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02Jul2015 Pre-Market Commentary: Unemployment Rate Down To 5.3%, Futures Up, Markets Expected To Be Very Volatile

Written by Gary

U.S. unemployment rate dropped to 5.3% and the U.S. stock index futures rose fractionally. The U.S. dollar fell 0.65 cents momentarily and WTI oil remained unchanged starting what looks like today's session will open up and volatile.


Here is the current market situation from CNN Money

European markets are mixed today. The FTSE 100 is up 0.37% while the DAX gains 0.06%. The CAC 40 is off 0.04%.

The first column is what was reported this morning. The second is what was expected and the thired is the last report.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. Stock Futures Higher After Jobs

U.S. stock futures rose slightly Thursday ahead of the June jobs report, which is expected to show the U.S. economy strengthening.

U.S. Economy Adds 223,000 Jobs; Unemployment at 5.3%

The job market's steady pace of growth this year, and also the American economy's overall strength, stand in sharp contrast to the situation overseas.

China Shares Tank as Beijing's Moves to Spur Buying Fall Short

Chinese shares plunged Thursday, even as Beijing grasps for solutions to stem the selling, including relaxing rules on the use of borrowed funds to invest in stocks.

Greece's Tsipras digs in against bailout

ATHENS/BRUSSELS (Reuters) - A defiant Prime Minister Alexis Tsipras urged Greeks on Wednesday to reject an international bailout deal, wrecking any prospect of repairing broken relations with European Union partners before a referendum on Sunday that may decide Greece's future in Europe.

Rail Week Ending 27 June 2015: Just Another Bad Month for Rail

Econintersect: Week 25 of 2015 shows same week and same month total rail traffic (from same week and month one year ago) contracted according to the Association of American Railroads (AAR) traffic data. Intermodal traffic expanded year-over-year, which accounts for half of movements - but weekly railcar counts continues in contraction. It should be noted that the level of contraction worsened from the previous week.

Greek Finance Minister Says He'll Resign if Referendum Endorses Bailout

Yanis Varoufakis's comment is the starkest sign yet that the government is likely to be reshuffled or could even fall should a yes vote prevail.

With Sweden's QE Officially Broken, The Riksbank Doubles Down: Lowers Rates Even More Negative; Boosts QE

It was precisely one week ago when we described how, for the first time in history, QE had officially failed to achieve its stated objective of pushing yields lower (ignoring that the real purpose is to push stock prices higher). In fact, it the outcome was precisely the opposite because as a result of the ongoing QE by Sweden's Riksbank, and not enough collateral, the "soaking up" of eligible debt made the market so illiquid, buyers were unwilling to touch the bonds until yields rose enough to offset the liquidity risk.

As Danske Bank explained: "Swedish rates continue to trade strong relative to Germany because of a lack of material in the repo market as a result of the Riksbank's QE program."

We added that the Riksbank targets about $10 billion in government bond purchases as it tries to revive consumer-price growth after months of deflation. That's about 14 percent of the market or 3 percent of Sweden's gross domestic product.

And the punchline: "any efforts to expand asset purchases would deplete Sweden's already limited sovereign debt supply", SEB AB and Danske Bank have said.

This also came just days ahead of the latest BIS semiannual report in which it blasted central banks for engaging in wanton, endless QE which has pushed stocks to all time highs only at the expense of bond market liquidity.

So what did the Swedish central bank do? Overnight the Riksbank confirmed that it neither learns from its own mistakes, nor reads BIS reports when at 9:30 CET, it ...

German Luxury Car Brands Dominate and Look to Extend Their Lead

Mercedes-Benz, BMW and Audi are winning with critically acclaimed models, technical innovation and sales â€" and their ambitions are only growing.

GOLD: Will This Summer's Rally Mark A Cyclical Turning Point?

gold_price_hits-_1280_silver_breaks_21

We focus on gold's seasonality in this column and what it could mean for gold's secular trend.

Between 1982 and 2012, gold typically started rising in early July, corrected slightly in October, and finished the year strongly higher. The first chart, courtesy of our friend, author, and market analyst Dimitri Speck, shows that the second week of June typically kicked off the yearly rise with a final dip.

gold_seasonality_30_years_till_2012

Courtesy: Seasonal Charts

Included within that 30 year time frame was a secular bear market (until 2001) and a secular bull market (as of 2002). We look more closely at gold's seasonality since the secular bull market started in 2002. The second chart, courtesy of StockCharts, shows the number of months in which gold closed higher than it opened. Clearly, July through September stand out with the largest number of higher monthly closes, while October is one of the weakest months in the year.

gold_seasonality_2002_2015_595

The same seasonalit ...

Train Carrying Toxic Gas Derails In Tennessee, Catches Fire; Thousands Evacuated

Remember when oil pipelines were at risk of spilling and as a result the progressive movement decided it would be far safer to transport US oil by train, because supposedly trains are so much safer for the environment (not to mention profitable for Warren Buffett), only to lead to a record surge in oil-carrying train accidents and derailments? Well, not even the most hardline of environment-friendlies could have anticipated what happened overnight in Blount County, Tennessee after a freight train derailed carrying flammable and poisonous material caught on fire on Wednesday night, leading to the evacuation of as many as 5000 residents from their homes.

Unlike most crude incidents in the recent past, however, this time it was not a Buffett train. According to the Blount County Sheriff's Office, a CSX train carrying liquid petroleum, a highly flammable and toxic gas, derailed and caught on fire at Mt. Tabor Road at Old Mt. Tabor Road around midnight.

As WATE reports, hundreds of people relocated to the Foothills Mall until they are able to go home. The Red Cross also set up shelter at Heritage High School for residents. Officials told WATE 6 On Your Side a shelter will be open at 233 Curry Avenue for displaced pets.

Evacuations could last between 24 and 48 hours, according to deputies. Seven law enforcement officers from the Blount County Sheriff's Office and surrounding were treated due exposure to the fumes.

The Blount County Sheriff's Office, Maryville Police, TEMA and emergency management are on scene.

CSX representative Lee Miller apologized to residents in a meeting at Heritage High School. He said environment and hazmat crews are on site "working ...

PayPal to buy digital money transfer provider Xoom

SAN FRANCISCO (Reuters) - PayPal Inc said it would buy digital money transfer provider Xoom Corp for $890 million as it muscles into a growing international remittance market and expand in countries like Mexico, India and China ahead of a spinoff from eBay Inc .

Frontrunning: July 2

Chinese stocks tumble again, ignoring Beijing's blandishments (Reuters)

Plight of Greek pensioners heaps pressure on Tsipras (Reuters)

Cash Crunch Hits Everyday Life in Greece (WSJ)

Souvlakis Tell a Story Well Beyond Today's Greek Crisis (BBG)

Greek Referendum on Bailout Too Close to Call, Poll Shows (BBG)

Move Over Greece: For Treasuries Traders, Today Is About the Fed (BBG)

ECB adds corporate names to QE-eligible bonds (FT)

Special Report: How Greece went bust (Reuters)

Puerto Rico's Pain Is Tied to U.S. Wages (WSJ)

Sweden takes interest rates deeper into negative territory (

European Stocks Mixed Amid Greece Worries

European stocks swung between small gains and losses, with investors still nervously watching the situation in Greece.

Dixons Carphone in deal with Sprint to open U.S. stores

LONDON (Reuters) - British electrical goods and mobile phone retailer Dixons Carphone has sealed a deal with Sprint Corp. , the U.S. mobile network operator, that could see it open and manage up to 500 Sprint-branded stores in the United States.

Did The West Coast Port Dispute Contribute To The First-Quarter GDP Slowdown?

by Liberty Street Economics

-- this post authored by Mary Amiti, Tyler Bodine-Smith, Michele Cavallo, and Logan Lewis

The decline in U.S. GDP of 0.2 percent in the first quarter of 2015 was much larger than market analysts expected, with net exports subtracting a staggering 1.9 percentage points (seasonally adjusted annualized rate). A range of factors is being discussed in policy circles to try to understand what contributed to this decline. Factors such as the strong U.S. dollar and weak foreign demand are usually incorporated in forecasters' models. However, the effects of unusual events such as extremely cold weather and labor disputes are more difficult to quantify in standard models.

China Crash Accelerates, Drags Composite Under 4000; US Futures Flat Ahead Of Nonfarm Payrolls

If it was Greece's intention to crush the Chinese stock market instead of Europe's, well - it succeeded. Because despite the PBOC and politburo throwing everything but QE at the stock market, China stocks closed down sharply on Thursday after another wild trading day as investors shrugged off regulators' intensified efforts to put a floor under the sliding market, by cutting trading fees and easing margin rules, which has now crashed 25% in about two weeks wiping out $2.5 trillion of the peak $10 trillion in Chinese stock market cap as of June 14. This ultimately resulted with the Shanghai Composite closing under 4000 for the first time since April.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 3.4 percent, to 4,107.99, while the Shanghai Composite Index lost 3.5 percent, to 3,912.77 points, on volume of 58.3 billion shares as margin calls are accelerating and as regulators realize that investor took leverage upon margin upon leverage.

The only good news out of China is for those long realized vol; if only there was some way to be long realized vol that is...

Elsewhere in Asia, most markets ignored the ever louder noise out of China, and are so far doing their best to ignore ...

As Saudis Keep Pumping, Thirst for Domestic Oil Swells

The kingdom is poised to break records for crude production this summer, but its ravenous energy needs threaten its ability to ramp up exports.

GE meets EU regulators over Alstom power unit deal

BRUSSELS (Reuters) - General Electric met EU antitrust regulators on Thursday, hoping they will take a softer line on its 12.4-billion-euro ($13.7 billion) bid for Alstom's energy unit.

The "Smartest Money" Is Liquidating Stocks At A Record Pace: "Selling Everything That's Not Bolted Down"

Just over two years ago, at the Milken global conference, the head of Apollo Group Leon Black said that "this is an almost biblical opportunity to reap gains and sell" adding that his firm has been a net seller for the last 15 months, ending with the emphatic punchline that Apollo is "selling everything that is not nailed down."

Roughly at that time the great stock buyback binge began, which coupled with two more central banks entering the stock levitation "wealth effect" bonanza, provided ample opportunity for the biggest asset managers in the world to sell into.

But while we knew that both "vanilla" institutions and hedge funds were actively selling in the public markets, it was not until last week when we got the most candid glimpse of just how much. We described it last week when citing Bank of America who said that "BofAML clients were big net sellers of US stocks in the amount of $4.1bn, following four weeks of net buying. Net sales were the largest since January 2008 and led by institutional clientsâ€"after three weeks of net buying, institutional clients' net sales last week were the largest in our data history."

Today, we got definitive confirmation that the truly "smartest money in the room", those who dabble not in the bipolar public markets but in private equity had indeed started "selling everything that is not nailed ...

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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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