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11Aug2017 Pre-Market Commentary: Wall Street To Open Higher, North Korea Continues Rhetoric Of A Nuclear Punishment, Global Market Have Lost Over One Trillion Dollars In Value

Written by Gary

US stock market index futures are modestly higher (SPY +0.2%) and may keep the markets from falling again in today's session. WTI crude is down -0.3% and the US dollar has slipped -0.4% to the high 92 level.


Here is the current market situation from CNN Money

European markets are broadly lower today with shares in France off the most. The CAC 40 is down 1.10% while London's FTSE 100 is off 1.07% and Germany's DAX is lower by 0.21%.

What Is Moving the Markets

Here are the headlines moving the markets.

North Korea nuclear nerves wipe $1 trillion off world stocks

LONDON (Reuters) - The damage inflicted on world stocks this week by the escalating war of words over North Korea topped $1 trillion on Friday, as investors again took cover in the yen, the Swiss franc, gold and government bonds.

Exclusive: Saudi Arabia favours New York for Aramco listing despite risks - sources

DUBAI/RIYADH/LONDON (Reuters) - Saudi Arabia favours New York for the main foreign listing of state oil giant Aramco, even though some financial and legal advisers have recommended London as a less problematic and risky option, people familiar with the matter told Reuters.

U.S. economic expansion to last another two years or more: Reuters poll

BENGALURU (Reuters) - The U.S. economic expansion will last at least another two years, according to a majority of economists polled by Reuters who also forecast growth will not accelerate the way the Trump administration has predicted.

Uber investor sues to force former CEO Kalanick off board

SAN FRANCISCO (Reuters) - Venture capital firm Benchmark Capital is suing former Uber Chief Executive Officer Travis Kalanick to force him off the board of the ride-services company and rescind his ability to fill three board seats, according to the lawsuit.

Amazon looks to new food technology for home delivery

SAN FRANCISCO (Reuters) - Amazon.com Inc is exploring a technology first developed for the U.S. military to produce tasty prepared meals that do not need refrigeration, as it looks for new ways to muscle into the $700 billion U.S. grocery business.

After a long drought, bear market funds attract buyers

NEW YORK (Reuters) - Bearish stock investors are slowly coming out of hibernation, as money has begun to move into funds that aim to profit when markets dive.

China investigates top local social media sites in push to control content

BEIJING (Reuters) - China is investigating its top social media sites, including WeChat and Weibo, for failing to comply with cyber laws, the latest step in the country's push to secure the internet and maintain strict Communist Party control over content.

Google cancels staff meeting over fears of online harassment

(Reuters) - Alphabet's Google canceled on Thursday a company-wide meeting scheduled to discuss the controversy over a memo opposing diversity policies, the company said, citing concerns about personal attacks on employees from far-right commentators.

Snap co-founders will not sell shares as stock slumps on earnings miss

(Reuters) - Snap Inc Chief Executive Officer Evan Spiegel said on Thursday neither he nor co-founder Bobby Murphy would sell shares of the Snapchat parent this year, but that failed to soothe investors after quarterly results fell short of analyst expectations.

Are Internal Market Cracks Turning Into Chasms?

Via Dana Lyons' Tumblr,

Recently noted deterioration in market internals appears to be getting worse, as evidenced by this rare divergence in the Nasdaq market.

One of the hallmarks of our intermediate-term Risk Model that helps orient our investment posture toward equities is breadth, a.k.a., internals. Internals measure the level of participation in the stock market, e.g., how many stocks are advancing versus declining, the number of new highs versus new lows, etc. The more participation there is, the broader the foundation for a market rally - and the more comfortable we feel being aggressively invested.

In recent weeks, we have published a series of charts and posts highlighting what appears to be a weakening of the internals, or participation, in the market recently. This trend has been interesting to note since the major large-cap averages have continued to trade near their all-time highs. That trend has not slowed down. In fact, it has arguably accelerated, as evidenced by today's Chart Of The Day.

Today's ChOTD shows that while the Nasdaq 100 (NDX) remains close to its 52-week high (i.e., less than 1% away as of yesterday), the number of new 52-week lows is now outstripping new highs on the Nasdaq exchange. Not only that, but the number of net new lows, i.e., new lows minus new highs, equated to more than 2.5% of all issues traded on the Nasdaq.

If that does not seem like a big number, it is actually just the 9th day ever that saw so many net new lows while the NDX was s ...

Trump: "Military Solutions Are Now Fully In Place, Locked And Loaded"

Confirming yesterday's report that the Pentagon is now prepared for a "preemptive strike", or response to any provocative action by North Korea, moments ago president Trump took the verbal war of words with Kim Jong-Un into the fourth day when he tweeted that "military solutions are now fully in place,locked and loaded,should North Korea act unwisely. Hopefully Kim Jong Un will find another path!"

Military solutions are now fully in place,locked and loaded,should North Korea act unwisely. Hopefully Kim Jong Un will find another path!

— Donald J. Trump (@realDonaldTrump) August 11, 2017

Earlier on Friday, the North Korean government's official newspaper said that the US mainland could be "reduced to ashes at any moment" as tensions between the two countries continue to mount. The Rodong Sinmun, an official mouthpiece of Kim Jong-un's ruling Workers' Party, said the "reckless and hysteric" behavior of Donald Trump would be to blame if the US is attacked.

The Trump administration has been "seized with anxiety and terror" following North Korea's successful testing of a long-range missile, the newspaper claimed, saying "US military warmongers are running amok".

"It is a tragedy that the reckless and hysteric behaviors may reduce the US mainland to ashes [at] any moment," it continued, according to KCNAWatch.

Ominously, the newspaper also said that it was the "steadfast will" of North Korea to "put an end to the hostile moves of the ...

China Warns Trump: "We Will Prevent A North Korea Regime Change"

In a troubling repudiation of President Donald Trump's demands that Beijing do more to rein in its bellicose neighbor, Beijing, through the state-owned media, cautioned the US president on Friday that it would intervene (militarily) on North Korea's behalf if the US and South Korea launch a preemptive strike to "overthrow the North Korean regime," according to a statement in the influential state-run newspaper Global Times.

"If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so," it said.

At the same time, the Chinese regime made it clear that its preferred outcome would be a continuation of the status quo, warning Kim Jong Un that it would "remain neutral if North Korea were to strike first." The article, cited by Rueters, reiterated calls for a diplomatic solution. However, the possibility of talks between the two sides was looking increasingly remote as both Trump and Kim continued to exchange threats of nuclear annihilation, with Trump clarifying Thursday that his earlier promise to respond with "fire and fury" should the North continue to threaten the US may not have gone far enough.

China - North Korea's most important ally and trading partner - has reiterated calls for calm during the current cr ...

Why One Trader Thinks Emerging Markets Are About To Get Slammed

While so far the rout from the North Korea crisis has impacted global volatility first and foremost, with the VIX surging 50% (a rather pointless metric considering where the VIX was just days ago) on a modest drop in the S&P which earlier this week was making new all time highs, as massive short vol positions have been rapidly unwound, one trader believes the next place of impact is the sector which has so far emerged, so to say, largely unscathed from rising risk concerns: emerging markets, the clear outperformer so far in 2017.

In his latest overnight Macro View, Bloomberg's Mark Cudmore writes that "Rightly or Wrongly, EM to Bear the Brunt of Selloff", and considering the overnight plunge in Chinese stocks, which as discussed earlier just suffered their biggest drop of the year led by the commodity sector...

... he may be right.

His full note below.

Rightly or Wrongly, EM to Bear the Brunt of Selloff

During acute periods of risk-aversion, positioning dominates fundamentals. This is why some of the best structural investment stories can see the most painful corrections in the short-term.

Emerging-market assets have been the rampant outperformers of 2017. The macro fundamental arguments for the vast majority of these assets remain in place: solid growth, high real yields, very cheap currencies, great demographics, an exploding middle- class, and exposure to a booming Chinese economy.

These are all long-term factors though and t ...

What Global Markets are Waiting for: A Sign on Inflation

After an oil-inspired surge in headline inflation in the first half of 2017, the data in the second half will be vital for investors seeking insight into whether central bank words will become actions.

Altice-Charter Chatter May Be Just Talk

How would European cable billionaire Patrick Drahi fund a bid for Charter Communications? It's the obvious question -- but perhaps it misses the point.

Glencore Bets Heavy on an Electric Car Future

Glencore is betting that being in the "right" commodities for a battery and electric car dominated future is more important than big cash payouts now.

This is why millennials can't have nice things (or save any money)

Young Americans spend $2,300 per year more on a wide range of items.

The Ratings Game: Snap earnings leave analysts cautiously optimistic even as ad revenues vanish

The newly public technology company has struggled to monetize its business amid tough competition, but Wall Street thinks there may be value in holding the shares.

Another reason millennials can't afford homes? Other people's weddings

This pre-wedding celebration adds up.

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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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