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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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 ...
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.
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?
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.
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