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17Aug2017 Pre-Market Commentary: US Markets To Open Fractionally Lower, WTI Crude Slips Overnight To The Mid 46 Handle, US Dollar Index Rises Against The Pound, Turmoil Right Around The Corner

Written by Gary

US stock market index futures are pointing towards a negative opening today (SPY -0.2%) as Fed's policymakers appeared increasingly wary about recent weak inflation.


Here is the current market situation from CNN Money

European markets are lower today with shares in London off the most. The FTSE 100 is down 0.42% while Germany's DAX is off 0.22% and France's CAC 40 is lower by 0.14%.

What Is Moving the Markets

Here are the headlines moving the markets.

European stocks and bond yields fall after Fed flags weak inflation

LONDON (Reuters) - European stocks and bond yields fell in early trade on Thursday after the Federal Reserve expressed concern over weak U.S. inflation, a trend which has clouded the outlook for the world's largest economy.

Wisconsin lawmakers debate billions in incentives for Foxconn plant

(Reuters) - The Wisconsin State Assembly on Thursday will consider a $3 billion incentive package for a proposed liquid-crystal display factory by Taiwan's Foxconn, the first vote on the deal by a chamber of the state's Republican-controlled legislature.

Wal-Mart's margins fall on price cuts, spending on e-commerce

CHICAGO (Reuters) - Wal-Mart Stores Inc on Thursday reported lower quarterly margins after it cut prices and invested heavily on expanding its e-commerce operations, and its shares fell nearly 3 percent.

U.S. talks tough on trade deficit as NAFTA discussions begin

WASHINGTON (Reuters) - The United States drew a hard line for renegotiating the North American Free Trade Agreement on Wednesday, demanding major concessions aimed at slashing trade deficits with Mexico and Canada and boosting U.S. content for autos.

Exclusive: China's CEFC in early talks to buy Rosneft stake - sources

HONG KONG/BEIJING (Reuters) - CEFC China Energy, which has grown from a niche oil trader to a sprawling energy conglomerate, is in talks to acquire a stake in Russian state oil giant Rosneft , three people with direct knowledge of the discussions said.

Futures lower on weak inflation concerns

(Reuters) - U.S. stock index futures were lower on Thursday, a day after the release of minutes from the Federal Reserve's meeting showed policymakers appeared wary about weak inflation, muddying the path of future interest rate hikes.

Fed's Fischer says move to unwind bank regulation 'dangerous': FT

LONDON (Reuters) - Efforts by the United States government to loosen regulations on banks are "dangerous and extremely short-sighted", one of the U.S. central bank's top policymakers said in an interview with the Financial Times published late on Wednesday.

China's Alibaba outstrips revenue estimates with online sales growth

(Reuters) - Alibaba, China's top e-commerce firm, beat analyst's estimates with a 56 percent rise in first-quarter revenue, driven by growth in online sales which make up most of its business.

Fed policymakers grow more worried about weak inflation

WASHINGTON (Reuters) - Federal Reserve policymakers appeared increasingly wary about recent weak inflation and some called for halting interest rate hikes until it was clear the trend was transitory, according to the minutes of the U.S. central bank's last policy meeting.

Wal-Mart Slides On Disappointing Guidance

Despite reporting strong earnings which beat on both the top and bottom line in today's most anticipated earnings report, Walmart stock is down 3%, sliding to the lowest level since late July after it provided full year EPS guidance whose midpoint was below Wall Street expectations.

First, here are WMT's otherwise respectable historical results.


Q2 adj. EPS $1.08, beating est. $1.07, on the top end of the $1.00- $1.08 range

Q2 revenue $123.4BN, beating est. $123.05b

Total U.S. comps. ex-fuel up 1.7%, in line with consensus est. of 1.7%

Wal-Mart U.S. comps. up 1.8%, est. up 1.8%; forecast up 1.5%-2.0% in Feb.

Wal-Mart U.S. traffic up 1.3% y/y, avg ticket up 0.5%

Wal-Mart U.S. E- commerce sales up 70 bps y/y, GMV up 67%

Sam's Club results were a little weaker, with comps of 1.2% missing expectations of 1.4% increase, as a result of the average ticket down 0.9% despite a 2.1% increase in traffic.

Sam's Club comps. ex- fuel up 1.2%, est. up 1.4% (Consensus Metrix); co. saw up 1%-1.5%

Sam's Club traffic up 2.1%, avg ticket down 0.9%

Meanwhile, as Bloomberg notes, Costco, Sam's Club main competitor, reported monthly comp. sales ahead of estimates in each of May, June, and July

And while WMT's historical data was solid across the board, traders were concerned with the company's guidance:

Sees 3Q EPS 90c-98c vs est. 98c (range 90c-$1.05)

Sees 3Q Wal- Mart U.S. comp. sales ex-fuel up +1.5%-2%

Sees 3Q Sam's Club ex- fuel comps. up 1%-1.5%

But the biggest red flag was the full year adjusted EPS forecast, which at $4.30-$4.40 (vs the previous $4.20-$4.40), the midpoint of which trailed the consensus estimate of $4.39.

Must See Charts - Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since "Tricky Dicky"

Must See Charts - Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since "Tricky Dicky"

- Gold hedges massive ongoing devaluation of U.S. Dollar
- 46th anniversary of 'Tricky Dicky' ending Gold Standard (see video)
- Savings destroyed by currency creation and now negative interest rates
- Long-term inflation figures show gold a hedge against rising cost of fuel, food and cost of living
- $20 food and beverages basket of 1971 cost $120.17 in 2017
- Household items increased by average of 2000% and oil by 5,373% since 1913
- Gold gained 5,669% since 1913; by nearly 3,000% since 1971
- Dollar has been reserve currency of world in the period and most other currencies have seen greater devaluation
- Evidence of gold's role as inflation and currency de ...

Euro Dumps To Session Lows After ECB Minutes Reveal Concerns About "Euro Overshooting"

While hardly a surprise after yesterday's Reuters trial balloon, which killed any speculation that Draghi would use the Jackson Hole podium to announce ECB balance sheet tapering, sending the EUR sliding, moments ago the EUR dumped to fresh session lows after the highly anticipated ECB minutes were released, noting that "concerns were expressed about the risk of the exchange rate overshooting in the future," confirming what we speculated last week, namely that for all the pseudo-hawkish rhetoric from Draghi since Sintra (and before), the ECB simply will not tolerate a Euro which approaches 1.20 and threatens to dent European corporate earnings.

The immediate kneejerk result sent the already sliding EURUSD to session lows:

There were also a few clues on future policy:



"On the other hand, there was a risk that financial conditions could tighten to a degree that was not warranted by the improvement in economic conditions and the outlook for inflation. In this context, the point was made that, looking ahead, the Governing Council needed to gain more policy space and flexibility to adjust policy and the degree of monetary policy accommodation, if and when needed, in either direction."

"Measures of underlying inflation, while showing some tentative signs of a pick-up, still needed to show conclusive evidence of a sustained upward trend. Therefore, a very substantial degree of monetary accommodation was still needed..."

Among the other highlights from the minutes, which were initially read as dovish ...

Virginia Governor Changes Stance: Confederate Monuments "A Barrier To Progress"

Virginia Governor Terry McAuliffe (D) has added his name to a growing list of public officials in state governments encouraging the removal of Confederate statues and memorials throughout the South. Late in the day on Wednesday McAuliffe released an official statement saying monuments of Confederate leaders have now become "flashpoints for hatred, division and violence" in a reference to the weekend of violence which shook Charlottesville as white nationalists rallied against the city's planned removal of a Robert E. Lee statue. McAuliffe further described the monuments as "a barrier to progress" and appealed to state and local governments to take action. The governor said:

As we attempt to heal and learn from the tragic events in Charlottesville, I encourage Virginia's localities and the General Assembly - which are vested with the legal authority - to take down these monuments and relocate them to museums or more appropriate settings. I hope we can all now agree that these symbols are a barrier to progress, inclusion and equality in Virginia and, while the decision may not be mine to make, I believe the path forward is clear.

The statement represents something of a flip flop on the issue for McAuliffe, who has long been on record as generally reluctant to remove Confederate monuments while the issue was being debated in various cities over the past months - he has previously carefully avoided sanctioning any blanket state-wide policy, instead considering it an issue to be decided at the local community level.


A vandalized C ...

Does the World Really Want Content From Apple?

Big money can't guarantee Apple success in Hollywood, especially when competitors are spending more.

Cisco's Long, Slow Decline

Investors had low expectations for Cisco Systems ahead of its fiscal fourth-quarter results posted Wednesday.

This Auto Lender Won't Pay Off

Subprime auto lender Credit Acceptance has run circles around short-sellers, but it shares are now looking expensive and vulnerable.

Economic Report: U.S. jobless claims fall to six-month low of 232,000

The number of Americans who sought unemployment benefits in mid-August fell to the lowest level in six months, mirroring the strongest U.S. labor market in almost two decades. Initial jobless claims in the period running from Aug. 6 to Aug. 12 declined by 12,000 to 232,000.

Market Snapshot: Dow looks set to break 4-day win streak

U.S. stock futures are heading lower on Thursday, as investors digest the latest Federal Reserve minutes and President Donald Trump's decision to disband a pair of his advisory business panels.

Raising the minimum wage leads workers in these industries to be replaced by robots

Some workers are more likely to be replaced by robots than others.

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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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