10Feb2016 Pre-Market Commentary: US Futures Higher, Crude Prices Higher, US Dollar Rising Fractionally Ahead Of FOMC Meeting This Afternoon

Here is the current market situation from CNN Money

European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 2.60% while Germany’s DAX is up 1.80% and London’s FTSE 100 is up 0.52%.

Time Warner raises profit forecast but fourth-quarter revenue misses

(Reuters) – Time Warner Inc , the owner of cable channels CNN and HBO and movie studio Warner Bros, raised its 2016 adjusted profit forecast and set a $5 billion share buyback program.

Audi, BMW sell fewer luxury cars than Mercedes

BERLIN (Reuters) – Germany’s Audi and BMW sold fewer vehicles in January than luxury rival Mercedes-Benz, which has benefited from a continued surge in Chinese demand for its compact cars and sport-utility vehicles (SUV).

Hermes warns of potential for further dip in sales growth

PARIS (Reuters) – French luxury goods maker Hermes has yet to see its business in Paris recover from November’s deadly attacks on the city and warned of a potential further slowdown in global sales this year.

Futures rise as oil recovers; Yellen testimony awaited

(Reuters) – U.S. stock index futures were higher on Wednesday, with oil prices staging a modest recovery, ahead of U.S. Federal Reserve Chair Janet Yellen’s appearance before Congress.

Dollar fails to find foothold as market awaits Yellen

LONDON (Reuters) – The dollar struggled to climb off 3-1/2-month lows on Wednesday as worries over a global economic slowdown weighed and traders waited for more tips on the likely course of U.S. interest rates from Federal Reserve Chair Janet Yellen.

Twitter results need to wow to reassure investors

(Reuters) – When Twitter Inc reports results on Wednesday, a less than stellar showing could hammer the stock further as a broad selloff in the technology sector has made investors jittery.

Oil rises toward $31 as Russia floats idea of supply cut

LONDON (Reuters) – Oil rose toward $31 a barrel on Wednesday after four days of declines, supported by the prospect of OPEC and rival producers cooperating to tackle a supply glut that has sent prices to a 12-year low.

Credit Suisse CEO says bank has a strong balance sheet: FT

ZURICH (Reuters) – Credit Suisse Chief Executive Tidjane Thiam told the Financial Times the Swiss bank’s capital position has never been better.

Yellen Hints At Slowing Economy, Dropping Stocks But Does Not Go Full Dove

With world markets begging for moar, Janet Yellen’s prepared Humphrey-Hawkisn Testimony was a disappointment:

*YELLEN: FED EXPECTS ECONOMY TO WARRANT ONLY GRADUAL RATE RISES (everything is fine)

*YELLEN: JOB, WAGE GAINS SHOULD SUPPORT INCOMES AND SPENDING (everything is awesome)

*FED REPORT: LEVERAGE RISKS IN FINANCIAL SECTOR `REMAIN LOW’ (so don’t worry about banks)

*YELLEN: FINANCIAL STRAINS COULD WEIGH ON OUTLOOK IF PERSISTENT (so, there’s chance)

The bottom line this is simply a rerhash of the Jan FOMC Statement and does not offer enouigh dovishness for the market.

As we detailed last night,

The dovish surprise is if she explicitly removes March from the hiking calendar (which would be Draghi-esque in front running the FOMC), broadly hints at a delay or expresses concern on downside risk to long term inflation or structural stagnation. The intention would be to show US households, business and investors that the Fed has their back.

This is not what she gave, and markets are disappointed.

Full statemenmt:

JPM’s Striking Forecast: ECB Could Cut Rates To -4.5%; BOJ To -3.45%; Fed To -1.3%

One week ago, in the aftermath of Japan joining the NIRP club, we wondered how low Kuroda could cut rates if he was so inclined. The answer was surprising: according to a Nomura analysis the lower bound was limited by gold storage costs. This is what the Japanese bank, whose profit was recently slammed by Japan’s ultra low rates, said:

“theoretically, negative interest rates’ lower bound depends partly on the cost of holding cash in the form of physical currency. When people hold cash out of aversion to negative interest rates, they risk losses due to theft and the like. The cost of avoiding this risk could be a key determinant of negative interest rates’ lower bound, but it is hard to directly quantify. As a proxy for the cost of holding physical currency, we estimated the cost of storing gold based on gold futures prices. This cost has averaged an annualized 2.4% over the past 20 years, though it has varied widely over this timeframe.”

Which, in conjunction with Kuroda’s promises that “Japan will cut negative rates further if needed”, raised flags: once the global race to debase accelerates, and every other NIRP bank joins in, will global rates be ultimately cut so low as to make a “gold standard” an implicit alternative to a world drowning in NIRP?

According to a just released report by JPMorgan, the answer is even scarier. In the analysis published late on Tuesday by JPM’s Malcolm Barr and Bruce Kasman, negative rates could go far lower t …

Profit At World’s Largest Shipping Company Plunges On Collapsing Global Trade, Sinking Crude Prices

Back in November, Nils Smedegaard Andersen, CEO of Maersk, the world’s largest shipping company, gave the world a reality check when it comes to global growth and trade.

œThe world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting Andersen told Bloomberg. “We believe that global growth is slowing down [and that] trade is currently significantly weaker than it normally would be under the growth forecasts we see.”

That amounted to a harsh indictment of the IMF’s œbuilt in optimism bias (to quote HSBC), a bias which leads the Fund to perpetually revise down its estimates for global growth once it’s no longer possible to deny reality. œWe conduct a string of our own macro-economic forecasts and we see less growth – particularly in developing nations, but perhaps also in Europe, Andersen added. œAlso for 2016, we’re a little bit more pessimistic than most forecasters.”

His comments came on the heels of a quarter in which Maersk’s profits fell 61% Y/Y. On Wednesday, we got the latest numbers out of the shipping behemoth and the picture is most assuredly not pretty.

For 2015, profits fell a whopping 84% to $791 million from $5.02 billion in 2014. Analysts were looking for a profit of $3.7 billion.

For Q4, the net loss came in at $2.51 billion, far worse than the Street expected. Shares of Maersk fell sharply in repsonse.

Not helping matters was Maersk’s oil unit, which took a $2.5 billion impairment charge. “Given our expectation that the oil price will remain at a low level fo …

Frontrunning: February 10

Global Stocks Bounce Back After Market Selloff; Asia Stumbles (WSJ)

New Hampshire Bucks the Establishment to Back Trump and Sanders (BBG)

Trump shows his U.S. presidential bid is no mere publicity stunt (Reuters)

Clinton Is Outdone by a Competitor Once Considered a Fringe Candidate (WSJ)

Deutsche Bank Jumps as Lender Said to Consider Bond Buyback (BBG)

Bank Executives Leading Surge of Insider Buying Amid Stock Rout (BBG)

Morgan Stanley Trading Executive Provides Grim Picture for Wall Street (WSJ)

Carlyle starts $200m share buyback as quarterly profits drop (FT)

Deutsche Bank’s Short-Term Fix (BBG)

Russia’s Biggest Oil Producer Skeptical on Output Deal With OPEC (BBG)

Credit Suisse chief says bank sector sell-off ˜not justified’ (

Stocks Bounce Back After Market Selloff; Asia Stumbles

A resurgence in banking stocks lifted equities across Europe, a rally that looked set to continue across the Atlantic, even as Asian markets continued to fall.

Oil Prices Up but Still Volatile

Oil prices rebounded from a steep fall but with volatile and range-bound trading leaving the market short of a meaningful rally.

Deutsche Bank Shares Soar

Shares in Deutsche Bank rose 14% following news that the German lender is considering buying back some of its debt.

Future Banking Crisis In Europe: Hard Landing In A New Reality

from LEAP/Europe 2020, Leap2020.eu

The beginning of 2016 is marked by the announcements of a “cataclysm”, expected to happen this year on the stock markets. What is different now compared to 2008 is that, this time, it is not some contrarian analysts who say so (the way LEAP did in its early publication of GEAB in February 2006) and who launch these alerts.

Further Analysis Of Corporate Bond Market Liquidity – Part Four Of Eleven

from Liberty Street Economics

— this post authored by Tobias Adrian, Michael Fleming, Erik Vogt, and Zachary Wojtowicz

Our earlier analyses from last October and earlier in this series looked at market liquidity measures averaged across all corporate bonds or broad sub-groups of corporate bonds. Commentators have pointed out that such broad averages might mask important differences among narrower sub-groups of bonds and that relatively illiquid bonds, in particular, have suffered the largest reductions in liquidity.

Capitol Report: NY Daily News calls voters ˜mindless zombies’ after Donald Trump wins New Hampshire

The New York Daily News calls Trump’s New Hampshire voters ˜mindless zombies’; Jeb Bush says his campaign isn’t dead; how Bernie Sanders made Hillary Clinton look old; and more.

Yellen says financial conditions less supportive to growth

Fed Chairwoman Janet Yellen said that there were risks to the outlook but said the central bank still expected to hike rates gradually

Market Snapshot: Dow futures charge higher as Wall Street awaits Yellen

Wall Street eyed a higher open Wednesday as investors waited for Federal Reserve Chairwoman Janet Yellen to shed light on her plan for U.S. monetary policy during testimony on Capitol Hill.