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04Aug2015 Pre-Market Commentary: Chinese Markets Close In The Green, Greek Banking Stocks Plunge, Oil Rising Off Support, European Stocks Mixed

Written by Gary

U.S. stock index futures are fractionally lower along with the U.S. dollar as investors await earnings reports from a batch of companies that include Walt Disney Co and Kellogg.

Global stocks are also mixed as sliding earnings hit shares in Europe and fresh measures to curb volatility has prompted a rally in China.

U.S. Markets expected to open fractionally lower and by 11 am be in the green.


Here is the current market situation from CNN Money

European markets are lower today with shares in France off the most. The CAC 40 is down 0.57% while Germany's DAX is off 0.27% and London's FTSE 100 is lower by 0.19%.

What Is Moving the Markets

Here are the headlines moving the markets.

China's Response to Stock Rout Exposes Disarray

Conflicting moves and a lack of coordination hampered Beijing's initial response to its stock-market rout, raising questions about whether Chinese authorities will be up to the challenge of implementing market changes.

June 2015 CoreLogic Home Prices Year-over-Year Growth Rate Now 6.5%. Home Price Growth Continues.

Econintersect: CoreLogic's Home Price Index (HPI) shows that home prices in the USA are up 6.5% year-over-year year-over-year (reported up 1.7% month-over-month). There is considerable backward revision in this index which makes monthly reporting problematic. CoreLogic HPI is used in the Federal Reserves's Flow of Funds to calculate the values of residential real estate.

China stock exchanges step up crackdown on short-selling

SHANGHAI/HONG KONG (Reuters) - China stepped up a crackdown on short-selling of shares on Tuesday, unveiling rules that make it harder for speculators to profit from hourly price changes, as some of the nation's major brokerages suspended their short-selling businesses.

Shire goes public with proposed $30 billion Baxalta tie-up

LONDON (Reuters) - London-listed group Shire said it was seeking to buy Baxalta in a $30 billion all-share deal, going public with its bid to create a global specialist in rare diseases after the U.S. firm spurned its initial approach.

Alibaba hires former Goldman banker Evans as president

BEIJING (Reuters) - Alibaba Group Holding Ltd has hired former Goldman Sachs Group Inc partner Michael Evans to oversee the e-commerce company's international expansion, a top priority as the firm looks beyond China to sustain its heady growth rates.

Blogger Sentiment More Bearish than Bullish Entering August 2015

Econintersect: The latest Blogger Sentiment Poll released 03 August 2015 by Ticker Sense shows bullish sentiment higher than last month - but still in a minority.

China's Aluminum Producers Stare Down Price Plunge

Chinese aluminum producers aren't curbing their output despite the metal's slump to a six-year low, suggesting the price of one of the world's most heavily-traded metals still has far to go before finding a floor.

This Is Your "New Economy": These 10 Startups Are Valued At $156 Billion On $4 Billion In Revenue

If one had to summarize the "new economy", which supposedly this time is different than the last time the US had a "new economy", in just one chart, it would be the following one which lists the 10 biggest "unicorns", or startups worth more than $1 billion, a list headed by Uber (which last week reported its latest record valuation of $51 billion, up from $17 billion exactly one year ago), and continuing with names which are more a marketing gimmick than an actual business model.

A few quick observations: the top 10 highest valued companies have a combined private valuation of $156 billion, on just about $4 billion in revenues and employ a whopping 19.5 thousand people.

In other words, the universe's combined historical Price/Sales ratio is 39x and each employee is worth about $8,000,000.

Here's hoping to the absolutely astronomical growth that these privately priced to perfection companies will need in order to justify their ridiculous valuations... just as the Fed prepares to hike rates and lead to what many know, but won't admit, will be a recession in a few years (if one hasn't started already).

Source: Economist

Stock futures lower as investors await earnings, data

(Reuters) - U.S. stock index futures were lower on Tuesday as investors awaited earnings reports from a batch of companies that includes Walt Disney Co and Kellogg .

Frontrunning: August 4


Unhappy Voters Shake Up Presidential Race (WSJ)

China stock exchanges step up crackdown on short-selling (Reuters)

China Dethroned as World's Most Liquid Stock Market After Curbs (BBG)

Xiaomi retakes the smartphone lead in China as Apple slips (Engadget)

Impact of EPA's Emissions Rule on Industry to Vary (WSJ)

Citadel's Ken Griffin Leaves 2008 Tumble Far Behind (WSJ)

Greece says expects bailout deal by Aug 18 (Reuters)

China's Response to Stock Rout Exposes Regulatory Disarray (WSJ)

Uber Driver Challenge Is Early Test for â€'Sharing-Economy' Firms (BBG)

U.S. officials eye risks from high frequency trading in bonds (Reuters)

Interest Rates And House Prices: Pill Or Poison?

by San Francisco Fed

-- this post authored by Oscar Jorda, Moritz Schularick, and Alan M. Taylor

Policymakers disagree over whether central banks should use interest rates to curb leverage and asset price booms. Higher interest rates make mortgages more expensive and could prevent borrowers from bidding up house prices to create a boom. However, rough calculations show that the size of rate increase needed to do so might also boost unemployment and push down inflation. Thus, using this type of policy tool may cause the central bank to deviate significantly from its goals of full employment and price stability.

Greece's financial woes see banking stocks plunge again

ATHENS (Reuters) - Greece's banking stocks plunged for the second day in a row on Tuesday, dragging the main Athens index down in a graphic illustration of the country's financial and economic woes.

Aetna profit beats as government plans expand

(Reuters) - Aetna Inc reported a better-than-expected adjusted net profit for the second quarter as it added more members to its government plans and medical costs remained stable.

Brazil presents another hurdle in Monsanto's bid for Syngenta

SAO PAULO (Reuters) - Seed giant Monsanto Co.'s unwanted takeover bid with Switzerland's Syngenta AG would face strong resistance in Brazil should it go forward, farmers and lawyers said, a hurdle that could delay or force major concessions to the $45 billion deal.

Banks Reported Little Change In Their Standards On Commercial And Industrial Loans In The Second Quarter Of 2015.

by Federal Reserve

The July 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that, on balance, banks reported little change in their standards on commercial and industrial loans in the second quarter of 2015. In addition, banks reported having eased some loan terms, such as spreads and covenants, especially for larger firms on net.

U.S. DoJ probes Deutsche trades worth billions: source

(Reuters) - The U.S. Department of Justice is investigating trades worth billions of dollars that Deutsche Bank AG made on behalf of Russian clients, a person familiar with the situation told Reuters on Tuesday.

Greek Banks Crash Limit Down For Second Day; China And Commodities Rebound; US Futures Slide

After a lukewarm start by the Chinese "market", which had dropped for the past 6 out of 7 days despite ever escalating measures by Beijing to manipulate stocks higher, finally the Shanghai Composite reacted favorably to Chinese micromanagement of stock prices and closed 3.7% higher as Chinese regulators stepped up their latest measures by adjusting rules on short-selling in order to reduce trading frequency and price volatility, resulting in several large brokerages suspending short sell operations. At this pace only buy orders will soon be legal which just may send the farce of what was once a "market" limit up.

Elsewhere in Asia, equities traded mixed following a lackluster Wall Street close amid further declines in commodity prices, after Brent crude dropped below $50/bbl for the first time since January, only to rebound in overnight trade. ASX 200 (+0.3%) traded in the green with gains in financials offsetting losses seen in commodity names. Elsewhere, the Nikkei 225 closed lower by 0.1% while JGBs rose following the latest 10-yr auction which drew highest b/c since Jan with 10-yr yields at a 9-week low.

Speaking of "buy only" trading, Greece may want to consider that soon because on the second day after reopening its market for trading, Greek banks traded limit down for the second day in a row. End result: banks such as Piraeus is now down over 50% in two days.

This is Piraeus Bank -51% in two days... We need a name for this chart. pic.twitter.com/x05r9omPEN

â€" Jonathan Ferro (@FerroTV) August 4, 2015

The reason: the same one we explained in "

Greece says expects bailout deal by Aug 18

ATHENS (Reuters) - Greece expects to conclude a bailout deal with international lenders by Aug. 18, with the drafting of the accord starting on Wednesday, government spokeswoman Olga Gerovasili said on Tuesday.

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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