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15Jun2015 Pre-Market Commentary: U.S. Futures Lower, Global Financial Markets In The Red, U.S. Empire Manufacturing Collapses

Written by Gary

U.S. Futures were half of a percentage point lower this morning, tracking world markets, after talks on ending a deadlock between Greece and its international creditors failed on Sunday. The U.S. Empire Manufacturing for June collapsed to -1.98 while expecting 6.00. Markets are expected to open lower


Here is the current market situation from CNN Money

European markets are broadly lower today with shares in Germany off the most. The DAX is down 1.92% while France's CAC 40 is off 1.55% and London's FTSE 100 is lower by 0.91%.

Traders were greeted with a sea of red this morning after debt discussions between Greece and its European creditors collapsed, pushing Athens closer to a debt default that threatens its future in the eurozone. Global financial markets suffered their first bout of significant contagion from the Greek crisis this year on Monday after 11th hour talks between the near bankrupt country and its creditors collapsed.

European stocks and the euro fell after talks between Greece and its creditors collapsed over the weekend. With both sides refusing to soften their long-held bargaining positions, talks on Sunday broke down after just 45 minutes.

Many officials now see a Eurogroup meeting on June 18 as the last chance for Greece to secure a deal on an agreed list of the economic reforms

After a big rise, the dollar is stuck in a rut. Many investors say it is unlikely to climb out anytime soon because an anticipated increase in rates by the Fed is already reflected in the currency's value.

What Is Moving the Markets

Here are the headlines moving the markets.

EU preparing for 'state of emergency' after Greek talks collapse

ATHENS/BERLIN (Reuters) - Germany's EU commissioner said on Monday it was time to prepare for a "state of emergency" after talks collapsed at the weekend to rescue Greece from default and ejection from the euro.

Saudi Arabia's Stock Market Opens to Foreign Investors

Saudi Arabia's $590 billion stock market opened to foreigners, nearly a year after the kingdom unveiled plans to give international investors direct access to the Middle East's biggest economy.

Planemakers' order books bulge on Asia, Middle East demand

PARIS (Reuters) - Airbus and Boeing opened the Paris air show with a flurry of multi-billion-dollar plane deals on Monday as demand from Middle Eastern and Asian airlines swelled their already bulging order books.

Our Phantom Economy

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Those who believe that phantom recoveries and phantom metrics can be substituted for reality are in for a shock in the next downturn.

Stripped of artifice, there are only two kinds of media stories: those that support the status quo narrative, and those that are skeptical of that narrative. What is the status quo narrative? Simply this: not only is this the best possible arrangement of labor, assets and money, it is the only possible arrangement of labor, assets and money.
It is impossible to challenge a system that is the only possible arrangement; the only option is to accept it.
In effect, the mainstream media is a vast Psychological Operation (PSYOPS) aimed at persuading the American public that the status quo Imperial system of predatory, debt-based crony-capitalism that benefits the few at the expense of the many is not just beneficial to all its debt-serfs and welfare recipients, but it is the only possible system--there is no alternative(TINA).
One of the greatest and most important PSYOPS of the Imperial State (U.S. Government) and its faithful lapdog the mainstream media is the unemployment rate. As I will show tomorrow, the real unemployment rate is between 20% and 40%, depending on whether you think someone earning $1,500 a year selling stuff on eBay and Etsy should be counted as "employed."
&n ...

CVS to Buy Target's Pharmacy and Clinic Businesses for $1.9 Billion

Drugstore operator CVS Health Corp said it will acquire Target Corp's U.S. pharmacy and clinics businesses for about $1.9 billion to boost sales and prescription volumes.

The Single Most Important Chart of the Last Century

The single most important story for the investment world is the US Dollar.

The US Dollar rally took a breather starting in late February 2015. Since that time, it has corrected a total of 7.2%. Technically this isn't even a correction (it would need to fall 10%) and it's far from entering a bear market (it would need to fall 20%).

In spite of this... the financial media is trumpeting that the bull market in the US Dollar is over. I think they are grossly underestimating what is happening in the US Dollar.

First of all, during the last two US Dollar bull markets (the early '80s and the late '90s) the Dollar had no shortage of 5%+ corrections.

Here's the Dollar bull market of the early '80s.

Here's the US Dollar bull market of the late '90s. Again there are five corrections of 5% or more.

My point is that 5%+ corrections are normal during US Dollar bull markets. Remember, the greenback rallied over 25% before starting this cool down period. So it was due for a pull back.

Moreover, in the BIG PICTURE, this correction has not violated the larger technical pattern we've been following in the US Dollar in any way:

This i ...

CVS to buy Target's pharmacy, clinics businesses for $1.9 billion

(Reuters) - Drugstore operator CVS Health Corp said it will acquire Target Corp's U.S. pharmacy and clinics businesses for about $1.9 billion to boost sales and prescription volumes.

More foreign pension funds oppose Toyota 'Model AA' shares

TOKYO (Reuters) - Three foreign funds on Monday said they would oppose Toyota Motor Corp's proposal to issue a new class of shares, joining an influential California pension fund in objecting to a sale that critics say favors Japanese retail investors.

Europe Warns Of "State Of Emergency" As Greek Stalemate Drags On

Talks between Greece and creditors collapsed on Sunday after Athens once again refused to compromise on the pension cuts and VAT hike the troika insists are necessary if the country is to receive the final tranche of aid from its second bailout program.

We noted yesterday that the charade is hardly over as Greek PM Alexis Tsipras knows he can continue to bluff for a few more weeks. Even in the event Greece misses its June 30 payment to the IMF, Christine Lagarde would need to muster the political will to send a failure to pay notice to the IMF board, at which point Athens would be formally in default and cross acceleration rights for the country's other creditors would trigger. But Lagarde has considerable discretion on the default notice and can delay it for at least 30 days. Between this and the fact that a critical payment to the ECB is still more than a month away, we suggested that the brinksmanship was far from over and that the new â€'deadline' would be Thursday's meeting of EU finance ministers in Luxembourg.

On Monday the usual back-and-forth between the IMF, Greece, and EU officials continued with IMF chief economist Olivier Blanchard insisting that Greece must implement changes to pensions and the VAT in order to hit (reduced) budget surplus targets while EU creditors should reshuffle Greece's payment schedule, reduce interest rates on the country's debt, and, if push comes to shove, writedown Greek bonds:

On the one hand, the Greek government has to offer truly credible measures to reach the lower target budget surplus, ...

U.S. futures track global markets as Greek talks stall

(Reuters) - U.S. stock index futures were lower on Monday, tracking world markets, after talks on ending a deadlock between Greece and its international creditors failed on Sunday.

Frontrunning: June 15


Tsipras Hardens Greek Stance After Collapse of Talks (BBG)

Obama Fights to Save Trade Bill (WSJ)

German Stock Market Pain Seen Just Beginning Should Greece Exit (BBG)

Russia to boost forces in western flank if U.S. stations arms in east Europe (Reuters)

Lab Nears Settlement Over Pricey Medicare Drug Tests (WSJ)

China's $358 Billion in Margin Loans Points to Next Bear Market (BBG)

Draghi Faces EU Court Ruling on 2012 Bond Plan as Greece Teeters (BBG)

Sex, lies and debt potentially exposed by U.S. data hack (Reuters)

SNP threatens to call another independence referendum (FT)

Libya says 'uncatchable' veteran militant killed in U.S. strike (

Greece contagion sweeps euro zone bond markets, hits shares

LONDON (Reuters) - Global financial markets suffered their first bout of significant contagion from the Greek crisis this year on Monday after 11th hour talks between the near bankrupt country and its creditors collapsed.

European Stocks Slide, Greece Tumbles But US BTFDers Emerge After Collapse In Greek Bailout Talks

As extensively reported over the past two days, this weekend's "last chance" Greek negotiations reached a roadblock after talks broke down after just 45 minutes. Creditors deemed the renewed reform proposals from Greece as inadequate as the troubled nation stands firm that they will not budge on pension cuts or VAT increases ahead of the June 18th European finance minister meeting.

Following these events, European equities (Eurostoxx50 1.2%) kicked off the week broadly lower, with the ASE down 7% and notable underperformance seen in the National Bank of Greece (-12% ) and Alpha Bank (-7%). Separately, after opening up by around 60 ticks, Bunds have since given up some of its gains but remain firmly higher (+28 ticks), touching on the 50% retracement level of June sell-off in the process. US equity futures likewise opened lower but have proceeded to levitate marginally higher as the BTFDer brigade refuses to buy that Greece will be kicked out.

Meanwhile the bluffing on all sides continues, with Greece refusing to budge on its red lines, while EU ratcheting up rhetoric even more and now openly saying Greece should prepare for a "state of emergency" if no deal by June 30: The European Commission needs to make plans for a 'state of emergency' in Greece from July 1 if Athens does not reach an agreement with its creditors, Germany's EU Commissioner Guenther Oettinger said on Monday in Berlin.

"We should work out an emergency plan because Greece would fall into a state of emergency," Oettinger, who is also a senior member of Chancellor Angela Merkel's Christian Democrats said, citing the need to ensure access to energy and medicine.

In any eventm, while as usual US stocks are preparing to brush off concerns of a default, so far Europe is a different story and by midmorning, the Stoxx Europe 600 index was trading around 1% lower, weighed down by a 1.2% slide on Germany's DAX-30. Athens' main stock exchange fell by just over 5%, led by a ...

Alwaleed backs Twitter interim CEO Dorsey, says brings continuity

RIYADH (Reuters) - Saudi Arabia's Prince Alwaleed bin Talal, one of Twitter's earlier investors, told Reuters he believed Jack Dorsey would bring continuity to the social messaging firm and he would back him if he wished to become chief executive permanently.

Airbus increases 20-year jet demand forecast

PARIS (Reuters) - Airbus increased its 20-year forecast for jet demand by nearly 4 percent on Monday and was upbeat about prospects for superjumbos such as its troubled A380 plane, driven by growth in emerging markets in the Asia-Pacific region and China.

Dollar's Allure Fades

After a big rise, the dollar is stuck in a rut. Many investors say it is unlikely to climb out anytime soon because an anticipated increase in rates by the Fed is already reflected in the currency's value.

Garuda commits to buying 30 Boeing 787, 30 737 MAX aircraft

PARIS (Reuters) - Boeing Co said Indonesian flag carrier Garuda Indonesia  committed to buying up to 30 787-9 Dreamliner planes and an additional 30 737 MAX 8 jets in a potential order worth $10.9 billion at list prices.

Disney's powerful marketing force: social media moms

LOS ANGELES (Reuters) - Wendy Wright is a home-schooling mother of two, a prolific blogger and a self-described "Disney Nut." Her cats are named Mickey and Minnie, and her blog is filled with advice for visiting Disneyland, tips for holding Disney-themed parties and reviews of Disney movies.

Exclusive: China to extend economic diplomacy to EU infrastructure fund

BRUSSELS (Reuters) - China will pledge a multi-billion dollar investment in Europe's new infrastructure fund at a summit on June 29 in Brussels, according to a draft communique seen by Reuters - Beijing's latest round of checkbook diplomacy to win greater influence.

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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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