Dow Jones Futures Rebound; Salesforce.com Rises On Earnings

Global Stock Markets

Dow Jones futures rebounded early Wednesday along with the S&P 500 and Nasdaq 100 after major stock indexes marked a distribution day Tuesday.

Dow components JPMorgan Chase (JPM) and Goldman Sachs (GS) rebounded after sharp declines Tuesday. Exxon Mobil (XOM) was also indicated higher as oil prices inched up. U.S. crude oil futures for July delivery added 0.5% to around $67.10 a barrel.
Dow Jones Futures Rise

Dow Jones futures, S&P 500 futures and Nasdaq 100 futures were indicated higher by 0.6% to 0.7% in premarket trading.

The bond market saw big inflows Tuesday as the 10-year Treasury yield hit a low of around 2.76%, down 18 basis points. Early Wednesday, the 10-year yield was trading around 2.87%.

Nasdaq 100 component and Leaderboard name Amazon.com (AMZN) rose in line with index futures ahead of its annual shareholder meeting. It's been hugging the 1,600 level after a breakout from a cup-with-handle base with a 1,568.62 entry.

Buyers were in Micron Technology (MU) again after shares jumped 2% Tuesday. Shares were trading around 63.60 early Wednesday as it tries to break out with conviction from a cup-shaped base with a 63.52 entry. The caveat is that it's a later-stage base after a big price run already.

Elsewhere, PagSeguro Digital (PAGS) was indicated higher after reporting earnings late Tuesday. Shares crashed 10% Tuesday ahead of the results. PagSeguro was weak along with other Brazilian stocks due to an ongoing truckers strike.

Meanwhile, shares of cloud software pioneer Salesforce.com (CRM) were up nearly 5% in premarket trading. Earnings and sales topped expectations late Tuesday. Shares were trading around 133, still in buy range from a 128.97 entry. Salesforce was featured as a call-option trade in the latest Earnings Preview column.

Watchmaker Movado (MOV) rose sharply early Wednesday on strong earnings. Michael Kors (KORS) and DSW (DSW) (IBD) also reported earnings, but shares fell sharply in premarket trading.

Investors are going to buy bitcoin whether advisors like it or not - Jamie Dimon, JP Morgan

Global Stock Markets

JP Morgan chairman Jamie Dimon has called bitcoin a fraud, and Vanguard CEO Tim Buckley told CNBC in an interview: You will never see a fund from Vanguard on bitcoin.

However, advisors need to brush up on cryptocurrency and blockchain technology so they can properly address questions from their clients, says Lex Sokolin of Autonomous Research.Bitcoin and other cryptocurrencies are a good way to add alternatives to allocation, on the order of 3 percent to 5 percent of a portfolio.

Many investors wonder when the right time will be to put some money in bitcoin. It's a question that financial advisors increasingly hear these days.

Yet advisors, for the most part, don't recommend investing in digital currency, or in the investment vehicles that have cropped up around it, at all. In fact, earlier this year, Merrill Lynch banned bitcoin buying across the firm. JP Morgan chairman Jamie Dimon called bitcoin a fraud (he later softened some of his comments), and Vanguard CEO Tim Buckley told CNBC in an interview: You will never see a fund from Vanguard on bitcoin.

There's no doubt that bitcoin has been wildly volatile, so for now, many advisors apparently remain wary and urge investors to avoid cryptocurrency investments altogether.

Cryptocurrency is very controversial, but it's really here to stay, he said. And the underlying [blockchain] technology is really fundamental to the types of companies that people are building right now.

It's important for individuals who want to invest in cryptocurrency to first understand what it is and also how blockchain technology works, Sokolin explained.

To be sure, one of the most compelling things about cryptocurrency is actually blockchain, he added. To that point, Amazon just announced that its cloud computing arm is partnering with a start-up called Kaleido to make it easier for customers to put their services on blockchain.

It's volatile right now, so you should not just go and fill your entire portfolio with cryptocurrencies, he said. But it is a good way to add alternatives to your general allocation, something like 3 [percent] to 5 percent of your portfolio.

Sokolin warned financial advisors that their clients are going to buy bitcoin whether they like it or not.

So [advisors] can choose to say that this whole thing will fall apart and not get educated about it and not help [investors], but that's really irresponsible, he said.

Advisors need to take the time and brush up on the subjects of cryptocurrency and blockchain technology so they can properly address questions from their clients, Sokolin explained.

Advisors really need to start to understand the basics of how blockchain works, he said. Start to understand why there are different cryptocurrencies.

What's the difference between a payments coin, like bitcoin or ethereum? Sokolin added. All of these things are different, so advisors have to spend the time so they can actually help their clients make sense of this.

Stocks slide towards longest losing streak of the year

Global Stock Markets

Shares were on their way to the longest losing streak of the year on Wednesday, as an advance in U.S. bond yields beyond 3 percent and warnings from top global firms about rising costs fed fears that a boom in earnings may have peaked. 

All eyes will be on the scandal-hit social media firm Facebook (FB.O) later when it reports its results, though there was plenty to keep investors occupied till then.

Falls in Asia’s and then Europe’s main bourses pushed the 47-country MSCI world share index .MIWD00000PUS down for a fifth day running to its lowest level for more than two weeks
Tech-heavy Taiwan shares .TWII had hit two-month lows as worries about a slowdown in gadget demand spread, while oil firms .SXEP also eased as crude prices LCOc1 came off 3-1/2 year highs.

Wall Street looked set to follow suit as the benchmark U.S. 10-year Treasury yield continued to push above 3 percent US10YT=RR, having broken the psychologically key level on Tuesday for the first time since the start of 2014.

It has been down to a mix of factors. A strong U.S. economy and rising commodity prices which are increasing the chance of more U.S. interest rate hikes, as well higher debt and improving relations between Washington and China and North Korea.

Euro zone bond yields - yields are a proxy of borrowing costs - were dragged up in the slipstream of the U.S. moves though Thursday’s looming European Central Bank (ECB) meeting ensured there was a touch of caution.

Markets want to know when the ECB plans to wind down its 2.55-trillion-euro stimulus programme. One of its policymakers, France’s Francois Villeroy de Galhau, said on Tuesday the weaker run of recent economic data was expected to pass.

The pan-European STOXX 600 equity index was last down 0.9 percent, as worries over the rising bond yields trumped a slew of well-received earnings updates from Kering <PRTP.and Credit Suisse (CSGN.S) as well as a flurry of takeover activity.

S&P E-mini futures ESc1 slipped 0.5 percent. Wall Street shares had skidded on Tuesday, with the S&P 500 .SPX slumping 1.34 percent, the most in two-and-a-half weeks.

Industrial heavyweight Caterpillar (CAT.N) beat earnings estimates due to strong global demand but its shares tumbled 6.2 percent after management said first-quarter earnings would be the “high water mark” for the year and warned of increasing steel prices.

“We’ve seen quite a lot of companies announcing above-estimate earnings and their shares falling sharply,” Mitsubishi UFJ Morgan Stanley Securities senior investment strategist Norihiro Fujito said.
Reuters data shows that analysts are now estimating bumper 21.1 percent growth in the January-March quarter among U.S. S&P500 firms.

Fujito noted major financial shares such as Goldman Sachs (GS.N) and Citigroup (C.N) as well as Google parent Alphabet GOOG.N, the first major tech firm to report earnings, have followed a similar pattern.

Facebook’s results are due after the closing bell. Revenues are expected to be up sharply but focus will all be on what impact the scandal over the misuse of tens of millions of its users’ data has had on usage of the social media site.

Creeping gains in U.S. Treasury yields are also fuelling nerves that portfolio managers may move money into safer fixed-income securities at the expense of riskier assets such as stocks and emerging markets.

The 10-year U.S. Treasuries yield US10YT=RR rose to as high as 3.02 percent. A break above its January 2014 peak of 3.041 percent could turn investors even more bearish.

Fed Funds rate futures prices <0#FF:> have been constantly falling this month, pricing in a considerable chance of three more rate hikes by the end of this year.

The impact is already reverberating in many emerging markets, with JPMorgan’s emerging market bond index .JPMEPR hitting a two-month low.

Turkey’s central bank took what was seen as a crucial interest rate decision. The lira has tumbled to all-time lows this year, stoking inflation, and its slightly larger-than- expected 75 basis points hike to 13.5 percent kept its markets largely in check.

In Indonesia, a market with one of the largest exposures to foreign portfolio holdings, the authorities have been intervening heavily to put a floor under the rupiah IDR=, which has been flirting with two-year lows.

The Indian rupee hit a 13-month low INR=IN while China's yuan CNH=CNY= eased again in line with its bond yields following recent tweaks to its policy settings.

The dollar also continued gaining against the major currencies, setting new 2-1/2-month highs of 109.21 yen JPY= and $1.2175 per euro EUR=.

Oil prices were broadly steady below the more than three-year highs hit in the previous session. Rising U.S. fuel inventories and production weighed on an otherwise heavily bullish market.

Brent LCOc1 fetched $74.01 a barrel, up 15 cents. West Texas Intermediate (WTI) crude CLc1 traded flat $67.88 while aluminium levelled off at $2,236 a tonne having been on a rollercoaster run in recent weeks following U.S. sanctions on Russia’s top producer of the metal, United Company Rusal (0486.HK)

US STOCKS-Futures rise as Syria fears wane, focus shifts to earnings

Global Stock Markets

* BofA shares rise after Q1 profit beat
* March retail sales rise more than expected
* Netflix rises ahead of results after the bell
* Futures up: Dow 0.65 pct, S&P 0.61 pct, Nasdaq 0.63 pct

U.S. stock index futures rose on Monday as investors bet the weekend’s U.S.-led missile attack on Syria would not escalate into a broader conflict, while turning their focus to the earnings season.

Saturday’s strikes marked the biggest intervention by Western countries against Syrian President Bashar al-Assad and his ally Russia, which is facing further economic sanctions over its role in the conflict.

“It’s not going to be a negative unless it turns into a bigger conflict. It’s going to be a day where the market is going to attempt to move a bit higher.”

Shares of Bank of America rose 0.84 percent in premarket trading after the lender reported a better-than-expected increase in quarterly profit

Shares of JPMorgan, Wells Fargo and Citigroup, all of which reported on Friday, were also higher.
Analysts are expecting the S&P 500 companies to record an 18.6 percent rise in profit, their strongest earnings growth in seven years, according to Thomson Reuters I/B/E/S.

However, many traders say that reactions to results could be muted as market participants have already priced in gains from corporate tax cuts, reflected in the stock market’s strong rally in 2017 and early 2018.

At 8:44 a.m. ET, Dow e-minis were up 158 points, or 0.65 percent. S&P 500 e-minis rose 16.25 points, or 0.61 percent and Nasdaq 100 e-minis gained 41.75 points, or 0.63 percent.

Waning fears of a broader conflict in Syria pushed short-dated U.S. Treasury yields to their highest level in almost a decade, while crude oil prices eased due to a rise in U.S. drilling activity.

Data on Monday showed U.S. retail sales increased more than expected in March, rising after three straight monthly declines, as households boosted purchases of motor vehicles and other big-ticket items.

Shares of Netflix, which is expected to report results after market close on Monday, rose 1.44 percent.

US STOCKS-Futures jump as big banks earnings lift sentiment

Global Stock Markets

* JPMorgan, Wells Fargo, Citigroup gain after results
* Starbucks down after Cowen downgrade
* Futures: Dow 0.54 pct, S&P 0.53 pct, Nasdaq 0.44 pct

U.S. stock index futures rose more than half a percent on Friday after a trio of big banks reported strong quarterly results, while geopolitical risks and concerns over trade war eased.

JPMorgan rose 1.5 percent in premarket trading after the biggest U.S. bank by assets reported a 35 percent surge in quarterly profit.

Wells Fargo rose 1.2 percent and Citigroup gained 1.6 percent after both the banks reported profit above Wall Street estimates.

“The numbers that we had were consistent with a strong economy,” said Scott Brown, Chief Economist at Raymond James in St. Petersburg, Florida. “The mood is still very positive and investors are looking at good news over the bad news.”

Tax cuts are expected to help corporate America post its biggest quarterly profit growth in seven years. Earnings at the S&P 500 companies are estimated to grow by 18.4 percent from a year earlier.
At 8:30 a.m. ET, Dow e-minis were up 131 points, or 0.54 percent and S&P 500 e-minis rose 14 points, or 0.53 percent. Nasdaq 100 e-minis gained 29.5 points, or 0.44 percent.

Stocks got a boost on Thursday after U.S. President Donald Trump cast doubt over the timing of his threatened strike on Syria, easing the risk of clashes between Western powers and Russia in Syria over an alleged chemical attack.

Talks of the United States re-opening negotiations with the Trans Pacific Partnership (TPP), a multinational trade deal the Trump administration walked away from last year, also helped sentiment.

But Trump later tweeted that the United States would only join the TPP if the deal were substantially better than the one offered to former President Barack Obama.

Among other stocks, Starbucks shares fell 1.2 percent after brokerage Cowen and Co downgraded the stock to “market perform”.

Dropbox fell about 7 percent after brokerage Instinet started with “reduce” rating on the cloud-based storage firm.

Tesla jumped nearly 3 percent after its founder Elon Musk said the electric car maker will not need to raise any money this year as it will have positive cash flow and be profitable in the third and fourth quarter.

Wall Street opens higher as Xi soothes trade war fears

Global Stock Markets

Wall Street opened higher on Tuesday after Chinese President Xi Jinping promised to cut import tariffs, soothing investor concerns about rising U.S.-China trade tensions. 

Ten of the 11 major S&P sectors were higher, with technology and energy stocks leading the gainers. The three major U.S. indexes were all up more than a percent with all 30 Dow components in the positive territory.

In his first public comments since the trade dispute with the Trump administration started, Jinping vowed to open the country’s economy and said China would raise the foreign ownership limit in automobile, shipbuilding and aircraft sectors “as soon as possible”.

His comments buoyed global markets, which have been under pressure as China and the United States threatened each other with billion in tariffs and investors feared that protectionist measures would hit global economic growth.

Energy stocks gained as oil broke above $70 a barrel on easing trade war fears between the world’s two largest economies. [O/R]

“The expectation was this could have gone one of two ways: he could have been aggressive about U.S. tariffs or been conciliatory and it feels like he’s more conciliatory,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Shares of major U.S. automakers such as General Motors (GM.N), Ford (F.N), Fiat Chrysler (FCAU.N) and Tesla (TSLA.O) were up between 2 percent and 3 percent following Xi’s comments.
At 9:54 a.m. ET the Dow Jones industrial average .DJI was up 317.16 points, or 1.32 percent, at 24,296.26.

The S&P 500 .SPX was up 28.34 points, or 1.08 percent, at 2,641.5 and the Nasdaq Composite .IXIC was up 70.79 points, or 1.02 percent, at 7,021.14.U.S. stocks will face a major test in coming weeks as first-quarter earnings pour in. Big banks such as JPMorgan Chase (JPM.N), Citigroup (C.N) and Wells Fargo (WFC.N) will kick off the earnings season with their results on Friday.

Analysts expect quarterly profits for S&P 500 companies to rise 18.5 percent from a year ago, which would be the biggest gain in seven years, according to Thomson Reuters I/B/E/S.

Facebook Inc (FB.O) shares erased premarket gains and were marginally down ahead of CEO Mark Zuckerberg’s testimony before U.S. lawmakers on Tuesday and Wednesday.

The CEO is expected to strike a conciliatory tone in an attempt to blunt possible regulatory fallout from the privacy scandal engulfing his social network.

Shares of Nvidia (NVDA.O) rose 4 percent after Morgan Stanley raised the stock to “overweight”.
Verifone Systems (PAY.N) shares rose 52 percent after the company agreed to be taken private for $2.28 billion.

Advancing issues outnumbered decliners on the NYSE for a 5.99-to-1 ratio on the upside and on the Nasdaq for a 3.68-to-1 ratio favoring advancers.

The S&P 500 index showed two new 52-week highs and no new lows, while the Nasdaq recorded 20 new highs and 12 new lows.

US STOCKS-Futures rise as Xi cools trade war fears

Global Stock Markets

U.S. stock index futures rose more than a percent on Tuesday after Chinese President Xi Jinping promised to cut import tariffs, soothing investor concerns about rising U.S.-China trade tensions. 

In his first public comments since the trade dispute with the Trump administration started, Jinping vowed to open the country’s economy and said China would raise the foreign ownership limit in automobile, shipbuilding and aircraft sectors “as soon as possible”.

His comments buoyed global markets, which have been under pressure as China and the United States threatened each other with billion in tariffs and investors feared that protectionist measures would hit global economic growth.

Shares of major U.S. automakers such as General Motors , Ford, Fiat Chrysler and Tesla were up between 2 percent and 4 percent premarket following Xi’s comments.

U.S. stocks will also face a major test in coming weeks as first-quarter earnings pour in. Big banks such as JPMorgan Chase , Citigroup and Wells Fargo will kick off the earnings season with their results on Friday.

Analysts expect quarterly profits for S&P 500 companies to rise 18.5 percent from a year ago, which would be the biggest gain in seven years, according to Thomson Reuters I/B/E/S.

Investors will keep a close eye on Facebook CEO Mark Zuckerberg’s testimony before U.S. lawmakers on Tuesday and Wednesday.

The CEO is expected to strike a conciliatory tone in an attempt to blunt possible regulatory fallout from the privacy scandal engulfing his social network.

On Monday, stocks pared gains late in the session following a report that the Federal Bureau of Investigation raided the office of President Donald Trump’s lawyer.

At 7:11 a.m. ET, Dow e-minis were up 274 points, or 1.14 percent, with 79,089 contracts changing hands.

S&P 500 e-minis were up 29 points, or 1.11 percent, with 261,980 contracts traded.

Nasdaq 100 e-minis were up 95.25 points, or 1.47 percent, on volume of 89,430 contracts.
Among stocks, shares of Nvidia rose 4 percent premarket after Morgan Stanley raised the stock to “overweight”.

Verifone Systems shares were up 51.7 percent after the company agreed to be taken private for $2.28 billion.

Global stocks jump as Xi calms jitters over U.S.-China trade row

Asian Stock markets

U.S stock futures rallied, Asian equities bounced and the safe haven yen fell on Tuesday, as Chinese President Xi Jinping promised to lower import tariffs on products including cars, helping soothe investor jitters over an escalating U.S.-China trade row. 

Xi, speaking at the Boao Forum for Asia in Hainan province, said that China will take measures to sharply widen market access for foreign investors, raise the foreign ownership limit in the automobile sector and protect intellectual property of foreign firms.

Xi’s comments prompted a rapid and largely positive reaction in financial markets, which have been rattled over the past week on fears the tit-for-tat U.S.-China tariffs will explode into a full-scale trade war in a blow to global growth.

“His comments seem to have covered all the major issues the U.S. has raised, including intellectual property and liberalisation of domestic markets,” said Yoshinori Shigemi, global market strategist for JPMorgan Asset Management in Tokyo.

“Xi threw the ball into the U.S. court but it appears China is laying the groundwork to achieve an agreement with the U.S.”

In the stock market, U.S. S&P 500 E-mini futures ESc1 rose 1.2 percent ESc1, while China's Shanghai Composite Index .SSEC gained 0.5 percent.

Financial spreadbetters expect London’s FTSE to open 46 points up at 7,240, Frankfurt’s DAX to open 109 points higher at 12,371 and Paris’ CAC to open 47 points firmer at 5,311.

The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS recovered from early losses and advanced 0.8 percent.

“By and large it appears that the speech is more conciliatory than it is pugilistic with respect to how their approach to the U.S. is,” said Vishnu Varathan, head of economics and strategy for Mizuho Bank in Singapore.

Japan's Nikkei share average .N225 rose 0.8 percent, helped by a jump in the transportation sector. Toyota Motor Corp (7203.T) and Honda Motor Co (7267.T), which have operations in China, rallied 2 percent and 3 percent, respectively.

Hopes that the trade dispute between the world’s two-largest economies may be resolved without greater damage to the global economy gave a lift to oil markets, with Brent crude futures LCOc1 rising 0.5 percent.

As risk sentiment improved, the safe haven currencies and assets retreated.

U.S. 10-year Treasuries fell, pushing their yields up 2 basis points to 2.806 percent US10YT=RR. Gold XAU= eased 0.3 percent.

The safe-haven yen fell broadly, helping the dollar rise 0.3 percent to 107.16 yen JPY=. The Australian dollar set a three-week high at 82.94 yen AUDJPY=R.

Against the U.S. dollar, the Australian dollar gained 0.4 percent to $0.7730 AUD=D3.

China is Australia’s top export market and the Aussie is often used as a liquid proxy by investors expressing views on the country’s outlook.

“President Xi has ignited a rally in risk assets that might have some legs if the U.S. can keep a lid on the protectionist rhetoric for a while,” said Sean Callow, FX strategist for Westpac in Sydney.

Wall Street to open higher as U.S.-China trade war fears ease

Global Stock Markets

Wall Street was on track to open higher on Monday, recovering from last week’s trade tariff driven selloff, after officials of the Trump administration stressed the dispute with China could be resolved through talks. 

The week also marks the start of earning season with big U.S. banks such as JPMorgan Chase (JPM.N), Citigroup (C.N) and Wells Fargo (WFC.N) set to report first-quarter results on Friday.
Investors expect tax cuts to help corporate America show its biggest quarterly profit growth in seven years.

Global markets came under pressure last week as the United States and China threatened each other with tens of billions worth of tariffs. Investors remained on edge as they feared protectionist measures would hit global economic growth.

U.S. stocks dropped about 2 percent on Friday, with the Dow falling more than 570 points on trade war fears.

But Trump’s Chief Economic Adviser Larry Kudlow said in an interview on Sunday the ongoing spat “might turn out to be very benign”.

Trump echoed Kudlow’s sentiment in a Twitter post that said any tariffs would be reciprocal and that he saw a “Great future for both countries!”

“One of the reasons why we’re seeing quite a strong rally at the opening is that the administration over the weekend including Mr Trump basically tried to deflate the fears of a trade war,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

“It appears the market has entered into a trading range and is basically fluctuating ahead of the earnings season.”

At 8:44 a.m. EDT, Dow e-minis 1YMc1 were up 143 points, or 0.6 percent, with 54,694 contracts changing hands. S&P 500 e-minis ESc1 were up 11.75 points, or 0.45 percent, with 201,523 contracts traded.

Nasdaq 100 e-minis NQc1 were up 40.25 points, or 0.62 percent, on volume of 64,626 contracts.

AveXis stock (AVXS.O) was among the top 25 most active stocks in premarket trading. Shares of the gene therapy company rose nearly 82 percent after Swiss drugmaker Novartis (NOVN.S) offered to buy it for $8.7 billion.

Merck’s (MRK.N) shares rose 2.3 percent after the drugmaker’s blockbuster cancer drug, Keytruda, met the main study goal of helping previously untreated lung cancer patients live longer.

Shares of Leucadia National climbed 12 percent premarket after the company said it would sell most of its non-financial assets to focus on investment banking and capital market businesses.

General Motors (GM.N) was up 2.1 percent premarket after Morgan Stanley raised it to “overweight”.

JPMorgan Co-President Sees Possible 40% Correction in Equity Markets

Global Stock Markets

JPMorgan Chase & Co. executive Daniel Pinto warned equity markets could fall as much as 40 percent in the next two to three years.

His comments come as investors worry over the effect of central banks raising interest rates and rising inflation.

The benchmark S&P 500 Index has gained about 47 percent since February 2016.

We know there will be a correction at some point, said Pinto, who oversees the trading and investment-banking unit at one of the largest U.S. banks. He said that markets are “nervous,” and if President Donald Trump goes beyond what he has already announced on steel tariffs, then investors could react badly.

The prospect of a global trade war has had markets on edge, as Trump’s threats of steel and aluminum tariffs were met with talk of retaliation in China and Europe.

JPMorgan Chief Executive Officer Jamie Dimon echoed Pinto’s concerns about tariffs.

If it continues and it gets worse, then it will hurt growth, it will hurt investment," Dimon said. It could offset some of the very huge positives we’ve had from competitive tax reform, he said

Last month, Pinto said trading revenue across his firm was on pace to increase by “mid to high single digits” in the first three months of 2018, with a spike in market volatility poised to help Wall Street firms break a three-quarter slump in that business.

Pinto was promoted to co-president this year.

The banker has advanced through the trading side of JPMorgan and has helped that business climb to the top of Wall Street. He’s spent his entire 35-year career at JPMorgan and its predecessors. Based in London, he was promoted to sole head of his unit in 2014, when Michael Cavanagh left.

JPMorgan raises oil price forecast to $70, topping many Wall Street targets, citing strong demand

Global Stock Markets

J. P. Morgan has raised its forecast for Brent crude oil prices to $70 a barrel on its view that growth in economies around the world will boost demand for energy.

To put that oil price call in context, Bank of America Merrill Lynch recently upped its Brent target to $64 a barrel, while Goldman Sachs kept its forecast at $62.

The bank also raised its estimate for U.S. crude by $10.70 to $65.63 a barrel. Merrill’s forecast stands at $60.

To be sure, J. P. Morgan now thinks Brent crude, the international benchmark for oil prices, will average $70 this year, with demand-driven oil price strength in the first half offsetting weakness in the back part of the year as drillers pump more oil.

Stronger-than-anticipated business activity, economic growth and consumer spending convinced Deshpande that oil demand will be better than expected in the first half of 2018. Brent prices will rise toward $78 a barrel in the first or second quarter of the year, he forecast in a research note released late last week.

Support for oil prices should last through the beginning of the summer, with strong prices prevailing through OPEC’s next meeting in June. At the meeting, the 14-member oil cartel is scheduled to discuss its deal with Russia and other producers to limit oil output.

Higher oil prices could influence the producers’ discussions about how to exit the agreement, which has supported oil prices by keeping 1.8 million barrels a day off the market since January 2017.

By the mid-year point, J. P. Morgan expects producers to start pumping more to capture the benefit of higher oil prices. This is particularly true for U.S. shale drillers, which use advanced technology to squeeze oil and gas from rock formations.

At $60 a barrel, J. P. Morgan expects U.S. shale production alone to increase by 1 million barrels a day in 2018. At $70, that growth increases by a multiple of 1.5 times, Deshpande said. Morgan Stanley equity analyst Martijn Rats earlier this month raised his own Brent price forecast, but in the second half of the year. He sees futures reaching $75 in the third quarter.

Brexit could mean JP Morgan moves more than 4,000 jobs from Britain

European Stock Markets

JPMorgan (JPM.N) could move more than 4,000 jobs out of Britain if Brexit talks result in a divergence of regulations and trade agreements between Britain and the European Union, the U.S. banking giant’s Chief Executive Jamie Dimon said on Thursday. 

Dimon has wavered in the past over how many jobs JP Morgan would move, as his estimates take into account the changing prospects of Britain securing a deal that gives its financial firms continued access to European markets.

After saying in the aftermath of the June 2016 referendum on Britain’s membership of the EU that around 4,000 jobs would move, Dimon last April in a letter to shareholders said it would likely shift far fewer jobs to European financial hubs.

Dimon’s comments on Thursday that the total could end up being more than 4,000 staff represent his starkest assessment yet of the impact of a so-called ‘hard Brexit’ under which Britain loses access to the EU’s single market.

It is among the highest estimates by a single financial firm of the number of jobs it would move out of Britain.


Around 10,000 finance jobs will be shifted out of Britain or created overseas in the next few years if Britain is denied access to Europe’s single market, a Reuters survey in September of firms employing the bulk of workers in international finance found. 

Wall Street traders brace for meager paychecks as bonus season approaches

Some traders at the largest Wall Street banks are about to get big, fat zeroes for bonuses while they watch markets thrive.

Trading revenue was down significantly across the industry during the fourth quarter, wrapping up a year in which clients around the globe sat idle as market volatility hovered near historic lows.

The big five Wall Street banks – JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N), Bank of America Corp (BAC.N), Goldman Sachs Group Inc (GS.N) and Morgan Stanley (MS.N) – reported an average revenue decline of 32 percent for the fourth quarter, and 12 percent for the full year. Even though stock markets hit new highs and bond markets moved little, executives said it was hard to generate income from inactive customers.

As a result, bonuses could be 10 percent to 20 percent lower than the prior year, and traders who sit on desks that posted losses could get nothing at all, consultants and recruiters said in interviews.

Bank of America net profit slumps on $2.9 billion tax charge, adjusted income beats

Bank of America Corp’s (BAC.N) net profit nearly halved compared with a year earlier as it booked a $2.9 billion charge stemming from the new federal tax law although it beat analysts’ estimates when adjusted for the charge.

The lender joined other large U.S banks, including JPMorgan Chase & Co (JPM.N) and Citigroup Inc (C.N), in reporting multi-billion dollar charges because the new law requires them to reassess their deferred tax assets and pay tax on profits kept abroad.

Excluding the tax charge, Bank of America earned $5.3 billion, or 47 cents per share. According to Thomson Reuters I/B/E/S, excluding the tax charge and another item, the company earned 48 cents per share, topping analysts’ estimate of 44 cents.

Revenue rose at three of the lender’s four businesses, pushing total revenue up about 2 percent to $20.69 billion.

Wall Street higher as consumer and bank stocks gain

Wall Street’s main indexes were higher on Friday as strong December retail sales data drove gains in consumer stocks and bank results pushed up the financial sector.

The S&P consumer discretionary index .SPLRCD jumped 0.55 percent after data showed households bought a range of goods and figures for the prior month were revised higher, suggesting the economy exited 2017 with strong momentum.

Amazon (AMZN.O) rose 1.3 percent and provided the biggest boost to the S&P and the Nasdaq.

JPMorgan Chase & Co (JPM.N) rose 0.5 percent in choppy trading after the biggest U.S. bank by assets reported profit that beat estimates, benefiting from higher interest rates and loan growth.

Wells Fargo (WFC.N) fell 0.7 percent as the bank set aside more money in fourth quarter to cover expenses related to probes into its mortgage and sales practices.

The S&P financial index .SPSY rose 0.5 percent.

While tax-related costs are expected to weigh on banks’ earnings, they are expected to benefit in the long run from lower tax burden.

Earnings for S&P 500 companies are expected to increase on an average by 11.8 percent in the quarter with profit for financial services companies growing as much, according to Thomson Reuters I/B/E/S.

JPMorgan, Goldman Sachs come top of banker pay league in Britain

JPMorgan (JPM.N) and Goldman Sachs (GS.N) paid their top bankers in Britain an average of $1.5 million each in 2016, compared with $1 million for local rivals HSBC (HSBA.L) and Barclays (BARC.L), data released by the banks last year shows. 

Data compiled by Reuters from 13 banks’ filings, some of which were released only late last month, shows they paid an average of $1.06 million to such staff in 2016, down from $2 million for the year ended Dec. 31, 2013 when new European Union rules aimed at curbing banker bonuses took effect.

The Wall Street banks’ higher pay packages show how they have bounced back more quickly from the financial crisis than their peers in Britain, some of which have faced hefty post-crisis costs that have limited banker pay.

The data also shows that EU rules to rein in banker bonuses, blamed for driving excessive risk-taking in the run up to the 2008 crisis, are having an impact.

JPMorgan paid 672 staff in senior or risk-taking positions a total of $1.02 billion in 2016 for an average of $1.52 million each, while 724 Goldman bankers took home an average of $1.48 million each, according to Reuters’ calculations from the filings. 

Bitcoin hits new records, heads for $10,000 as bubble fears grow

European Stock Markets

Bitcoin soared to fresh records Tuesday, putting it on course for $10,000, but the virtual currency's stratospheric rise has fuelled fears of a bubble after a 10-fold increase this year.

The cryptocurrency, launched in 2009 as a bit of encrypted software written by someone using the Japanese-sounding name Satoshi Nakamoto, has had a roller-coaster ride that has taken it from just a few US cents to its current sky-high valuation.

Traded on specialist platform, with no legal exchange rate and no central bank backing it, Bitcoin is monitored and regulated by its community of users, and is used to buy everything from pizza to a pint in a London pub. But it has attracted widespread criticism, from financial industry titans to governments.

JP Morgan Chase boss Jamie Dimon in September slammed the unit as a "fraud" and said he would fire his employees if they were caught trading it, while China has shut down Bitcoin trading platforms and South Korea's prime minister Tuesday voiced fears it could lead the young to get involved in fraudulent crime.

Still, the opposition has not stopped a dizzying surge in bitcoin this year, with its value jumping a 2017 low of $752 in mid-January to a record high above $9,895 Tuesday afternoon. Its value has rise about 45 percent in the past two weeks alone.

Analysts say the popularity has been driven by growing interest from major investors and a decision last month by exchange giant CME Group to launch a futures marketplace for the currency, which has not been listed on a major bourse before.

As its fortunes have improved, retail investors have also rushed to jump on to the Bitcoin bandwagon, although fears of a bubble are growing, having witnessed wild swings in the past.

Transactions happen when heavily encrypted codes are passed across a computer network.

Bitcoin and other virtual currencies use blockchain, which records transactions that are updated in real time on an online ledger and which are maintained by a network of computers.

Hundreds of other digital currencies have been created since its launch, but Bitcoin remains by far the most popular. Its supporters insist it offers an efficient alternative to traditional currencies because it is not subject to the whims of a state that may, for example, devalue its money to boost exports.

Commentators also suggest some are buying it as an alternative bet in times of global economic uncertainty. But critics point to its volatility, an apparent vulnerability to theft and its use in illicit purchases online.

In one of the most high-profile scandals to hit the currency, major Tokyo-based bitcoin exchange MtGox collapsed in 2014 after admitting that 850,000 coins—worth around $480 million at the time—had disappeared from its vaults.

Bitcoin's use on the underground Silk Road website, where users could use it to buy drugs and guns, was also presented as proof it was a bad thing.

Despite concerns, most observers believe it is unlikely to suffer heavy falls soon.

NEW FED CHIEF

On top of the near-term inflation readings, investors are looking at whom U.S. President Donald Trump will nominate as successor to Fed Chair Janet Yellen, whose term expires next February. 

 

White House Chief of Staff John Kelly said on Thursday that Trump was “some time away” from making a decision, while another official said Trump had met with Stanford University economist John Taylor -- of economics text book Taylor-rule fame -- to discuss the job. 

Meanwhile, the euro was flat but still set for its biggest weekly rise in a month.

European Central Bank policymakers broadly agreed to extend asset purchases at a lower volume at their October policy meeting with views converging on a nine-month extension, sources at the central bank told Reuters. 

Britain’s pound rose to a 10-day high, boosted by a report in Germany’s Handelsblatt newspaper that the European Union could offer Britain a two-year transitional Brexit deal.

The most eye-catching move, however, was from digital currency Bitcoin as it soared by as much as 7.4 percent after Thursday’s 13 percent gain, to hit a record high of $5,846. It is up more than 450 percent this year. 

The chief financial officer of JPMorgan Chase & Co said the firm was open-minded about the future potential use of digital currencies, appearing to dial back comments last month from his boss, Chief Executive Officer Jamie Dimon, who said bitcoin was a “fraud”. 

Among commodities, copper prices held firm after hitting a one-month high on Thursday as optimism over the demand outlook from major consumer China fuelled buying. London copper futures were at $6,898.50 a tonne, up 0.2 percent on the day.

Oil prices also climbed after data showed both U.S. crude production and inventories had declined. Crude was set for its sixth weekly rise in the last seven weeks. U.S. crude jumped 2 percent to $51.59 a barrel. Brent crude rose 2.2 percent to $57.50 a barrel.

Wall Street slips as bank results fail to excite

Wall Street was slightly lower at the open on Thursday as results of major banks JPMorgan and Citigroup failed to fuel the optimism that has driven indexes to record highs. 

The Dow Jones Industrial Average .DJI fell 29.34 points, or 0.13 percent, to 22,843.55. The S&P 500 .SPX lost 3.31 points, or 0.12 percent, to 2,551.93. The Nasdaq Composite .IXIC dropped 9.09 points, or 0.14 percent, to 6,594.46. 

Financials drive Wall St. higher; Trump's tax plan awaited

Wall Street opened higher on Wednesday as rising expectations of a December interest rate hike powered financial stocks, with focus also on President Donald Trump’s long-awaited tax plan.

Lawmakers should expect a “very, very powerful document” that would cut taxes “tremendously” for the middle class, Trump said on Tuesday. If passed, the plan would be the president’s first significant legislative win since taking office in January.

Shares of big banks, including Bank of America (BAC.N), JPMorgan (JPM.N) and Goldman Sachs (GS.N), were up about 1.5 percent, after Federal Reserve Chair Janet Yellen said it would be “imprudent” to keep rates on hold until U.S. inflation hit the 2 percent target. 

Traders now see an 81.4 percent chance of a December rate hike, compared with 71.4 percent a week ago, according to CME Group’s FedWatch tool. 

Commerce Department data showed new orders for key U.S.-made capital goods increased more than expected in August and shipments maintained their upward trend, pointing to underlying strength in the economy.

At 9:36 a.m. ET (1336 GMT), the Dow Jones Industrial Average .DJI was up 74.86 points, or 0.34 percent, at 22,359.18, the S&P 500 .SPX was up 10.28 points, or 0.41 percent, at 2,507.12 and the Nasdaq Composite .IXIC was up 46.66 points, or 0.73 percent, at 6,426.83. 

Nine of the 11 major S&P indexes were higher, led by a near 1 percent gain in the financial index .SPSY. 

Technology index .SPLRCT also gained 0.88 percent, lifted by a 0.9 percent gain in Apple (AAPL.O)

Nike (NKE.N) slipped about 4.5 percent and was the biggest drag on the S&P and the Dow, after the company posted its slowest quarterly sales growth in nearly seven years and said it expected a further drop in revenue from North America. 

Micron Technology (MU.O) jumped 7.34 percent after the company reported a better-than-expected profit and forecast results above estimates. 

Fed Board Governor Lael Brainard and St. Louis Fed Chief James Bullard are expected to make appearances later in the day. 

Advancing issues outnumbered decliners on the NYSE by 1,775 to 798. On the Nasdaq, 1,747 issues rose and 565 fell.