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31Jul2015 Pre-Market Commentary: U.S. ECI Worst Since 1982, U.S. Dollar Drops, Oil Gains Fractionally, Lukewarm Earnings, Chinese Stocks Fall Again

Written by Gary

A very disappointing US Employment Cost Index (2Q) report this morning showing the smallest quarterly increase in US wages since 1982. With wages going nowhere and rents skyrocketing, this should be good for consumption, right?

Bad news is good news. U.S. futures shot upward from being in the red fractionally to green, but flat when the ECI announcement came out. The U.S. dollar dropped like a rock and WTI oil gained $0.10.

The markets are expected to open in the green, but it doesn't look like the higher opening prices will stick at this early juncture.


Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 0.30% while the FTSE 100 gains 0.06%. The DAX is off 0.04%.

What Is Moving the Markets

Here are the headlines moving the markets.

Exxon quarterly profit slides 52 percent on low prices

(Reuters) - Exxon Mobil Corp , the world's largest publicly traded oil company, on Friday reported a 52 percent slide in second-quarter profit as tumbling crude oil prices weighed on results.

Exxon Quarterly Profit Slides 52% on Low Prices

Exxon Mobil Corp, the world's largest publicly traded oil company, on Friday reported a 52 percent slide in second-quarter profit as tumbling crude oil prices weighed on results.

Barclays cuts 150 investment bank jobs under cost-cutting plan

LONDON (Reuters) - Barclays Plc is cutting about 150 staff from its investment bank as part of the British bank's attempt to cut costs and improve profitability in the business, a person familiar with the matter said.

Frontrunning: July 31


U.S. stock futures slip amid lukewarm earnings, fall in commodities (Reuters)

Stressful times for low-polling Republicans who may miss debate stage (Reuters)

Trump shows staying power with surge ahead of first debate (Reuters)

China Market Manipulation Probe Targets Spoofers After Crash (BBG)

Beijing Chosen to Host 2022 Winter Olympics (WSJ)

Obama Warns Support on Iran Deal 'Getting Squishy' Amid Pressure (BBG)

Pacific trade negotiators chase elusive final deal in tough talks (Reuters)

Relativity Media's Bankruptcy Filing Ripples Beyond Hollywood (WSJ)

Commodities Slide With Ruble as Europe's Stocks, Bonds Decline (BBG)

U.S. stock futures slip amid lukewarm earnings, fall in commodities

(Reuters) - U.S. stock index futures fell slightly on Friday following a spate of uninspiring corporate results and a drop in prices of crude oil and major industrial metals.

Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising "Recession Exit May Be Unsustainable"

Earlier today, Eurostat released the two most important data points for Europe: inflation and unemployment. On the former, there was no surprise at the headline level which remained at 0.2% for the another month, in line with expectations, but core CPI excluding energy, food, alcohol and tobacco, rose to 1.0%, the highest print in 2015 and one which pushed Bund prices well lower.

But it was the unemployment number which showed something unexpected. While the overall unemployment rate for the Eurozone also stayed unchanged at 11.1%, fractionally worse then the consensus estimate of a decline to 11.0%...

... it was renewed concern about what is going on in Italy, where unemployment rose from 12.5% to 12.7%, proving consensus expectations about a strong improvement to 12.3% dead wrong...

... and posing a question just what is going on in the country with the biggest debt load in Europe, and more importantly how is it that Rome is still unable to benefit from the ECB's QE which has pushed Italian yields far below those of the US despite an economy which is suddenly taking on water.

And nowhere was this more visible than in Italy's youth unemployment rate, which surprisingly jumped by nearly 2% to 44.2%, a record level, and one which is starting to rival some of Europe's most troubled nations, such as Spain and of course G ...

Exclusive: China watchdog extends pursuit of short sellers to HK, Singapore - sources

HONG KONG/SHANGHAI (Reuters) - China is pressing foreign and Chinese-owned brokerages in Hong Kong and Singapore to hand over stock trading records, sources said, extending its pursuit of "malicious" short sellers of Chinese stocks to overseas jurisdictions.

Deutsche Bank Didn't Archive Chats Used by Some Employees Tied to Libor Probe

A month after reaching a $2.5 billion settlement over interest rate rigging, Deutsche Bank told regulators its disclosures may have been incomplete because it accidentally failed to archive electronic chats involving its employees.

Fair Game: Pulling Down Underwater Borrowers

A report suggests that a program advertised as a lifeline for as many as four million troubled borrowers has allowed big banks to run roughshod over homeowners again and again.

Chinese Stocks Drop, End Worst Month Since August 2009; US Equity Futures Flat

In a repeat of Thursday's action, Chinese stocks which had opened about 1% lower, remained underwater for most of the session before attempting a feeble bounce which took the Shanghai Composite fractionally into the green, before the now traditional last hour action which this time failed to maintain the upward momentum and the last day of the month saw a surge in volume which dragged the market to its lows before closing roughly where it opened, -1.13% lower, dragged down by energy and industrial companies.

The drop took place even as 505 companies were still halted on the Shanghai and Shenzhen exchanges on Friday, or 18% of all listings. Energy and industrial stocks dropped before Saturday's manufacturing data. PetroChina Co., the biggest oil producer, slid 5.3 percent. Air China Ltd. dropped 10 percent; as these companies were among the mostly supported by the government it appears that the Chinese plunge protection team took today off.

This caps the worst month for Chinese stocks since since August 2009, as the government struggles to rekindle investor interest amid a $3.5 trillion rout, one which has sent the Shanghai market lower by 15% - the biggest loss among 93 global benchmark gauges tracked by Bloomberg, as margin traders cashed out and new equity-account openings tumbled amid concern valuations are unsustainable.

As Bloomberg notes, "while unprecedente ...

Fed's Balance Sheet 29 July 2015 - Down Slightly

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,447 trillion..

Commodities, China stocks lick wounds after brutal July

LONDON (Reuters) - Commodities and China investors waved a relieved goodbye to July on Friday following a brutal sell-off that has revived fears about the global economy and overshadowed more encouraging news from the U.S. and Europe.

Japan Contraction Doesn't Mean More Easing

Japan's economy may turn out to have shrunk last quarter, but a new inflation measure gives the Bank of Japan an excuse not to act.

Uber to invest $1 billion in India to expand services

(Reuters) - Uber Technologies Inc [UBER.UL] will invest $1 billion in India in the next nine months, as the online taxi-hailing company looks to expand its services in its biggest market outside the United States.

Honda profit up 20 percent as robust U.S. sales, weak yen offset quality costs

TOKYO (Reuters) - Honda Motor Co said on Friday its quarterly net profit jumped 20 percent, beating estimates, as strong sales in the United States and a weak yen helped it absorb the impact of higher quality-related costs.

Fed's 'nearly balanced' language no bar to September rate rise

WASHINGTON (Reuters) - The U.S. Federal Reserve will not need to see balanced risks to the economy to proceed with an interest rate hike in September, according to former Fed officials and a review of central bank statements through recent turns in policy.

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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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