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14Feb2018 Pre-Market Commentary: Valentine's Day: Is 3-day Investor Lovefest Over, Inflation Data Shows Faster-than-expected Rise, Dow Heads For A Triple-digit Drop At The Open

Written by Gary

US stock market futures pointed to a negative start for Wall Street on Valentine's Day (SPY -1.1%). DOW heads for a 250-point drop at the open after a hotter-than-expected inflation report.


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.06%, while the DAX is leading the CAC 40 lower. They are down 0.58% and 0.12% respectively.

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.

Apple in talks for first order from Chinese chipmaker: Nikkei

(Reuters) - Apple Inc is in talks to buy storage chips from Yangtze Memory Technologies, a move that would mark the iPhone maker's first buy from a Chinese memory chipmaker, the Nikkei reported on Wednesday.

Gasoline, rents seen lifting U.S. monthly CPI; annual rates to slow

WASHINGTON (Reuters) - U.S. consumer prices likely increased solidly in January, boosted by rising gasoline and rents, but annual inflation growth is expected to have slowed as the large price gains from last year drop out of the calculation.

Broadcom scales back Qualcomm board challenge to simple majority

(Reuters) - Broadcom Ltd cut the number of board seats it was trying to win at Qualcomm Inc to six from 11 on Tuesday, saying this would let Qualcomm shareholders push the U.S. chip maker toward a sale while ensuring continuity.

Opel says to build next-generation Corsa in Spain

FRANKFURT (Reuters) - Opel, the German carmaker now owned by France's PSA Group , said a new version of its Corsa city car would be built exclusively in Zaragoza, Spain, from 2019.

Uber's fourth-quarter loss narrows to $1.1 billion: source

(Reuters) - Uber Technologies Inc narrowed its fourth-quarter loss to $1.1 billion from a loss of $1.46 billion in the previous quarter, a person familiar with the matter told Reuters.

Walmart goes to the cloud to close gap with Amazon

SAN BRUNO/SUNNYVALE, Calif. (Reuters) - One of Walmart Inc's best chances at taking on Amazon.com Inc in e-commerce lies with six giant server farms, each larger than ten football fields.

South Korea union says GM plant closure is 'death sentence', threatens strike

GUNSAN/SEOUL (Reuters) - General Motors' workers at a South Korean plant staged a protest on Wednesday against its planned closure, calling the move by the U.S. automaker a "death sentence", and threatening a strike.

Toshiba names ex-banker as CEO, seen tackling opposition to chip unit sale

TOKYO (Reuters) - Toshiba Corp appointed a former banker experienced in dealing with distressed companies as CEO, and forecast its first annual profit in four years, helped by a buoyant chip business that it has agreed to sell.

How To Trade Today's CPI Release In FX: Goldman Explains

Markets are intensely focused on today's US core CPI release. A softer print than consensus is likely to prove helpful to risk sentiment since it should reassure investors that inflation is likely to move towards target gradually. Equally, a firmer print could extend the recent period of market volatility.

From an FX market standpoint, Goldman looks at the specific crosses investors can use to position for a US core CPI surprise today. The bank focuses on the US CPI releases in 2017 - a period when market focus on these releases was especially acute - and identify the crosses that have seen the largest responses using intra-day data around each release.

Goldman's findings: in G10 FX, AUD, NZD and JPY have typically had the largest moves in response to core CPI surprises over the past year. Within EM, the most responsive crosses have tended to be MXN, TRY, ZAR and BRL among high-yielders and HUF among low-yielders. At the other end of the spectrum, some of the least responsive currencies tend to be INR and RUB in EM and GBP and CAD in G10.

Separately, the responses of the JPY and CHF may be dominated by the behaviour of risky assets and equities (which have been at the epicentre of recent volatility) rather than the direction of the CPI surprise itself. And, in the case of ZAR, the ongoing headlines around President Zuma's position as head of state are likely to affect the market response.

As shown in the chart below, through 2017, the most responsive crosses to surprises in US core CPI were NZD, AUD and JPY in G10 FX, and MXN, TRY, ZAR and BRL in EM FX

Three People Shot After Intruders Try To Ram NSA Compound Gate

Two men who tried to ram the gate at the NSA's main campus in Fort Meade, Maryland in a stolen Ford Escape were shot this morning by a security guard, according to the Baltimore Sun.

One of the attempted intruders was killed, while the other was wounded. A security guard was also injured.

DEVELOPING - Two men dressed as women who attempted to enter a gate at the NSA's campus at Fort Meade, MD in a stolen Ford Escape this morning were shot by a security guard, Bloomberg reports. One intruder was killed, the other wounded. A security guard was also injured.

— BreakingNewzman (@BreakingNewzman) February 14, 2018

Maryland State Highway Administration has shut down MD 32 in both directions at Canine Road in response.

REPORTED; Shooting near NSA, 3 ppl shot, inicdent reported near gate #1 As a result 32 is blocked east of 295 #MDtraffic #GMW pic.twitter.com/UvxqgaVfEm

— Julie Wright (@thejuliewright) February 14, 2018

Fort Meade officials warned drivers to follow alternate routes and "expect long delays."

...

Bitcoin Soars Above $9000 After South Korea Back-Pedals Crypto Ban

Are cryptocurrencies playing catch up to VIX's collapse?

Bitcoin is surging back above $9000 this morning - after testing and failing on Monday - seemingly tracking VIX's plunge into VIX options expiration today...

The catalyst for the leg higher appears to be South Korea once again as regulators downplayed any threats of a ban.

As Bloomberg reports, South Korea's government gave the strongest signal yet that it will allow cryptocurrency exchanges to keep operating in the country, a welcome development for traders who had feared an outright ban in one of the world's biggest markets for digital assets.

Policy makers will focus on making cryptocurrency trading transparent rather than outlawing it altogether, Hong Nam-ki, minister of the Office for Government Policy Coordination, said in a video a posted on the presidential website. It was the government's first coordinated response to the public uproar over a justice ministry proposal in December to shut digital-asset exchanges.

From last Friday's close, Litecoin is the biggest winner (spiking after this morning's headlines), but all major cryptos are higher on the wee ...

Russian Deputy PM: Our Banks Are Ready To Turn Off SWIFT

Russian financial institutions are prepared to survive without access to SWIFT (The Society for Worldwide Interbank Financial Telecommunication) - the global dollar-based interbank payments network - should the US and European Union follow through with threats to cut it off, according to Deputy Prime Minister Arkady Dvorkovich.

"Certainly, it is unpleasant, as it will prove a stumbling block for companies and banks, and will slow down work. It will be inevitable to deploy some aged technologies for information transfer and calculations. However, the companies are technically and psychologically ready for the shutdown as this threat was repeatedly voiced," Dvorkovich said, according to TASS and RT, adding that such a dramatic step would negatively corporations doing business in the US and Europe.

"In general, disconnecting Russia from SWIFT would be a crazy step on the part of our Western partners. It is obvious that for the companies which work in Europe and the US it would be harmful. And this applies not only to the shutdown of the service," he said.

The US and European Union have been periodically threatening to disconnect Russia from SWIFT since 2014 (over SWIFT's own objections), when the conflict in Ukraine flared up and the two powers introduced the first round of international penalties against Moscow for its alleged involvement.

Why Private Equity Risks Tripping on Its Own Success

The past decade has seen a flood of capital into hard-to-see, less liquid assets, transforming the scale and scope of the private-equity firms managing this money.

Does Private Equity Really Beat the Stock Market?

Private-equity returns are really hard to measure and come with big caveats. It helps to understand just exactly what sort of performance private-equity managers are selling.

The Next Big Number Keeping Markets on Edge

Throughout last year, investors worried about a phantom menace that could upset markets: higher U.S. inflation. They were wrong, to their own pleasant surprise. Now they could be right, which creates its own complications.

Single on Valentine's Day? Here's how much debt makes you a deadbeat date

There appears to be a tipping point where debt and singledom go hand-in-hand.

From dodgy backdrops to nasty airbrushing, avoid these online dating photo fails

How to put your best face forward when using a dating app, without using tricks.

Key Words: Credit Suisse CEO defends enabling volatility bets with XIV: 'It worked well ... until it didn't'

Credit Suisse CEO Tidjane Thiam on Wednesday defends a controversial product that let traders bet that markets would stay calm. Pundits accused the XIV ETN and related products of "blowing up" the broader market last week.

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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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