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09Jun2015 Pre-Market Commentary: U.S. Futures Down Fractionally, Markets Expected To Open Lower

Written by Gary

U.S. stock index futures are lower again this morning after three straight days of losses on rising speculation that the Federal Reserve will raise rates as soon as September. Markets are expected to open lower.


Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.65% while France's CAC 40 is off 0.30% and London's FTSE 100 is lower by 0.18%.

European stocks are fractionally in the red, tracking losses in Asia and the U.S., triggered by bond market volatility, uncertainty over the future of Greece and concerns surrounding the impact of an interest rate rise in the U.S.

What Is Moving the Markets

Here are the headlines moving the markets.

Greece delivers reform plan to EU, warns on cost of failure

ATHENS/BRUSSELS (Reuters) - Greece handed its creditors new proposals on unlocking funds to keep the country from default, with Prime Minister Alexis Tsipras offering hope for a deal and warning the cost of failure would be enormous.

Futures fall as rate hike fears intensify

(Reuters) - U.S. stock index futures were lower on Tuesday, following three straight days of losses on rising speculation that the Federal Reserve will raise rates as soon as September.

"Not Credible" Is Europe's Response To Latest Greek 3-Page Proposals As Greek Islanders Threaten Referendum

In attempt to bridge the gap between a proposal submitted by Greek PM Alexis Tsipras last Monday and a draft agreement devised by creditors the following day, Athens has reportedly submitted a new three-page plan focused on fiscal sustainability.

A second document was also submitted in which Greece has apparently proposed borrowing from the ESM to cover its obligations to the ECB in July and August. Those payments amount to around 7 billion.

Here's Bloomberg:

The Greek government submitted a three-page budget proposal to its creditors in Brussels in a bid to unlock bailout funds, two international officials with direct knowledge of the discussions said.

The document covered only fiscal targets, one of the people said. Greece gave its creditors a separate note, also three pages long, on how to address the country's financing needs, in which the government asked to use funds from the European Stability Mechanism to repay about 6.7 billions euros ($7.6 billion) of bonds held by the European Central Bank that come due in July and August, the people said.

Greece has already received 129 billion from the EFSF. Borrowing from the ESM to pay the ECB is essentially borrowing from Europe to pay Europe, much as the country tapped its IMF SDR to pay the IMF in May. As an aside, May's IMF end-around depleted Greece's SDR to the tune of 95%. Its SDR holdings now amount to just 30 million. Greece's ESM paid in capital is around 2.2 billion.

At least one unnamed official who spoke to Bloomberg isn't optimistic:

HP pays $100 million to settle shareholder class-action suit

AMSTERDAM (Reuters) - Dutch pension fund manager PGGM said on Tuesday Hewlett-Packard had agreed to pay $100 million to settle a class-auction lawsuit relating to the company's 2011 acquisition of Autonomy, a "big data" analysis company.

Frontrunning: June 9


Greece Said to Submit Revised Budget Plan in Bid for Funding (BBG)

Protesters seek firing of Texas officer who threw girl to ground (Reuters)

HSBC to cut 50,000 jobs in quest for higher dividends (Reuters)

U.S. base shipped live anthrax to 19 states plus D.C.: Pentagon (Reuters)

Obama Administration Opens Door for More Student-Debt Forgiveness (WSJ)

China Said to Weigh Margin Finance Rule Change Amid Stock Boom (BBG)

Doctor who trained U.S. troops suspended for macabre techniques (Reuters)

Exxon to Face Regulators' Questions Over Quakes (WSJ)

Apple Works to Refocus Its Devices at Nexus of Entertainment (BBG)

Lululemon raises full-year profit, revenue forecast

(Reuters) - Lululemon Athletica Inc raised its full-year revenue and earnings forecast, the latest sign that the Canadian yogawear retailer was recovering from the turmoil caused by an embarrassing recall of overly sheer yoga pants in 2013.

HSBC to cut 50,000 jobs in quest for higher dividends

HONG KONG/LONDON (Reuters) - HSBC pledged a new era of higher dividends on Tuesday, laying out plans to slash nearly one in five jobs and shrink its investment bank by a third to combat sluggish growth across its sprawling empire.

Exclusive: Henkel, Coty submit binding bids for P&G assets

(Reuters) - Henkel & Co KGaA AG and Coty Inc, both of which have personal care and cosmetics businesses, made binding offers to buy separate parts of Procter & Gamble Co's beauty businesses worth up to a total of $12 billion, according to people familiar with the matter.

Low Prices Let China Blaze New Easing Path

China's low inflation keeps the door open to novel forms of monetary stimulus.

European Stocks Suffer Longest Losing Stretch In 2015; US Futures Down

After a quiet Asian session, where not even the latest Chinese CPI miss was enough to push the SHCOMP to new multi-year highs, all eyes were on Europe where a few hours ago the European Commission announced it had received not one but two new proposals from Greece according to EU Commissioner for Economic Affairs Pierre Moscovici, with the Greek government adding that it considers proposals submitted last week as remain basis for political negotiations. According to Bloomberg, the freshly submitted documents contains alternative proposals to close differences with creditors on fiscal gap with; proposals to create a debt viable sustainability plan for country. What they do not contain is an agreement to engage in pension cuts as the Troika demands so this is most likely another dead end path.

"Diverse proposals are being circulated including new suggestions which were received earlier this morning," spokesman Margaritis Schinas said, noting that Economics Commissioner Pierre Moscovici had met Greek delegates in Brussels on Monday. "The three institutions are currently assessing these suggestions with diligence and care," Schinas added.

However, barely had Europe received the Greek addenda when it nein'ed all over them, with BBG citing an international official directly involved in talks saying that the "Greek government's revised proposal to unlock bailout funds is vague rehash of earlier plans, not considered credible."

Also overnight, as reported previously, the headquarters of Deutsche Bank was raided earlier this morning and while no details were initially available, Reuters said that investigators were "looking for evidence related to client transactions" with a DB spokesperson saying the raid was in relation to "security deals made by clients." It was initially unclear what deals and what clients, but the raid may explain the sudden departure of DB's co-CEOs over the weekend.

In any case ...

Prosecutors search Deutsche Bank offices for client transaction evidence

FRANKFURT (Reuters) - Deutsche Bank offices in Frankfurt were searched on Tuesday by German prosecutors seeking evidence related to client securities transactions, Germany's largest lender said.

Oil gains on driving season demand, China stimulus hopes

LONDON (Reuters) - Oil prices gained on Tuesday as higher seasonal demand in developed economies offset the impact of a large global supply overhang.

May 2015 Small Business Optimism Strengthens And Is Finally Back to Normal Level

Econintersect: The National Federation of Independent Business (NFIB)'s optimism index rose from 95.2 to 98.3. The market was expecting the index between 96.0 to 97.3 with consensus at 97.2. This index has returned to "normal" levels seen in times of expansion.

U.S. rate prospects spook global stocks, dollar on defensive

LONDON (Reuters) - European shares followed Asian stocks lower on Tuesday as speculation intensified that the U.S. Federal Reserve could raise interest rates sooner than many expect, though this failed to give the dollar a significant boost.

EU Commission receives new Greek reform proposal

BRUSSELS (Reuters) - The European Commission has received a new proposal from Greece for reforms that could unlock new funding from the cash-strapped country and is now assessing it, an EU official said on Tuesday.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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