20Dec2018 Pre-Market Commentary: Wall Street To Open Lower, DOW Futures Down -0.1%, WTI Tumbles Opening At 55.89

Here is the current market situation from CNN Money

European markets are broadly lower today with shares in France off the most. The CAC 40 is down 1.66% while Germany’s DAX is off 1.13% and London’s FTSE 100 is lower by 0.27%.

U.S. weekly jobless claims rise less than expected

WASHINGTON (Reuters – The number of Americans filing applications for jobless benefits rose marginally from near a 49-year low last week, suggesting underlying strength in the labor market and broader economy.

Tokyo prosecutors appeal after court decides against extending Ghosn detention

Tokyo prosecutors have appealed a court decision that prevents further detention of Carlos Ghosn, a surprise ruling which could free the ousted chairman of Nissan Motor Co Ltd for the first time since his arrest for alleged financial misconduct.

Tokyo court rejects prosecutors’ appeal against decision not to extend Ghosn’s detention: media

A Tokyo court upheld a decision not to extend the detention of former Nissan Motor Chairman Carlos Ghosn and former Representative Director Greg Kelly, public broadcaster NHK said on Thursday, a move that brings them closer to a release on bail.

Embraer to pay out $1.6-1.7 billion in extraordinary dividends: paper

Brazilian planemaker Embraer SA is planning to distribute $1.6 billion to $1.7 billion in extraordinary dividends to shareholders, using proceeds from its recent deal with Boeing Co , the Valor Econômico newspaper reported on Thursday.

Brazil judge blocks Boeing-Embraer tie-up with new injunction

A Brazilian judged on Thursday issued his second injunction blocking the proposed sale of 80 percent of planemaker Embraer’s commercial aviation division to Boeing Co .

Uber resuming self-driving car testing in Pennsylvania

Uber Technologies Inc [UBER.UL] on Thursday is resuming limited self-driving car testing on public roads in Pittsburgh, nine months after it suspended the program following a deadly accident in Arizona.

World stocks suffer as Fed heightens recession fears

World equity markets slipped on Thursday after the U.S. Federal Reserve dashed investor hopes of a more dovish policy outlook, worsening worries of a recession as signs grow that global economic growth is stuttering.

Futures edge higher in bounce after Fed-triggered swoon

U.S. stock futures edged higher on Thursday, following a sharp pullback in the prior session after the Federal Reserve stuck to its plan to keep withdrawing monetary support from an economy it views as strong, dampening hopes for a more dovish outlook.

Altria pays $12.8 billion for minority stake in e-cigarette company Juul

Marlboro cigarette maker Altria Group Inc on Thursday announced it would pay $12.8 billion to take a 35 percent stake in Juul Labs Inc, a marriage between an old-line tobacco giant and a fast-growing electronic-cigarette rival looking to make inroads among smokers.

Putin Discusses Sanctions, Syria, And Stockpiling Nukes In Marathon Year-End Q&A

In keeping with an annual tradition that has persisted since shortly after his election to the highest office in the Russian Federation, Russian President Vladimir Putin held his annual end-of-year marathon Q&A session Thursday in downtown Moscow. This year, the Kremlin said it has accredited more than 1,700 journalists to participate, according to ABC.

Kremlin spokesman Dmitry Peskov, who accompanies Putin on stage and calls on journalists, told media ahead of the event that Putin would focus on domestic issues, and also every “aggressive and hostile” international situation involving Russia – of which there are many. And during the press conference, Putin has, so far, delivered, commenting on every contemporary controversy, from the diplomatic incident between Russia and Ukraine, the killing of Jamal Khashoggi, the poisoning of Sergei Skripal, the US’s decision – made barely a day ago – to withdraw troops from Syria, the US’s intention to withdraw from the INF and the looming possibility of another round of sanctions, which are currently under consideration in the US Congress.

Powell To Markets: “You’re Wrong!”

Via DataTrekResearch.com,

“Today’s prices are wrong” is the central tenet of active portfolio management. Without that belief, no manager could justify his or her role in capital markets. Systematically identifying mis-priced assets is the first line of a PM’s job description.

At the same time, investors have grown accustomed to questioning the existence of rampant asset price inefficiencies. That has driven the growth of passive management, of course. But it has also made “what’s your investment edge?” the only question that matters when quizzing everyone from a junior hedge fund analyst to the most senior long-only manager.

Markets made a harsh assessment today: Fed Chair Jay Powell has no edge.To be fair, that judgment actually started in early October, when Powell offered his “far from neutral rates” comment. The S&P 500 is down 14% since then. Today’s 1.5% drop was just the equity market’s way of saying “you are missing important information”.

Six quick thoughts to expand on this, all based on Chair Powell’s answers to various questions during the post-meeting press conference:

#1. Not only did the Chair shrug off markets, he also discounted commentary from the Fed’s own business contacts. Powell mentioned that there is a “mood of angst” as he speaks to companies just now. But he brushed aside these sentiments, noting that they may not last. He also mentioned the difficulty of measuring business confidence with enough precision to incorporate it more robustly in Fed rate discussions.

#2. When questioned about still-quiescent inflation and the Fed’s consistent over-estimation of this half of their dual mandate, Powell could only say (essentially) “Well, we’re pretty close to 2%”. In the Fed’s latest S …

Krona Rallies After Riksbank Delivers First Rate Hike In Seven Years

The world’s oldest central bank delivered a holiday surprise for krona bulls on Thursday when Sweden’s Riksbank raised its benchmark repo rate off the crisis-level -50 basis points to -25 bps, its first – and unexpected – rate hike in seven years. The decision, which was anticipated by only 10 of 24 analysts polled by Bloomberg, sparked a rally in the Swedish krona sending it almost 1% higher to trade at 10.26 to the euro, its biggest jump since early October. Putting the news in context, Capital Economics noted that markets were pricing in less than a 10% probability of a hike yesterday.

Despite a raft of weak inflation data that had led most analysts to push back their rate-hike expectations until February, the central bank decided to hike in order to “maintain credibility” after five years of forecasting rate hikes that never happened. Prior to the hike, the Riksbank advised that a hike could arrive either late this year or during its February meeting. Inflation expectations now appear “established” at around the Riksbank’s 2% target, which suggests that “the need for a highly expansionary monetary policy has decreased slightly,” the bank said in a statement. The bank’s board, which voted 5-1 to raise rates, said the next hike would probably come durin …

Bill Blain: This Is The One Thing That Scares Me Most

Blain’s Morning Porridge submitted by Bill Blain

“Christian Men, be sure, while God’s gifts possessing, you who will bless the poor shall yourselves find blessing…”

The Fed did not deliver us Gold, Frankincense or Myrrh. 2018’s “mood of angst about growth” wasn’t improved as the Fed closed a bad year with a 25 bp hike y’day. Powell ignored Trump and mumbleswerved about: “significant uncertainty on the ultimate destination of any further rate increases..” The way he said it; 2 hikes next year sounded less hawkish rather than more dovish. Markets reacted in a predictable fashion: Badly! Biggest post FOMC nosedive in years.

This will be my last porridge of 2018. Merry Christmas! As we kiss the last few days of the “worst year in memory” goodbye! Will 2019 be as bad? Of course not… but.. Things are seldom as bad as you fear…. they can be…. much much worse.

This time last year I was calling for a stock market correction (rather than full crash) in Q1. It didn’t happen till November. I was a fairly lone Cassandra on the likely unintended consequences of QE of the great QE unwind on all asset classes – warning an outbreak of subjective realism would crush overly tight bond spreads and inflated equity as the buybacks ended. It’s half happened.

The full effects of the QE wind-down are only now being felt and made apparent. It’s an ongoing threat. The fact so many investors still don’t get it is why I remain a massive bull on off-market alternatives, divergent, uncorrelated real assets producing real cashflows. I warned about the dangers of US tax cuts being a short-term boost solving few long-term issues like a balance consumption/production economy.

On a more positive tack, 2019 looks more likely to be a market “recuperative” year because the last few months of pain …

Rail Week Ending 15 December 2018: Economically Intuitive Sectors Continue In Contraction

Written by Steven Hansen

Week 50 of 2018 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors were in contraction this week.

Economic Report: Philly Fed manufacturing index in December weakens to more than two-year low

The Philadelphia Fed manufacturing index in December fell to a reading of 9.4, from 12.9 in November and the lowest level since August 2016.

Metals Stocks: Gold hovers at roughly 5-month highs after Fed rate-hike campaign tweaked

Gold prices ticked higher Thursday, a mild recovery from the after-hours decline for the precious metal that followed the Federal Reserve’s as-expected rate increase.

The Wall Street Journal: Trump understands intricacies of campaign finance laws, old testimony reveals

Sworn statements by President Donald Trump dating back several decades indicate he has a deep understanding of campaign-finance laws, legal experts say, which could be critical if investigators ever pursue a case against him over his alleged direction of hush-money payments in the 2016 campaign.