Oil price declines are faltering for now and the Federal Reserve is taking a patient approach to the timing of its first rate-hike leaving US markets set for a higher open on Thursday in anticipation of non-farm payroll data on Friday that’s expected to show another month of strong job gains.
Comments from FOMC voting member Charlie Evans at a forum in Chicago that “raising rates would be a catastrophe” gave that extra nudge needed by equities after a fairly neutral set of Fed minutes.
Fed minutes were heavily caveated; confidence in the labour market was tempered by fears of raising rates too soon, global imbalances and US inflation below its 2% target. The market came away with the idea that the Fed hasn’t decided when to move on rates and is happy to stay on hold while the oil-effect on inflation runs its course.
The US oil industry has had its first prominent bankruptcy since OPEC decided not to cut oil production and prices crumpled to $50 per barrel. WBH Energy, a drilling company in Texas filed for bankruptcy after a lender refused to offer further credit. Like in any boom, the scramble for easy profits leads to excessive risk-taking normally in the form of too much debt and the shale boom in the US is proving no different. The WBH bankruptcy will likely be the first of many if oil prices stay around current levels.
Facebook founder and CEO Mark Zuckerburg will be pleased that WhatsApp now has more than 700m users growing by 100m since August. WhatsApp’s user growth puts Zuckerburg further away from the ‘egg on face’ potential associated with a failure of his $19bn acquisition of the smartphone messaging app. As user growth continues the emphasis will need to at some point shift to revenue-generation. WhatsApp charges users a small annual fee of 99c (69 in the UK) but it will take a lot more than that to cover the gigantic purchase price.
Futures suggest the:
S&P 500 will open 13 points higher at 2,038 with the
Dow Jones expected to open 117 points higher at 17,701 and the
Nasdaq 27 points higher at 4,187.
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