U.S. Stock Futures Heading Lower This Morning; As Germany Falls Into Deflation; Leading Russian Banker Calls New EU Sanctions – ‘Economic War’
U.S stock futures are soundly in the red this morning, as I write this short note; and, is on-track to open down over 100pts. — if these futures hold. Germany, the “strong man of Europe,” officially joined the deflation party in Europe last month, as prices fell there last month “with the first fall in prices since the Autumn of 2009,” according to this morning’s Financial Times. Germany’s Federal Statistics Office said on Thursday, “it expected harmonized consumer prices, calculated to fit with the broader Eurozone calculation, to decline 0.5 percent in January 2015 — a fall from a rise in costs of 0.1 percent last month (December 2014) . According to The Financial Times, “the plunge was due almost entirely to the collapse in oil prices, with energy costs falling 9 percent over the past twelve months. The Financial Times added, “the last time prices fell in the Eurozone’s largest economy was in September 2009; and, the latest dip — all but confirms that deflation across the currency area worsened in January.”
Meanwhile, Andrey Kostin, Chief Executive of Russia’s VTB Bank (one of Russia’s largest) told CNBC on Thursday that the European Union’s decision to extend additional sanctions against Russia “is akin to economic war.” “We have quite a strong opinion on sanctions. In other words, sanctions are economic war against Russia.”
So, we’ll see how the market opens. If we have another down day in the afternoon — the last hour of trading — which is always the most crucial — because it is put up or shut up time for traders — will be even more important because we’re heading into a weekend. Will traders decide to buy on the dip heading in; or, will there be accelerated selling into the close — as traders decide not to be long ahead of the weekend. The former would be good and could signal a positive open for Monday; while the latter, would be negative and bearish. Perhaps we’ll get something in between.
Beyond today’s action, Greece appears headed for a divorce from the EU; and, perhaps the beginning of the end of the Euro as we know it– is in a terminal death spiral. V/R, RCP