Premarkets are down fractionally, morning financials mixed and may point to another session opening down.
World stock markets and the dollar remained in a sharp sell-off mode today having been jolted sharply lower by weak U.S. growth data and cautious comments from the Federal Reserve pointing to cooling economic activity and reduced job-market gains in its latest policy statement, underscoring uncertainty about when the economy will rebound and clouding the timing interest-rate increases.
Here is the current market situation from CNN Money
European markets are broadly higher today with shares in Germany leading the region. The DAX is up 1.02% while London's FTSE 100 is up 0.30% and France's CAC 40 is up 0.18%.
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Once market participants realize the top is in and the only possible result from here on is a loss, the herd will turn and follow the leaders who are selling.
A funny thing happens when the stock market herd turns--all the usual central bank tricks no longer push the markets higher. Though the mainstream financial media reports on central bank policy as if the policies move the markets, the actual mechanism is not policies per se but their effect on the belief structure of market participants. If market participants believe the markets are going higher, for whatever reason, they will buy more stocks to reap the anticipated gains. If market participants believe the top is in and markets will decline, they will sell, i.e. liquidate positions rather than build them. This is called distribution, as the smart money distributes stocks to the greater fools who have yet to get the memo that the top is in and from now on, stocks will only lose value. What causes the herd to turn? The process is not entirely mechanical or predictable. Those in the front of the herd tend to lead those following, and so we look to the leading stocks, sectors and players for clues as to what the herd will do. When the leaders of the stock rally dwindle to a few names, that is evidence that the herd is losing its momentum and confidence. When those leaders no longer make ne ...
The key feature of the past two days was neither the disappointing US GDP report, nor Japan's failure to boost QE, nor the Fed's muddled, confused statement but the huge rout in German "short of a lifetime" Bunds on close to record volume.
What caused it?
As Bloomberg summarizes the various opinions suggested by Wall Street analysts, the rout in German debt and other European sovereign bonds was caused by market-technical factors such as investor positioning and supply glut rather than shift in views on economic outlook, analysts say, with profit-taking on successful QE trades, thin market liquidity and position-squaring before month-end are cited among main bearish catalysts.
A detailed breakdown by firm:
UBS (Mike Schumacher, Nishay Patel)
Spike in bund and UST yields over past two wks bolsters confidence in bearish call
Favor positioning for higher yields via France 5/10 steepeners and by paying EUR 5Y/5Y swaps
Weakness largely driven by technical factors, such as positioning, not fundamentals
Allianz Global Investors (Mauro Vittorangeli)
This isn't start of bear market in bonds or developments that would persuade ECB to mull tapering QE early
Price action is more related to S/T supply and demand factors, as investors take profits and unwind ECB trades
Banks are embroiled in a dispute with the U.S. government over what they term its "aggressive" interpretation of foreign-bribery laws. The probe has broad implications for how corporations do business overseas.
To be sure, Greece has been "running out of money" for quite some time. Given the incessant media coverage surrounding the country's cash shortage and the fact that Athens somehow seems to scrape together the funds to make payments both to lenders and to public sector employees against impossible odds, it's tempting to think that as dire as the situation most certainly is, the country might still be able to ride out the storm without suffering a major "accident." Having said that, some rather alarming events have unfolded over the past week or so, including a government decree mandating the transfer of excess cash reserves from municipalities to the central bank. As it turns out, that didn't go over well with local officials and as we reported on Tuesday, the government finally hit the brick wall, coming up some 400 million short on payments to pensioners. Here's what we said then:
According to Bloomberg, the Greek government is â‚¬400 million short of the amount needed for payment of pensions and salaries this month, citing a Kathimerini report.
Surprisingly, this takes place even as Greece's IKA, OGA pension funds have been informed by the government that amount needed for payment of pensions will be deposited today, while the Greece's OAEE pension fund has said payment of pensions won't be a problem.
In other words, someone is not telling the truth: either there is enough money or there isn't. And if the latter case is valid, then either the government or the pensions are now openly lying to the population.
HELSINKI/PARIS (Reuters) - Finland's Nokia reported quarterly profits well below market forecasts at its telecom network equipment business, sending its stock tumbling 9 percent and raising concerns over its planned takeover of smaller rival Alcatel-Lucent .
NEW YORK (Reuters) - Warren Buffett has carved out a core stock-picking strategy of investing in companies with strong economic "moats," businesses that have built, fortified and generated success from well-known brands that make it difficult for them to succumb to competitive forces.
(Reuters) - U.S. stock index futures were lower on Thursday, a day after data showed that U.S. economic growth slowed to a crawl in the first-quarter and a Federal Reserve statement that provided little clarity on a rate hike timeline.
The days when Russia scrambled to prevent the plunge in its currency in December of 2014, pushing its interest rate to an eye watering 17%, are now a distant memory: moments ago, the CBR announced that following the most recent cut from 15% to 14% on March 13, it once again cut rates by a greater than consensus 150 bps, to 12.50%. The majority of analysts, or 25 of 40, had expected a cut to only 13.00%.
The reason for the bigger than expected cut: "lower inflation risks and persistent risks of considerable economy cooling. Amid ruble appreciation and significant contraction in consumer demand in February-April 2015, monthly consumer price growth declines and annual inflation tends to stabilise."
The immediate reaction has seen the USDRUB retrace some of its losses suffered earlier today.
On 30 April 2015, the Bank of Russia Board of Directors decided to reduce the key rate from 14.00 to 12.50 percent per annum, taking account of lower inflation risks and persistent risks of considerable economy cooling. Amid ruble appreciation and significant contraction in consumer demand in February-April 2015, monthly consumer price growth declines and annual inflation tends to stabilise. According to the Bank of Russia forecast, consumer price growth will slow down faster than ...
The biggest overnight story was neither out of China, where despite the ridiculous surge in new account openings and margin debt the SHCOMP dipped 08%, or out of Japan, where the Nikkei dropped 2.7%, the biggest drop in months, after the BOJ disappointed some by not monetizing more than 100% of net issuance and keeping QE unchanged, but Europe where for the second day in a row there was a furious selloff of Bunds at the open of trading, which briefly sent the yield on the 10Y to 0.38% (it was 0.6% two weeks ago), in turn sending the EURUSD soaring by almost 200 pips to a two month high of 1.1250, and weighing on US equity futures, before retracing some of the losses.
As we reported earlier, the technicals certainly do not favor Bund flows now, and it is likley that the Bund squeeze is far from over.
Negative news about the Apple watch aka the "tattoo snafu"will likely weigh on the DJIA today, with AAPL stock already down -1% in premarket trading.
A deeper look at the market shows Asian equities falling amid a negative Wall Street close, after the FOMC failed to offer any changes to its policy. Nikkei (-2.7%) led the slump after resuming trade following yesterday's market closure, with weakness prompted by the BoJ refraining from c ...
LONDON (Reuters) - World stock markets and the dollar remained in a sharp sell-off mode on Thursday, having been jolted sharply lower by weak U.S. growth data and cautious comments from the Federal Reserve.
Eurostat reported moments ago that European CPI came in flat in March, as expected, and up a fraction from a modest -0.1% print last month, driven entirely by an ongoing 5.8% drop in energy prices, while food, services and goods all posted modest increases in the past month.
To some this was another indication that the deflation in the Eurozone is ending. Of course, if that is the case, it is risk negative and EUR positive because in addition to yesterday's first positive loan creation print in 3 years, the ECB's QE may not even need to last until September of 2016 before European inflation comes back with a bang.
On the other hand, looking at the other Eurostat release today, showing that European unemployment remained flat at 11.3%, despite expectations of a modest decline to 11.2%, with Italy's 13% print leading the rise in unemployment up from 12.7%, and far worse than the 12.6% expected, and suddenly the end to Draghi's QE does not look that imminent. This follows the March unemployment print which not only missed consensus but was worse than the highest estimate.
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