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27Nov2017 Pre-Market Commentary: Global Markets Open Mixed Today

Written by Gary

The financial news this morning centers on Bitcoin's surprise surge. Gold and silver up modestly. WTI and Brent are lower, whilst other oil markers are generally up. USA markets are trending to open up.


Here is the current market situation from CNN Money

European markets are mixed. The CAC 40 is higher by 0.16%, while the DAX is leading the FTSE 100 lower. They are down 0.15% and 0.04% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Ending NAFTA would hurt growth, competitiveness of United States, Canada: report

DETROIT (Reuters) - Terminating the North American Free Trade Agreement would harm the U.S. and Canadian economies and reduce their competitiveness versus Asia and Europe, a report issued by the Bank of Montreal said on Monday.

China wobble knocks stocks, bitcoin eyes $10,000

LONDON (Reuters) - World stocks edged lower on Monday, led by a fall in Chinese share prices and a sell-off in South Korean tech stocks that kept risk appetite muted, while the euro hit a two-month high against the dollar on optimism around German coalition talks.

Meredith to buy U.S. publisher Time in Koch-backed deal

(Reuters) - U.S. media company Meredith Corp said on Sunday it will buy Time Inc, the publisher of People, Sports Illustrated and Fortune magazines, in a $1.84 billion all-cash deal backed by conservative billionaire brothers Charles and David Koch.

Executives of scandal-hit Uber travel globe to reassure regulators

TOKYO (Reuters) - Uber executives are traveling the globe to reassure regulators that the company is changing the way it does business, after a string of controversies hurt the ride-hailing firm's reputation, its Asian head told Reuters on Monday.

Exclusive: Cyber Monday showdown - Wal-Mart closes in on Amazon in online price war

(Reuters) - Wal-Mart Stores Inc is within striking distance of matching Amazon.com Inc's online prices for the first time, a key milestone in its effort to regain the "low price leader" title.

$10,000 in sight for bitcoin as it rockets to new record high

LONDON (Reuters) - Bitcoin's vertiginous ascent showed no signs of stopping on Monday, with the cryptocurrency soaring to another record high just a few percent away from $10,000 after gaining more than a fifth in value over the past three days alone.

Bubble or breakthrough? Bitcoin keeps central bankers on edge

FRANKFURT (Reuters) - Central bankers say the success of bitcoin and other cryptocurrencies is just a bubble.

Exclusive: Exxon Mobil chief revamps refining, chemical operations - spokeswoman

HOUSTON (Reuters) - Exxon Mobil Corp Chief Executive Darren Woods is reorganizing the company's refining and chemical operations, part of a push to boost profits amid volatile oil and natural gas prices, a spokeswoman said.

BMW to spend 6.5-7 percent of sales on R&D in 2018: CFO in Handelsblatt

FRANKFURT (Reuters) - German carmaker BMW will further raise its spending on research and development next year, to 6.5 to 7 percent of sales, its finance chief Nicolas Peter told German daily Handelsblatt.

Bill Blain: "Germany Is On Fire: How Long Until Bundesbank Demands Rate Hikes To Cool It?"

Blain's Morning Porridge - November 27th 2017, submitted by Bill Blain of Mint Partners

Germany - not solved and likely to prove an even larger problem..

"El castillo, le torre yo soy, le espada que guarda el caudal.

Another massive shopping day - Cyber Monday. Let's see if the declining footprint into US malls confirms the end of retail and tomorrow belongs to Amazon, Ebay and Tencent? Suspect so... (Personally, I'm furious as I bought a new evening suit recently and picked it up Friday to discover even a proper West-end tailor was having a "black Friday sale". I won't be going back there again!)

Looks like I got Germany wrong.

My predictions Angela Merkel would find herself trapped into a difficult minority or a convention defying second election look increasing unlikely as she is now threshing out a "Grand Coalition" CDU deal with the SDP. My "bad".The membership of both parties apparently support it. I read a single member of her own party who dared to call for her resignation was subsequently booed down by the mob of enthusiastic Merkelistas.

The market is welcoming the news as far more positive for Germany than the earlier Jamaica Coalition, and positive for Europe as a reinvigorated Merkel will re-engage with Macron's France to solve Europe's many problems with sprinklings of German good-fairy dust.

Chinese Stock Rout Resumes As Top Fund Sees "High Probability" Of Bond Carnage

In early November, we discussed how commentators were disturbed by the sell-off in Chinese government bonds after the Party Congress, which saw yields rise to 4.0%. The anomaly was that yields in less-liquid, unsecured Chinese corporate bonds had barely moved. Some sleuthing on the part of the Wall Street Journal discovered that the most likely explanation was that redemptions in China's shadow banking sector, especially in the infamous $4 trillion Wealth Management Products (WMP), meant that cash needed to be raised...quickly. Highly liquid government bonds were the easiest option. Furthermore, retaining the higher-yielding corporate bonds was handy in meeting the guaranteed returns in the WMP Ponzi schemes.

The relative stability in corporate bond yields was short-lived, with the Chinese bond sell-off spreading to the corporate sector as November progressed. Besides the post-Congress focus on deleveraging, the mainstream explanation was that investors were differentiating between good and bad credits ahead of more than $1 trillion of local bonds maturing in 2018-19. The spin was positive as it would lead to capital being channeled more productively.

Needless to say, this was not how we viewed it. From our perspective, it looked like the emergence of cascading sell-offs within Chinese financial markets which have been abused by excessive leverage and Ponzi characteristics. Recent plunges in Chinese equities have strengthened our conviction. Indeed, as the new trading week opened, equities were hit again, as we pointed out last night and as Bloomberg observes this morning:

FX Weekly Preview: EUR Bursts Higher Again As Year-End Call For 1.2000 Return

Submitted by By Shant Movsesian and Rajan Dhall MSTA of FXdailyterminal.com

At the very start of the year, we recall the chorus of projections for EUR/USD to fall below parity, warranted by the euphoria over the Trump administration's plans for a tax overhaul alongside the reform plans for healthcare, and allied to the assumption that Europe had too many headwinds to negotiate in order for underlying growth to impact significantly on the region. Some were even calling for levels as low as 0.9500 and 0.9000. Five months into the year and with the French elections voting in Emmanuel Macron, there was renewed confidence, and with recovery still pushing ahead, the shift in sentiment was near tidal as outside calls for 1.2000 became the consensus and hedge funds and money managers poured into the EUR across the board. We saw EUR/CHF shaken out of its coma, with the SNB naturally welcoming the move back above 1.1000 and later 1.1500 - though as an aside, the Swiss central bank still believes the EUR is overvalued - the ECB are more worried about the speed of appreciation in the USD rate.

Pyrrhic Victory - Prosecutor Finds 36 Guilty For The Stock Exchange Crash In 1999

An Athens Appellate Court Prosecutor has found 36 people guilty for the infamous "Athens Stock Exchange Crash of 1999" that caused thousands of small investors to have lost their life savings.

As KeepTalkingGreece.com reports, it has taken 18 years for an Athens Appellate Court Prosecutor, Athina Theodoropoulou, to find guilty 36 individuals implicated in the affair - including stockbrokers, investors, and shipowners.

The accused had been previously tried on fraud charges and money laundering, but at the time the three-member appellate court of Athens, with different members on the bench, had unanimously declared all of the accused innocent on all counts.

The case was re-opened by the Areios Pagos, Greece's Supreme Court, as the judges believed that the acquittal lacked sufficient legal justification.

They ordered that the case be retried from scratch.

According to prosecutor Theodoropoulou, the first court erroneously concluded that there were no damages incurred by those charged.

Will Investors' Low-Rate Mistake Kill the Stock Market?

Why are stocks so expensive? In part it may come down to a behavioral quirk that could be putting the market at risk.

Investors Must Focus on Big Picture on Black Friday

There is a predictability to Black Friday stories each year, yet there also is a predictability to what they tell us about how stores will do over holidays—not much.

Rio Tinto Isn't Tesla; It Should Hold Fire On a Lithium Bet

Lithium-battery and electric-vehicle plays are enjoying a futuristic ride into the stratosphere. Rio Tinto shouldn't follow—at least not yet.

Where The Weather Is Deadliest

from Statista.com

-- this post authored by Martin Armstrong

As part of the latest Global Climate Risk Index by Germanwatch, the countries proportionately most affected by extreme weather over the last twenty years have been revealed.

Are Student Loan Defaults Cyclical? It Depends. Part 2 Of 2

from Liberty Street Economics

-- this post authored by Rajashri Chakrabarti, Nicole Gorton, Michelle Jiang, and Wilbert van de Klaauw

This post is the second in a two-part series on student loan default behavior. In the first post, we studied how educational characteristics (school type and selectivity, graduation, and major) and family background relate to the incidence of student loan default. In this post, we investigate whether default behavior has varied across cohorts of borrowers as the labor market evolved over time. Specifically, does the ability of student loan holders to repay their loans vary with the state of the labor market? Does the type of education these students received make any difference to this relationship?

Gifts That Pay Off: Gifts that pay off: Turn your child into an early (and savvy) investor

A relatively small investment now can make your child's life so much easier when he or she grows up

Deep Dive: Fund manager looks beyond 'FAANG' stocks and finds even bigger winners for 2018

Renaissance Investment Management's Michael Schroer highlights Applied Materials and Lam Research. By Phil van Doorn.

The New York Post: Princes William and Harry will be stormtroopers in 'Star Wars: The Last Jedi'

Prince William and Prince Harry will be making a cameo in "The Last Jedi" next month — serving as First Order Stormtroopers during a brief scene with John Boyega.

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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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