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27Jul2015 Pre-Market Commentary: Oil Falling, U.S. Dollar Down But Steady, Shanghai Down 8.5%, Markets Expected To Open Lower

Written by Gary

U.S. stock futures drifted lower this morning after a steep drop (8.5%), the most since February 2007, in Chinese stocks provided additional fuel to the venerable U.S. dollar falling further. The Commerce Department reports orders for long-lasting goods rose 3.4% in June, surpassing expectations for a 3% increase.

The markets are expected to gap lower at the opening.


Here is the current market situation from CNN Money

European markets are broadly lower today with shares in France off the most. The CAC 40 is down 1.99% while Germany's DAX is off 1.99% and London's FTSE 100 is lower by 0.66%.

From a technical perspective, the US dollar looked vulnerable to start the week, but the 8.5% drop in Chinese shares in Shanghai. The linkage between the two is that global headwinds may intensify and keep the Fed from raising rates in September. This seems like a premature judgment, but market pricing was never as convinced of a Fed hike than as surveys suggested.

Watch the 200-day moving average, which comes in near 2063. a test of this moving average has been a good buying opportunity, though sometimes it takes a week or two for this to become clear.

What Is Moving the Markets

Here are the headlines moving the markets.

Apple Watch to be sold at Best Buy stores from August

(Reuters) - The Apple Watch will be available at stores of Best Buy Co Inc , the largest U.S. consumer electronics chain, starting Aug. 7.

New Greek bailout talks start, creditors seek more action

BRUSSELS/ATHENS (Reuters) - Talks between Greece and its international creditors on a third bailout began in Athens on Monday but the lenders want to see more reforms turned into law before they disburse the first loans to keep the near-bankrupt country afloat.

Mitsubishi Motors plans Japan, SE Asia, Russia output focus after U.S. pullout

TOKYO (Reuters) - The president of Mitsubishi Motors Corp said Japan, SouthEast Asia and Russia will become the automaker's principal production hubs after it calls time on making cars in the United States later this year because of dwindling output there.

Teva Pharmaceuticals to Buy Allergan's Generics Business

The $40.5 billion transaction would be the latest in what has been a frenzied period of deal-making in the pharmaceutical sector.

Chinese shares tumble 8.5 percent in biggest one-day drop since 2007

SHANGHAI (Reuters) - Chinese shares tumbled more than 8 percent on Monday as an unprecedented government rescue plan to prop up valuations abruptly ran out of steam, throwing the viability of Beijing's efforts to stave off a deeper crash into doubt.

More Layoffs Expected at U.S. Energy Firms

U.S. energy companies are planning more layoffs, asset sales and financial maneuvers to deal with a recent, sudden drop in U.S. crude-oil prices to under $50 a barrel, the lowest level in four months.

Teva to buy Allergan generic drug business for $40.5 billion, drops Mylan bid

TEL AVIV (Reuters) - Teva Pharmaceutical Industries has agreed to buy Allergan Plc's generic drugs business for $40.5 billion in a cash and stock deal that will turn the Israeli company into one of the world's largest pharmaceutical firms.

Frontrunning: July 27


Chinese shares tumble 8.5 percent in biggest one-day drop since 2007 (Reuters)

Japan's Economy Shrank Last Quarter, Top Forecaster Says (BBG)

Creditor teams in Athens to work on third bailout (AFP)

Tsipras's Paradox Is Six Months of Pain and Enduring Popularity (BBG)

Goldman-Backed Instant Messaging Company Seeks New Investment (WSJ)

Best Buy will sell the Apple Watch on August 7th (Engadget) - when is it coming to Dollar General?

Senate votes to revive Ex-Im (Hill)

U.S.-Turkey Deal Paves Way to Set Up Buffer Zone in Northern Syria (WSJ)

Banks revolt over plan to kill $17B Fed payout (Hill)

Governors Would Take Almost Any Highway Measure Congress Offers (

U.S. stock futures slump after China market selloff resumes

(Reuters) - U.S. stock index futures fell sharply on Monday on concerns about China's slowing growth in the wake of the biggest drop in Shanghai shares in eight years.

UBS Reports Strong Results

The Swiss bank posted a second-quarter profit that exceeded forecasts led by its wealth-management business, and said it is in a comfortable position despite impending new capital requirements and volatile markets.

Greek PM Tsipras under pressure over covert Syriza drachma plan reports

ATHENS (Reuters) - Some members of Greece's leftist government wanted to raid central bank reserves and hack taxpayer accounts to prepare a return to the drachma, according to reports on Sunday that highlighted the chaos in the ruling Syriza party.

The Only Six Stocks That Matter

Six firms "Amazon, Google, Apple, Facebook, Netflix and Gilead Sciences" account for more than half of the $664 billion in value added this year to the Nasdaq Composite. That is raising concerns about the health of the market.

Global Stocks, US Equity Futures Slide Following China Crash

It all started in China, where as we noted previously, the Shanghai Composite plunged by 8.5% in closing hour, suffering its biggest one day drop since February 2007 and the second biggest in history. The Hang Seng, while spared the worst of the drubbing, was also down 3.1%. There were numerous theories about the risk off catalyst, including fears the PPT was gradually being withdrawn, a decline in industrial profits, as well as an influx in IPOs which drained liquidity from the market. At the same time, Nikkei 225 (-0.95%) and ASX 200 (-0.16%) traded in negative territory underpinned by softness in commodity prices.

Heading to Europe, while the release of better than expected German IFO data saw stocks in Europe come off the worst levels of the session, the major indices remain broadly lower. The initial weakness in stocks saw the DAX break below the 50% Fibonacci retracement of the July low to high, before bouncing back above the level following IFO release. However the recovery was short-lived, as EUR remained bid and in turn prevented a pick in sentiment as European exporters remained firmly in the red. Elsewhere, the cautious sentiment saw Bunds trade higher, albeit marginally, while EU peripheral bond yield spreads widened as a result.

Of note, Phillips (+3.74%) traded sharply higher following earnings, while UBS (-1.5%) failed to sustain initial bid tone as combination of profit taking and general risk averse tone saw shares fall. In terms of notable US based equity stories, Teva (TEVA) announced that it will acquire Allergan Generics (AGN) for USD 40.5bIn and have withdrawn offer to acquire Mylan (MYL).

Finally, w ...

Gold "Extremely Rare" - All World's Gold Fits In Average Four-Bedroom House

Gold "Extremely Rare" - All World's Gold Fits In Average Four-Bedroom House

- Gold is extremely rare and all gold ever mined would fit in giant bar the size of a four bedroom house
- Gold is a tangible asset which always retains value - unlike paper assets
- Growing Chinese, Indian and Asian middle class provide "fundamental pillar of support" to gold
- Jewellery is not a suitable vehicle for gold investment due to high mark-ups and VAT
- "Something romantic about gold" and a "premium product" said Bobby Kerr
- Risk of further weakness in short term but buying opportunity presenting itself
- History and academic research shows gold a "hedging instrument" and safe haven asset

Research Director and founder of GoldCore, Mark O'Byrne, was interviewed by Bobby Kerr on Newstalk's "Down to Business" on Saturday morning. A range of aspects pertaining to gold and the gold market were discussed including the rarity of physical gold; the enormous demand for gold from China and India and gold's proven safe haven qualities.

27-07-2015_1
All the gold in the world in a giant gold cube (0.9999 pure)

When explaining the true scarcity of physical gold, Mark was asked whether all the g ...

Goodbye Wall Street, Hello Silicon Valley

A technology-fueled gold rush is drawing seasoned financial executives with the promise fresh challenges and compensation that can top even the paychecks common in the investment world.

Fed Officials May Offer More Clarity on Rates

Central bank officials are likely to emerge from their meeting Wednesday with short-term interest rates still pinned near zero, though they could send hints that they're getting closer to raising the rates. Chairwoman Yellen has emphasized she expects higher U.S. borrowing costs before year-end.

Why Taking The 2009 Homebuyer Tax Credits Might Have Made You Worse Off

by Zillow

Beginning in 2008 and continuing into 2010, Uncle Sam gave a federal tax break to millions of eligible homebuyers as a means of goosing demand for homes during the worst of the Great Recession. But was it actually a good idea to take the money and jump into homeownership in 2009, or would those millions of buyers have been better off renting and investing their savings instead?

Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down

This was not supposed to happen.

After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China's stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!

The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg's Richard Breslow: "fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day." Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling.

The last thing the communist party and the PBOC wanted was another massive sell off after having not only fired the "bazooka" but come up with a different bazooka to halt "malicious sellers" virtually every day, including threats of arrest.

Chinese Shares Tumble Again

The main Shanghai index slid 8.5 percent, its biggest one-day decline in eight years, abruptly ending a nearly three-week lull in the market rout.

European shares slide taking cues from Asia

LONDON (Reuters) - European stocks and major commodity prices fell hard on Monday as concerns over China dominated financial markets in the wake of the biggest drop in Shanghai shares in eight years.

Itineraries: More Fees Propel Airlines' Profits, and Embitter Travelers

Bag fees, flight-change fees, special seat requests, first-class upgrades: Profit margins for nonticket add-ons can be as high as 80 percent, says one analyst.

UBS posts second-quarter earnings above expectations

ZURICH (Reuters) - UBS posted a bigger-than-expected jump in second-quarter profit on Monday and chief Sergio Ermotti said the Swiss bank had "good momentum" going into the second half of 2015.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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