22Mar2019 Pre-Market Commentary: Wall Street’s Main Indexes Are Set To Open Lower This Morning, DOW Futures Down Triple Digits, WTI Crude Slips, Gold Index Lower

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 1.37% while London’s FTSE 100 is off 1.34% and Germany’s DAX is lower by 0.85%.

Boeing makes safety change, Indonesian airline cancels order

Indonesian airline Garuda said on Friday it would cancel a $6 billion order for Boeing 737 MAX jets, citing concerns over passenger confidence, as Boeing tried to quell safety worries by making a previously optional cockpit warning light compulsory.

Wall St. set for weaker open as global growth concerns weigh

Wall Street’s main indexes were set to open lower on Friday after downbeat German data exacerbated fears of a slowdown in global growth following an abrupt dovish turn by the Federal Reserve earlier this week.

Tiffany holiday-quarter sales miss expectations on weak tourist spending

Tiffany & Co narrowly missed Wall Street estimates for quarterly sales on Friday, two months after the luxury retailer signaled soft demand in the holiday season because of low spending by Chinese tourists and weakness in Europe and at home.

Trump: China trade deal likely; carmakers can avoid tariffs with U.S. plants

U.S. President Donald Trump said trade negotiations with China were progressing and a final agreement “will probably happen,” adding that his call for tariffs to remain on Chinese imported good for some time did not mean talks were in trouble.

Norwegian Air says its Boeing MAX fleet doesn’t have cockpit warning light

Norwegian Air’s fleet of 18 Boeing 737 MAX 8 aircraft is not equipped with a cockpit light warning of discrepancies between angle of attack sensors, the company said on Friday.

German 10-year bond yields crash below zero as growth fears roil markets

German 10-year bond yields dived below zero while European shares and the euro fell on Friday after grim data from the continent fuelled fears of a global economic slowdown following this week’s dovish turn by the U.S. Federal Reserve.

American Airlines pilots expect to test 737 MAX software fix in Boeing simulator

American Airlines pilots expect to test Boeing Co’s 737 MAX software fix on simulators this weekend, the pilots’ union told Reuters on Thursday, a key step in restoring their confidence in the jet after two fatal crashes.

Indonesia’s Garuda asks to cancel 737 MAX order it had been reconsidering before Ethiopia crash

Garuda Indonesia has asked to cancel an order for 49 Boeing Co 737 MAX 8 jets, citing a loss of passenger trust following two crashes, although it had been reconsidering the order before the latest disaster in Ethiopia last week.

Nokia shares dive on potential Alcatel-Lucent compliance issues

Finnish network equipment maker Nokia said on Friday it was looking into transactions at its former French rival Alcatel-Lucent which it acquired in 2016, after reporting possible compliance issues at the unit to U.S. authorities.

Pizza Marghe-Xi-ta

Submitted by Michael Every of Rabobank

Pizza Margherita is globally known as the taste of Italy and Chinese president Xi wants a slice. Italian PM Conte still look set to sign a deal that sees Italy join the One Belt One Road initiative during Xi’s European visit. In the meantime Italy’s peers are growing concerned that China is using the country as a platform to increase its grip on the West. France has warned against this, and even the US is getting uncomfortable at the idea. Even one part of the Italian coalition, Northern League’s Salvini, is calling OBOR an attempt to ‘colonise Italy’.

What The Fed Got Wrong (But The Bond Market Knew All Along)

Authored by Jeffrey Snider via Alhambra Investment Partners,

The Real End of The Bond Market

These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke).

But as esoteric as all that may be, recent corporate statements leave much less doubt at least as to the primary effect. Before the FOMC gave up on the boom, company bellwethers like FedEx beat them to it.

Corporate giants doing business abroad are painting a dreary picture of the world’s economy…This week, top executives at FedEx, BMW, UBS and others described bleak global business conditions while discussing quarterly results. Fitch Ratings also “aggressively” cut its forecast for the year.

The head of UBS was among the latest to blame the world’s backdrop for weaker-than-expected results. CEO Ermotti told a conference in London on Wednesday that it “one of the worst first-quarter environments in recent history,” Reuters reported.

Economists would do well if they would ever learn to curve (stop it with the ridiculous one-year forwards and term premiums nonsense). The bond markets have been saying all along that this was the way it was going to turn out. The reason: liquidity risks. These are high, …

US GDP May Be Hit By The Boeing 737 MAX Fiasco

With US GDP in Q1 already tracking at a barely positive 0.4% according to the Atlanta Fed and expected to barely hit 2.0% for the full year (according to the double-dovish Federal Reserve), it wouldn’t take much to push the US economy into a contraction in the current quarter (in which stocks have staged their biggest 3 month move since 1987), and perhaps in the second one, ending the second longest expansion of all time with a recessionary whimper.

Just such a recessionary catalyst may be the fiasco involving the Boeing 737 MAX, which according to JPM economist Michael Feroli, could begin impacting the economic dataflow. According to the biggest US bank, the issues affecting the 737 MAX should have no short-run impact on GDP, as production of this airplane is continuing, but will affect the composition of GDP, implying more growth in inventories and less growth of business investment and gross exports.

However, if the issues are not resolved in a timely manner and production of the 737 MAX needs to be halted for an extended period of time, it would take about 0.15% off the level of GDP, or about 0.6%-point off the quarterly annualized growth rate of GDP in the quarter in which production is stopped.

Some context: the value of total shipments of aircraft by domestic producers in the US totaled $129 billion in 2016. Extrapolating that figure using monthly shipments data by the aircraft and parts industry implies a similar figure for 2018, around $130 billion. The NIPA-based data arrive at a similar number and indicate that by category of demand, around 55% of that production is destined for export, 35% is purchased by domestic businesses, and 10% by the Department of Defense.

Global Markets Slide, Yields Collapse As European Recession Deepens

After yesterday’s furious rebound in the S&P, which almost appeared staged to confirm the Fed hasn’t lost control after its shocking doubling down on dovishness which resulted in a bizarre drop in stocks in the last 30 minutes of trading on Wednesday, the rally once again fizzled overnight, dragged lower by European stocks with U.S. equity futures following, while the euro tumbled and 10-year German bunds slumped into negative for the first time since 2016 after miserable data from the German manufacturing sector renewed worries about global growth on Friday.

Rail Week Ending 16 March 2019: Deeper In Contraction Year-to-Date

Written by Steven Hansen

Week 11 of 2019 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages remain in contraction.

Amazon makes own play for the beauty sector as online brands pick up steam

Amazon has launched a skin-care line, Belei.

Forecaster of the Month: The Fed won’t kill the economic expansion, top forecaster says

“The Fed isn’t going to kill this expansion,” says Ryan Sweet of Moody’s Analytics and the winner of MarketWatch’s Forecaster of the Month contest.

The Conversation: Why you shouldn’t give your pet CBD, let alone marijuana

Advice from a toxicologist: “natural” doesn’t always equal “safe.”