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24Jul2015 Pre-Market Commentary: Markets Moved By China's PMI Decline

Written by Gary

It seems that China's manufacturing 15 month low is affecting the markets especially metals.


Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 0.38% while the FTSE 100 gains 0.09%. The DAX is off 0.04%.

What Is Moving the Markets

Here are the headlines moving the markets.

Metals sink on China, Europe growth concerns as U.S. dollar firms

LONDON (Reuters) - Metal prices hit multi-year lows on Friday as weaker-than-expected data from China and the euro zone raised concerns about global growth, but the U.S. dollar rose on the prospects of a Federal Reserve interest rate hike.

Nikkei's 'pink 'un' buy highlights need to escape greying Japan

HONG KONG (Reuters) - In splashing $1.3 billion for Britain's Financial Times, media group Nikkei is just the latest in a string of Japanese companies driven to look overseas to escape poor growth prospects from a rapidly aging domestic population.

Security issues delay start of Greece's new bailout talks

BRUSSELS (Reuters) - No date has been set for the beginning of formal talks on a new rescue program for Greece because international creditors are still looking for a secure place to hold negotiations in Athens, a European Commission official said on Friday.

Energy sector may prove expensive even if results beat estimates

(Reuters) - The battered energy sector may begin to brighten a little as companies report second-quarter results, but barring a big increase in the price of oil, the sector won't be able to sustain even current share prices going forward, analysts and investors say.

Commodity Clobbering Continues As Amazon Lifts Futures

After yesterday's latest drop in stocks driven by "old economy" companies such as CAT, which sent the Dow Jones back to red for the year and the S&P fractionally unchanged, today has been a glaring example of the "new" vs "old" economy contrast, with futures propped up thanks to strong tech company earnings after the close, chief among which Amazon, which gained $40 billion in after hours trading and has now surpassed Walmart as the largest US retailer.

Ironically, AMZN's beat was not due to its retail results but thanks to its ongoing AWS/cloud rollout which will continue as long as the second tech bubble rages on because while AMZN's market cap may be bigger than WMT, whatever you do, don't compare PE multiples.

Away from techs it has been a very different story, with the previously noted flash smash in gold, a near carbon copy of Sunday's (un)precedented plunge, coupled with the tumble in copper as well as ongoing oil price drop this time catalyzed by the worst Chinese Caixin (now that Markit is out) manufacturing PMI in 15 months, together with European PMI misses across the board, most notably those out of Germany and France.

As a result Brent crude is little changed near 2-wk low after disappointing Chinese manufacturing data fueled demand concerns, adding to bearish sentiment in an oversupplied mkt. WTI up ~26c, trimming losses after yday falling to lowest since March 31 to close in bear mkt. ...

Laws passed, Greece to open bailout talks as recession pushes goals further

ATHENS/BRUSSELS (Reuters) - Greece's creditors prepared on Thursday for the start of bailout talks in Athens, after lawmakers adopted a second package of reform measures before dawn despite a left wing rebellion that may bring early elections.

Health insurer Anthem to buy Cigna in $54.2 billion deal

(Reuters) - Anthem Inc said on Friday it would buy Cigna Corp in a deal valued at $54.2 billion, creating the largest U.S. health insurer by membership.

Fed's Balance Sheet 22 July 2015 - Another Slight Increase

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,462 trillion..

The China Factor: China's Global Ambitions, With Loans and Strings Attached

The country has invested billions in Ecuador and elsewhere, using its economic clout to win diplomatic allies and secure natural resources around the world.

Second half of 2015 begins on shaky note

LONDON/SYDNEY (Reuters) - The global economy started the second half of the year on shaky ground as business activity in the euro zone was weaker than expected and China's vast factory sector appeared to be contracting at the fastest pace in 15 months in July.

U.S. Authorities Probe Banks' Handling of FIFA Funds

U.S. authorities have intensified their scrutiny into a handful of major financial institutions' handling of potentially tainted funds connected to widespread allegations of corruption within FIFA, say people familiar with the matter.

Japan's Meiji Yasuda to Buy StanCorp Financial for $5 Billion

Japan's Meiji Yasuda Life Insurance plans to buy StanCorp Financial for $5 billion, the latest in a series of acquisitions by Japanese firms abroad.

LNG Ltd. Offers Long-Term Gas Relief

Fresh approvals and contracts could make LNG Ltd. worth owning long before its gas-export-terminal projects are up and running.

Nikkei's Financial Times buy follows years of attempting to break into English news

(Reuters) - Nikkei's $1.3 billion purchase of the Financial Times from Britain's Pearson PLC marks the culmination of decades of attempts by the Japanese household name to break into mainstream English-language media.

At 78, Scientist Is Starting a Hedge Fund

George Zweig discovered the quark at age 26, assisted with a covert military operation during the Vietnam War and helped design one of the first cochlear hearing implants. Now, at 78, he is starting a hedge fund.

Weak Chinese PMI Leads Commodities Lower By The Nose

The Caixin-Markit Chinese PMI data for July showed that the Chinese factory sector dropped to its lowest level in 15 months raising fears about Chinese growth being unable to drive global GDP growth. This was the 5th straight month that the data checked in below 50, a level that indicates contraction.

Unlucky Emerging Markets Don't Get Lift From Weak Currency

The bright side of a currency decline is supposed to be rising exports. But in key emerging markets around the world, that isn't happening.

WTO members seal trillion-dollar IT trade deal

WASHINGTON (Reuters) - World Trade Organization (WTO) members finalized a deal on Friday to cut tariffs on $1 trillion worth of information technology products in a boost for producers of goods ranging from video games to medical equipment.

Government Pension Cuts Tangled in Patchwork of Legal Rulings

Steps taken by states and cities to rein in pension plans have resulted in a tide of litigation, with vexing and sometimes contradictory results.

A Stunning Look At California's Historic Drought - From The Air

"Ugly brown rings where waves used to lap at the shore. Dry docks lying on desiccated silt. Barren boat ramps. Trickles of water." Those are just some of the disturbing images California's Department of Water Resources team saw in an aerial tour of Northern California's Folsom Lake, Lake Oroville and Shasta reservoirs released this week...

The dramatic aerial views timelapsed from just a year ago show the level of devastation already... and it's not about to get any better...

Click image below for interactive gallery...

Source: SFGate.com

Fund's Gamble on Health Law Pays Off Big

Larry Robbins's Glenview Capital Management has made realized and paper gains of more than $3.2 billion since it started betting on hospitals and insurers in the wake of the health-care overhaul.

World Trade Slumps By Most Since Financial Crisis

As goes the world, so goes America (according to 30 years of historical data), and so when world trade volumes drop over 2% (the biggest drop since 2009) in the last six months to the weakest since June 2014, the "US recession imminent" canary in the coalmine is drawing her last breath...

As Wolf Street's Wolf Richter adds, this isn't stagnation or sluggish growth. This is the steepest and longest decline in world trade since the Financial Crisis. Unless a miracle happened in June, and miracles are becoming exceedingly scarce in this sector, world trade will have experienced its first back-to-back quarterly contraction since 2009.

Both of the measures above track import and export volumes. As volumes have been skidding, new shipping capacity has been bursting on the scene in what has become a brutal fight for market share [read... Container Carriers Wage Price War to Form Global Shipping Oligopoly].

Hence pricing per unit, in US dollars, has plunged 14% since May 2014, and nearly 20% since the peak in March 2011. For the months of March, April, and May, the unit price index has hit levels not seen since mid-2009.

Liberty Movement Needs More Innovations To Counter Technological Tyranny

Submitted by Brandon Smith via Alt-Market.com,

The great lesson from history that each consecutive generations seems to forget is that the tools of tyranny used outward will inevitably be turned inward. That is to say, the laws and weapons governments devise for supposed enemies abroad will ALWAYS and eventually be used against the people they are mandated to protect. There is no centralized system so trustworthy, no political establishment so free of corruption that the blind faith of the citizenry is warranted. If free people do not remain vigilant they will be made slaves by their own leadership. This is the rule, not the exception, and it applies to America as much as any other society.

The beauty of the con game that is the "war on terror" is that such a war is ultimately undefinable. An undefinable war has no set enemy; the establishment can change the definition of the "enemy" at will to any culture, country, or group it wishes. Thus, the war on terror can and will last forever. Or, at least, it will last as long as corrupt elitists remain in positions of power.

As I have outlined in past articles, most terror groups are creations of our nation's own covert intelligence apparatus, or the covert agencies of allied governments.

ISIS is perhaps the most openly engineered terror organization of all time (surpassing Operation Gladio), with U.S. elites and purported anti-Muslim terror champions like Sen. John McCain and Gen. Paul Vallely making deals with "moderate" Free Syrian Army rebels who immediately turn out to be

Wheels: The Web-Connected Car Is Cool, Until Hackers Cut Your Brakes

A pair of researchers said that they had hacked a Jeep Cherokee through its Internet-connected system, allowing them to take control of the engine, brakes and even steering.

Gold "Flash-Crashes" Again Amid Continued Commodity Liquidation As China Manufacturing Slumps To 15-Month Lows

As Bridgewater talks back its now widely discussed bearish position on fallout from China's equity market collapse, Chinese stocks rose at the open (before fading after ugly manufacturing data). However, liquidations continue across the commodity complex in copper, gold, and silver. Though not on the scale to Sunday night's collapse, the China open brought another 'flash-crash' in precious metals. All signs point to CCFD unwinds, and forced liquidations as under the surface something smells rotten in China, which has just been confirmed by the lowest Manufacturing PMI print in 15 months.

Gold flash crashed...

As we noted previously, while the actual selling reason was irrelevant, the target was clear: to breach the $1080 gold price which also happens to be the multi-decade channel support level.

As liquidations across the metals complex continue..

The World Economy Visualized

Via Jim Quinn's Burning Platform blog,

If itsy bitsy pie slice - Greece (.33%) - can create this much worldwide economic havoc because of their unpayble level of debt, imagine what will happen when the truth is revealed about France (3.81%), Italy (2.88%), and Spain (1.88%). China's (13.9%) entire economic model has been built upon debt and the world consuming their output.

The world has run out of money to consume their shit. Japan (6.18%) is in the midst of a demographic and debt death spiral. The U.S. (23.32%) is living on borrowed time and the continued dominance of the USD. How long will it last? We are inhabiting in a world stacked with TNT run by monkeys with matches.

Courtesy of: Visual Capitalist

Today's data visualization is the most simple breakdown of the world economy that we've seen. Not only is it split to show the GDP of dozens of countries in relation to one another based on size, but it also subtly divides each economy into its main sectors: agriculture, services, and industry.

The lightest shade in each country corresponds to the most primitive economic activity, which is agriculture. The medium shade is industry, and the darkest shade corresponds to services, which tends to make up a large portion of GDP o ...

Push to Lift Minimum Wage Is Now Serious Business

What started in New York City as a seemingly quixotic drive for fast-food workers has spread to the point that it has become a significant, and divisive, element in the presidential campaign.

Earnings Summary for Today

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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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