18Nov2015 Pre-Market Commentary: U.S. Stock Future Indexes Quiet And Flat Ahead Of Federal Reserve Meeting, Euroasian Markets Down

Here is the current market situation from CNN Money

European markets are lower today with shares in France off the most. The CAC 40 is down 0.68% while Germany’s DAX is off 0.25% and London’s FTSE 100 is lower by 0.10%.

U.S. housing starts fall to seven-month low, permits rise

WASHINGTON (Reuters) – U.S. housing starts in October fell to a seven-month low as single-family home

Target raises earnings forecast after profit rises

CHICAGO (Reuters) – Target Corp on Wednesday reported a bigger-than-expected increase in quarterly profit as revenue got a boost from online sales and strong growth in product categories at the center of its turnaround plan.

Ford-UAW contract passage in doubt as voting nears end

DETROIT (Reuters) – Workers at two large Ford Motor Co plants in Louisville, Kentucky rejected a proposed four-year labor contract by 2-to-1, putting its passage in doubt as voting at Ford plants nears an end.

Square IPO set to price Wednesday in highly watched deal

SAN FRANCISCO (Reuters) – Mobile payments company Square Inc is set to price shares for its initial public offering late Wednesday in what is expected to be a harbinger for how other highly valued tech companies are received in their public debuts.

More work to ensure large banks can be wound down: Fed’s Dudley

NEW YORK (Reuters) – More work remains to ensure the world’s largest banks can be safely wound down in a crisis, including making the legal structure of their various entities more simple and rational, a top Federal Reserve policymaker said on Wednesday.

Security jitters drive European investors back to safe havens

LONDON (Reuters) – European investors edged back into safer assets on Wednesday as a shootout between French police and militants suspected of involvements in the Paris attacks kept the market focused on international security issues.

Stock futures mostly flat as Paris shootout adds to jitters

(Reuters) – U.S. stock index futures were little changed on Wednesday as investors remained cautious after a shootout between French police and militants in Paris and a bomb scare at a German soccer match.

Lowe’s sales top estimates amid strengthening U.S. housing market

(Reuters) – Lowe’s Cos Inc , the No.2 U.S. home improvement chain, reported better-than-expected quarterly profit and sales at stores open at least a year, as people spent more on home improvement amid a strong recovery in the U.S. housing market.

Major Market Index Fails Key Test

Via Dan Lyons’ Tumblr,

The blue chip Major Market Index failed to recapture a key breakdown level.

This post is about 2 weeks late, but still very pertinent in its message. We’ve written about the Major Market Index (XMI) on a couple occasions. Not widely followed, the XMI is an index of 20 of some of the largest blue chip industrial stocks in the U.S. market. While not a very broad index, it is influential, in terms of its constituents’ “name” recognition as well as their “weighty” impact on many of the averages.

The last time we posted something on the XMI was in June, taking note of a couple not-so-constructive developments on its chart. These would, of course, be a precursor to much greater weakness in the August-September decline. One of the key junctures during that period was the index’s early-August breakdown below its post-2009 UP trendline. That breakdown opened the gates to the steep losses later in the month.

Recently, amid the sharp post-September rally, the XMI returned to “kiss” the underside of the broken trendline. This was no happy reunion, however, as the result was a clear and precise rejection of price by the trendline.

What is the significance of this rejection? It simply suggests that prices will not return to the pace of advance that they enjoyed while they were above the trendline. It doesn’t necessarily mean that a new downtrend will begin in earnest. It could simply be that, notwit …

Frontrunning: November 18

Security jitters drive European investors back to safe havens (Reuters)

Global Anti-ISIS Alliance Begins to Emerge (WSJ)

Merkel says cancelling soccer match was ‘responsible’ decision (Reuters)

Paris attacker may have had accomplice on journey through Balkans (Reuters)

Drop Assad demands if you want to unite against Islamic State: Russia to West (Reuters)

Putin sets up commission to combat terrorism financing (Reuters)

Turkey Detains IS Suspects En Route to Germany, Anadolu Reports (BBG)

Xi says China’s economy resilient, ample room for manoeuvring (AP)

LinkedIn’s Hoffman: Half of Tech ‘Unicorns’ May Not Succeed (BBG)

Sky Upgrades TV Service to Fend Off Rivalry From Netflix, BT (

It Will SUNE Be Over: Axiom Says SunEdison “Credit Event Appears More Likely”, Sees Price Dropping To $2/Share

Back in the summer, SUNE was a hedge fund darling and in the portfolio of virtually every aggressive asset manager: a true hedge fund hotel.

Since then it has plunged by 90% on both concerns about fundamentals and hedge fund liquidations and margin calls. Just yesterday, the stock plunged another 34% beginning the question which hedge fund is still long and is about to get another major margin call.

In any event, as @the_real_fly says, “it will SUNE be over” and perhaps catalyzing the ending is a brand new note by Axiom Capital Research titled “The Nightmare Before Christmas†— Credit Event Appears More Likely than Presaged, in which the analyst Gordon Johnson sees at least another 33% of downside before the stock finally stabilizes at something resembling a fair value of $2.00

Here are the highlights:

Credit Risk Appears Worse-than-Forebode. After some pressure from a number of SUNE pundits following our downgrade of the shares last week (given SUNE’s shrs had already moderated -75% vs. +1% for the S&P 500 over the same timeframe), we decided to do another “scrub†of the company’s 10-Q published 11/9. Following this exercise, we are even more resolute in our subdued outlook, SELL rating, and yr-end C16 PT of $2/shr (34% downside). Why? Five reasons, namely:

(1) when excl. cash committed for construction projects, SUNE has just ~$600mn in cash for general corporate purposes (which we now blv may not be enough to sustain SUNE through 2Q16) — Ex. 2,

(2) SUNE’s decision to borrow $169mn in 1yr paper from Goldman Sachs (GS; NR) in 3Q15 at a 15.4% interest rate (incl. $9mn prepayment) to put up collateral, we blv, for the 8/11/15 $152mn margin call on its $410mn Deutsche Bank (DB; NC) loan (an addtl. $91mn of collateral was required from SUNE 10/15 [Ex. 3], and we surmise more since then with the fall in Terraform Power’s shrs [TERP; NC]), pointing to emergen …

Regulators Probe Startup Valuations

Federal securities regulators are looking more closely at whether U.S. mutual funds have proper procedures in place to accurately price shares of private technology companies amid signs the tech boom is wavering.

China’s Banks Test U.S. Legal System

A U.S. federal judge has ordered Bank of China to turn over account records tied to a luxury-goods counterfeiting case, but the lender says that would violate Chinese law.

Fintech Startups Join Forces With Former Foe: Banks

After years of staking combative positions, financial technology—or “fintechâ€â€”upstarts have rethought relationships with the big banks.

The Importance Of Commodity Prices In Understanding U.S. Import Prices And Inflation

from Liberty Street Economics

— this post authored by Thomas Klitgaard and Patrick Russo

The dollar rose sharply against both the euro and yen in 2014 and 2015 and non-oil import prices subsequently fell. An explanation for this relationship is that a stronger dollar reduces the dollar-denominated cost of producing something in Germany or Japan, giving firms room to lower their dollar prices in order to gain sales against their U.S. competitors. A breakdown by type of good, however, shows that import prices for autos, consumer goods, and capital goods tend not to move much with changes in the dollar as foreign firms choose to keep the prices of their goods stable in the U.S. market.

Capitol Report: U.S. may soon have power to take passports from tax delinquents

If you owe the Internal Revenue Service more than $50,000 in taxes, you could soon have your passport taken away if a highway-bill revenue-raising measure becomes law.