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21Jul2017 Pre-Market Commentary: Wall Street Flat For The Opening, Investors Remain On Board The Trump Train, WTI Crude Down 0.8 Percent, US Dollar Down And Unchanged From Yesterday

Written by Gary

US stock index futures were slightly lower this morning (spy -0.1%), but remained near record levels. Investors have taken cues from earnings reports of industrial heavyweights General Electric and Honeywell.


Here is the current market situation from CNN Money

European markets are mixed to lower. Shares in Germany are off as the DAX drops 0.93%. The CAC 40 is down 0.36% while the FTSE 100 in London is unchanged.

Bumper earnings dominate on Wall Street as General Electric, Honeywell report

Avoid health-care stocks as D.C. spins its wheels? Here's a case for buying them

What Is Moving the Markets

Here are the headlines moving the markets.

Futures slightly lower on earnings from industrial giants

(Reuters) - U.S. stock index futures were slightly lower on Friday, but continued to hover around record levels, as investors took cues from earnings reports of industrial heavyweights General Electric and Honeywell.

FTC probing allegations of Amazon's deceptive discounting

WASHINGTON (Reuters) - As part of its review of Amazon's agreement to buy Whole Foods, the Federal Trade Commission is looking into allegations that Amazon misleads customers about its pricing discounts, according to a source close to the probe.

GE profit falls 59 percent; cash flow up in quarter

(Reuters) - General Electric Co's profit fell nearly 60 percent in the second quarter, largely due to the sale of its appliances business, but cash flow rose, sales topped expectations and its shares were slightly lower.

MasterCard says $18 billion British class action lawsuit blocked

LONDON (Reuters) - A 14 billion pound ($18 billion) class action lawsuit against MasterCard for allegedly overcharging more than 45 million people in Britain over a 16-year period was blocked from proceeding by a judge, MasterCard said on Friday.

Siemens retreats from Russian energy after Crimean scandal

FRANKFURT/MOSCOW (Reuters) - Germany's Siemens tried to distance itself from a Crimean sanctions scandal on Friday, halting deliveries of power equipment to Russian state-controlled customers and reviewing supply deals.

Exclusive: U.S. toughens stance on foreign deals in blow to China's buying spree

(Reuters) - A secretive U.S. government panel has objected to at least nine acquisitions of U.S. companies by foreign buyers so far this year, people familiar with the matter said, a historically high number that bodes poorly for China's overseas buying spree.

Chinese courier ZTO sued for 'untrue statements' in $1.4 billion U.S. IPO

SHANGHAI (Reuters) - Chinese courier ZTO Express and the underwriters of its New York stock market listing have been sued by a U.S. pension fund that alleges the firm exaggerated its profit margins to lure investors into its $1.4 billion initial public offering.

German automakers may have colluded over diesel emissions treatment systems: Spiegel

FRANKFURT (Reuters) - Germany's carmakers VW , BMW , Audi, Porsche may have colluded to fix the prices of diesel emissions treatment systems using industry committees, German magazine Der Spiegel reported on Friday.

Wanted: Housewives to beat staff crunch at Japan's FamilyMart

TOKYO (Reuters) - Japan's second-largest convenience store chain hopes it has found an answer to its labor problems - housewives.

Lavrov Scoffs At Western Media: "Trump-Putin May Have Met Multiple Times... In The Bathroom"

Headlines ripped across social media - 'the Russians admit that Trump and Putin may have met more than 3 times' - sparking an instant 'I told you so' from the 'left' proving the conspiracy of collusion is correct. However, we note that the source of this new story, Russian Foreign Minister Sergie Lavrov, compared these conversations to "children mingling at a kindergarten," adding "maybe they met in the toilet too."

"When you are bought by your parents to a kindergarten do you mix with the people who are waiting in the same room to start going to a classroom?

I remember when I was in that position I did spend five or ten minutes in the kindergarten before they brought us to the classroom."

As a reminder, while the White House didn't use this analogy to explain press reports of a second, undisclosed Trump-Putin conversation at the G20 meeting in early July, it fits.

"There was no 'second meeting' between President Trump and President Putin, just a brief conversation at the end of a dinner. The insinuation that the White House has tried to 'hide' a second meeting is false, malicious and absurd," a White House Official said.

And now it seems Lavrov is piling on to Western media's constant efforts to paint the relationship one way, adding:

"They might have met even much more than just three times,"

"After the dinner was over...I was not there...President Trump apparently went to pick up his wife and spent some minutes with P ...

Trader Tells 'New' Volatility-Sellers: "Come On In, The Water's Warm"

Authored by Kevin Muir via The Macro Tourist,

By now most of us are fed up with hearing apocalyptic warnings of the coming VIX disaster when all the naïve short sellers will be squeezed in an epic 2008 style equity crash. Either you buy this argument, or you don't. No sense wasting too much more time on it. I am of the opinion that for all the uninformed XIV buyers (the short VIX ETF), there are stacks of VXX longs desperately trying to catch the next great VIX rise. But, who knows? I might be wrong, and I definitely am not privy to the extent of institutional equity index volatility selling, so maybe there truly is a massive weak short position whose comeuppance will soon be laid bare for everyone to see.

But yesterday I had dinner with a buddy who passed along some interesting information that caught me by surprise. He is a unique individual. A former derivatives broker who didn't trade with pension funds and other typical institutional clients, but instead specialized in high net worth individuals and non-traditional corporations. His clients could definitely be described as sophisticated, but with an entrepreneurial, non-traditional flare.

He still keeps in contact with his old shop, and he told me what the brokers are experiencing. Across the board, clients are engaging in volatility selling strategies. And although they are shorting some stock index volatility, they are not limiting themselves to equities.

He described an endemic pattern of these sophisticated clients shorting gold vol, euro vol, bond vol - any listed options, these guys are shorting them. Take gold for example. They pick a three month option, and with gold trading here at 1245, they sell the 1145 put while simultaneously selling the 1345 call. Lever up the position, collect the premium, and let the quiet markets pad ...

Frontrunning: July 21



Euro surge to two-year high prompts stocks pause (Reuters)

Short Sellers Give Up as Stocks Run to New Records (WSJ)

U.S. toughens stance on foreign deals in blow to China's buying spree (Reuters)

Trump team seeks to control, block Mueller's Russia investigation (WaPo)

Trump Would Set Off a Chain Reaction by Trying to Fire Mueller (BBG)

Manafort Investigated for Possible Money Laundering (WSJ)

Strong quake off Turkish and Greek coasts kills two, injures dozens (Reuters)

Bank Profits Near Pre-Crisis Peak in U.S. Despite All the Rules (BBG)

Senate Republicans complain of chaos in healthcare effort (Reuters)

GOP Floats Proposal to Ease Medicaid Cuts (WSJ)

GOP Health Bill's $13,000 Deductibles Would Be Illegal, CBO Says (

US Urges All Nationals In North Korea To "Depart Immediately", Bans Tourists From Visiting

Dennis Rodman will be disappointed to learn that the US is set to ban all citizens from traveling to North Korea, according to two agencies that operate tours there. Koryo Tours and Young Pioneer Tours said the ban would be announced on 27 July to come into effect 30 days later, the BBC reported. "After the 30-day grace period any US national that travels to North Korea will have their passport invalidated by their government." The ban comes one month after US student Otto Warmbier died following his imprisonment by the Kim regime.

China-based Young Pioneer Tours, which had taken Warmbier to North Korea, and Koryo Tours said the ban will come into force on July 27 - the anniversary of the end of the Korean War - with a 30-day grace period. Koryo Tours added that the Swedish embassy in Pyongyang, which handles consular affairs for the United States in the North, informed it of the ban, but did not say how long it would last. The U.S. embassy in the South Korean capital, Seoul, did not immediately respond to a request for comment.

Rowan Beard said that the 30-day grace period would "give leeway for any [Americans] currently in the country as tourists or on humanitarian work". Simon Cockerill, of Koryo Tours, said: "It remains to be seen what the exact text is, but the indication is it's just a straight up ban on Americans going." Mr Cockerill told the BBC the agency would still conduct tours and take Americans until the ban came into effect.

Additionally, Rowan Beard of Young Pioneer Tours, told the BBC the embassy was urging all US nationals to depart immediately. He said the embassy was trying to check on the number of US tourists left in the country.

For now there has been no official confirmation from the US: the state department continues to have an alert dated 9 May strongly warning US citizens not to travel to North Korea. ...

Geely's Rally Is Running Out of Road

One of China's most prominent auto makers has been the gift that kept on giving for investors, but not for long.

BHP Sees a Hungry Planet, Elliott Sees Another Shale Disaster

BHP has written off billions in U.S. shale investments, but it is poised to plow a substantial amount of funds into potassium fertilizer, or potash. Activist shareholder Elliott is kicking up a fuss.

How Quants Calm the Stock Market

One factor helping to keep the VIX and realized volatility extremely low is quant funds that are discovering surprises before they can create big stock-market moves.

The Wall Street Journal: Gold tries for most robust weekly rise in two months as dollar drops

Gold prices gained modestly Friday, looking to add to what has been the longest winning streak for the yellow metal in some two months as the dollar remained under pressure against the euro in particular.

In One Chart: Energy stocks break out from 7-month downtrend line

The ETF tracking the energy sector has broken above a downtrend line, amid a backdrop of "bullish divergence," that suggests a bottom may have already been seen.

MarketWatch First Take: Microsoft rides huge tax benefit from failing at smartphones to big earnings beat

Microsoft Corp. beat Wall Street's earnings estimates by a wide margin in its biggest quarter of the year, and it has a huge failure to thank for it.

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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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