17Feb2016 Pre-Market Commentary: US Futures Up Fractionally, European Markets Up 2%, Crude Slides After Iran Refuses Production Cut, Investors Concerned With Upcoming FOMC

Written by Gary

US stock future indexes are up fractionally and Crude hit $30 before backing off.

The FOMC is ready to issue the minutes from its meeting in January and investors are concerned that the Fed has once again overestimating the strength of the economy. Markets are expected to open higher with a strong possibility of slipping.

Here is the current market situation from CNN Money
	European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 2.08% while Germany’s DAX is up 2.03% and London’s FTSE 100 is up 1.65%.

What Is Moving the Markets

Here are the headlines moving the markets.
	Insight: Lost in translation – Wal-Mart stumbles hard in Brazil CAMPO GRANDE, Brazil/BENTONVILLE, Arkansas (Reuters) – When Wal-Mart Stores Inc. first expanded into Brazil’s midwestern farm-belt city of Campo Grande seven years ago, the economy was booming and executives were eager to open stores even in sub-prime locations on one-way streets heading out of town.
	Bombardier to slash 7,000 jobs over the next two years (Reuters) – Canadian aircraft and train maker Bombardier Inc said it would slash its workforce by about 7,000 over the next two years, while ramping up hiring to support production of its struggling CSeries commercial jet program.
	Airbus to keep border security unit in defense electronics sale FRANKFURT/SINGAPORE (Reuters) – Airbus Group has excluded its border security business from the planned sale of its defense electronics unit, whose sale may now go ahead within weeks, defense and space workers at the European company were told on Wednesday.
	T-Mobile profit nearly triples as it adds more customers (Reuters) – T-Mobile US Inc’s profit nearly tripled in the holiday quarter as aggressive price cutting and offers helped it draw customers away from competitors.
	Oil, stocks surge as relief rally trumps caution LONDON (Reuters) – Oil and stocks jumped on Wednesday, as European earnings and hope that top oil producers will convince Iran to agree to a production freeze overcame initial caution in Europe.
	Iran says will resist curbs on oil output as part of global pact ANKARA/DUBAI (Reuters) – Iran said on Wednesday it would resist any plan to restrain its oil output as fellow OPEC ministers tried to persuade the country to join the first global oil pact in 15 years.
	Futures rise as oil gains hold steady (Reuters) – U.S. stock index futures were higher on Wednesday, setting the stage for a third straight day of gains, as oil prices rose and investors snatched up beaten-down shares.
	Iranian banks reconnected to global payments network DUBAI (Reuters) – Global transaction network SWIFT has reconnected a number of Iranian banks to its system, allowing them to resume cross-border transactions with foreign banks after the lifting of sanctions on Tehran, a SWIFT official said.
	Inovio says Zika vaccine shows response in mice (Reuters) – Drug developer Inovio Pharmaceuticals Inc said preclinical testing of its vaccine for Zika virus induced robust and durable response in mice and it expected to test the vaccine in humans before the end of 2016.
	Tim Cook Refuses To Comply With “Chilling” Government Demand To “Build A Backdoor” Into iPhone Following the December 2 horrific mass shooting in San Benardino, Judge Sheri Pym of U.S. District Court in Los Angeles said on Tuesday that Apple must provide “reasonable technical assistance” to investigators seeking to unlock data – in other words hack – on an iPhone 5C that had been owned by Syed Rizwan Farook, one of the San Bernardino shooters. Tim Cook however has refused to comply. The Apple CEO said his company opposed a demand from the judge to help the FBI break into an iPhone recovered from one of the San Bernardino shooters. Cook said that the demand threatened the security of Apple’s customers and had “implications far beyond the legal case at hand.” It gets worse: in a letter to Apple’s customers, Cook said the FBI had asked the company to build “a backdoor to the iPhone”, which while may not have been an issue in the pre-Snowden days, has become a very sensitive topic for a nation that realizes its government is intent on tracking its every move. “The government is asking Apple to hack our own users and undermine decades of security advancements that protect our customers ” including tens of millions of American citizens ” from sophisticated hackers and cybercriminals,” he said. “We can find no precedent for an American company being forced to expose its customers to a greater risk of attack.” Cook’s summary: “The implications of the government’s demands are chilling. If the government can use the All Writs Act to make it easier to unlock your iPhone, it would have the power to reach into anyone’s device to capture their data. The government could extend this breach of privacy and demand that Apple build surveillance software to intercept your messages, access your health records or financial data, track your location, or even access your phone’s microphone or camera without your kn …
	Stocks Have Taken Out Critical Support… Prepare Now! One of the most critical lines to watch is the 12-month moving average for stocks. Historically this line has served well as a proxy for determining if stocks were in a bull or bear market. When stocks rallied above this line, they were in a bull market. When they fell below this line, they were in a bear market. As you can see, this line was a great metric for targeting when to enter or exit the markets. The significance of this line was somewhat obscured by Fed policy post-2009. Put simply, anytime stocks broke below the critical 12-month moving average, the Fed unveiled a new monetary program to reignite the bull market. However, starting in 2011, the Fed got its wish (a long-term bull market) by convincing enough investors that whenever stocks collapsed into dangerous territory, the Fed would stop in. From that point onward, stocks stayed above the 12-month moving average. Until today. The China Yuan devaluation in August 2015 triggered a sharp sell-off for stocks that took us below the 12-month moving average. The bulls tried desperately to reclaim this line in October-December but have failed. On top of this, the Fed is now tightening rates. And with a US Presidential election only nine months away, the Fed’s hands are tied regarding another QE program (the fact the Fed’s policies have …
	Downturn Now Hitting The Refining Sector Submitted by Michael McDonald of OilPrice Downturn Now Hitting The Refining Sector As all energy investors know, it has been a terrible year for oil and natural gas companies. Many stocks are down half or more from their 52-week highs. Yet amidst the carnage, one energy group has held up very well ” refiners. Companies like Valero (VLO) and Phillips 66 (PSX) have traded flat or even moved higher over the last year. This reality has largely been driven by the glut of crude bringing down input prices for these firms while continued stable demand for gasoline and diesel has led to better crack spreads. The crack spread refers to the profit per barrel of oil that refiners earn from turning oil into finished products like gasoline, diesel, and jet fuel. While 2015 was a strong year for downstream operators, refiners could soon follow oil companies’ downward trajectory. Crack spreads are increasingly coming under pressure as the laws of supply and demand come into balance. Highly profitable crack spreads are drawing more refining capacity online and leading to more supply for many derivative oil products. Established refiners are struggling to combat already high inventories of gasoline and other products by cutting production at key plants, but that effort is unlikely to help sustain cracking margins over the short term. Energy analysts are forecasting that cracking spreads will f …
	Bombardier Thanks Canada For $1 Billion Bailout By Firing 7,000 People Back in October, Quebec put taxpayers on the hook for a $1 billion bailout of planemaker Bombardier, which was having one hell of a hard time creating a buzz around its CSeries commercial jet program. Bombardier has been around for nearly 8 decades and employees more than 40,000 people in the province. The company’s role in the provincial economy is œincalculable, Quebec’s Economy Minister Jacques Daoust said last year. œHow can I let them go? he asked. For its money, Quebec would get a 49.5% stake in a new business that will own the assets and liabilities of the CSeries commercial jet program, which isn’t exactly going well. In exchange, the company promised to manufacture the aircraft in the province for at least 20 years. œHow confident is Quebec that this will fan out for the economy and taxpayers? That’s what we don’t know, Paul Boothe, a former senior Canadian official who was the federal government’s lead negotiator with the domestic units of GM during bailout talks in 2009 said at the time. Well, now we do know. On Wednesday, Bombardier announced it’s cutting 7,000 jobs as part of a œglobal workforce optimization. œImpacted positions are mostly based in Canada and Europe, the company said this morning, after reporting results that missed estimates on both the top and bottom line. Here’s the breakdown: So obviously that sounds bad, but don’t worry because the job losses will be “partially offset” by hiring in “certain growth areas.” Like the CSeries program. Which is “growing” so fast that the company had to take a $1 billion bailout fr …
	OPEC Presses Iran, Iraq to Cap Crude-Oil Production OPEC turned up the pressure on members Iran and Iraq to limit their oil production, a day after Saudi Arabia, Russia and other oil producers agreed to curbs on their output.
	Global Stocks Lifted by Oil Rally Stocks mostly gained Wednesday, spurred by rising oil prices and a two-session rally on Wall Street. Futures pointed to a 0.8% opening gain for the S&P 500.
	The Real Crisis Is for Bank Bonds, Not Banks Buyer beware: the turmoil in European bank debt is more about investors than the banks they invested in.
	High-Frequency Cross-Market Trading And Market Volatility – Part Eight Of Eleven from Liberty Street Economics — this post authored by Dobrislav Dobrev and Ernst Schaumburg The close relationship between market volatility and trading activity is a long-established fact in financial markets. In recent years, much of the trading in U.S. Treasury and equity markets has been associated with nearly simultaneous trading between the leading cash and futures platforms. The striking cross-activity patterns that arise in both high-frequency cross-market trading and related cross-market order book changes in U.S. Treasury markets are also witnessed in other asset classes and naturally lead to the question that we investigate in this post of how the cross-market component of overall trading activity is related to volatility.
	Economic Report: Producer price index rises 0.1%, defying expectations for another decline Core prices were up 0.2% during the month
	Europe Markets: European stocks bounce up, with an assist from oil shares European stocks climb, with the regional’s blue-chip benchmark guided by gains within the embattled commodities and banking sectors.
	The Wall Street Journal: Future online TV subscriptions from Apple or YouTube could potentially cost $40 New entrants such as, Apple, YouTube and Amazon would could potentially charge anywhere from $24.99 to $39.99 for an online TV subscription with content from major Hollywood studios and networks.