27Dec2018 Pre-Market Commentary: Wall Street Has Pulled Back From Yesterday’s Historic Gains With Futures Pointing To A Significant Decline For The Three Major U.S. Stock Indexes Ahead Of The Open In Nearly A Decade.

Here is the current market situation from CNN Money

European markets are broadly lower today with shares in Germany off the most. The DAX is down 2.03% while London’s FTSE 100 is off 1.22% and France’s CAC 40 is lower by 0.36%.

U.S. jobless claims dip in sign of labor market strength

The number of Americans filing applications for jobless benefits fell marginally last week to near a 49-year low, pointing to underlying strength in the labor market.

Stock futures tumble after Wall Street’s dramatic surge

U.S. stock futures slumped 1.6 percent on Thursday, a day after a breathtaking rally drove gains of more than 1,000 points on the Dow Industrials for the first time ever and helped other main indexes notch their largest daily percentage gains in nearly a decade.

Tesla sets up Shanghai financial leasing unit as China plans accelerate

Tesla Inc has registered a financial leasing company in China, a local business registration filing shows, in the latest sign the U.S. electric car maker is attempting to speed up its push into China.

Dramatic stock market rally runs out of steam

A global equity rally fueled by a dramatic surge on Wall Street ran out of steam on Thursday, setting U.S. shares up for a weak opening after a fall in Chinese industrial profits offered a reminder of the pressures on the world economy.

China’s Sinopec suspends top officials at trading arm: sources

Chinese state oil major Sinopec has suspended the two top officials at its trading arm Unipec after the company suffered losses, sources with knowledge of the matter said on Thursday.

China says direct trade talks with U.S. in January, pledges more opening

China and the United States have made plans for face-to-face consultations over trade in January, the Chinese commerce ministry said on Thursday, as the world’s two biggest economies advanced efforts to resolve a months-long trade war.

Exclusive: Foxconn to begin assembling top-end Apple iPhones in India in 2019 – source

Apple Inc will begin assembling its top-end iPhones in India through the local unit of Foxconn as early as 2019, the first time the Taiwanese contract manufacturer will have made the product in the country, according to a source familiar with the matter.

Exclusive: White House considers new year executive order to bar Huawei, ZTE purchases

President Donald Trump is considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using telecommunications equipment made by China’s Huawei and ZTE, three sources familiar with the situation told Reuters.

Oil slips back toward 18-month lows on oversupply

Oil prices fell on Thursday after rebounding 8 percent in the previous session, as worries over a glut in crude supply and concerns over a faltering global economy pressured prices even as a stock market rally offered support.

DataTrek: “Healthy” Markets Don’t Rally 1,086 Points On The Dow

Submitted by Nicholas Colas of DataTrek Research

Even with Wednesday’s rally, December’s 11-13% declines (S&P 500, Russell 2000) for US stocks couldn’t have come at a worse time for markets. First, there is the psychological damage of seeing such a swoon in what is a typically good month for domestic equities. Then there is the magnitude of the decline, erasing solid YTD gains in just a few weeks and making 2018 the first down year for US stocks since the Financial Crisis a decade ago.

One underappreciated problem, however, (unless you happen to manage taxable portfolios) is how money managers and investment advisors had to respond to this sudden reversal of fortune. Put yourself into their shoes for a moment:

In a few days your clients will see a year-end statement with declining bond, stock, and commodity asset prices. Pretty much nothing worked this year… That will sting, but after a decade of gains that is a manageable issue.

But… Say you sold some large winners earlier this year as stocks began to roll over, perhaps the large cap Tech names that everyone from hedge funds to retail investors over-weighted until recently. Those were good sales, to be sure, but in a taxable account they create a future liability and your clients will have to cut a large check to the US Treasury in April 2019.

To minimize the tax bill from those capital gains, you need to sell some losers to offset those winners. Clients understand market-to-market losses; they can be less forgiving, however, of out-of-pocket tax payments when there is no wealth effect of rising asset prices to soften the blow. Until September, those paper gains were there. Now, they aren’t.

Here is the real-world market impact of that problem. Back on December 17th we gave you a list of the 11 worst performing names in the S&P for the then-YTD. This …

Sinopec Shares Drop As Top Officials Fired Over Trading Losses

Shares of Asia’s largest petroleum refiner plunged on Thursday, dragging down the broader Chinese market, following reports that two senior officials at Unipec, the trading subsidiary of Chinese refining giant Sinopec, had been dismissed by their Communist Party overseers due to an unspecified trading loss.

According to Bloomberg, which cited a statement from a company spokesman, Chen Bo, president of Unipec, and Zhan Qi, the company’s Communist Party secretary, have been suspended over “work reasons” (though losses in the subsidiary’s energy-trading unit are widely suspected to be the true reason). The decision was made by the internal party committee at Sinopec and announced yesterday in an internal decision.

News of the dismissals comes one day after US crude prices posted their largest one-day jump in two years (though it’s likely that Unipec, like refiners across the world, posted large losses during the alarmingly swift plunge in oil prices during Q4, which left many refiners wrong-footed). Several refiners have …

S&P Futures Tumble As Epic One-Day Rally Fizzles

On any other day, a 1.5% drop in the S&P futures would be cause for alarm; however after yesterday’s historic 5% surge in US stocks it merely prompts a shrug, because even with ES sliding -36 points, it is roughly where it was trading at 3:35pm yesterday.

Whether because we went from a near record oversold market to overbought in one day, or just because traders concluded that yesterday’s surge was nothing more than a bear market rally, the kind of which we saw on so many occasions during the depths of the financial crisis…

… nearly a third of yesterday’s rally fizzling, wiped out in overnight trading, with S&P futures sliding for the past 6 hours and after an early spike which pushed the Emini briefly above 2480, the contract has since dropped as much as 60 points and is prompting renewed concerns about the sustainability of yesterday’s bullish reversal.

Trump Considering Order To Ban Purchases Of Huawei, ZTE Equipment

After the US government elicited outrage from the Chinese due to its attempts to convince its allies to bar the use of equipment made by telecoms supplier Huawei, President Trump is apparently weighing whether to take another dramatic antagonistic step that could further complicate trade negotiations less than two weeks before a US delegation is slated to head to Beijing.

According to Reuters, the White House is reportedly considering an executive order that would ban US companies from using equipment made by Huawei and ZTE, claiming that both companies work “at the behest of the US government” and that their equipment could be used to spy on US citizens. The order would invoke the International Emergency Economic Powers Act to order the Department of Commerce to prohibit the purchase of equipment from telecoms manufacturers that could threaten national security.

Though it wouldn’t explicitly name Huawei or ZTE, the ban would arise from Commerce’s interpretation. The IEEA allows the president the authority to regulate commerce in the face of a national emergency. Back in August, Congress passed and Trump signed a bill banning the use of ZTE and Huawei eq …

Market Snapshot: Dow futures down more than 300 points after Wall Street’s historic rebound

Stock futures indicate a lower open for Wall Street on Thursday, as bulls struggle to build on a sharp rebound the previous session in an environment where heightened volatility prevails.

Michael Sincere’s Long-Term Trader: That massive one-day stock market rebound was a sucker’s rally

Make these 4 moves now to protect your money in a bear market, writes Michael Sincere.

Economic Report: Jobless claims fall slightly to 216,000 in week before Christmas; layoffs still very low

The number of Americans applying for unemployment benefits fell slightly in the week before Christmas, reflecting a vibrant U.S. labor market and the very low number of layoffs taking place during the holiday season. Initial jobless claims slipped by 1,000 to 2016,000.