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29Jun2017 Pre-Market Commentary: Wall Street To Open Fractionally Higher, Dollar Slides To Lowest Level Since October, U.S. Banks Set To Rally After Passing Fed Stress Tests, Crude Prices Rise For 6th Day In A Row

Written by Gary

US stock index futures were fractionally higher this morning (SPY +0.05%), a day after the SP 500 scored its biggest one-day percentage gain in about two months. Bond prices are slumping for a third day, while the dollar has fallen further.

Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.26%, while the CAC 40 is leading the DAX lower. They are down 0.69% and 0.52% respectively.

Big banks, data in the spotlight on Wall Street

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.

Today's Markets

In Asia, Japan +0.5%. Hong Kong +1.1%. China +0.5%. India +0.1%.
In Europe, at midday, London +0.2%. Paris -0.7%. Frankfurt -0.4%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq -0.3%. Crude +0.8% to $45.10. Gold -0.3% to $1245.70.
Ten-year Treasury Yield +3 bps to 2.25%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 GDP Q1
8:30 Corporate profits
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Fed's Bullard: U.S. Monetary and Economic Policy
3:00 PM Farm Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Companies reporting earnings today »

What Is Moving the Markets

Here are the headlines moving the markets.

Stock futures flat ahead of GDP data

(Reuters) - U.S. stock index futures were little changed on Thursday, a day after the benchmark S&P 500 index scored its biggest one-day percentage gain in about two months, as investors awaited GDP and jobs data.

Britain says Fox bid for Sky gives Murdoch too much power over news

LONDON (Reuters) - Britain intends to refer Rupert Murdoch's takeover of Sky to a full investigation because the deal raises concerns about the amount of influence the media mogul would wield.

Walgreens scraps Rite Aid takeover, to buy half its stores

(Reuters) - Drugstore chain Walgreens Boots Alliance Inc terminated its deal to buy Rite Aid Corp after struggling to win antitrust approval, and said it would instead buy nearly half of the smaller rival's U.S. stores for $5.18 billion in cash.

High-tech dashboards signal big changes for auto parts suppliers

SAN FRANCISCO (Reuters) - Peer at the instrument panel on your new car and you may find sleek digital gauges and multicolored screens. But a glimpse behind the dashboard could reveal what U.S. auto supplier Visteon Corp found: a mess.

Fed gives big U.S. banks a green light for buyback, dividend plans

WASHINGTON/NEW YORK (Reuters) - The Federal Reserve has approved plans from the 34 largest U.S. banks to use extra capital for stock buybacks, dividends and other purposes beyond being a cushion against catastrophe.

'Hammer, hammer, hammer': Canada lobbies U.S. before NAFTA talks

CINCINNATI, Ohio (Reuters) - In the baking Ohio heat Canada's trade minister is trying to save NAFTA, one encounter at a time.

Western Digital says Toshiba's actions in chip spat harm customers

TOKYO (Reuters) - Western Digital Corp said on Thursday that legal action and other moves taken by Toshiba Corp in their dispute over the sale of its prized memory chip unit were harming Toshiba's stakeholders and customers.

Stuttgart prosecutors probe Porsche, Bosch about diesel emissions

FRANKFURT (Reuters) - Prosecutors in Stuttgart have launched a preliminary probe against employees at German sportscar maker Porsche AG to see whether they were involved in designing engine management software to cheat emissions tests.

Small upside for U.S. stocks in second half, worries loom

NEW YORK (Reuters) - U.S. stocks will rise marginally in the second half of the year, although any future economic disappointments or deeper uncertainty over President Donald Trump's agenda could trigger a market pullback, a Reuters poll showed.

Why It's So Difficult To Call The Market Top

Via Global Macro Monitor,

This is one of our favorite posts of all-time.

Thought it apropos to re-post given that everyone and their mother is trying to call the top in stocks. It's all about yield-seeking capital flows, my friends. Tell us what interest rate is the tipping point which thwarts that behavior and we will tell you when the stock and credit markets top and flop.

"John Bull can stand many things, but he cannot stand 2 , 0, .5 ,1, 1.5 , 2 percent" - Bagehot

We are still far from the tipping point interest rate that sends the yield seekers back to their caves, in our opinion.

I just borrowed 5-year money for my daughter's first car at 2.64 percent. That is less than 85 basis points over the 5-year note, for a used car!

Expensive Assets

Yes, absolutely, all assets are incredibly expensive. But pension funds are not going to make their nut sitting in cash waiting for them to get cheaper. Seniors in Europe can't eat with their interest earnings from negative rates.

Argentina floating a 100-year bond at 7 percent-ish, even after defaulting several times over the past 30 years, is definitely th ...

Saudi Deny Deposed Saudi Crown Prince Barred From Leaving Kingdom, "Confined To Palace"

In the aftermath of the recent surprising Saudi succession, overnight the NYT reported that the recently deposed Saudi crown prince, Mohammed bin Nayef, has been barred from leaving the kingdom and confined to his palace in the coastal city of Jidda, citing to four current and former American officials and Saudis close to the royal family.

The paper adds that the new restrictions on the man who until last week was next in line to the throne and ran the kingdom's powerful internal security services sought to limit any potential opposition for the new crown prince, Mohammed bin Salman, 31, the officials said, speaking on the condition of anonymity so as not to jeopardize relationships with Saudi royals. It was unclear how long the restrictions would remain in place.

However, this morning, a senior Saudi official on Thursday denied as "baseless" the NYT report, and a Saudi official told Reuters that bin Nayef, a veteran interior minister, was continuing to host guests and there were no restrictions at all on his or his family's movements.

The senior Saudi official expressed shock at the report, which he described as a "fabricated story" and suggested that Mohammed bin Nayef may seek legal action against the newspaper.

"What was published by the New York Times is untrue, completely false, and baseless," the official told Reuters, responding to a question on the New York Times report.

"His Royal Highness Prince Mohammed bin Nayef and his family is mov ...

Treasury Yields Spike Amid A Burst In Early Volume

Following the previously noted ongoing rise in yields around the globe on the back of this week's unexpected and coordinated central bank hawkish jawboning which sent 10Y Bunds as high as 0.43%, double where they were earlier in the week...

... the fixed income sell-off continued in early NY orders with US yields leading the squeeze higher amid burst in volume which saw some 150k contracts push the 10Y yield higher. According to Citi, "there's little to stop the move, with nothing overnight discouraging this trend - we haven't seen any obvious headlines to trigger the latest move."

As such the whole US treasury curve is higher, with 10y yields testing 2.29% and 5y yields reaching for 1.88%. With US yields showing signs of stabilizing and potentially turning higher from here driven by the belly of the curve, Citi adds that we may see a resumption of the bear steepening move.

Consequently USDJPY continues to squeeze higher amid some modest dollar strength, and we are now trading around 112.70 just ahead of the trend line resistance at 112.75.

Warren Buffett May Soon Be The Largest Shareholder In A 2nd US Megabank

Remember when Warren Buffett anecdotally "took a bath" when he decided to effectively rescue Bank of America with a $5 bilion equity injection in 2011? He may be due for another bath any minute.

Warren Buffett, already the largest shareholder in recently disgraced Wells Fargo, could soon become the largest shareholder in another US megabank after Bank of America said it would raise its dividend by 60%, from 30 cents to 48 cents, moments after the Federal Reserve gave it and 32 other SIFI-designated US lenders

Central Banks Give Sleepy Markets a Wake-Up Call

The U-turn in bonds is a sign that investors haven't been paying attention to what central banks have been saying.

Chip Makers Cashing In on Digital Currencies, for Now

Graphics processors have long been the mainstay of personal computers tricked out for gaming. But the chips are also useful for a task called cryptocurrency mining.

Blue Apron IPO Tied Up by Big Tech

Blue Apron Holdings is the latest startup to have a tech giant suck the air out of its public market debut. It certainly isn't the first and likely won't be the last.

Economic Report: Poor start to 2017? Not really. First quarter GDP raised again to 1.4%

The U.S. economy didn't perform all that badly in the first three months of 2017, growing twice as fast as the government originally reported.

Metals Stocks: Gold stages a retreat as government bond yields jolt higher

Gold prices threaten to snap a three-session climb on Thursday as a global rise in government bonds diminish the appeal of investing in precious metals that don't bear interest.

Why did these generic drugs' prices jump as much as 85%?

The price hikes were made the day of a Senate hearing on expensive drugs.

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