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13Oct2017 Pre-Market Commentary: Wall Street To Open Moderately Higher, On Track For More New Record Highs, The Dollar Is On Course For Its Worst Week, Crude Oil Futures Have Risen By Nearly 2%

Written by Gary

US stock market index futures point to a higher opening (SPY +0.2%) as core CPI and retail sales for September came in below expectations.


Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 0.11% while the DAX gains 0.10%. The FTSE 100 is off 0.18%.

Looking at the last three columns (below), the first one (Actual), is what was reported this morning. The second column (Forecast) is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

Consumer banking powers BofA profit beat

(Reuters) - Bank of America Corp's profit surged 15 percent in the third quarter as higher U.S. interest rates boosted income from consumer banking and the lender also met its own target on cost control.

Wells Fargo hit by legal charges, mortgage banking slump

(Reuters) - Wells Fargo & Co reported an 18.6 percent decline in quarterly profit on Friday, hurt by previously disclosed legal costs and a slump in mortgage banking income.

Dollar heads for worst week in five as stocks cheer record streak

LONDON (Reuters) - World stocks advanced for a fourth straight day on Friday on expectations of broad-based global growth, while the dollar was on course for its worst week in five as investors awaited U.S. inflation data.

Amazon Studios chief Roy Price suspended following harassment allegation

SAN FRANCISCO (Reuters) - Amazon Studios chief Roy Price was put on an immediate leave of absence Thursday, the company said, following allegations that he harassed a producer and ignored an actress's claim of a sexual assault by producer Harvey Weinstein.

Samsung Electronics CEO Kwon announces shock resignation as profits surge

SEOUL (Reuters) - Samsung Electronics Co Ltd said on Friday its CEO and Vice Chairman Kwon Oh-hyun plans to step down from management, deepening concerns over a leadership vacuum at the tech giant after group scion Jay Y. Lee was jailed for bribery.

Cyclical sector rally banks on global economic expansion

NEW YORK (Reuters) - U.S. stock sectors that are particularly dependent on economic growth recently grabbed hold of the market's rally and are poised to keep the reins should further signs of global expansion emerge.

As crisis at Kobe Steel deepens, CEO says cheating engulfs 500 firms

TOKYO (Reuters) - The cheating crisis engulfing Kobe Steel Ltd just got bigger.

Airbus CEO warns of significant fines over corruption probe

PARIS (Reuters) - Airbus Chief Executive Tom Enders reiterated on Friday the group could face significant fines as the result of UK and French corruption investigations into the use of middlemen in plane sales.

BASF to harvest seeds, herbicide businesses from Bayer for $7 billion

FRANKFURT (Reuters) - BASF has agreed to buy seed and herbicide businesses from Bayer for 5.9 billion euros ($7 billion) in cash, as Bayer tries to convince competition authorities to approve its planned acquisition of Monsanto.

Are You Better Off Than You Were 17 Years Ago?

Authored by Charles Hugh Smith via OfTwoMinds blog,

We tend to measure what's easily measured (and supports the status quo) and ignore what isn't easily measured (and calls the status quo into question).

If we use gross domestic product (GDP) as a broad measure of prosperity, we are 160% better off than we were in 1980 and 35% better off than we were in 2000. Other common metrics such as per capita (per person) income and total household wealth reflect similarly hefty gains.

But are we really 35% better off than we were 17 years ago, or 160% better off than we were 37 years ago? Or do these statistics mask a pervasive erosion in our well-being? As I explained in my book Why Our Status Quo Failed and Is Beyond Reform, we optimize what we measure, meaning that once a metric and benchmark have been selected as meaningful, we strive to manage that metric to get the desired result.

Optimizing what we measure has all sorts of perverse consequences. If we define "winning the war" by counting dead bodies, then the dead bodies pile up like cordwood. If we define "health" as low cholesterol levels, then we pass statins out like candy. If test scores define "a good education," then we teach to the tests.

We tend to measure what's easily measured (and supports the status quo) and ignore what isn't easily measured (and calls the status quo into question). So we meas ...

Looking For A Last Minute 'Cheap' Trade On A CPI Miss?

Demand has exploded for a cheap options bet which stands to benefit should the market-implied odds of a Federal Reserve rate hike in December tumble.

As Bloomberg reports, the eurodollar call option involved expires Friday, so the biggest chance the wager has to profit lies with a weaker-than-forecast print on the September consumer price index, set for release at 8:30 a.m. New York time.

The options position emerged Wednesday, and was added to dramatically on Thursday, CME open interest data show.

Expectations are for a 0.6% rise in CPI MoM (Core CPI +0.2% exp) and the whisper number is for a 0.5% rise.

The current odds for a Dec rate hike are 80.2%...

The minutes of the Fed's September meeting showed some officials are concerned that low inflation is more than temporary.

Rajan Dhall MSTA from fxdaily.co.uk provides a quick preview of what to expect:

Looking ahead to the US data releases this afternoon, there are some common themes to pick on, with the CPI rate set to rise on the boost in gasoline prices. Shortages and disruption in agricultural products will also lead to upward pressure in price, but will be 'factored out' to a certain degree.

&nb ...

U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold

U.S. Mint Gold Coin Sales and VIX Point To Increased Market Volatility and Higher Gold

- US Mint gold coin sales and VIX at weakest in a decade
- Very low gold coin sales and VIX signal volatility coming
- Gold rises 1.7% this week after China's Golden Week; pattern of higher prices after Golden Week
- U.S. Mint sales do not provide the full picture of robust global gold demand
- Perth Mint gold sales double in September reflecting increased gold demand in both Asia and Europe
- Middle East demand likely high given geopolitical risks
- ...

BofA Beats Despite 22% Plunge in FICC Revenue, Credit Loss Provision Jumps 15%

Mirroring the pattern set by JPM and Citi yesterday, Bank of America reported revenue and earnings that modestly beat expectations, with Q3 revenue of $21.8BN and $22.1BN on an adjusted, FTE basis, just above the $21.9BN consensus estimate, generating net income of $5.6 billion (up 13% Y/Y), and EPS of $0.48, above the $0.46 estimate, and higher than the $0.41 reported Y/Y, even as sales and trading revenues slumped, and FICC revenue tumbled by 19%.

Net interest income increased 9% for the second consecutive quarter, or $1.0B, to $11.4B. BofA achieved this as its Net Interest Yield (i.e. NIM) rose fractionally from 2.34% in Q2 to 2.36% in Q3, a number just barely higher than the 2.35% expected. As the bank explained,the Net Interest Income increased "reflecting the benefits from higher short-end interest rates, loan growth and one additional interest accrual day, partially offset by higher deposit pricing in GWIM and the full quarter impact from the sale of the non-U.S. consumer credit card business."

BofA also gave the following interest rate sensitivity as of Sept 30: "+100bps parallel shift in interest rate yield curve is estimated to benefit NII by $3.2B over the next 12 months, driven primarily by sensitivity to short-end interest rates."

With everyone looking at trends in loan quality, BofA revealed that just like JPM and Citi, its provision for credit losses jumpe ...

Big Banks' Credit Card Woes Spell Trouble for Smaller Issuers

J.P. Morgan and Citigroup reported solid earnings, but also flashed a warning signal on consumer debt that investors in some other companies should heed.

Drinking Beer Alone Could Work Better for Asahi in China

The Japanese company is set to ditch its investment in Tsingtao. Following the strategy of other foreign brewers in China could be more profitable

Corporate Scandals Say More About Japan Than the Nikkei

Japanese stocks are at a two-decade high, but the recent spate of corporate scandals shows all is still not well.

Social Security checks expected to increase 2% in 2018

Seniors who collect Social Security are slated to receive a 2% increase in their monthly checks in 2018, marking the biggest gain in six years.

Earnings Outlook: UnitedHealth earnings: Insulated from Obamacare, Amazon and still going strong

Though it's considered a bellwether for the health-care sector, UnitedHealth Group is largely immune to many of the industry's biggest risks.

Earnings Watch: Netflix earnings: Why higher subscription prices lead to more shows like 'Stranger Things'

In the months since Netflix Inc. last opened its books to investors, the streaming and media company has continued to reach deep into its pockets to invest in furthering its content aspirations.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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