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25Aug2017 Pre-Market Commentary: Wall Street To Open Higher Prior To Fed Chair Yellen's Remarks, WTI Crude Slipping Off High 47 Handle, Possible Cat 3 Hurricane Harvey Sends Gasoline Futures Surging 4 Percent Higher

Written by Gary

US stock market index futures are sharply higher this morning (SPY +0.4%) as investors await Fed's Yellen's speech at in J-Hole today. Be alert for sharp reversals.


Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.36% while France's CAC 40 is up 0.33% and Germany's DAX is up 0.24%.

What Is Moving the Markets

Here are the headlines moving the markets.

Stocks heading for best weeks in six ahead of Yellen, Draghi speeches

LONDON (Reuters) - World stocks climbed toward their best week in six on Friday, as a near three-year high in emerging market shares and a roaring rally in metals bolstered the year's global bull run.

Samsung leader Jay Y. Lee given five-year jail sentence for bribery

SEOUL (Reuters) - The billionaire head of South Korea's Samsung Group, Jay Y. Lee, was sentenced to five years in jail for bribery on Friday in a watershed for the country's decades-long economic order dominated by powerful, family-run conglomerates.

Without insurance, some vendors balk at stocking Sears' shelves

(Reuters) - U.S. department store operator Sears Holdings Corp is having trouble stocking shelves, as some vendors have fled while others are demanding stricter payment terms because of difficulties hedging against default risk.

Fiat Chrysler says will always evaluate deal inquiries

MILAN (Reuters) - Fiat Chrysler (FCA) said on Friday it would evaluate any inquiries about potential transactions, but did not have anything to add to its previous comments on reported interest from China's Great Wall Motor in its Jeep brand.

Britain heads back to the Brexit table, plans in hand, economy in decline

LONDON (Reuters) - Britain's economy is beginning to feel the Brexit pinch, or perhaps given the strong performance of the rest of the world economy, it should be punch.

Futures higher as investors await Yellen's speech

(Reuters) - U.S. stock index futures were higher on Friday as investors await Fed Chair Janet Yellen's speech at the central bankers' symposium in Jackson Hole, Wyoming, for clues regarding the future path of monetary tightening.

VW manager told CEO about U.S. 'cheating' in July 2015: media

FRANKFURT/HAMBURG (Reuters) - A former senior quality manager at Volkswagen has told investigators he informed then-CEO Martin Winterkorn on July 27, 2015, that the carmaker had "cheated" during emissions tests in the United States, German media reported on Friday.

Air Berlin frequent flyer programme files for insolvency

BERLIN (Reuters) - Air Berlin's frequent flyer programme filed for insolvency on Friday, bad news for members with points on their accounts, which they can no longer use.

Exclusive: New Russia sanctions disrupt major Intesa loan syndication

LONDON/MILAN (Reuters) - Italian bank Intesa Sanpaolo has encountered problems syndicating a loan to Glencore and Qatar's wealth fund to finance their purchase of a stake in the Kremlin-controlled oil major Rosneft because of new U.S. sanctions against Russia.

Whole Foods' Rivals Are Facing An Impossible Choice

A day after Amazon revealed its plans to cut prices at Whole Foods Market following the completion of its takeover on Monday - an announcement that obliterated billions of dollars' worth of food suppliers and rival grocers' market capitalization - Bloomberg is reporting that WFM's rivals are mulling an incredibly difficult choice: Whether to follow suit and cut prices in one of the few segments of the food market that's actually growing, or hold the line against their high-tech rival and risk being undercut into oblivion.

Price reductions could draw in new customers to brick-and-mortar locations. However, already thin profit margins and technological barriers make lowering prices a risky proposition.

"...the price reductions could draw in curious new shoppers and present brick-and-mortar retailers with a dilemma. Do they follow suit and see their margins squeezed, or hold fast and risk sacrificing sales in one of the few areas of the food industry that's actually growing?"

Greg Portell, a partner at consulting firm A.T. Kearney, said that it will be difficult for rivals to match Amazon's "dynamic" pricing model.

"Changing prices across the board is not a simple process for most retailers," said Greg Portell, a partner at consulting firm A.T. Kearney. "It takes time and labor. What Amazon has done is bring a level ...

"Today Is The Day" - One Trader Takes A 'Dark Side' Stab Ahead Of J-Hole

Authored by Kevin Muir via The Macro Tourist blog,

Today is the day. Both Draghi and Yellen speak later at Jackson Hole. Although expectations for market moving news have been damped down, the market might be getting a little too complacent.

Over the past month or so, bond markets have been drifting higher on the assumption the Fed would take a dovish wait-and-see approach to the introduction of quantitative tightening (widely expected to be started in September.) On the other side of the Atlantic, investors are increasingly pricing in a slower tapering to the ECB's quantitative easing program, believing Draghi would rather overshoot than risk pulling a Trichet by tightening and then be forced to quickly resume easing.

Have a look at the movement over the past three months of the Fed Funds futures' curve:

http://themacrotourist.com/images/2017/08/FFAug2517.png

The Fed Fund futures curve has not only shifted downward (in terms of yield), but also flattened with the far month contracts falling farther than the near months. This means that not only is the market believing the Fed will tighten more slowly, but that the number of raises is also declining.

As for the European markets, there are no expectations of changes to the front end of the curve, so we need to look at the longer end to get a feel for what is occurring.

http://themacrotourist.com/images/2017/08/GDBR10Aug2417.png

Frontrunning: August 25



Trump to push for tax reform passage by year's end, says Cohn (FT)

Bond Routs, Stock Surges: Jackson Hole Can Be Messy for Markets (BBG)

Hurricane Harvey intensifies (Reuters)

GOP Plan to Kill Estate Tax Sets Up Conflict Over Charitable Giving (BBG)

ECB Is Set to Buy More Bonds (WSJ)

U.S. Plans to Unveil New Round of Sanctions on Venezuela, Sources Say (BBG)

U.S. Navy recovers second body in search for sailors missing after collision (Reuters)

Britain will not pay 'a penny more' than it thinks right to leave EU: Boris Johnson (Reuters)

Amazon Clobbers Grocers With Price Cuts at Whole Foods (WSJ)

Samsung Heir Gets 5 Years for Scandal That Toppled a President (BBG)

Auto Dealers Dogged by 'Boys Club' Showrooms Costing Them Sales (

Gartman: "We Know For Certain That We Wish Not To Be Short Of Equities"

Exactly two weeks after Dennis Gartman staked his reputation that "the bull market has come to an end", the "commodities guru" appears to be getting second thoughts, and as we writes in his overnight note, he no longer "wishes to be short of equities." While it is unclear what that means for Gartman's "reputation", or if one even exists, here is how he frames his quandary:

STOCKS IN AROUND THE WORLD CONTINUE TO ADVANCE as seven of the ten markets comprising our International Index have risen in the course of the past twenty four hours; as two have fallen and as one finished its trading day unchanged. Thus, in the end, ahead of today's Jackson Hole, Wyoming affair, stocks in global terms are up 0.25% for the day and are up 9.9% for the year-to-date.

Importantly, the CNN Fear & Greed Index, which had fallen below the important 20 level late last week and earlier this week to the level marked as that of "Extreme Fear," has turned higher and finished last evening at 22.

Historically, we are to err upon the notion of owning equities when the market is "Extremely fearful" and if this were not "Jackson Hole Friday" we'd be doing precisely that; that is, we'd be modestly long of equities in some form or fashion. However, would we be anything other than marginally long? No we would not for the market still looks to be egregiously expensive in almost any manner of its pricing. P/e's seem hi ...

Samsung Will Soon Need a Leader Who Isn't in Jail

The tech behemoth has been doing fine in recent months. But the five-year prison sentence handed to its de facto leader should give investors pause.

China's Mobile-Payment Food Fight

China's leading internet search company, Baidu, is moving out of the food delivery business, ceding ground to its two largest domestic tech rivals, which dominate the sector.

Merck Is Good for Your Portfolio's Health

Buying Merck gives investors exposure to the most promising cancer drug on the market at a good price.

NerdWallet: Should you pay off your mortgage or invest the money?

It's a choice with serious financial consequences. Here are 6 things to consider to help you decide.

Economic Report: Orders for durable goods sink 6.8% in July, the most in nearly three years

​Durable-goods orders dropped 6.8% in July, the biggest drop in almost three years, the government reported Friday.

SEC halts trading in First Bitcoin Capital shares, which have gained more than 6,000% in 2017

The Securities and Exchange Commission on Thursday temporarily suspended trading in the shares of First Bitcoin Capital Corp. because of concerns about the accuracy and adequacy of public information on the Canadian company.

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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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