22Feb2016 Pre-Market Commentary: US Markets Higher, Crude Higher As ‘Cuts’ To Take Place March First

Here is the current market situation from CNN Money

European markets are sharply higher today with shares in Germany leading the region. The DAX is up 1.78% while France’s CAC 40 is up 1.51% and London’s FTSE 100 is up 1.36%.

Goldman slashes legal cost estimate

(Reuters) – Goldman Sachs Group Inc cut the upper end of its estimate of legal costs it may face beyond what it has set aside by more than half to $2 billion.

Allergan reports higher-than-expected Q4 revenue

(Reuters) – Allergan Plc , which is being bought by Pfizer Inc , reported better-than-expected revenue, helped by strong performance in its U.S. brands segment, which sells products like Botox and Restasis eye drops.

Apple urges government to form commission on encryption issues

(Reuters) – Apple Inc , fighting a demand by the U.S. government that it unlock an iPhone used by one of the San Bernardino shooters, has called for the creation of a government commission or panel of experts to discuss the implications of the demand on issues such as national security and personal freedoms.

Stocks futures sharply higher as oil extends gains

(Reuters) – U.S. stock index futures were sharply higher on Monday, in lock-step with oil prices, as investors look for signs of stability after a turbulent start to the year.

Lumber Liquidators set to slump after revised cancer-risk report

(Reuters) – Lumber Liquidators Holdings Inc’s shares were set to tumble on Monday after a revised U.S. federal agency report showed people exposed to some types of the company’s laminate flooring were three times more likely to get cancer than previously estimated.

Exclusive: Up to 90 million more Takata airbag inflators may face U.S. recalls

DETROIT/WASHINGTON (Reuters) – U.S. auto safety regulators are examining whether an additional 70 million to 90 million Takata Corp airbag inflators should be recalled because they may endanger drivers, according to a person with knowledge of the matter.

Oil rises on IEA’s U.S. shale outlook and rig data

LONDON (Reuters) – Oil rose after the world’s oil consumer body said on Monday it expected U.S. shale production to fall this year and next, potentially easing a glut that has driven prices to their lowest in more than a decade.

Stocks gain broadly, pound falls on EU exit fears

LONDON (Reuters) – Shares rose in Europe and Asia on Monday, boosted by higher oil and commodity prices, while sterling fell against the dollar and euro on concerns Britain may vote to leave the European Union.

Ericsson, Nokia offer contrasting timelines for 5G network upgrades

BARCELONA (Reuters) – Ericsson , the world’s top supplier of wireless equipment, said on Monday it expects 150 million users to be on next-generation 5G networks five years from now, steering clear of an industry debate over whether network upgrades could start far earlier.

Cable Crashes To 7 Year Lows As Brexit Battle Begins

With the UK’s referendum on EU membership due in four months, it appears the market is gravely concerned about the possibility of Brexit. Despite the unleashing of Project Fear (both military and corporate fearmongery), cable (GBPUSD) has crashed 2.3% (the most in 7 years) to its lowest in 7 years, and both FX volatility and credit risk Brexit indicators are soaring to record highs.

Just as we warned, Friday’s dubious gains have evaporated and cable is crashing to 7 years lows…

As Deutsche Bank’s Jim Reid notes,

So four months tomorrow we’ll see yet another important referendum for financial markets as all of us here in the UK decide on EU membership. Maybe we’re imagining it but it seems that important national referendums are becoming more widespread. In the last 12 months we’ve seen the Scottish Independence and the Greek EU deal referendums both of which were market moving events. Not long before those we had the Crimea referendum, although in fairness this was less of a market moving event, while Catalonia was the subject of a somewhat de-facto referendum back in September. If such national polls are becoming more frequent it perhaps reflects the weak global economic environment and the hope that a major change brings a better future.

Very crudely, the Brexit opinion polls in recent years have tended to be correlated to the economic data in Europe and the U.K. So the stay vote has polled notably higher in good times than bad. In the Eu …

“We’ve Reached The Limit”: Denmark Central Bank Chief Says Monetary Policy Is Exhausted

For the likes of Paul Krugman, the Riksbank provides a cautionary tale for central banks wary of committing so-called œpolicy mistakes.

Back in 2010, the bank started to hike rates. That decision halted a decline in unemployment and shortly thereafter, it became apparent that œthe rock star of the recovery had turned itself into Japan.” Or so Krugman says.

He went on to blame the œerror on “Sadomonetarism, which he hilariously described as œan attitude, common among monetary officials and commentators, that involves a visceral dislike for low interest rates and easy money, even when unemployment is high and inflation is low.

If these œsadomonetarists are indeed œcommon among monetary officials, then it’s news to us because everywhere you turn, DM central bankers have plunged headlong into the Keynesian abyss as NIRP proliferates and QE continues unabated in Europe, Japan, and yes, in Sweden, where the Riksbank made a U-turn in 2011 on the way to pushing rates deeply into negative territory.

Here’s where the world stands as it relates to NIRP.

The question one might fairly ask Krugman is why the world is still stuck with a stubborn deflationary impulse 8 years after Ben Bernanke mustered the œcourage to print. Central banks have eased, and eased, and eased and yet inflation is still below target (and that’s putting it nicely) while global growth and trade remain stuck in the doldrums.

It could be that the competitive nature of the rate cuts and QE expansion ultimately mean that no one gets to enjoy the benefits – or at least not for long. One round of easi …

The Simple Reason Why Stocks Are Soaring: Gartman “A Bit Net Shorter”, Says “Market Is In Very, Very Bad Trouble”

One can devise all sorts of complex explanations why global stocks and US futures are on fire this morning, or one can just assume that alos are doing what they do best: fading Dennis Gartman.

From his latest note:

IF VOLUME IS SUPPOSED TO FOLLOW THE TREND ¦: If volume us supposed to follow the trend then the stock market is in very, very bad trouble indeed, for the volume is strong as the market weakens and its weak as the market weakens and its strong as the market rises.

We have changed our positions only by the very barest of margins here at TGL in our retirement account. Using our oldest trading rule which is to simply add to winning positions and try our very best to do less of those position that are serving us ill, we cut back on the long position we are holding in a small coal company headquartered in Illinois but otherwise we did nothing, leaving us a bit net shorter of the market…. We are sitting tighter, up 7.9% for the year-to-date and rather pleasantly out-performing global equities.

As for why gold is getting hammered today, perhaps it’s as simple as this:

SPOT GOLD IN MONTHLY TERMS: An Important Trend Line’s Been Broken: It’s been four years + since the peak but now this trend line’s been broken and the bullish case for gold is becoming easier and easier to make and to hold firmly to.

We are long of gold in EUR and Yen related terms via GEUR and GYEN and we are long of gold in US dollar terms via the shares of the largest gold mining firm in North America against which we hav …

Frontrunning: February 22

Futures sharply higher as oil extends gains (Reuters)

Global Stocks Gain on Rising Commodities Prices, China (WSJ)

Pound in freefall as Boris Johnson sparks Brexit fears (Telegraph)

Pound Slides Most Since 2009 as Johnson Backs ˜Brexit’ Campaign (BBG)

Donald Trump, Hillary Clinton Seize Leads for Their Parties’ Nominations (WSJ)

Oil Glut Will Persist Into 2017 as IEA Sees Prices Capped (BBG)

Japanese Seeking a Place to Stash Cash Start Snapping Up Safes (WSJ)

San Bernardino victims to oppose Apple on iPhone encryption (Reuters)

Apple Calls for Congress to Form Committee for Privacy Issues (BBG)

Syrian Conflict’s Toll Pressures Allies (WSJ)

Gold, Oil Go Their Separate Ways (

HSBC Says Slower Asian Growth, Volatile Markets Could Hit Revenue

HSBC Holdings said slower Asian growth and volatile markets could hit revenue and delay parts of its strategy this year, as it reported worse-than-expected fourth-quarter results.

British Pound Falls on EU Exit Fear

The British pound fell by 2% after London’s popular mayor, Boris Johnson, became the most prominent politician to say he would back the campaign for Britain to leave the European Union in a June 23 referendum.

Global Stocks Gain on Rising Commodities Prices, China

Global stocks gained Monday as rising commodities prices and signs of stability in China markets helped rekindle a rally that stalled at the end of last week. In currencies, the pound fell sharply against the dollar.

Whither Mortgages?

from Liberty Street Economics

— this post authored by Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw

Our most recent Quarterly Report on Household Debt and Credit showed that although total household debt has increased somewhat since 2012, that growth has been driven almost entirely by nonhousing debt – credit cards, auto loans and student loans. The largest category of household debt – mortgages – has been essentially flat since 2012, in spite of a substantial rise in housing prices over that period. In this post, we explore the sources of the sluggish growth in mortgage debt using our New York Fed Consumer Credit Panel, which is based on Equifax credit data.

Petro-Euro, Money-debt, Banking Crisis, Real Economy: Ten Years To Seal The Fate Of An Economic-financial System

from LEAP/Europe 2020, Leap2020.eu

Precisely ten years ago (to the day), in its second bulletin of February 2006 [1], warning about the imminent explosion of a “global systemic crisis”, the GEAB based its opinion on the identification of two strong signs: the end of the publication of the M3 money supply indicator [2] (suggesting a start to unusual degrees of the famous “money printing” which everyone has spoken about ever since); and the Iranian oil bourse launch – a country not yet constrained by international sanctions at the time – but a stock market based on the Euro [3].

Market Snapshot: Dow industrials poised for a more-than-1% gain as oil roars ahead

Stock futures point to a higher start for Wall Street as oil prices continue to gain from Friday’s news that the U.S. oil-rig count declined for the ninth straight week.