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30Jun2017 Pre-Market Commentary: Wall Street To Open Higher, WTI Crude In The Low 45 Handle, US Dollar Remains Weak, Investors Getting Ready To Head Home Early For The Long Forth Of July Weekend

Written by Gary

US stock index futures were moderately higher this morning (SPY +0.3%) a day after Wall Street fell sharply. The dollar was on course for its worst quarter in seven years and crude prices moved higher putting crude on track for its biggest weekly gain since May.


Here is the current market situation from CNN Money

European markets are higher today with shares in France leading the region. The CAC 40 is up 0.50% while London's FTSE 100 is up 0.16% and Germany's DAX is up 0.02%.

What Is Moving the Markets

Here are the headlines moving the markets.

Stock futures slightly higher ahead of consumer spending data

(Reuters) - U.S. stock index futures were slightly higher on Friday, a day after Wall Street fell sharply, as investors awaited a slew of economic data, including on consumer spending, a key indicator for U.S. economy.

Exclusive: Airbus CEO Enders to take control of plane sales in new shake-up

PARIS (Reuters) - Airbus is launching a reorganization of its commercial aircraft sales operations in a move likely to focus fresh attention on a delicate balance of power at Europe's largest aerospace company, people familiar with the situation said.

Berkshire to become BofA's top shareholder after share swap

(Reuters) - Warren Buffett's Berkshire Hathaway Inc will swap its preferred shares in Bank of America Corp into common shares worth about $17 billion, making it the biggest shareholder of lender.

BP's gasoline buying lifts European benchmark to record volumes

LONDON (Reuters) - An unprecedented gasoline buying spree by BP in June lifted trading volumes on Europe's benchmark Argus index to the highest on record, the price reporting agency said on Friday.

HSBC ends 20-month wait for China securities JV approval

LONDON (Reuters) - HSBC has won Chinese approval for its investment banking joint venture with a local state-backed fund, ending a twenty-month wait for a decision that will allow it to begin expanding its business in the world's second largest economy.

Markets bet Abe will 'pull stimulus from a hat' if Tokyo election stings

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe has seen his popularity slump ahead of a local election in Tokyo following scandals and gaffes by officials close to him, but the stock market is betting that a poor showing by the premier's party would be good for shares.

RadioShack creditors' lawsuit says Sprint killed 6,000 jobs

WILMINGTON, Del./BOSTON (Reuters) - Sprint Corp used confidential information from its alliance with RadioShack Corp to open competing mobile phone stores, dooming the comeback by the electronics retailer and destroying jobs, according to a lawsuit filed on Wednesday by RadioShack creditors.

U.S. SEC to allow firms to file confidential draft statements before IPOs

(Reuters) - The U.S. Securities and Exchange Commission said on Thursday it was expanding the Jumpstart Our Business Startups (JOBS) Act, by allowing all public companies to file confidentially prior to initial public offerings, in a move designed to revitalize the IPO market.

Bayer to cut profit view on Brazil, consumer health setbacks

FRANKFURT (Reuters) - Bayer said on Friday it would cut its full-year earnings forecast due to high inventories at crop protection distributors in Brazil and a weaker-than-expected consumer health business.

Trump Calls For "Immediate" Repeal Of Obamacare If Senate Deal Fails

Instead of lashing out at various media personalities on Twitter this morning, President Trump has instead pivoted to Healthcare Law, and in an early morning tweet has endorsed a strategy for replacing Obamacare may resonate with conservatives like Kentucky's Rand Paul: Repeal now, replace later. Trump tweeted: "If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!"

If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!

— Donald J. Trump (@realDonaldTrump) June 30, 2017

The tweet is notable because it is the polar opposite of what Trump told Paul Ryan shortly after he won the election and shortly before Congress went into session, as Axios reminds us. And, more confusing, part of the reason why the House GOP leadership didn't run with a clean repeal vote, as they'd done many times under President Obama, was because Trump had made it clear to Ryan he wouldn't sign the bill.

Furthermore, Axios adds that Trump is "frustrated, like every other Republican involved in the jammed-up health care negotiations. HHS Secretary Tom Price met with senior officials at the White House yesterday, and a source familiar with the meeting said the mood was far more negative than the day before" which means that moderate Republican senators "aren't buying what Mitch McConnell is offering them. At least not yet."

So with a deal seemingly out of ...

Frontrunning: June 30



Rhetorical question of the day: Twisted Geniuses or Bumbling Ex-Academics? (WSJ)

Markets Steady on Quarter's Last Day (WSJ)

Their fortunes enmeshed, Trump and Putin to hold first meeting next week (Reuters)

Oil Is Set for Longest Rally of 2017 (BBG)

Brightening economy sets euro up for strongest quarter since debt crisis (Reuters)

Eurozone Inflation Falls Again in Setback for ECB (WSJ)

Trump's Travel Ban Takes Effect, Setting Strict Entry Limits (WSJ)

China says HK joint declaration no longer has meaning (Reuters)

U.S. likely to bar Japan investigators from interviewing warship crew, official says (Reuters)

Chinese Regulators Play Whac-A-Mole With Banks (WSJ)

Trump says he is sending federal help to fight Chicago crime (Reuters)

Iraq's Dilemma: Who Will Lead the Next Big Fight Against ISIS? (< ...

Trump "Overrules" Cabinet, Prepares To Unleash Global Trade War

While one of Trump's recurring campaign promises was that he would "punish" China and other key US trade counterparties if elected, for taking advantage of free-trade by imposing steep tariffs and duties on foreign imports to "level the playing field", the President's stance changed drastically after the election, U-turning following his amicable meeting with China's president Xi Jinping in March, but mostly as a result of pressure by his ex-Goldman advisors to keep existing trade arrangements in place and not "rock the boat."

Now, all that may be about to fall apart.

According to Axios, behind the constant media scandals, "one of the most consequential and contentious internal debates of his presidency unfolded during a tense meeting Monday in the Roosevelt Room of the White House" where with "more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they're hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports."

In other words, Trump - true to his campaign promises - is set to launch a global trade wars after all, one where then main country impacted would be China, however the collateral damage would extend to Canada, Mexico, Japan, Germany and the UK.

And what may be even more striking is that Trump overruled his cabinet, as "the sentiment in the room was 22 against and 3 in favor — but since one of the three is named Donald Trump, it was case closed." Axios adds that while "no decision has been made, the President is leaning towards imposing tariffs, despite opposition from nearly all his Cabinet."

Needless to say, if Trump follows through, the outcome would have a profound effect on U.S. economic and foreign policy; Trump will forma ...

Warren Buffett Becomes Bank Of America's Top Shareholder, Books $12 Billion Profit

As we previewed exactly 24 hours ago, Buffett's Berkshire Hathaway said it will exercise warrants to swap its preferred Bank of America shares for 700 million shares of BAC common stock, making Buffett the largest shareholder, surpassing BlackRock, Vanguard and State Street . Buffett is also the top shareholder at Wells Fargo.

Buffett exercised his warrants, which were due to expire in 2021, to swap $5 billion in preferred stock worth about 6% of the company for common stock at $7.14 a share, less than a third of yesterday's closing price of $24.32, effectively translating in a profit of $12 billion for the Omaha octogenarian. The decision was prompted by the latest Fed stress test, which allowed the bank to hike its dividend by 60%, from 30 cents to 48 cents. BofA also announced its plans for a record $12 billion stock buyback, almost immediately after the Federal Reserve gave it the green light on Wednesday, while also approving the capital-return plans of 32 other US banks that received the SIFI designation.

As we noted yesterday, in his February letter, Buffett said that an increase in BAC's dividend above 44 cents would likely prompt him to swap Berkshire's preferred shares in the second-largest bank into common shares now worth about $16.7 billion - more than tripling a $5 billion investment made fewer than six years ago.

Buffett, the world's fourth-richest man with a net worth of $76.1 billion, according to Forbes, bought $5 billion of Bank of America preferred stock with a 6 percent di ...

Economy Is Losing a Big Booster

The oil-price rebound gave capital spending a boost but weakening prices means it will likely be short-lived.

China to Markets: Relax, Global Growth is Fine

While global bond and stock markets are under pressure, the latest data from China contained some encouraging news.

India's Tax Reform Is Far From Straightforward

A new goods and sales tax is an improvement on the current situation, but still too complex

Rail Week Ending 24 June 2017: Economically Intuitive Sectors Slow

Week 25 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors slowed.

Starting July 1, people can legally buy retail marijuana in Nevada

Starting at 12:01 a.m. July 1, adults age 21 and older will be able to buy up to an ounce of marijuana, or one-eighth of an ounce in marijuana-infused edibles and concentrates.

Darrell Delamaide's Political Capital: Media courts backlash with constant assault on Trump

Mainstream media have overplayed their hand with their unceasing and venomous attacks on Donald Trump, writes Darrell Delamaide.

Mark Hulbert: Staples investors should take the money from private equity and run

Mark Hulber explains why investors should be cautious about private equity's ability to improve a company's profitability.

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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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