14Jan2016 Pre-Market Commentary: Investors Remain Jittery Over China And Plunging Oil Prices, US Futures Flat To Fractionally Higher

Written by Gary

U.S. stock index futures were little changed this morning but were fractionally in the green. Investors continued worries over China’s economy and a slump in energy prices, have pushed all major U.S. indexes into correction or bear market territory. Markets are expected to open fractionally higher and may start the ‘decent’ again.

Here is the current market situation from CNN Money
	European markets are sharply lower today with shares in France off the most. The CAC 40 is down 2.21% while Germany’s DAX is off 1.93% and London’s FTSE 100 is lower by 1.16%.

What Is Moving the Markets

Here are the headlines moving the markets.
	U.S. jobless claims rise; labor market still healthy WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits unexpectedly rose last week, but remained below levels associated with a healthy labor market.
	Renault searched in emissions probe, says no signs of defeat device PARIS (Reuters) – French carmaker Renault said fraud investigators had inspected three of its in an emissions probe, news that wiped billions off its market value in an echo of the scandal engulfing German rival Volkswagen.
	Best Buy expects U.S. sales to fall 1.5 percent in fourth quarter (Reuters) – Best Buy Co Inc said it expected its U.S. sales to fall by about 1.5 percent in the current quarter due to weak demand for mobile devices, scanners and printers in the holiday season.
	JPMorgan posts better-than-expected profit as costs kept in check (Reuters) – JPMorgan Chase & Co, the biggest U.S. bank by assets, reported a better-than-expected quarterly profit for the last quarter of the year as it kept a tight lid on expenses and legal costs dropped sharply.
	Stock futures little changed; JPMorgan up after results (Reuters) – U.S. stock index futures were little changed on Thursday, after a sharp fall the day before, as JPMorgan kicked off earnings for big banks with better-than-expected results.
	Oil hovers at 12-year lows as Iran supply looms LONDON (Reuters) – Oil prices steadied on Thursday, but remained near 12-year lows on the prospect of Iran unleashing its oil on an oversupplied market and with few signs of improving demand in a fragile global economy.
	Giving up on stocks: China’s retail investors seek safety first SHANGHAI (Reuters) – As China’s legions of retail investors flee the country’s tumultuous equity markets, pushing stock prices down around 15 percent so far this year, money is flowing into perceived safe-haven assets such as domestic bonds, gold and the dollar.
	Stocks and commodity currencies floored by new oil plunge LONDON (Reuters) – Share markets and heavily commodity-dependent currencies took a fresh beating on Thursday, having been floored again by the latest plunge in oil prices, this time to below $30 a barrel.
	Japan automakers hitch pickups to U.S. growth as gas prices slide DETROIT (Reuters) – Japanese automakers are taking on Detroit’s Big Three and scrambling to expand their share of pickup truck sales in the United States, as record low gasoline prices curb demand for their once best-selling small and medium-sized sedans.
	‘Slumlord’ Buffett’s “Disturbing Business Model” To Be Probed By Feds Submitted by Mike Krieger via Liberty Blitzkrieg blog, He walked them through Clayton-built homes on the lot, then into the sales center, passing a banner and posters promoting one subprime lender: Vanderbilt Mortgage, a Clayton subsidiary. Inside, he handed them a Vanderbilt sales pamphlet. “Vanderbilt is the only one that finances on the reservation,” he told the women. His claim, which the women caught on tape, was a lie. And it was illegal. In minority communities, Clayton’s grip on the lending market verges on monopolistic: Last year, according to federal data, Clayton made 72% of the loans to black people who financed mobile homes. The company’s in-house lender, Vanderbilt Mortgage, charges minority borrowers substantially higher rates, on average, than their white counterparts. In fact, federal data shows that Vanderbilt typically charges black people who make over $75,000 a year slightly more than white people who make only $35,000. Through a spokesperson earlier this month, Buffett declined to discuss racial issues at Clayton Homes, and a reporter who attempted to contact him at his home was turned away by security… She continued to raise concerns, writing in an email to Clayton’s director of marketing that when she spoke to new borrowers, “there were many things they were not made aware about during the sale.” < …
	Frontrunning: January 14 Islamic State launches militant assault on Indonesia’s capital (Reuters) Three winners emerge in $1.6 billion Powerball jackpot (Reuters) European Stocks Tumble, Credit Markets Weaken on Growth Concern (BBG) Stocks and commodity currencies floored by new oil plunge (Reuters) China Bear Market Looms as PBOC Fails to Stop Flight to Safety (BBG) Anxious phone calls, tense moments before Iran’s Supreme Leader okayed U.S. sailors’ release (Reuters) The Quiet Side of China’s Market Intervention (WSJ) ECB wary of further action despite uncertain future (Reuters) Continental Resources CEO Sees Oil Prices Doubling by Year End (WSJ) The Real Price of Oil Is Far Lower Than You Realize (BBG) Crude at $10 Already a Reality for Canadian Oil-Sands Miners (BBG) North Dakota Cities Use Oil Slump to Reg …
	JPM Earnings Rebound On Big Drop In Compensation Expense; Dimon Notes “Some Stress In Energy” There were four things we mostly cared about in today’s JPM earnings release, the first Wall Street bank to report Q4 results: how did the company’s fixed income and equity trading revenue do; what is the bank’s credit exposure to energy/oil; did the recent Fed hike do anything to boost the company’s Net Interest Margin (this has been the primary catalyst for bank share upside), and did JPM halt its practice of releasing reserves and start building reserves – a major inflection point when it comes to management expectations for future credit quality deterioration. But before we go there, here is a quick skim of the summary income statement: as the table below shows, JPM posted a modest $0.13 increase to EPS Y/Y which rose to $1.32, beating estimates of $1.27 driven by a $1.1BN reduction in expenses while revenue increased only $0.2BN from a year ago. One place where the cost-cutting may have come from is headcount as JPM lost 12,000 workers in 2015 and has lost ~43,000 since 2012. However, the biggest hit was in Investment Banking compensation (as in bonus accruals) which dropped by $1.1BN Y/Y to $4.4BN, also down $1.7 billion from the prior quarter. It will not be a happy year for JPM bonus recipients. Then a quick look at JPM’s balance sheet which has continued its recent trend of declining, and was down to $2.352 trillion, down $221 billion from a year ago, while the matching decline on the liability side was once again in deposits which dropped to $1.28 trillion from $1.363 trillion a year ago, while non-operating deposits decline by $200 billion. And while JPM no longer discloses the full breakdown of its …
	“Fundamentals Don’t Matter Right Now, It’s Panic On The Way Down,” Trader Warns In the wake of yet another dramatic selloff on Wednesday which brought the Dow to the brink of correction territory and kept the market on pace for its worst start to a year in history, investors are getting worried. A confluence of factors including the continued devaluation of the yuan, plunging oil, and soaring HY risk have brought markets to the precipice and the bears are out in force, with the likes of Albert Edwards calling for a horrific 75% plunge in the S&P. In short: the writing is on the wall and you should probably read it. Here with more on the carnage and on how it’s œbubbles on the way up [but] panic on the way down, is former FX trader Mark Cudmore. * * * From Bloomberg Yesterday’s selloff across almost all assets provides the confirmation that’s needed for investors to heed the many medium-term bearish technical signals triggered last week. It’s time for capital preservation. Even if an oversupply of oil provided the trigger for yesterday’s capitulation, in a broader sense fundamentals don’t matter right now. That’s frequently the case in the short term (bubbles on the way up; panic on the way down), even if they always matter in the long-term.
	Global Stocks Slide on Oil, China Fears Stocks in Europe and Asia resumed the steep declines that have dominated the year Thursday, as fears around commodity prices and the outlook for global growth continued to batter markets.
	J.P. Morgan’s Earnings Rise, Hit Annual Record J.P. Morgan said its fourth-quarter profit beat expectations, sending the bank to its second consecutive year of record annual earnings.
	Not Too Big to Fail—Too Expensive to Exist While the U.S. government hasn’t heeded populist calls to œbreak up the nation’s largest financial firms, those demands are at times being answered through indirect pressure from regulators.
	Economic Report: Monthly jobless claims hit highest level since July The average number of people who applied for jobless benefits in the past month climbed in early 2016 to the highest level since last July, fresh government figures show.
	Market Snapshot: U.S. stock futures point to gains as market tries to shake off fear After a tough selloff in the prior session, stock futures waver across the flatline.