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09Feb2018 Pre-Market Commentary: Wall Street Set To Open Slightly Higher As The Dow Tries To Rebound From 1,000-point Plunge, House Passes Budget Deal And Ends Government Shutdown

Written by Gary

The US equities main benchmarks are pointing to fractionally higher opening (S&P +0.01%, SPY +0.8%). WTI crude slides towards weekly loss (low 63 handle) on excess supply worries.


Here is the current market situation from CNN Money

European markets are broadly lower today with shares in France off the most. The CAC 40 is down 1.40% while Germany's DAX is off 1.40% and London's FTSE 100 is lower by 0.89%.

What Is Moving the Markets

Here are the headlines moving the markets.

Wall Street on course for worst week in six years

(Reuters) - U.S. stock markets were set to open flat to lower on Friday, on course for their worst week in more than six years.

Trump 'energy dominance' policy pits Washington against Moscow

WASHINGTON (Reuters) - Last July, U.S. President Donald Trump stood beside his Polish counterpart, Andrzej Duda, in Warsaw and promised to help wean the nation off Russian energy imports. He offered U.S. fuel as an alternative, "so that you can never be held hostage to a single supplier."

Qualcomm rejects Broadcom's revised buyout offer, proposes meeting

(Reuters) - U.S. semiconductor company Qualcomm Inc on Thursday rejected Broadcom Ltd's revised $121 billion buyout offer, but proposed meeting its peer to see whether they can address what it called the bid's "serious deficiencies in value and certainty."

Exclusive: China's Ant plans equity fundraising at potential $100 billion valuation - sources

HONG KONG (Reuters) - China's Ant Financial Services Group is planning to raise up to $5 billion in fresh equity that could value the online payments giant at more than $100 billion, people familiar with the move told Reuters.

How soaring U.S. oil exports to China are transforming the global oil game

SINGAPORE (Reuters) - Bit by bit, the U.S. petroleum industry is turning world oil markets inside out.

Oil slides towards weekly loss on excess supply worries

LONDON (Reuters) - Oil prices fell for a sixth day on Friday, and were on track for their biggest weekly losses in 10 months, as record-high U.S. crude output added to concerns about a sharp rise in global supplies.

Expedia shares sink after disappointing 2018 forecast

(Reuters) - Shares of U.S. online travel services company Expedia fell 19 percent in premarket trading on Friday, after forecasting 2018 selling and marketing costs would outpace revenue growth as it battles rivals for market share.

Former Credit Suisse 'star' gets five-year jail term for 'clever fraud'

GENEVA (Reuters) - Former Credit Suisse client adviser Patrice Lescaudron was sentenced to five years imprisonment by a Geneva court on Friday for abusing the trust of clients and putting in place a fraudulent scheme that brought him tens of millions of francs.

Ford of Europe applies for German banking license amid Brexit uncertainty

FRANKFURT (Reuters) - Ford of Europe said it has applied for a German banking license in case the carmaker's British bank is no longer allowed to offer services on a pan-European basis after Britain leaves the European Union.

One Trader Explains Why This Market Wreck Is Different Than Others

Yesterday's collapse in US equities (and overnight rout in Asia) has many questioning their favorite TV guru's perspective that this is a "healthy" dip to be bought, just like all the others... Former fund manager Richard Breslow thinks otherwise, and explains why this market wreck is different...

Via Bloomberg,

I've been struggling all week with the question of why this extraordinary volatility and downdraft in equity prices just isn't haunting me. After all, previous episodes, like the beginning of 2016, were certainly unnerving. And as it is Friday I was hoping for some closure on this issue. And then it came to me. Being a visual person, I should look to my charts for some inspiration. And that is indeed where I've found solace.

One of my all-time favorite charts and a great barometer of the really big-picture state of the market is a monthly chart of the S&P 500 with the 21-month moving average drawn on top of it. You can go back decades and with little difficulty list what unhappiness was occurring when the index dipped below this rather remarkable line.

But my secret cheat-sheet has another characteristic that has been utterly violated since the last U.S. presidential election. And now there is a price to be paid for it. M ...

Paul Tudor Jones: "This Market Feels Like Japan In 1989 Or The US In 1999"

After years of stock and bond markets moving primarily in one direction (higher), Paul Tudor Jones say inflation is about to re-emerge "with a vengeance" and revive volatility from its yearslong slumber.

And while the explosion of volatility this week has pushed Fed funds futures traders to price in fewer interest rate hikes, Tudor believes the alarming pace of rising prices - after eight years of tumbling unemployment accompanied by nonexistent wage growth - will force the Federal Reserve to pick up the pace of interest-rate hikes.

Tudor, who wrote a letter to investors obtained by Bloomberg earlier this week, before the US stock market's second "bloodbath" of the week - said the market's complacency - said policy makers have been too permissive. Instead of expressing their befuddlement over why PCE refused to markedly rise, they should've been hiking rates. Now, the "impropriety" of President Donald Trump's tax cut - which will vastly expand the Treasurys debt offerings, causing rates to spike - is going to catch investors off guard. Going into the year, many had expected stocks to "melt up" as corporations rushed to buy back shares and expand capex.

By leaving rates low, the Fed has inadvertently blown a financial bubble that, apparently, even the PPT can't handle. Jones says the present situation reminds him of the US market circa 1999.

"We are replaying an age-old storyline of financial bubbles that has been played many times before," Jones, founder of Tudor Investment Corp., wrote in a Feb. 2 letter to clients.

"This market's current temperament feels so much like either Japan in 1989 or the U.S. in 1999. And the event ...

Blain: "Here's Why This Gets Worse Before It Gets Better"

Submitted by Bill Blain of Mint Partners

Wobble continues. Does a Correction morph into a Crash?

"They would never evolve. They shouldn't have survived..... Evolution was something that happened to other species.."

Not looking like a positive morning out there. Stocks are down 10% - so officially it's a correction! Markets are still wobbling. Folk who thought they'd survived Monday's carnage intact are new beginning to wonder if they should press the panic-button, or pull the dump-lever just in case this gets worse and liquidity dries up. The US has managed to shut itself down again. Our best hope at the Winter Olympics has broken her heel. If this all feels sickeningly familiar - Welcome to 2008 Part 2. Market wobbles, you heave a sigh of relief, and then it pukes massively all over you.

Early this morning it was raining. A storm is coming. And I must have dropped my wallet after paying for a Taxi early this morning.

My gut feel - based on active participation in every single market Donnybrook/Stamash since 1987 - is this gets worse before it gets better. And that's a good thing - because this is when the great opportunities present themselves!! Cry Havoc and unleash the brokers...

But first we need to talk about my wallet. I appreciate most of you are more concerned with markets than my wallet, but does Life care? Losing my wallet is probably far less worse than will happen to most folk. Yet, its illustrative of something: I called my Amex card to cancel. Lots of help, new card with me early next week. Called my bank. Lots of unhelpful questions and the impression I was the 10 thousandth idiot to a lost my wallet this morning. Sympathy? Look for it in a dictionary is the best advice. New card after 6 business days? Perhaps. Asked if I can get some money out from the branch to ...

Moscow Slams "Illegal US Presence In Syria" Following Pentagon's "Defensive" Airstrikes

Moscow lashed out at the US this morning, after the US-led coalition in Syria carried out several "defensive" airstrikes against Syrian forces allied with President Bashar al-Assad on Wednesday in Syria's Deir al-Zor province - purportedly in retaliation for what the coalition said was an "unprovoked" attack on the US-backed left-wing rebel group.

In response, during a closed door meeting of the UN Security Council in New York, Russian UN ambassador Vasily Nebenzya reminded his colleagues that the US presence in Syria is "actually illegal." "Nobody invited them there," Nebenzya stated, emphasizing that the coalition's actions were jeopardizing the region's hard-fought stability.

According to the Russian Defense Ministry, the Syrian militia was advancing against a "sleeper cell" of Islamic State terrorists near the former oil processing plant of al-Isba, when the unit was suddenly fired upon by air strikes. At least 25 militiamen were injured in the attack, the Russian Ministry of Defense said, adding that pro-government troops targeted by the coalition did not coordinate their operation with the Russian command.

'What right does the US have to defend illegal formations in Syria?' - former US diplomat @JimJatras https://t.co/1gIXvGODUR pic.twitter.com/a8hTiKYfHq

— RT (@RT_com) February 8, 2018

The US, however, maintains that the militia attacked the SDF. ...

What Tech Giant SoftBank Wants With Boring Old Reinsurer

The idea of a Japanese tech company spending $10 billion on a stake in a reinsurer sounds crazy, but when you think about Softbank's pursuit of Swiss Re, it starts to make frighteningly good sense.

Stocks Changed, but Bonds Still Sound the Same

Trouble for stocks has often been a boon to bonds in recent years. But recent turmoil seems unlikely to have the same outcome. The economic backdrop is simply too bond-unfriendly.

No-Wynn Situation Looks a No-Win for Investors

For the moment, investors seem to be hoping things will soon go back to normal at Wynn Resorts following Steve Wynn's departure as chief executive. But many uncertainties remain.

Market Extra: Nearly one-fifth of S&P 500 stocks are in a bear market

Even with its latest in a series of hefty drops on Thursday, the U.S. stock market hasn't officially entered correction territory. However, a not-insignificant number of stocks have gone beyond that threshold.

Tax overhaul is a credit negative for tech sector, S&P says

The overhaul of the U.S. tax law may be good for tech companies, many of which have kept billions of dollars overseas because of tax rates, but in the long run, it may weaken the credit profile of the sector.

Tax overhaul will lead to as many ratings downgrades as upgrades, says S&P

The tax bill signed into law in December will likely lead to as many ratings downgrades as upgrades as companies will spend most of the savings on shareholder returns or mergers and acquisitions, S&P Global Ratings said Thursday.

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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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