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16Jan2018 Pre-Market Commentary: Wall Street To Open Higher, Bitcoin Tumbles To 6-week Low As Top Cryptocurrencies All Drop, US Oil Companies Expected To Produce Gusher Profits

Written by Gary

US stock market index futures are ripping higher pre-market, record breaking run looks set to continue (SPY +0.5%). Dow futures surge triple digits, index set to hit 26,000 at the opening.


Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.90% while the CAC 40 gains 0.27%. The FTSE 100 is off 0.12%.

What Is Moving the Markets

Here are the headlines moving the markets.

Citi reports $18.3 billion loss on tax law; adjusted profit rises 4 percent

(Reuters) - Citigroup Inc on Tuesday posted an $18.3 billion quarterly net loss on one-time tax charges, but said adjusted income rose 4 percent from a year earlier as consumer businesses made up for lower revenue from bond and currency trading. The loss for the fourth quarter was due to a $19 billion write-down on the value of deferred tax assets left from losses in the financial crisis and $3 billion of expenses for the new U.S. tax on past profits earned and kept abroad.

Shares stay on record run, metals suffer meltdown

LONDON (Reuters) - Asia and Europe's big bourses kept world shares on their record-breaking run on Tuesday, although a steadier dollar halted the sizzling start to the year for the euro, yen and yuan and sent metals markets down sharply.

Exclusive: Saudi Aramco snubs UBS and Bank of America for listing roles - sources

LONDON (Reuters) - Saudi Aramco has not invited UBS and Bank of America Merrill Lynch to pitch for senior advisory roles in its stock market listing because they have not lent money to the state oil giant in recent years, according to five finance sources.

Bitcoin slides 18 percent on crackdown fears; crypto rivals also plunge

LONDON (Reuters) - Bitcoin tumbled 18 percent on Tuesday to a four-week trough close to $11,000, after reports that a ban on trading of cryptocurrencies in South Korea was still an option drove fears grew of a wider regulatory crackdown.

Exclusive: U.S. lawmakers urge AT&T to cut commercial ties with Huawei - sources

WASHINGTON (Reuters) - U.S. lawmakers are urging AT&T Inc, the No. 2 wireless carrier, to cut commercial ties to Chinese phone maker Huawei Technologies Co Ltd and oppose plans by telecom operator China Mobile Ltd to enter the U.S. market because of national security concerns, two congressional aides said.

GM sees 2018 earnings flat, with pickups picking up in 2019

DETROIT (Reuters) - General Motors Co said on Tuesday it expects earnings in 2018 to be largely flat compared with 2017, but that profits should pick up pace in 2019 as its revamped line of high-margin pickup trucks hits the U.S. market.

Dow on track to top 26,000 at open

(Reuters) - Futures on the Dow Jones Industrial Average surged more than 200 points on Tuesday, indicating that the blue-chip index could open above 26,000 for the first time, supported by strong earnings from UnitedHealth.

Maersk, IBM to launch blockchain-based platform for global trade

COPENHAGEN (Reuters) - The world's largest container shipping firm A.P. Moller-Maersk is teaming up with IBM to create an industry-wide trading platform it says can speed up trade and save billions of dollars.

GE to take $6.2 billion charge in its finance arm

(Reuters) - General Electric Co will record an after-tax charge of $6.2 billion in its fourth quarter results as part of an ongoing review of its finance arm's insurance portfolio, the company said.

GE Tumbles After Massive Finance-Arm Charge

Having enjoyed a phoenix-like renaissance in 2018 so far, GE is tumbling in the pre-market, erasing 2018 gains, following reports that the company will record an after-tax charge of $6.2 billion in its fourth quarter results as part of an ongoing review of its finance arm's insurance portfolio.

Additionally, as WSJ reports, GE will have to set aside $15 billion over seven years to bolster insurance reserves at its GE Capital unit, surprising investors with deeper than expected problems in a business many thought the company had left behind.

The upshot is that the GE Capital unit, which had been paying dividends in recent years to the parent company, won't pay dividends to GE for the foreseeable future. GE had suspended the GE Capital dividend last year and slashed its payout to shareholders by half.

Shareholders are not impressed...

https://www.zerohedge.com/sites/default/files/inline-images/20180116_GE.png

GE's looming charge is one of the biggest yet in a corner of the insurance industry that has reeled from pricing miscalculations made decades ago.

Chief Executive John Flannery expressed frustration at the review's results while saying the actions will restore GE Capital ratios to appropriate levels.

"At a time when we are moving ...

Frontrunning: January 16



GE to Take Massive Charge to Shore Up Insurance Reserves (WSJ)

GOP Leaders Struggle to Avert Shutdown After Immigration Blow-Up (BBG)

DACA Squabbling Imperils Ability to Avert a Shutdown (WSJ)

Bitcoin Plunges 20% (WSJ)

China Escalates Crackdown on Cryptocurrency Trading (BBG)

Wall St. Braces for a Different Year of U.S. Inflation (BBG)

Days after Hawaii alert gaffe, Japan issues false alarm about a missile launch (Reuters)

Under Trump, the Business World Notches a Net Success (WSJ)

Lawmakers urge AT&T to cut ties with Huawei (Reuters)

Not just Florida: Tourism big in other states opposing coastal drilling (

China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would "Detonate Next Crisis"

In its latest reminder that China is a (for now) happy holder of some $1.2 trillion in US Treasurys, Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing "deficiencies in US political ecology" and tax cuts that "directly reduce the federal government's sources of debt repayment" weakening the base of the government's debt repayment.

Oh, and just to make sure the message is heard loud and clear, the ratings, which are now level with those of Peru, Colombia and Turkmenistan on the Beijing-based agency's scale of creditworthiness, have also been put on a negative outlook.

In a statement on Tuesday, Dagong warned that the United States' increasing reliance on debt to drive development would erode its solvency. Quoted by Reuters, Dagong made specific reference to President Donald Trump's tax package, which is estimated to add $1.4 trillion over a decade to the $20 trillion national debt burden.

"Deficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track," Dagong said adding that "Massive tax cuts directly reduce the federal government's sources of debt repayment, therefore further weaken the base of government's debt repayment."

Projecting US funding needs in the coming years, Dagong said a deterioration in the government's fiscal revenue-to-debt ratio to 12.1% in 2022 from 14.9% and 14.2% in 2018 and 2019, respectively, would demand frequent increases in the government's debt ceiling.

"The virtual solvency of the federal government would be likely to become the detonator of the next financial crisis," the Chinese ratings fi ...

Bitcoin Crashes 20% Amid Growing Fears Of Crypto Crackdown

As first discussed last night, the selling in bitcoin and across cryptocurrencies - which began as Asia opened, and appeared to be catalyzed by headlines from South Korea's finance ministry that a cryptocurrency exchange shutdown is still an option...

https://www.zerohedge.com/sites/default/files/inline-images/20180115_crypto1.png

... accelerated overnight with bitcoin plunging as much as 20% as the prospect of regulatory crackdowns appeared to spread across Asia. Having traded just above $11,000 this morning, the lowest level since late December, and down more than 40% from its all-time high of $20,000 set just a month ago, bitcoin fell 12.3% to $12,130 as at 7:30am ET.

sdf

As bitcoin halted a two-day rally, rival cryptocurrencies also plunged, and the losses in bitcoin are largely in line with those seen across the cryptocurrency space. As of writing, Ripple (XRP), stellar lumens (STR) and cardano (ADA) are down at least 25 percent on the day each. Ethereum's e ...

Trouble Ahead for the Treasury Market

Inflation, less central bank bond buying, an increase in supply—there are plenty of reasons for Treasury yields to go a lot higher this year.

The Dollar's Decline Has a Flipside for Markets

It isn't a happy new year for dollar bulls, with the currency starting 2018 by falling to a three-year low. The weak dollar has consequences elsewhere for central banks and markets—but isn't necessarily something to be feared.

Don't Fear a Biotech Correction

Patience from biotechnology investors may be needed this year, but it will be rewarded in the long run.

Economic Report: Empire State factory gauge softens a bit in January

The Empire State manufacturing survey slipped to 17.7 in January from a revised 19.6 in December, the New York Fed said.

Bond Report: Treasury yields lower ahead of Empire state survey

Treasury yields were slightly lower ahead of the Empire State manufacturing survey in what looks to be a muted day for trading.

Google Assistant vs. Amazon Alexa: When will we get to choose our voice assistant?

As voice becomes more crucial across devices, manufacturers need to introduce products capable of letting consumers choose their preferred assistant upon unboxing.

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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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