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03Jan2018 Pre-Market Commentary: Wall Street Set To Open Fractionally Higher And Achieving New Historic Highs, Stocks Rise On Strong Global Economic Growth, Encouraging Risk-on Among Investors

Written by Gary

The US equities main benchmarks are again pointing yo another higher opening this morning (SPY +0.1%), after a strong first day of the trading year.


Here is the current market situation from CNN Money

European markets are higher today with shares in Germany leading the region. The DAX is up 0.49% while France's CAC 40 is up 0.45% and London's FTSE 100 is up 0.07%.

What Is Moving the Markets

Here are the headlines moving the markets.

Stock futures rise on signs of strong global economic growth

(Reuters) - U.S. stock futures pointed to a higher opening for Wall Street on Wednesday as signs of quickening economic activity around the world encouraged risk-on sentiment among investors.

Petrobras to pay $2.95 billion to settle U.S. class action over corruption

NEW YORK (Reuters) - Brazil's state-controlled oil company, Petroleo Brasileiro SA , said on Wednesday that it has agreed to pay $2.95 billion to settle a U.S. class action brought by investors who claim they lost money as a result of a corruption scandal.

Spotify hit with $1.6 billion copyright lawsuit

(Reuters) - Music streaming company Spotify was sued by Wixen Music Publishing Inc last week for allegedly using thousands of songs, including those of Tom Petty, Neil Young and the Doors, without a license and compensation to the music publisher.

Dominion Energy to buy Scana Corp in $14.6 billion deal

(Reuters) - Dominion Energy Inc said on Wednesday it would buy troubled utility Scana Corp in an all-stock deal worth about $14.6 billion, including debt.

U.S. blocks MoneyGram sale to China's Ant Financial on national security concerns

(Reuters) - Ant Financial's plan to acquire U.S. money transfer company MoneyGram International Inc collapsed on Tuesday after a U.S. government panel rejected it over national security concerns, the most high-profile Chinese deal to be torpedoed under the administration of U.S. President Donald Trump.

Pershing Square, Valeant to appear in court on insider trading suit settlement

(Reuters) - A U.S. court on Tuesday asked Valeant Pharmaceuticals International Inc and activist investor Bill Ackman's Pershing Square to appear for a hearing to discuss the proposed settlement in an insider trading lawsuit.

China central bank can tell local governments to regulate bitcoin miners' power use: source

BEIJING (Reuters) - China's central bank told a top-level government internet finance group that the monetary authority can tell local governments to regulate the power usage of bitcoin miners to gradually reduce the scale of their production, a source said.

Amazon, Google cut speaker prices in market share contest: analysts

SAN FRANCISCO (Reuters) - Amazon.com Inc and Alphabet Inc's Google both discounted their virtual assistant speakers so deeply over the holiday shopping season that they likely lost a few dollars per unit, highlighting a sharply different strategy from Apple Inc as it prepares its HomePod speaker, analysts said.

More than half of new Norway car sales now electric or hybrid

OSLO (Reuters) - Sales of electric and hybrid cars exceeded half of new registrations in Norway in 2017, a record aided by generous subsidies that extended the Nordic nation's lead in a shift from fossil-fuel engines, data showed on Wednesday.

Iran Revolutionary Guard Declares Protests Over, Pro-Govt Rallies Spring Up On State TV

While confusion and skepticism remains high towards the 'progress' of both sides in Iran, it appears the government is pushing back hard today as State TV broadcasts images of 1000s of Iranians taking part in pro-government rallies and the Revolutionary Guard declaring the protests are over.

1

With about 20 dead, including several policemen, since Iran's protests broke out last week, today appears to be a full court press from the establishment to quell the latest uprising.

As Bloomberg reports, Iran's powerful Revolutionary Guards Corps declared an end to the unrest that has roiled the Islamic Republic over the past week.

"The enemies should know that threats against Iran's defense and security no longer work," the state-run Islamic Students News Agency reported, citing guards commander Mohammad Ali Jafari.

The "sedition" has ended, he said.

And alongside this, Reuters reports thousands of Iranians took part in pro-government rallies in several cities on Wednesday in a state-sponsored show of force.

State television broadcast live pictures of rallies in the southwestern cities of Kermanshah and Ilam and in the northern city of Gorgan, where marchers waved Iranian flags and pictures of Supreme Leader Ayatollah Ali Khamenei.

In the Shi'ite holy city of ...

You Can't "Normalize" Markets That Depend On Extreme Monetary Stimulus

Authored by Charles Hugh Smith via OfTwoMinds blog,

Central banks are now trapped.

In a nutshell, central banks are promising to "normalize" their monetary policy extremes in 2018. Nice, but there's a problem: you can't "normalize" markets that are now entirely dependent on extremes of monetary stimulus. Attempts to "normalize" will break the markets and the financial system.

Let's start with the core dynamic of the global economy and nosebleed-valuation markets: credit.

Modern finance has many complex moving parts, and this complexity masks its inner simplicity.

Let's break down the core dynamics of the current financial system.

The Core Dynamic of the "Recovery" and Asset Bubbles: Credit

Credit is the foundation of the current financial system, for credit enables consumers to bring consumption forward, that is, buy more stuff today than they could buy with the cash they have on hand, in exchange for promising to pay principal and interest with their future income.

Credit also enables speculators to buy more assets than they otherwise could were they limited to cash on hand.

Buying goods, services and assets with credit appears to be a good thing: consumers get to enjoy more stuff without having to scrimp and save up income, and investors/speculators can reap more income from owning more assets.

But all goods/services and assets are not equal, and all credit is not equal.

There is an opportunity cost to any loan (i.e. credit), as the income that will be devoted to paying principal and interest in the future could have been devoted to some other use or investment.

So borrowing money to purchase a product or an asset now means foregoing some future purchase.

While all products have some sort of payoff, t ...

China Central Bank Prepares To Regulate Bitcoin Mining

Not long after bitcoin soared by over $1,000 in a matter of minutes, when it was revealed that Peter Thiel had invested in the cryptocurrency, overnight bitcoin experienced some weakness after a report in the QQ.com news portal, subsequently confirmed by Reuters, that China's PBOC had held a meeting to regulate bitcoin mining power use, an increasingly sensitive topic now that global bitcoin energy consumption is greater than what Qatar uses in a year.

According to QQ.com, the PBOC called for rectifying irregularities in electricity use of some bitcoin mining fields, and during a closed-door meeting, discussed limiting the power use of bitcoin mining.

As Reuters further details, while the People's Bank of China can't directly regulate bitcoin miners' power usage, it can ask local authorities to do so, the central bank told members of the Leading Group of Beijing Internet Financial Risks Remediation at a meeting at the end of 2017, the source said.

As a result, China's monetary authority can tell local governments to regulate the power usage of bitcoin miners to gradually reduce the scale of their production. To many this was an implicit warning that China is preparing to clamp down on, and regulate, bitcoin mining in China.

While China is one of the world's biggest sources of bitcoin mining, the intensive use of computers for bitcoin mining has boosted demand for electricity, leading to price spikes and increases.

To be sure, China's disdain for bitcoin - a mechanism which the locals eagerly use to bypass local capital controls is hardly new - in September China ordered all initial coin offerings to cease and all cryptocurrency trading exchanges to be shuttered with the a ...

North Korea Calls South Via Cross-Border Hotline For First Time In 2 Years

Shortly after President Trump claimed that the "nuclear button" on his desk is much bigger and more powerful than the button on the desk of North Korea's Kim Jong Un, the North demonstrated an eagerness to directly thaw relations with its Southern neighbor, when Pyongyang was first to use a border hotline with the South which resumed operation after an exchange of messages between Pyongyang and Seoul. Officials reportedly spoke for 20 minutes to make sure that the line works.

South and North Korea made their first contact at the border village of Panmunjom via a communication channel which Pyongyang ordered brought back online earlier on Wednesday, Yonhap reported. South Korea's unification ministry said that "A North Korean official first contacted the South side via the channel." The conversation was meant to pave the way for official talks between the two sides about sending a delegation from the North to next month's Winter Olympics in the South, according to the Washington Post.

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According to the statement issued by an unnamed Northern official, future discussions will focus on sending North Korean athletes to the PyeongChang Winter Olympics which will kick off in South Korea next month. The North will open dialogue at 7:00am GMT (3:00 pm Pyongyang time) at the shared border village of Panmunjom, the

Ant-Moneygram's Demise Spells the End for China-U.S. Deal Making

CFIUS's decision to block the proposed $1.2 billion deal shows that Beijing's recent efforts to relax foreign investment rules aren't going to meet with much reciprocity.

Why European Banks Will Struggle to Rally

U.S. bank stocks had a great run in 2017: Europeans, not so much. Those betting on a Continental banking catch-up in 2018 shouldn't get their hopes up.

Bright Side of Higher Treasury Yields

There could be serious problems in financial markets if long-term interest rates rise in 2018. There could be serious problems if they don't.

November 2017 CoreLogic Home Prices Up 7% Year-over-Year

Written by Steven Hansen

CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 7.0 % year-over-year year-over-year (reported up 1.0 % month-over-month). CoreLogic HPI is used in the Federal Reserves' Flow of Funds to calculate the values of residential real estate.

Metals Stocks: Gold extends win streak to trade at highest since mid-September

Gold firms for a ninth session in a row on Wednesday, trading at its highest since the middle of September, as safe-haven demand for the precious metal supports prices even as the bruised dollar stabilizes.

Retailers are getting help from technology including AI in a busy returns season

Retailers entered the holiday season with new plans for processing the millions of returns that are expected.

The Wall Street Journal: White House, congressional leaders to restart spending talks

Congressional leaders and senior White House officials will restart negotiations Wednesday afternoon to iron out differences over spending on the Pentagon and other government agencies, with lawmakers hoping to avoid a further series of short-term patches.

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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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