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03Aug2015 Pre-Market Commentary: U.S. Futures Flat Chinese Slide Again, WTI Oil Weak And Greek Markets Off 23%

Written by Gary

U.S. stock futures were flat before and after the morning somewhat positive financials while ignoring Greece's main stock index loosing close to a fifth of its value as it reopened for the first time in more than five weeks. The Shanghai Composite closed down -1.11% and Dr. Copper Tumbles To 6 Year Low.

Markets are expected to open flat to fractionally higher, but ease into the negative arena by 11:30 am.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.52% while Germany's DAX is up 1.11% and London's FTSE 100 is up 0.08%.

What Is Moving the Markets

Here are the headlines moving the markets. xxxxxxxxxxx

After five-week shut down, Greek stocks plummet

ATHENS (Reuters) - Greece's stock market suffered heavy losses on Monday, plunging nearly 23 percent at the open before recovering slightly, after a five-week shutdown brought on by fears the country was about to be dumped from the euro zone.

US consumer spending up 0.2 percent in June, weakest gain in 4 months; income rises

WASHINGTON (AP) — Consumer spending in June rose by the smallest amount in four months as shoppers cut back on purchases of cars and other big-ticket items. The Commerce Department says consumer spending edged up 0.2 percent in June, the poorest showing since a similar increase in February. The modest advance followed a sharp 0.7 percent rise in spending in May.

The increase had been driven by heavy spending on autos. But in June, auto sales slowed. Overall purchases of durable goods, the category that covers autos, fell 1.3 percent in June. Personal income rose 0.4 percent for a third straight month, reflecting strong employment gains.

Greek Stocks Fall as Exchange Reopens

Greece's main stock index lost close to a fifth of its value on Monday as it reopened for the first time in more than five weeks.

Stock futures little changed ahead of raft of data

(Reuters) - U.S. stock index futures were little changed on Monday as investors await another batch of earning reports and a raft of economic data.

U.S. consumer spending slows in June, inflation muted

WASHINGTON,(Reuters) - - U.S. consumer spending in June recorded its smallest gain in four months as demand for automobiles softened, suggesting the economy lost some momentum at the end of the second quarter.

Tyson Foods cuts profit forecast on weak beef business

(Reuters) - Tyson Foods Inc , the biggest U.S. meat processor, cut its profit forecast for the year ending September, citing export market disruptions in its beef business and high cattle costs.

With The S&P 2% From All Time Highs, Wall Street Bearishness Is More Extreme Than March 2009

One would think contrived confidence would lead to more confidence, and manipulated market record highs would lead in abundant euphoria and market bullishness, a traditional reflexive feedback loop used and abused by central banks the world over over the past century. One would be wrong.

With the S&P500 about 2-3% from all time record highs, a range it has been trading in for the past 7 months...

... BofA says that its "Sell Side" indicator is suggesting Wall Street bearishness is greater than during the extreme selloff in March 2009 when the S&P hit the infamous 666.

In July, the Sell Side Indicator â€" our measure of Wall Street's bullishness on stocks â€" was unchanged at 52.0 for the fourth consecutive month. The indicator remains in "Buy" territory, as Wall Street's bearishness is still more extreme than at the market lows of March 2009. Given the contrarian nature of this indicator, we remain encouraged by Wall Street's ongoing lack of optimism and the fact that strategists are still recommending that investors significantly underweight equities, at 52% vs. a traditional long-term average benchmark weighting of 60-65%.

What does this contrived sentiment indicator suggest? "Historically, wh ...

Greek stock market plunges by a fifth upon reopening, survey points to dramatic economic slump

ATHENS, Greece (AP) — Greece's stock market plunged over 22 percent as it reopened Monday after a five-week closure, giving investors their first opportunity since late June to react to the country's latest economic crisis. Bank shares suffered most, hitting or nearing the daily trading limit of a 30 percent loss.

"There's a sense of panic," said Evangelos Sioutis, financial analyst and head of equities at Guardian Trust. He noted some traders are selling stock merely to raise cash because there is so little liquidity in the Greek economy. "There are no buyers," he said. "The outlook is not clear." Markets in the rest of the world, however, were largely unaffected, a sign that investors outside Greece have now largely cut off ties with the country after years of crisis there.

HSBC sells up in Brazil as profits jump on Hong Kong boom

HONG KONG/LONDON (Reuters) - HSBC Holdings beat expectations with a 10 percent rise in first-half profit thanks to a strong performance in Hong Kong and has agreed a $5.2 billion sale of its business in Brazil.

Fiat Chrysler recalls 332,000 Dodge Chargers due to air bag issue

DETROIT (Reuters) - Fiat Chrysler Automobiles said over the weekend it is recalling about 322,000 Dodge Charger sedans in North America because side air bags can deploy when a car door is slammed.

Goldman raises top end of legal-loss estimate

(Reuters) - Goldman Sachs Group Inc raised the top end of the range for possible legal losses to about $5.9 billion, the bank said in a regulatory filing on Monday.

Greek Stocks, Economy Collapse, Suffer Worst Declines In History

The Athens Stock Exchange reopened on Monday and unsurprisingly, some folks were selling.

Trading was suspended five weeks ago after PM Alexis Tsipras' dramatic midnight referendum call precipitated capital controls and a lengthy bank "holiday." Shares opened lower by nearly 23% and the country's banks traded limit-down, which makes sense because they are, after all, largely insolvent. Here's NY Times:

The Athens Stock Exchange plunged 22.8 percent when it reopened on Monday after a five-week shutdown imposed by Greek authorities as part of efforts to prevent a financial collapse.

Bank stocks, which are particularly vulnerable as Greek lenders are set for new recapitalization in the coming months, took a battering, falling by as much as 30 percent.

Although foreign investors face no restrictions in the Athens exchange, local traders can only use existing cash holdings to buy shares; they are prohibited from tapping local bank deposits to buy shares as the authorities seek to prevent capital flight.

Asked about the harrowing decline, European Commission spokeswoman Mina Andreeva had no comment but did say that Brussels has "taken note" of the reopening. Amusingly, she also said the decision was made by "competent" Greek officials. A ban on short-selling was due to expire on Monday but will be extended, an unnamed official told Reuters.

Meanwhile, monthly PMI data from Markit confirmed that the Greek economy suffered an outright co ...

Goldman Raises Legal-Loss Range

Goldman Sachs Group raised the top end of its range of "reasonably possible" legal expenses to about $5.9 billion, up from about $3.8 billion in May, the Wall Street firm said Monday in a regulatory filing.

Frontrunning: August 3



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U.S. to defend Syrian rebels with airpower, including from Assad (Reuters)

Alpha Natural Resources to Seek Chapter 11 (WSJ)

Iran's Rouhani Says Nuclear Deal â€'More Than What Was Imagined' (BBG)

Cables Show Hillary Clinton's State Department Deeply Involved in Trans-Pacific Partnership (IBTimes)

Win or Lose, U.S. Stocks Get Biggest Earnings Bang Since '12 (BBG)

Weaker China factories argue for more policy support as stocks swoon (Reuters)

French riot police disperse migrants at Channel Tunnel (AP)

Stock Guru Bill Miller Is Back But the Questions and Pain Linger (

Investigating The Trading Activity Of Collateralized Loan Obligations Portfolio Managers

by Liberty Street Economics

-- this post authored by Stavros Peristiani and Joao Santos

Unlike mortgage-backed and home equity-backed securities, collateralized loan obligations (CLOs), whose collateral is predominantly corporate loans, are slowly but steadily recovering. This revival, illustrated in the chart below, spotlights again a sector of nonagency structured finance that has been scrutinized for its investment practices. This post investigates the trading activities of CLO collateral managers. Understanding their investment strategies is crucial to assessing their effectiveness as financial intermediaries, including their role in financing leveraged buyouts, corporate recapitalizations, project finance, and their impact on bank loan underwriting standards. It is also relevant to the recent debate concerning the potential perils of the reemergence of CLOs.

Greek stocks bashed on return, China woes go on for commodities

LONDON (Reuters) - The Greek stock market slumped when it reopened on Monday after being shut down for five weeks, while weak data from China helped push oil prices to their lowest in six months and Asian stocks close to their 2015 lows.

Chinese Stocks Slide Again, Copper Tumbles To 6 Year Low; Greek Market Crashes After One Month Trading Halt

If China had hoped it would root out intervention by eliminating Citadel's rigging algos, and unleash a buying spree it was wrong: the Shanghai Composite opened negative, and never managed to cross into the green, despite the usual last hour push higher, ending down -1.1% and down for 6 of the past 7 days.

Worse, the high-beta Chinext tumbled 8% from Friday's late day highs upon opening. Surprisingly, this happened even as China's final Caixin/Markit manufacturing PMI tumbled to 47.8, the lowest since July 2013 as reported previously, a collapse which normally would have been very bullish for stocks as it guarantees even more PBOC intervention. The trouble is that with the PBOC losing the market's faith, not to mention control, bad economic news are becoming even worse news for stocks.

Adding commodity insult to stock injury, earlier today copper plunged to a fresh 6 year low, and like crude, is back in its second bear market of the past year.

#Commodities Watch: #Copper Heads into Bear Market after Metal Hits 6-Year Low http://t.co/zNhsG5Q8Yi via @business pic.twitter.com/RnnWDGT0v2

â€" Javier Blas (@JavierBlas2) August 3, 2015

Elsewhere in Asia equities fell with Chinese bourses at the forefront in the wake of disappointing Chinese O ...

Hong Kong Fines BNP Paribas for Leaving Investors in the Dark

Hong Kong's securities regulator fined a unit of BNP Paribas SA for misconduct related to its dark pool operations.

German carmakers buy Nokia maps to fend off digital rivals

FRANKFURT (Reuters) - German carmakers BMW , Audi and Mercedes , will pay around 2.5 billion euros ($2.8 billion) to buy Nokia's maps business, beating out high-tech rivals for location services seen as key to the future of self-driving cars.

German Carmakers Buy Nokia's Here Mapping Unit for $3 Billion

A consortium including Audi, BMW Group and Daimler will acquire Here as technology and digital maps become an increasingly important part of the car industry's future.

Spy Software Gets a Second Life on Wall Street

A wave of companies with ties to the intelligence community is winning over the world of finance.

Allianz-Led Consortium to Buy Back Tank & Rast

A consortium headed by Allianz's infrastructure arm is set to spend more than $3.84 billion to buy a highway service station chain that it sold for about a third of that sum a decade ago.

Something Just Snapped: Container Freight Rates From Asia To Europe Crash 23% In One Week

One of the few silver linings surrounding the hard-landing Chinese economy in recent weeks has been the surprising resilience and strength of the Baltic Dry Index: even as Chinese commodity demand has cratered in 2015, this "index" has more than doubled in the past few months from all time lows, and at last check was hovering just over 1,100.

Many were wondering how it was possible that with accelerating deterioration across all Chinese asset classes, not to mention the bursting of various asset bubbles, could global shippers demand increasingly higher freight rates, an indication of either a tight transportation market or a jump in commodity demand, neither of which seemed credible.

We may have the answer.

It appears that the recent spike in shipping rates was analogous to the dead cat bounce in crude oil prices: a speculator-driven anticipation for a sustainable rebound that never took place. And now, just like with crude prices, it is all crashing down.... again.

According to Reuters, shipping freight rates for transporting containers from ports in Asia to Northern Europe dropped 22.8 per cent to $400 per 20-foot container (TEU) in the week ended last Friday, data from the Shanghai Containerized Freight Index showed.

Freight rates on the world's busiest shipping route have tanked this year due to overcapacity in available vessels and sluggish demand for ...

Eurozone Crisis Nations Leave Greece Behind

The eurozone recovery is increasingly being led by those hardest hit by the crisis â€" except for Greece.

Athens Stock Exchange Reopens, and Investors Sell Off Greek Shares

Shares in the country's banks were especially vulnerable, falling up to 30 percent, as trading restarted after a five-week shutdown.

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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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