Written by Gary
US stock market major index’s futures are fractionally higher (SPY +0.3%) following steep losses in yesterday’s session. The Fed Chair has indicated more interest rates hikes coming to prevent the U.S. economy from overheating.
Here is the current market situation from CNN Money | |
European markets are mixed to lower. Shares in France are off as the CAC 40 drops 0.27%. The DAX is down 0.14% while the FTSE 100 in London is unchanged. |
What Is Moving the Markets
Here are the headlines moving the markets. | |
Wall Street on course for February loss, first in 11 months(Reuters) – Wall Street looked set to open flat on Wednesday, on track for loss on the month in February, as concerns over rising interest rates and their downward impact on stock markets dominated chatter among traders. | |
A question of interest at the heart of debate over GM Korea rescueSEOUL (Reuters) – For years, General Motors resisted calls from South Korean officials to cut interest rates it was charging on nearly $3 billion in loans to its loss-making South Korean unit, according to three sources and documents seen by Reuters. | |
Exclusive: Bayer to win EU approval for $62.5 billion Monsanto deal – sourcesBRUSSELS (Reuters) – German drug and crop chemicals maker Bayer is set to win conditional European Union antitrust approval for its $62.5 billion bid for world No. 1 seed company Monsanto , two people familiar with the matter said on Wednesday. | |
Lowe’s profit and margins miss lowest Wall Street estimate, shares tumble(Reuters) – Lowe’s Companies Inc’s quarterly profit and gross margins failed to beat even Wall Street’s lowest estimate on Wednesday as the No.2 U.S. home improvement chain’s margins fell, sending its shares down about 10 percent premarket. | |
U.S. stocks to keep recovering, set to climb 8 percent this year: Reuters pollNEW YORK (Reuters) – U.S. stocks will build on the recent recovery from a selloff earlier this month to rack up an over-8-percent gain for the year, according to a Reuters poll of Wall Street market strategists, extending a bull run that began in 2009. | |
GM Korea to slash executive numbers, talks with union make little progressSEOUL (Reuters) – General Motors’ South Korean unit plans to slash the number of its executives, an internal letter seen by Reuters showed – the latest step by the U.S. automaker as it attempts a politically contentious restructuring of the loss-making business. | |
Valeant revenue forecast misses estimates as competition heats up(Reuters) – Valeant Pharmaceuticals’ forecast for 2018 revenue fell below Wall Street estimates, as the company faces intensifying competition for some of its major products. | |
Toys R Us goes into administration in Britain, putting 3,000 jobs at riskLONDON (Reuters) – Retailer Toys R Us UK [TOYUK.UL] has gone into administration, the firm appointed to oversee the process said, putting around 3,000 jobs at risk. | |
Bunge’s coveted Argentina plants lure ADM takeover approachROSARIO, Argentina/CHICAGO (Reuters) – On the banks of the Parana River, machines hum 24 hours a day in Argentina’s grain ports, churning out soy-based animal feed and shooting it straight into the hulls of ships bound for buyers worldwide. | |
JPMorgan & BofA Admit “Disruptive Threat” Of Cryptocurrency To Their BusinessHaving explained why central banks are so nervous about cryptocurrencies, it seems the rest of the banking sector is finally admitting the real driver behind their disdain for digital currencies – they are competition and an existential threat. As CoinTelegraph’s Molly Jane Zuckerman reports, J.P. Morgan Chase has added a segment on cryptocurrencies to the “Risk Factor” section of their 2017 annual report to the US Securities and Exchange Commission (SEC), filed yesterday, Feb. 27. The annual report mentions cryptocurrencies under the “Competition” subsection when describing how new competitors have emerged that threaten J.P. Morgan’s operations:
The report notes that these new technologies, evidently including Blockchain, although they don’t mention it by name, “could require JPMorgan Chase to spend more to modify or adapt its products to attract and retain clients and customers or to match products and services offered by its competitors, including technology companies.” This competition could potentially “put downward pressure on prices … | |
Here Comes The “4 Rate Hike” BandwagonMoments ago we reported that while Wall Street (if not market) consensus is clearly shifting to a hawkish view of 4 rate hikes this year in the aftermath of Powell’s hawkish testimony to the House, at least one strategist, SocGen’s Kit Juckes is not buying it, and wrote that “global level inflationary pressures aren’t noticeably building, fuels the view that the growth spurt at the end of 2017 is now behind us.” Whether it is the recent slide in the Atlanta Fed’s Q1 GDP estimate, or the various global economic surprise indexes… … one could argue that Juckes is right. And yet, a quick skim of the various market comments this morning shows that the SocGen analyst is clearly in the minority. As Bloomberg notes, the Powell session before the House, which many expected to be a ho-hum event that would have minimal impact on stocks, ended up spooking the markets thanks to comments that signaled an increased slant at the March meeting toward four rate hikes this year. Here are a few reactions of note, via BBG: Evercore ISI vice chairman (and former New York Fed official) Krishna Guha: “Had thought the message in March would be 3+3 (three … | |
SocGen: The Fed Is Wrong, “The Growth Spurt Is Now Behind Us”Yesterday, Fed Chair Jerome Powell threw markets for a loop when he suggested that the US economy is on the verge of overheating, and that it was performing better than it did during the December FOMC meeting. This prompted a surge in the dollar, and a slump in both Treasurys and stocks. The narrative immediately shifted: UBS’ chief economist Paul Donovan commented that “Former US Federal Reserve Chair Yellen suggested that there were few systemic risks in the US financial system, but that the current fiscal position was troubling. This is a rather consensus view, but the former Fed chair presumably had access to better information than the consensus. Current Federal Reserve Chair Powell indicated rates should go up” and added that “the broad picture is of a US economy performing at or above trend, justifying four rate hikes this year.” Others quickly chimed in (via Bloomberg): Evercore ISI vice chairman (and former New York Fed official) Krishna Guha: “Had thought the message in March would be 3+3 (three in 2018, three in 2019) with the Committee moving to 4+3 in June once the inflation data had firmed further. Following Powell’s remarks there seems to be a good chance that many or even most FOMC participants will go to 4+3 in March” JPMorgan Chief U.S. Economist Michael Feroli (who remains in the four-rate-hike camp for both 2018 and 2019): “We now think the odds are tilted slightly in favor of the median participant revising up their outlook to look for four hikes this year and another three hikes next year” Goldman Chief Economist Jan Hatzius: “We agree with the market’s hawkish assessment of Powell’s comments. At this point we see roughly even odds that the median dot will show 3 hikes (2.125%) or 4 hikes (2.375%) for 2018 in March, and we think the median dot for 2019 is likely to move up from 2.7% to 2.875%” | |
The Real Reason Behind the Bidding War for SkyThe world’s media titans are locked in battle over Sky. Comcast, Disney and Fox all believe Europe’s pay-TV leader will give them heft to fight back against Netflix. | |
No Magic Number for QualcommBroadcom’s reduced bid still represents substantial premium, but deal risk remains high. | |
Powell’s First Problem: Taming the Job MarketThe Federal Reserve says the economy is “near or a little beyond full employment.” Preventing it from getting too tight without causing trouble will be tough. | |
The Tell: Head of world’s largest hedge fund says U.S. in a ‘pre-bubble phase’ with a 70% chance of recessionBridgewater Associates founder Ray Dalio says he sees a growing chance of a recession as the U.S. enters a “pre-bubble stage.” | |
Key Words: Forget inflation — worry about what happens when this ‘Goldilocks’ era ends, says Ray DalioThe same day new Federal Reserve chief Jerome Powell gave his maiden Capitol Hill testimony, the head of the world’s largest hedge fund said this is now the challenge for central banks. | |
Metals Stocks: Gold claws up from two-week lows as dollar gains are temperedGold prices gained feebly Wednesday, an attempted recovery from their lowest finish in more than two weeks, as U.S. dollar strength was pared from a robust showing a day earlier. |
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