18Sep2019 Pre-Market Commentary: Wall Street Futures Are Flat, DOW Down 34 Points, SP 500 Down 4.88 Points, WTI At 58.50

Here is the current market situation from CNN Money

European markets are higher today with shares in France leading the region. The CAC 40 is up 0.17% while Germany’s DAX is up 0.13% and London’s FTSE 100 is up 0.05%.

From oil shocks to funding strains, Fed confronts new complexities

The Federal Reserve will conclude its latest policy meeting on Wednesday buffeted by conflicting economic data, under steady pressure from the White House for steep interest rate cuts, and confronted as well with an unexpected jump in overnight borrowing costs that may require action on its own.

ECB weighs investigating Deutsche Bank over alleged unauthorized bond purchases: sources

The European Central Bank is examining whether to open a formal investigation into Deutsche Bank for allegedly buying some of its own securities without authorization, two people familiar with the matter said on Wednesday.

Apple spars with EU as $14 billion Irish tax dispute drags on

Apple accused the European Commission of misunderstanding its business on day two of the iPhone maker’s appeal against a $14 billion tax order, in a dispute that is key to the EU’s drive to collect more taxes but which could also run for years.

Futures on back foot before Fed policy decision

U.S. stock index futures dipped on Wednesday as investors waited for the Federal Reserve’s decision on interest rates in what has been a rocky week for global markets.

Garments for lease: ‘rental’ apparel brings new wrinkles for retail stores

Lisa Batitto, 54, says she has virtually stopped buying clothes ever since she started renting them.

Lone 737 MAX criss-crossed Canada for pilot checks during grounding

While the world’s Boeing 737 MAX fleet remains grounded after two fatal crashes, a solitary Air Canada plane has been spotted in the skies, shuttling between Quebec and Ontario.

Britain to investigate $5 billion U.S. takeover of defense firm Cobham

Britain will investigate the national security impact of the purchase of defense company Cobham by U.S. private equity firm Advent International, potentially delaying or even blocking the $5 billion deal.

Explainer: Why Asia’s biggest economies are backing hydrogen fuel cell cars

China, Japan and South Korea have set ambitious targets to put millions of hydrogen-powered vehicles on their roads by the end of the next decade at a cost of billions of dollars.

Toyota banks on Olympic halo for the humble bus to keep hydrogen dream alive

Buses may not be the most glamorous mode of transport but at the 2020 Tokyo Olympic games, they will represent Toyota Motor Corp’s best bet for wider acceptance of hydrogen power – technology so far eclipsed by electric vehicles.

Caution: Mean Reversion Ahead

Caution: Mean Reversion Ahead

Authored by by Michael Lebowitz and Jack Scott via RealInvestmentAdvice.com,

If you watch CNBC long enough, you are bound to hear an investment professional urging viewers to buy stocks simply because of low yields in the bond markets. While the advice may seem logical given historically low yields in the U.S. and negative yields abroad, most of these professionals fail to provide viewers with a mathematically grounded analysis of their expected returns for the equity markets.

Mean reversion is an extremely important financial concept and it is the œreversion part that is so powerful. The simple logic behind mean reversion is that market returns over long periods will fluctuate around their historical average. If you accept that a security or market tends to revolve around its mean or a trend line over time, then periods of above normal returns must be met with periods of below normal returns.

If the professionals on CNBC understood the power of mean reversion, they would likely be more enthusiastic about locking in a 2% bond yield for the next decade.

Expected Bond Returns

Expected return analysis is easy to calculate for bonds if one assumes a bond stays outstanding till its maturity (in other words it has no early redemption features such as a call option) and that the issuer can pay off the bond at maturity.

Let’s walk thought a simple example. Investor A and B each buy a two-year bond today priced at par with a 3% coupon and a yield to maturity of 3%. Investor A intends to ho …

Frazzled Traders Fade Futures, Buy Bonds Ahead Of Repo Injection, Fed Decision

Frazzled Traders Fade Futures, Buy Bonds Ahead Of Repo Injection, Fed Decision

Soaring, then tumbling oil prices; soaring, then sliding repo rates; unprecedented factor volatility as crowded positions exploded – it sure has been quite a week headed into today’s Fed decision which quickly lost the top spot as the most market-moving event of the week amid a barrage of six sigma, exogenous shocks.

Blain: “Something Is Happening, And We Don’t Know What It Is”

Blain: “Something Is Happening, And We Don’t Know What It Is”

Blain’s Morning Porridge, submitted by Bill Blain

Why so Calm?

Even as the Fed meeting pondered raising rates by a smidge, it had to intervene to pump money into the short-term US financial system for the first time since the 2008 crisis. That’s a clear sign of financial dislocation ” but markets seem utterly unconcerned. (The wires all quote issues such as tax payments and an imbalance between new funding and low redemptions to explain the sudden lack of cash, but none of my money market chums are convinced. They fear something else, a big No-See-Em is underway.)Â

The last crisis started in money markets. Add that to the ongoing WTF-happened questions about the Saudi bombings, and there seems to be a curious sense of false calm in markets. No vol, no concern, and gold hardly moving. I can’t help but think of ducks; serenely floating upstream while their legs are furiously paddling below the surface. Something is happening, and we don’t know what it is.

Since I don’t know either, today is the day to take a pop at the Green Puritan movement:Â

There is a great comment from Bill Gates in the FT – Fossil fuel divestment has œzero climate impact, says Bill Gates. Worth a read, and maybe get yourself thinking about what damage ESG/Green group-think nonsense is doing? Its distorting the global economy and voiding perfectly sane investment strategies. As regular readers will know, I …

Smart TVs Caught Sending Sensitive User Data To Facebook And Netflix

Smart TVs Caught Sending Sensitive User Data To Facebook And Netflix

A study by researchers from Northeastern University and Imperial College London found that many popular smart TV models, including models by Samsung and LG, as well as streaming dongles Roku and Amazon FireTV, are leaking sensitive user data to advertisers.

The models listed above would share data like location and IP address with Netflix, Facebook and third-party advertisers, according to the FT.

Why a GST cut in auto alone may not be enough to rev up sales

Why a GST cut in auto alone may not be enough to rev up salesIn the current situation, wholesale volumes have shrunk due to inventory correction at the dealer end.

Land ownership to soon get Aadhaar-like twist

Land ownership to soon get Aadhaar-like twistDisputes over land, validity of titles & rightful ownership account for two-thirds of pending cases in India.

Cognizant just hit a big job milestone in India

Cognizant just hit a big job milestone in IndiaCognizant would be the country’s second biggest white-collar employer, and the biggest MNC employer in India.

Futures Movers: Oil adds to loss with Saudi output seen coming back online, rising U.S. supplies

Oil futures are heading lower for a second day on Wednesday as crude-oil markets react to Saudi Arabia’s report that it will fully restore some 5.7 million-barrels-a-day of crude output by month end after last weekend’s attacks.

Bond Report: Treasurys rally on Middle East tensions

Treasury prices are rising Wednesday, pushing yields lower, after Iran says it is willing to retaliate against any measures taken against it, following a drone strike on Saudi Arabian oil facilities in the past weekend.

U.K. launches security probe into U.S. buyout group Advent’s £4 billion Cobham takeover

The U.K. government has ordered an investigation into the £4 billion acquisition of defense manufacturer Cobham by U.S. private equity firm Advent International on national security grounds.