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13Jul2017 Pre-Market Commentary: Wall Street Opened Flat, New DOW Historic Highs Expected, WTI Crude Prices In The 45 Handle

Written by Gary

US stock markets opened flat this morning (SPY +0.01%), a day after Federal Reserve Chair Janet Yellen's dovish stand on interest rates allayed investor fears of a tighter monetary policy.


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 0.41% while Germany's DAX is up 0.06% and London's FTSE 100 is up 0.04%.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures higher after Yellen's rate hike view

(Reuters) - U.S. stock index futures were higher on Thursday, a day after Federal Reserve Chair Janet Yellen's dovish stand on interest rates allayed investor fears of a tighter monetary policy.

Qatar Airways still pursuing American Airlines stake after code share hitch

(Reuters) - Qatar Airways said it will go ahead with plans to buy a stake in American Airlines Inc even though the U.S. carrier is ending their code-share agreement.

Trump's Fed nominee has history of benefiting from bailouts

(Reuters) - President Donald Trump's pick to lead bank supervision at the Federal Reserve benefited from the government bailing out or rescuing two banks during the 2008 financial crisis, but that may not prevent his confirmation by a U.S. Senate controlled by a business-friendly Republican party, policy analysts told Reuters in recent days.

BlackRock cuts fees, builds bond indexes in bid 'to be ubiquitous'

NEW YORK (Reuters) - The world's largest asset manager BlackRock Inc on Thursday launched four bond exchange-traded funds and cut fees on another in an effort to lure more investors to its products from traditional debt markets.

Target forecasts rise in second-quarter comparable sales, higher profit

(Reuters) - Target Corp said on Thursday it expects a "modest" increase in second-quarter comparable sales, the first rise in five quarters, helped by improved traffic and sales trends in the first two months of the quarter ending July.

Germany summons Daimler to address diesel allegations

BERLIN (Reuters) - Germany's Volkswagen investigation committee has summoned German carmaker Daimler for an extraordinary meeting on Thursday to address allegations it sold cars with excessive emissions, the Transport Ministry said.

Kremlin says turbines being installed in Crimea are of Russian origin

MOSCOW (Reuters) - The Kremlin said on Thursday that gas turbines being installed in Crimea were of Russian origin after German engineering firm Siemens said earlier this week that two of its turbines had been delivered there against its wishes and without its knowledge.

French government to appeal pro-Google court tax ruling

PARIS (Reuters) - The French government said on Thursday it would appeal against a court ruling in Google's favour with regard to 1.1 billion euros ($1.25 billion) in tax.

Goldman Sachs relaxes dress code for techs in fight for talent

(Reuters) - Traditionally buttoned-up Wall Street bank Goldman Sachs Group Inc has relaxed the dress code for its computer engineers in a bid to attract tech talent with a more casual environment.

Gartman Covers Oil Short

Two days ago, when oil was plumbing its latest cycle lows, Goldman came out with a "contrarian" note in which it admitted that its bullish commodity outlook had been wrong, and cautioned that absent "shock and awe" from OPEC, oil could drop below $40, to which our logical counter was that this likely capped the latest crude selloff, but there was one outstanding item: the world-renowned momentum chaser, Dennis Gartman: "As to whether this means that the "suddenly" skeptical Goldman, which as we sarcastically pointed out was selling oil throughout its entire "bullish phase", is now finally buying WTI, consider that Gartman remains bearish and do the math."

Fast forward 48 hours when after the latest rebound in oil, Gartman is no longer bearish...

ENERGY PRICES HAVE FALLEN FROM THEIR BEST LEVELS and have done so despite the very bullish numbers on inventories of crude and products reported out yesterday by the EIA. However, firstly we have to report that crude oil production in Venezuela continues to dwindle as OPEC reported yesterday that production there has fallen to 1.93 million bpd. This has happened despite the fact that all of the other members of OPEC, in aggregate, produced more crude oil in June than they had in May.

... and has covered his short:

... what concerns us is that even with prices lower than where we marked them yesterday, the contangos for Brent and WTI have both narrowed and this is the 2nd day in a row that the averaged front month contango has narrowed. This we take seriously, and we take it all the more seriously in that at $2.33/barrel the contango has narrowed for the week, for it ...

'Transitory' - Core Producer Price Inflation Falls Back Below Fed Mandate

With The Fed convinced any downturn in inflation is 'transitory' - due to wireless carrier discounting, or oil ups and downs - today's Core PPI fell back below the 'mandated' 2.0% level after one brief shining month above it. Producer prices ex food and fuel rose just 1.9% YoY, slowing from last month's 2.1% rise.

This is the 3rd time in5 years that Core PPI has managed just one month above The Fed's mandate and faded...

Under the covers shows some interesting standouts...

A major factor in the June increase in the index for final demand services was prices for securities brokerage, dealing, investment advice, and related services, which rose 4.0 percent.

The indexes for machinery and equipment wholesaling, loan services (partial), insurance, inpatient care, and truck transportation of freight also advanced. Conversely, margins for apparel, footwear, and accessories retailing declined 3.7 percent. The indexes for motor vehicle maintenance and repair (partial) and for airline passenger services also fell.

Leading the June advance in the index for final demand goods, prices for m ...

Why Middle America Doesn't Care About The Trump Jr. Narrative: Reuters Explains

For almost a full year now the New York Times, Washington Post, MSNBC and CNN, among others, have teamed up to bring us one Russian collusion story after another. Yet, after all of it, even including the New York Times' most recent Trump Jr. 'bombshell', they are still no closer to actually presenting any tangible evidence that anyone within the Trump administration actually colluded with the Russian government and/or otherwise committed any actual crimes of any type throughout the 2016 campaign.

And while we suspect that these media outlets somehow feel it is their duty to advance the cause of 'The Resistance' at all costs, even if it means destroying their own journalistic integrity from time to time with a few fake news reports, we get the feeling that this crusade could end up backfiring 'bigly' with the folks of middle America.

As Reuters points out today, absent any tangible evidence to the contrary, the media's breathless Russian coverage has done little to turn the pro-Trump sections of middle America against the President...if anything, it has only served to bolster their support of the President and further erode their confidence in the media.

Many of the 20 people interviewed in several Ohio towns were dismissive of the barrage of headlines about a June 2016 meeting between Trump's eldest son Donald Jr. and a woman he was told was a Russian government lawyer who might have damaging information about Democratic election rival Hillary Clinton.

In Little Hocking, Ohio, Lisa Walker, 54, runs a small thrift shop. Wearing a t-shirt emblazoned with the American flag, she says her husband has expressed fears that somebody is going to try and assassinate Trump.

She and her husband voted for Trum ...

Our Financial Buffers Are Thinning

Authored by Charles Hugh Smith via OfTwoMinds blog,

The fragility of our financial buffers will only be revealed when they fail in the next crisis.

While buffer has a specific meaning in chemistry, I am using the word in the broad sense of a reserve resource that absorbs the initial destructive impacts of crises or system overloads. Marshland along a sea coast is a buffer against destructive storm waves, for example.

A savings account acts as a buffer against financial drawdowns or losses of income that would otherwise quickly cascade into a full-blown crisis.

Redundancy of resources can act as a buffer. If an airline maintains an aircraft in reserve, this reserve plane acts as a buffer against the disruption to the airline's scheduled flights should one of its aircraft be unexpectedly removed from service by a mechanical failure. The reserve aircraft can replace the plane that was withdrawn from service with minimal disruption.

Stockpiles act as buffers against supply disruptions. A storage tank of oil buffers a refinery against any delay in its incoming shipments of crude oil. Supplies of food and water buffer against severe natural disasters that disrupt regional water service and food deliveries.

Credit can act as a financial buffer against unexpectedly high expenses or declines in revenue. If a tire on our vehicle goes flat during a road trip and we only have a few dollars cash, a credit card buffers the disruption by funding the replacement tire and labor.

But over-using credit can end up thinning our financial buffers. If someone starts using their credit card not as an emergency buffer but to augment their cash income--in effect, acting as if the borrowed money was a pay raise rather than a loan- ...

Intel: Lonely At The Top

Intel's dominance in key chip makers has created a unique vulnerability. As challengers emerge in PCs and servers, Intel seems to have nowhere to go but down.

A One-Two Combination for Stocks

A great time to buy stocks is when interest rates are falling and profit growth is accelerating. As earnings season kicks off, rates and earnings are doing the opposite, and that tends to be a bad time to own shares.

U.S.-China Trade Tensions Are About to Get Ugly Again

A recipe for renewed trade tensions: Donald Trump facing difficulties at home, China failing to rein in North Korea and a sharply rising trade deficit.

June 2017 Producer Price Final Demand Year-over-Year Inflation Moderates to 2.0%

Written by Steven Hansen

The Producer Price Index year-over-year inflation marginally declined from 2.4 % to 2.0 %.

08 July 2017 Initial Unemployment Claims Rolling Average Again Marginally Worsens

The market expectations for weekly initial unemployment claims (from Bloomberg / Econoday) were 242 K to 250 K (consensus 245,000), and the Department of Labor reported 247,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 243,500 (reported last week as 243,000) to 245,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

Health-care fund manager with 20% gain this year sees good times ahead as FDA becomes 'more accommodating'

Ziad Bakri, manager of the T. Rowe Price Health Sciences Fund, looks for three main themes in his stock picks.

Bond Report: Treasury yields tick higher after jobless claims, PPI

Treasury yields rise after a raft of economic data showing weakening inflation pressures amid a tight labor market cast doubt on the Fed's plans to tighten monetary conditions, even though members of the central bank have said the balance sheet reduction is likely to start soon.

Economic Report: U.S. wholesale inflation up slightly in June but no longer rising rapidly, PPI shows

U.S. wholesale prices increased slightly in June but are no longer rising rapidly, providing further evidence that inflation is well contained.

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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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