQ:WFM) -0.4% after a downbeat quarter.
Yelp (NYSE:YELP) -28% AH chopping guidance for 2017.

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 Import/Export Prices
10:00 Atlanta Fed's Business Inflation Expectations
10:30 EIA Petroleum Inventories
1:00 PM Results of $23B, 10-Year Note Auction
2:00 PM Treasury Budget

What Is Moving the Markets

Here are the headlines moving the markets.

Europe shares steady; dollar down on Comey sacking

LONDON (Reuters) - European shares held at 21-month highs on Wednesday, while the dollar fell on concerns that U.S. President Donald Trump's dismissal of his FBI chief could make passage of his tax reform plans more difficult.

EpiPen maker Mylan's profit edges past estimates

(Reuters) - Generic drug maker Mylan NV reported first-quarter profit just above expectations, helped by demand for products it gained through the acquisition of Swedish drugmaker Meda, even as sales of its controversial EpiPen allergy shot declined.

U.S. burger chain Wendy's quarterly profit, sales beat estimates

(Reuters) - Wendy's Co reported higher-than-expected quarterly same-restaurant sales and profit, driven by the popularity of its value meals such as "4 for $4" and lower costs.

Amazon trounces rivals in battle of the shopping 'bots'

SAN FRANCISCO (Reuters) - Earlier this year, engineers at Wal-Mart Stores Inc who track rivals' prices online got a rude surprise: the technology they were using to check Amazon.com several million times a day suddenly stopped working.

U.S. broadcaster Tribune posts surprise quarterly loss

(Reuters) - U.S. broadcaster Tribune Media Co , reported a quarterly loss on Wednesday, compared with a profit a year earlier, hurt in part by lower ad revenue from its TV and entertainment business and as it took an impairment charge.

ChemChina gets around 82 percent of Syngenta in $43 billion deal

ZURICH (Reuters) - ChemChina [CNCC.UL] has won around 82 percent support from Syngenta shareholders for its $43 billion takeover of the Swiss pesticides and seeds group, China's biggest foreign acquisition to date, the two companies said on Wednesday.

Glass Lewis says BlackRock CEO's pay, performance misaligned

NEW YORK (Reuters) - Proxy adviser Glass Lewis recommended on Tuesday that BlackRock Inc shareholders "express their concern" regarding the world's largest asset manager's pay of its top executives, including CEO Larry Fink.

Barclays boss Staley faces shareholder fury over whistleblower

LONDON (Reuters) - Barclays Chief Executive Jes Staley apologized to shareholders on Wednesday for his attempts to unmask a whistleblower, but faced calls from individual shareholders to resign over his conduct.

SAP chairman defends executive pay system

MANNHEIM, Germany (Reuters) - SAP said on Wednesday its executive pay system was reasonable, defending management bonuses against the criticism of some shareholders.

Frontrunning: May 10



Trump fires FBI chief Comey, setting off political storm (Reuters)

Comey Firing Upends Russia Probes (WSJ)

White House Says Decision Stemmed From Comey's Handling of Clinton Email Probe (WSJ)

Comey Ouster Threatens to Backfire on Troubled Trump White House (BBG)

Comey's Deserved Dismissal (WSJ)

GOP baffled by timing; WH braces for independent probe (Axios)

After Ouster at FBI, Small Group of GOP Senators Holds Sway Over Next Steps (WSJ)

U.S. Commerce's Ross says 3 percent GDP growth not achievable this year (Reuters)

Trump's New Tax Plan Is a Mystery for the Middle Class (WSJ)

Barclays chief apologises to shareholders for trying to indentify whistleblower (FT)

Warren Pushes Administration on Plan to Break Up Megabanks (BBG)

New South Korea p ...

Trump Slams Democrats For Defending Comey: "They'll Be Thanking Me!"

It was a return to the old, familiar routine on Wednesday morning, when President Trump went after Democrats on Twitter for their reaction to his decision to fire FBI Director James Comey.

"The Democrats have said some of the worst things about James Comey, including the fact that he should be fired, but now they play so sad!" the president tweeted Wednesday.

The Democrats have said some of the worst things about James Comey, including the fact that he should be fired, but now they play so sad!

— Donald J. Trump (@realDonaldTrump) May 10, 2017

Trump unexpectedly fired Comey - the man who had been leading the controversial investigation into potential ties between the Trump campaign and Russia - on Tuesday evening, a decision some media reports suggested he had expected would be met with a favorable reception from Democrats, and especially the Clinton team, especially after Hillary accused Comey of being the catalyst behind her losing the election. The dismissal came in a signed letter from Trump to Comey that said it was time for a "new beginning" at the nation's "crown jewel of law enforcement." Comey was in LA at the time, and learned about his termination while watching TV.

Needless to say, the move "shocked" Washington and sparked outrage from Democrats, who said the president was trying to shut down the FBI's investigation. Democratic lawmakers fired off statements condemning the president's actions and impugning his motives, with some alluding to the Watergate era.

The most vocal response came from Senate Minority Leader Charles Schumer late Tuesday raised questions about the reasoning behind Comey's firing. "Were these investigations getting too close to home for the president?" Schumer asked during a news ...

JPMorgan: "Comey's Dismissal Saps Trump's Political Capital At The Worst Possible Time"

With so much taking place overnight, and confused global market whipsawing in the aftermath of a barrage of political, geopolitical and earnings news, here is another recap to follow our traditional market wrap, this time courtesy of JPMorgan, focusing on the key things that are happening this morning.

From JPM's Adam Crisafulli

Market update - Asia saw mixed price action, Eurozone stocks are off small, and US futures are down a few points.

What's happening this morning? There are a few moving pieces this morning. Trump managed to go a few days w/o controversy (a relatively long stretch for the current White House) but the Comey firing is by far the biggest headline of the night. As far as the market is concerned, Comey's dismissal saps Trump's political capital and weakens relations w/Congress at the time when he is trying to move an ambitious pro-growth agenda through the Senate and House.

* * *

China's inflation data provides further evidence of CQ1 being the country's near-term nominal growth peak (PPI cooled by more than expected). It was a mixed night of US earnings (DIS, FOSL, and YELP all suffered afterhours weakness; FOSL and YELP in particular plunged; that being said semiconductor numbers were strong w/great figures from MCHP and NVDA).

Europe - the major indices are flat-to-down small. Autos, basic resources, retail, energy, and utilities are outperforming while media, real estate, telecoms, industrials, and luxury are lagging. There were a bunch of earnings in Europe but none were particularly controversial. Barratt Developments, ING, Ahold Delhaize, and AXA are all higher after reporting (AXA also announced plans to IPO its US life insurance operation). ITV and Heidberg Cement are trading lower on earnings.

FX/T ...

Global Markets Thrown For A Loop After Comey's Shocking Sacking

Just as the reflation trade appeared to be finding its latest wind, after a modest rise in oil prices over the past 24 hours (now that Andurand has finished liquidating his book) and a halt to the commodity rout in China, Trump threw the markets for a loop again with his firing of James Comey, which has implications on everything from Trump's tax policy (most likely delayed due to more infighting between, and within, the two parties) to US geopolitics (will Trump launch another attack, this time against N. Korea to deflect from this scandal?)

"There is no doubt that Trump is dominating proceedings this morning after the sacking of Comey. This is a political story rather than a market story, but yet again it creates uncertainty in the market, which leaves everything the president does with a cloud floating over it," said James Hughes, chief markets analyst at GKFX in London, quoted by Reuters.

"The Comey news is being treated as a risk-off event, and the headlines were sparking the dollar's move down," said Bart Wakabayashi, branch manager for State Street Bank and Trust in Tokyo.

As a result it has been a chaotic, mostly "risk-off" overnight session, in which S&P futures, some Asian markets and European stocks (which yesterday hit the highest level since August 2015) declined on the latest spike in political uncertainty after Trump's abrupt firing of Comey. The USD weakened vs G-10 peers; in Japan JGBs sold off across the curve after BOJ's Kuroda acknowledged that QE purchases have become smaller. The USD/JPY fell in response to the latest belligerent North Korean rhetoric in which a North Korean ambassador told SkyNews his country will conduct a 6th nuclear test, the only question is when. In the other Korea, the Kospi opened higher, rising to new records after Moon Jae-in won the South Korean presidential vote, but then erased early gains a ...

The Surprising Losers From the VIX's Decline

The low level of the market's so-called fear gauge is not only bad news for investors who bet on higher volatility, it is bad for conservative investing strategies that profit directly from market choppiness, too.

AXA's U.S. IPO Looks Like the Start of a Long Goodbye

AXA's plan for a multibillion-dollar listing of its U.S. life arm looks like a step toward the exit by the French insurer even if it starts by selling only a minority stake.

More Action On Tap for Videogame Stocks

Videogame players like action. Investors in videogame publishers may need to steel themselves up for some.

Metals Stocks: Gold finds some footing as FBI's Comey firing pressures stocks

Gold futures prices gained Wednesday, pulling the metal up from its lowest close since mid-March, as more upheaval in Washington turned investors briefly away from riskier assets in favor of haven plays.

MarketWatch First Take: Nvidia surges as AI drives deeper into the cloud

Nvidia Corp. has been a gaming company for as long as it has existed, with almost all of its revenue tied to the hardware that makes video games come alive.

Deep Dive: Short-sellers smell blood in car-rental stocks

The industry's profit margins are shrinking, so higher sales can't even help, writes Phil van Doorn.

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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