18Jan2016 Pre-Market Commentary: U.S. Markets Closed Today In Observance Of MLK Day, WTI Crude Higher, US Dollar Steady In Low 99's And European Markets In The Red

Written by Gary

US markets are closed today, but certain commodity and European markets are trading today. WTI crude has climbed fractionally higher almost to $31, Brent has risen off its lows and the US dollar is trading in the low 99’s. European markets are open, quiet and in the red fractionally. (See below)

Here is the current market situation from CNN Money
	European markets are lower today with shares in Germany off the most. The DAX is down 0.53% while France’s CAC 40 is off 0.43% and London’s FTSE 100 is lower by 0.38%.

Today, Monday, January 18th, all US markets (including equity, option and fixed income) will be closed in observance of Martin Luther King, Jr. Day.

There will be no Pre-Market or After Market hours trading sessions.

What Is Moving the Markets

Here are the headlines moving the markets.
	Oil firms after hitting 2003 low on lifting of Iran sanctions LONDON (Reuters) – Oil prices rose on Monday, recovering from a 2003 low as the market braced for additional Iranian exports after the lifting of sanctions against the country over the weekend.
	Exclusive: China’s chief stock regulator has offered to resign – sources BEIJING (Reuters) – Xiao Gang, the embattled head of China’s securities regulator, has offered to resign, sources said, after perceived mismanagement wiped more than $5 trillion off the value of the Shanghai and Shenzhen stock markets since they peaked last June.
	Strong China property data masks big problem: unsold homes BEIJING/HONG KONG (Reuters) – For an economy facing its slowest economic growth in a quarter century, a 7.7 percent year-on-year rise in new home prices in December would seem to offer China some light at the end of the tunnel.
	Apple European headquarters evacuated over security alert DUBLIN (Reuters) – Staff at Apple’s European headquarters in Ireland were evacuated on Monday while police searched the premises following a security alert, a police spokesman said.
	Adidas names Henkel’s Rorsted to replace Hainer as CEO BERLIN (Reuters) – German sportswear firm Adidas has appointed Henkel’s Kasper Rorsted as its new chief executive after the 53-year-old Dane succeeded in cutting costs and boosting profits during an eight-year reign at the consumer goods group.
	Volkswagen to recall 614 Skoda Superb III cars sold in Russia MOSCOW (Reuters) – Germany’s Volkswagen [VOWGK.UL] will voluntarily recall 614 cars of the Skoda Superb III model it had sold in Russia since 2015, Russian technical safety watchdog Rosstandart said on Monday, citing a technical fault.
	Worried about sub-$20 crude? Some sellers are already there SINGAPORE (Reuters) – An end to sanctions on Iran has driven global crude futures to 12-year lows and brought sub-$20-a-barrel oil in sight, although for some producers that is already a painful reality.
	European stocks look to fight out of the global gloom LONDON (Reuters) – Many stock markets around the world and oil prices slumped to multi-year lows on Monday amid persistent worries over global growth, although European stocks offered a chink of light in the gloom, staging an early bounce following last week’s sell-off.
	Airbus plan heralds Iran boom after sanctions lifted DUBAI (Reuters) – A purchase of more than 100 aircraft from Europe’s Airbus may be one of Iran’s first big deals in a trade and investment boom that could reshape the economy of the Middle East.
	Equity Futures Rise After Oil Rebounds From 12 Year Lows; US Markets Closed In the aftermath of the latest Chinese near-panic intervention to keep its currency from an out of control collapse when as reported yesterday, the PBOC announced it would raise the RRR for offshore Yuan deposits, a move which would reduce the amount of the currency available in the market, squeezing supply further (and breaking Hong Kong HIBOR markets again in the process) and making it more difficult and expensive for speculators, the Chinese stock market went exactly nowhere, closing up 0.44% suggesting that when it comes to manipulating asset classes, China can do either stocks or FX (or soon corporate bonds once that particular – and most epic – bubble bursts), but not both at the same time. So, with the US closed today for Martin Luther King Holiday (futures are open until 1pm ET before closing until 6pm), global risk tone has once again been set entirely by oil, which opened sharply lower at fresh 12 year lows on fears of an Iran oil glut, but has steadily rebounded on the latest OPEC comments, and at last check both WTI and Brent were mostly unchanged trading in the low $29’s on muted volume. A quick recap of the key oil market highlights: in a report just released by OPEC, the now defunct cartel hopes non-OPEC production will fall by 700,000b/d, even as Iran begins pumping an extra 500,000b/d while Saudi exports jumped by a whopping 355,000b/d to 7.719MM b/d in November from 7.364MM b/d in October. The rest of the OPEC headlines: OPEC PREDICTS OIL MARKET WILL BEGIN TO REBALANCE IN 2016 OPEC SEES NON-OPEC OIL SUPPLY FALLING BY 0.7M B/D IN 2016 AMID LOW PRICES OPEC OUTPUT FELL 0.2M B/D TO 32.2M B/D IN DECEMBER OPEC SEES DEMAND FOR ITS OIL RISING 1.7M B/D TO 31.6M B/D IN 2016 OPEC’S JANUARY REPORT INCLUDED D …
	Japan’s Nikkei Closes Below 17,000 As Hong Kong Money-Markets ‘Break’ Again With Hong Kong Dollar spot little changed (but pressing the weaker end of its peg band) and 12-month forwards suggesting notable weakness/depegging to come, it appears that the Hong Kong interbank lending debacle is far from over. While overnight money appears stable, 1-week Yuan HIBOR is up 370bps at 11.90%, and 1-month and 3-Month HKD HIBOR just snapped higher ( to Jan 2013 highs and July 2010 highs respectively). It appears comments from Hong Kong Monetray Authority’s Norman Chan that it’s just a matter of time before outflow of funds lead to the local currency hitting the low end of the peg sparked heavy medium-term demand for liquidity. Offshore Yuan is crepping back weaker (as is crude) after an early bounce. YUAN 1-WEEK HIBOR RISES 370 BPS TO 11.90% And while the levels are not as exciting the relative spike is notable in HK interbank markets. HONG KONG 3-MONTH HIBOR RISES TO HIGHEST SINCE JUL. 2010 *HONG KONG 1-MONTH HIBOR RISES TO HIGHEST SINCE JAN. 2013 But for now spot is stable (albeit at the weak-end of the peg band)…
	Doug Casey: Why Do We Need Government? Submitted by Doug Casey via CaseyResearch.com, Rousseau was perhaps the first to popularize the fiction now taught in civics classes about how government was created. It holds that men sat down together and rationally thought out the concept of government as a solution to problems that confronted them. The government of the United States was, however, the first to be formed in any way remotely like Rousseau’s ideal. Even then, it had far from universal support from the three million colonials whom it claimed to represent. The U.S. government, after all, grew out of an illegal conspiracy to overthrow and replace the existing government. There’s no question that the result was, by an order of magnitude, the best blueprint for a government that had yet been conceived. Most of America’s Founding Fathers believed the main purpose of government was to protect its subjects from the initiation of violence from any source; government itself prominently included. That made the U.S. government almost unique in history. And it was that concept – not natural resources, the ethnic composition of American immigrants, or luck – that turned America into the paragon it became. The origin of government itself, however, was nothing like Rousseau’s fable or the origin of the United States Constitution. The most realistic scenario for the origin of government is a roving group of bandits deciding that life would be easier if they settled down in a particular locale, and simply taxing the residents for a fixed percentage (rather like “protection money”) instead of periodically sweeping through and carrying off all they could get away with. It’s no accident that the ruling classes everywhere have martial backgrounds. Royalty are really …
	The Fed’s Stunning Admission Of What Happens Next Following an epic stock rout to start the year, one which has wiped out trillions in market capitalization, it has rapidly become a consensus view (even by staunch Fed supporters such as the Nikkei Times) that the Fed committed a gross policy mistake by hiking rates on December 16, so much so that this week none other than former Fed president Kocherlakota openly mocked the Fed’s credibility when he pointed out the near record plunge in forward breakevens suggesting the market has called the Fed’s bluff on rising inflation. All of this happened before JPM cut its Q4 GDP estimate from 1.0% to 0.1% in the quarter in which Yellen hiked. To be sure, the dramatic reaction and outcome following the Fed’s “error” rate hike was predicted on this website on many occasions, most recently two weeks prior to the rate hike in “This Is What Happened The Last Time The Fed Hiked While The U.S. Was In Recession” when we demonstrated what would happen once the Fed unleashed the “Ghost of 1937.” As we pointed out in early December, conveniently we have a great historical primer of what happened the last time the Fed hiked at a time when it misread the US economy, which was also at or below stall speed, and the Fed incorrectly assumed it was growing. We are tal …
	Oil Extends Slide Below $30 Crude oil futures extended a fall below $30 a barrel, as the removal of sanctions over Iranian oil exports sparked concerns that oil prices would move even lower.
	European Stocks Volatile After Recent Selloff Global stocks struggled for direction amid lingering concerns about China’s economy and a fresh fall in oil prices.
	Europe’s Lower-Rated Debt Moves Higher on Amundi’s List Europe’s largest asset manager is adopting an unusual strategy to shield its corporate-bond funds from the volatility roiling financial markets: buying riskier debt.
	Money, Banking, And Monetary Policy From The Formation Of The Federal Reserve Until Today from the Richmond Fed — this post authored by Robert L. Hetzel and Gary Richardson Our nation’s founding fathers debated whether the United States should have a national bank. In 1791, Congress chartered the first Bank of the United States to handle the financial needs of the federal government and the credit and coinage of the nation. The charter expired after 20 years. Five years later, in 1816, Congress chartered a second Bank of the United States, whose charter also expired after two decades.
	Historical Echoes: How Members Of The Society For Creative Anachronism Make Money from Liberty Street Economics — this post authored by Amy Farber Have you seen these people? You might come upon them wearing historic period garb. The Society for Creative Anachronism (SCA), founded in 1966, is, according to its website, “an international organization dedicated to researching and re-creating the arts and skills of pre-17th-century Europe.” The members like to recreate life in an earlier time, which means using the technology existing at that time and eschewing later technology (not all the time, just when they are in “anachronism mode”.
	The Tell: J.P. Morgan goes totally bearish on oil, slashes 2016 crude forecast to $31.50 J.P. Morgan dramatically slashes its outlook for both crudeÂ and Brent, saying the oversupply in the market will keep prices from bouncing back until late this year
	Market Extra: This chart shows how long it could take Iran to get its oil production up to speed The market is waking up to a new reality of Iran oil after sanctions on the country were lifted over the weekend. This chart from Commerzbank offers some clues on just how long that process could take.
	The Wall Street Journal: OPEC says oil markets will begin to rebalance in 2016 Oil prices remain below $30 a barrel Monday but OPEC is optimistic the market will start to rebalance itself this year as weak prices take their toll on production outside the cartel.