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Global Stocks, Futures Flat As Santa Rally Runs Out Of Steam In Christmas Eve-Shortened Session
After a furious three day "dash for trash", no volume, no breadth, commodity-driven rally, even Santa is now exhausted and overnight US equity index futures were little changed with European and Asian shares mixed. The dollar has declines as gold, silver gain, with WTI initially continuing its recent meteoric rise (up over 8% in the past three days, nearly hitting $38), only to reverse and give up all overnight gains moments ago. Copper falls after Chinese stocks see a second day of weakness, down 0.7% while an unexpected tumble in the USDJPY to 7 weeks lows has dragged the Nikkei (-0.5%) and its futures down.
Ongoing conventional sentiment is best summarized by the following quote by William Jackson, senior EM economist at Capital Economics: "markets are being supported by at least stabilization in oil prices. In China there seems to be signs of stabilization in the economic data and also some of the signs from policy makers that are suggesting that we will see more stimulus, which could also boost the markets." As we reported yesterday, this is precisely the opposite of what is actually happening as China is now far more focused on deleveraging, and intends to reallocate human capital from villages to towns as its next big growth push.
Top news stories include Salesforce.com, GE deals; Icahn-Pep Boys deal sweetener, BNP Paribas equity capital statement, PostNL-Royal Mail deal speculation.
The US market closes early as do the U.K., French and Netherlands while Germany, Switzerland, Italy are shut all day.
Market Wrap
- S&P 500 futures down 0.1% to 2051
- Stoxx 600 down 0.2% to 366
- FTSE 100 up less than 0.1% to 6247
- DAX closed
- German 10Yr yield up 1bp to 0.64%
- Italian 10Yr yield up 2bps to 1.68%
- Spanish 10Yr yield up 4bps to 1.87%
- MSCI Asia Pacific up 0.4% to 131
- Nikkei 225 down 0.5% to 18790
- Hang Seng up 0.4% to 22138
- Shanghai Composite down 0.7% to 3612
- US 10-yr yield up less than 1bp to 2.26%
- Dollar Index down 0.4% to 97.95
- WTI Crude futures up 0.3% to $37.60
- Brent Futures down 0.3% to $37.25
- Gold spot up 0.3% to $1,073
- Silver spot up less than 0.1% to $14.32
Looking at global markets, Asian stocks traded mixed following the positive lead from Wall St where a continued recovery in commodities bolstered sentiment, after crude rallied on an unexpected drawdown in DOE inventories. This supported Asian bourses with the ASX 200 (+1.3%) further underpinned by miners amid the commodity-wide recovery.
Nikkei 225 (-0.5%) initially played catch up to the ongoing Santa Rally seen across global stocks on return from yesterday's public holiday, although pared gains as exporters felt the brunt of JPY strength. Chinese markets were mixed with the Shanghai Comp (-0.7%) led lower by financials amid profit taking in the sector and weakness in China's largest brokerage Citic as the Co. expects losses to its financing business. JGB's are mildly weaker as the ongoing strength in stock markets dampened demand for safe haven assets.
Top Asia News
- Bank of Japan Still Has Room to Maintain Easing, Suga Says: Govt pondering incentives to boost corporate investment
- JPMorgan Says Japan Inc. Must Prepare for Yen Below 100 a Dollar: Sasaki sees yen at 110 by end-2016, equilibrium below 100
- China Vanke Welcomes Anbang as Ally in Shareholder Tussle: Insurer emerges as key player after boosting stake to 7%
- Anil Ambani Said to Seek $757 Million Value for Cement Units: Deal expected to be announced as early as this month- end
- Macquarie Consortium Offers to Buy Online Property Pricing Firm: Group offers 75.5 Australian cents for each Onthehouse share
The European session so far is particularly quiet, with little in terms of news. With many of the European indices closed, the ones that are open have seen muted price action (Euro Stoxx: -0.2%), with the notable outperformer on a sector breakdown being energy names as WTI remains above Brent, with the former set for its largest weekly gain in 2 months. French, Irish shares lead underperformance of bourses open today; Spanish equities outperform.
The Stoxx 600 slid 0.2 percent, paring a second weekly advance. The index is up 1.2 percent since Dec. 18 thanks to a rally in energy and commodity producers that pushed it 2.7 percent higher on Wednesday. Futures on the Standard & Poor’s 500 Index slipped 0.2 percent on Thursday after the gauge erased its annual loss yesterday.
Dutch mail-delivery company PostNL NV climbed for a fourth day, taking its jump in the period to 24 percent. Belgian real estate company Banimmo sank 8.7 percent after saying it won’t pay a dividend for 2015.
Top European News
- ECB Reverse Auctions to Add Competition in Extended QE Program: Some of 19 euro-area central banks that carry out QE now may use reverse auctions, where potential sellers compete to undercut one another on price.
- BNP Paribas Sees $983 Million Earnings Hit From BNL Goodwill: Bank wrote down the goodwill related to its Italian corporate & consumer banking unit.
- PostNL Shares Rise Most Since April on Report of Possible Bid: Shares rose after Daily Mail reported speculation that U.K.’s Royal Mail is on verge of bidding EU5/share.
- KPMG Estimates Abengoa Debt at EU19.1b: Expansion: KPMG analysis means Abengoa’s debt as of Sept. is EU5b less vs EU24b est. in June: Expansion
- Banks Allow Abengoa to Sell Assets for EU300m: El Pais
- Santander Says ECB Requires CET1 at 9.75% on Consolidated Basis: Bank received decision from ECB on prudential minimum capital requirements for 2016.
- Spanish Political Situation Unprecedented: PP’s Martinez- Maillo: Acting PM Rajoy’s contacts with Socialist leader Sanchez didn’t get off to a good start.
In FX markets, the notable movers come in the form of AUD/USD, with the commodity currencies making the most of the rebound in energy and metals . GBP has also seen some choppy price action today, with GBP/USD initially flirting with the 1.4900 handle, briefly breaking above the level amid the aforementioned USD weakness, but failing to hold onto gains, with GBP then led lower through strength in EUR/GBP. Finally of note, USD/JPY also saw the impact of the weaker USD, with the pair breaking below 120.50 to reach its lowest level since the beginning of November.
The Bloomberg Dollar Spot Index fell 0.3 percent, on course for a 0.8 percent drop this month, the most since June. The euro gained 0.5 percent, while the the Aussie rose 0.5 percent and the yen strengthened 0.5 percent to 120.31 per dollar.
The offshore yuan was little changed even as the Chinese central bank’s decision to extend onshore market hours and allow in more foreign participants.
In commodities, oil in New York headed for the largest weekly gain in more than two months as U.S. inventories declined and the number of drilling rigs fell. Stockpiles slid 5.88 million barrels last week, the most since June, government data showed. A 1.2 million-barrel gain was projected in a Bloomberg survey. Gulf Coast refiners typically curb deliveries at the end of the year to reduce local taxes. The number of active oil rigs in the U.S. fell by 3 to 538 this week, according to Baker Hughes Inc.
Gold advanced 0.3 percent to $1,073.48 an ounce as a drop in the dollar boosted the appeal of the metal as an alternative asset. Still, gold is poised to fall for a sixth quarter, the longest streak of declines since 1976, according to Bloomberg data.
Industrial metals were mixed, with nickel falling 0.5 percent, while aluminum, zinc and lead advanced. Copper fell 0.5 percent to $4,698 a metric ton. The metal is down 9 percent since Sept. 30 in the longest run of quarterly drops since at least 1986 amid slowing demand from top consumer China.
Top Global News
- Salesforce.com to Buy SteelBrick for ~$300m Net of Cash: Acquirer to issue shares, assume options, awards.
- BGC Partners to Buy 33% of GFI Group It Doesn’t Already Own: GFI to continue as surviving entity; deal calls for BGC to buy Jersey Partners (JPI) in back-end merger.
- Icahn Sweetens Pep Boys Offer With Promise to Trump Bridgestone: Investor promised to top any bid from Bridgestone Corp. up to ~$1.01b.
- MoneyGram, Wal-Mart in Talks to Keep MoneyGram in WMT Stores: Cos. discussing continued provision of MGI products, services to be offered in WMT stores.
- GE Said to Buy Metem Corp for Undisclosed Amount: WSJ: GE hasn’t publicly disclosed purchase; declined to disclose price.
- Puerto Rico Electric Wins Debt-Restructuring Deal With Creditors: Utility reached agreement with insurance cos. MBIA, Assured Guaranty, bondholders to restructure $8.2b of debt.
- United Pilot Leadership Approves Tentative Contract Extension: Tentative agreement now goes to 12,000 pilots for vote.
- Apple Pay Seeks Growth in Asia, Europe After Slow U.S. Adoption: Apple Pay ramping up in markets where people are more comfortable with so-called contactless payments.
- Pratt & Whitney Defends Engines Amid JPMorgan Fuel Doubts: UTX unit rebutted JPMorgan that engines may not meet performance benchmarks because of possible modifications.
- Hyatt Says It Found Malware on Payment Processing Computers: says it has started investigation, hired cyber security experts.
- BB&T Says Regulators Approved National Penn Acquisition: Bank received approvals from Fed, FDIC, all necessary state regulators.
- Crude Oil Set for Biggest Weekly Gain in 2 Months as U.S. Supply Drops: Futures are up 8.8% this week, the biggest advance since Oct. 9.
- Disney CEO Iger’s Pay Falls 3% to $44.9m in Fiscal 2015: Cash bonus shrank by $410,000 and the value of a pension declined because of an accounting change.
- Third Avenue’s Barse Wanted to Sell Assets to Fortress: WSJ: Former CEO of Third Avenue Management wanted to sell assets of troubled credit fund to Fortress before he was ousted.
- IHeartMedia Creditors May Force Restructuring: NY Post: Goldman, Canyon Capital are forming group of senior lenders.
Bulletin Headline Summary from Bloomberg and RanSquawk
- In FX markets, the notable movers come in the form of AUD/USD, with the commodity currencies making the most of the recent rebound in energy and metals
- Oil futures are now coming off yesterday's highs, reached after an unexpected draw down in
yesterday's DoE inventories. Furthermore, WTI is now back trading at a premium to Brent - Note that today sees various market closures and early closures, a full list is provided below
- Treasuries little changed, 10Y yield at 2.255% little changed from Christmas Eve of 2014; trading quiet as most of Europe closed, UST futures scheduled to close at 1pm ET, cash trading at 2pm.
- China’s stocks fell the most in two weeks as health-care and property companies slumped and concern grew that IPOs will divert funds away from existing equities
- The Bank of Japan still has policy options to continue its unprecedented monetary easing, Chief Cabinet Secretary Yoshihide Suga said in an interview days after the central bank announced it wouldn’t expand its main stimulus target
- Some of the 19 euro-area central banks that carry out QE now may use reverse auctions, where potential sellers compete to undercut one another on price, the ECB said this week
- Syria’s foreign minister said the government is willing to join talks aimed at ending the country’s bloody civil war as the United Nations pushes to revive negotiations next month.
- Sovereign 10Y bond yields mostly higher. Asian stocks mostly lower, European stocks mixed, U.S. equity-index futures rise. Crude oil higher, gold little changed, copper falls
US Event Calendar
- 8:30am: Initial Jobless Claims, Dec. 19, est. 270k (prior 271k); Continuing Claims, Dec. 12, est. 2.2m (prior 2.238m)
- 9:45am: Bloomberg Consumer Comfort, Dec. 20 (prior 40.9)
- 11:00am: U.S. to announce plans for auction of 3M/6M bills, 2Y/5Y/7Y notes
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...Can still print & give free money to citizens like they do in Finland.
Just walk across the southern border.....we've got you covered.
Hang out with the ISIS guys...not much of a sense of humor...but other than that, they rock.
It's the greatest threat global security has ever faced.
All the weapons in the world won't matter once ISIS army kick into gear!
https://www.youtube.com/watch?v=gq_su8XIpZU
Hey! Let's sing Christmas carols!
Joy to the world
My visa has come
Let's declare Obama
Our king!
It's all Bullshit!!!
Merry Christmas to all the new ZHers and all of us who have seen this site continue to provide the truth for many!
Merry Christmas Zippy....screw you Cornell.
It's OK.
The Elitist Swine/Wanking Bankers/Political Fucks are savoring their loot swiped from the unwashed.
MOAR of the same effluvium and rape coming in 2016.
As long as the FED can fiat, it's same ol' same 'ol, with the Presidential SELECTION on tap to distract the 99.999%.....
Welcome to Recovery Winter VIII.....enjoy!
as the new year is upon us, I would like to thank ZH- free discussion was in danger a while back here, with the swiss server legal issue and mostly antisemtism being used to ban a few folk. (francis we still love ya man)..but one can still post the most stupid anti jew stuff here, so maybe ZH manned up and said fuck the censorship, this is a free site all ideas are welcome.
that is my hope. long live a free internet.
Merry Christmas ZH and the characters who reside here . Also the ones no longer with us.
two words describe mericas fearture- moar fascism.
To all ther old farts around here,
Have yourself a geriatric Christmas
may your poop be light...
I swear, despite Zero Hedge being my top "go to" site for good info, this place really has a blind spot when it comes to oil. Here IMHO is what has happened the last few days with oil:
1. The US oil export ban was permanently abolished. (That is Y-U-U-U-U-U-G-E!)
2. Russia (as ZH reported) is seriously cutting into Saudi Arabia's market share in Europe.
3. The insane attacks against MLPS regarding their long-accepted and successful cash flow valuation model is costing the banks a lot of business. The market has lost patience with these politically-driven attacks and is snatching the some of the best bargains ever offered in the market.
4. The US just imposed a serious duty on imported steel from China. That is a new policy that has implications for ALL dumpers including oil dumpers.
By abolishing the export ban just as the US is within inches of becoming energy independent puts a serious nail in the coffin for the Saudi plans of crushing prices to regain market share in the US and Europe. Most of their strategy was based on a bluff about how much oil they are really producing. Ten million barrels a day? Blow me! I doubt they can sustain even 8.5 million a day. Now that the US will eventually retake control of global prices, the politics has been flipped on its head. Here is the key take for this week:
WTI/Brent spreads reversed. Does anyone truly believe that Europe and other oil consumers would rather buy their oil and natgas from OPEC rather than the US? The market is now searching for a clue as to what that premium will eve eventually. We are swimming in natgas in the US mainly because it is a byproduct to oil production. We will soon be major exporters. There are several exporting projects nearing completion already. That doesn't matter to a Europe who now faces being totally dependent on Russian sources? How much more will they be willing to pay for safe and reliable US sources over a desperate Russia? I expect to see a $2-3 premium near term grinding up to $5-6 next year with the spread expanding upwards to $12-15 as oil prices inevitably climb back up based on reality rather than paper "glut" calculations.
So this week's OIL rally is not a "dash to trash". It's a serious reset based on a fundamentally critical change in the market for the most important commodity for having a modern civilization in the first place. Atlas is now shrugging off the political Wall Street chains and there is a lot of money to be made by those who "get it". The old valuations models will work again once equity prices again reflect the fundamentals of GROWTH so debt/equity ratios of 45-55% again make sense.
Wall Street created this phony problem of MLP valuations in the first place to placate political interests. Everyone is losing money with the new way of doing things. THAT is what is being FIXED now.
Merry Christmas to all and to all a good fight.
Here's a brief and entertaining present for all...at least here. Enjoy.
https://www.youtube.com/watch?v=NU1e992LSfM
Saw this article yesterday and it paints the complete picture of the phony stock market.......
http://www.businessinsider.com/baml-warns-of-gaps-in-sales-and-earnings-2015-12
Santa went flacid, Rudolph celebrates.