Global stocks rose today, fueled by some robust data, but questionable, out of China and a batch fresh of strong corporate earnings reports.
Not so good financial report this morning helped pushed the U.S. stock futures index upwards over half of a percentage point as employment change was down, trade balance was down, but mortgages were up. Oil immediately shot up fractionally and the the U.S. dollar fell 0.20 cents.
Expect markets to gap up on opening and then settle by mid-morning.
Here is the current market situation from CNN Money
European markets are sharply higher today with shares in France leading the region. The CAC 40 is up 1.50% while Germany's DAX is up 1.34% and London's FTSE 100 is up 1.06%.
Jay Powell reminded investors that September is not guaranteed and a dismal ADP print confirmed that there's maybe enough bad news that we get one or two more months of ZIRP... so stocks surge on algo eagerness. Bonds are also rallying and the dollar fading...
NEW YORK (Reuters) - U.S. private employers hired 185,000 workers in July, which was the smallest increase since April and reduced expectations of a strong jobs reading in the government's payrolls report due Friday, according to a payrolls processor on Wednesday.
Standard Chartered halved its dividend and reported a sharp fall in profit but new Chief Executive Bill Winters relieved investors by saying the bank had yet to decide whether it needed to raise fresh capital.
Following June's small-business-driven better-than-expected rise in ADP employment, July printed a stunningly weak 185k against expectations of 215k - the biggest miss since March. This is around the lowest level of the year and lowest since Q1 2014. It is also 20% lower than the 232K ADP print a year ago, and the weakest July print since 2013: all signs screaming QE4 a rate hike is imminent.
Sure enough small business exuberance in June turned to pessimism in July as gains rose at half the pace for firms less than 50 people. Manufacturing jobs were also weak (8k goods producing vs 178k services). The question now is what will The Fed need as an excuse to raise rates given that employment is no longer their crutch, printing below economists' lowest estimate.
From the report:
Payrolls for businesses with 49 or fewer employees increased by 59,000 jobs in July, half of the June number. Employment among companies with 50-499 employees increased by 62,000 jobs, down from 78,000 the previous month. Employment gains at large companies â€" those with 500 or more employees â€" increased sharply from June, adding 64,000 jobs ...
(Reuters) - Motorola Solutions Inc said private equity firm Silver Lake would invest $1 billion in the maker of walkie-talkies and radio systems as it looks to boost growth in its services business, which includes video monitoring and data analytics.
Submitted by Tony Sagami via MauldinEconomics.com,
On July 14, I wrote about the danger developing in the transportation sector, and things are looking even worse today. Here's what I mean:
Look Out Below #1: Royal Dutch Shell reported its quarterly results last week—$3.4 billion, down from $5.1 billion for the same quarter a year ago—and warned that "today's oil price downturn could last for several years."
In anticipation of tough times, Shell slashed its 2015 capital expenditure budget by 20% and is going to lay off 6,500 high-paying jobs (not Burger King-type jobs) this year.
Look Out Below #2: UPS is a very good barometer of the consumer end of our economy: It's the largest component of the Dow Jones Transportation Average both by sales and market valuation.
And UPS isn't very confident about the US economy. Here is what UPS CEO David Abney said in a recent conference call with analysts:
If you just look at in [sic] January, the GDP forecast we thought was going to be about 3.1%. Now the thinking in July is about 2.3%, so let's say a pretty signi ...
NEW YORK (Reuters) - Federal Reserve policymakers have not yet decided whether to raise interest rates at a closely watched meeting next month, an influential governor at the U.S. central bank said on Wednesday, adding data on the labor market in particular would be key to that decision.
ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras said on Wednesday Greece is close to concluding a deal with lenders on a multi billion euro bailout, which he said would end doubts over the country's presence in the euro zone.
(Reuters) - Time Warner Inc reported a better-than-expected quarterly profit, helped by higher content revenue in its Turner division as well as the release of "Batman: Arkham Knight" and "Mortal Kombat X" videogames.
Standard Chartered's new CEO Bill Winters thinks the bank is positioned well in "markets which will offer outstanding opportunities for decades to come", and while that may be true, the opportunities in those markets didn't prove to be all that outstanding in the first half of the year, as the bank's EM and commodities exposure contributed to a 44% decline in H1 profits. NIM fell 33 bps Y/Y.
The bank says it needs to better "align its dividends to earnings" which will require a "rebasing" of the payout, which is a really nice way of saying this: "we can't pay out as much because we aren't making as much." In any event, the dividend was cut in half:
Nevertheless, investors are apparently willing to trade a 50% dividend cut for a momentary reprieve on the "you need to raise capital now" calls, because shares moved higher on the back of news the bank's fully loaded CET1 ratio rose to 11.5% from 10.7%.
Bernstein's Chirantan Barua, called the dividend cut a "great move and minimizes the probability of a capital raise north of $5 billion in the months to come." For his part, Winters had the following words of wisdom regarding the bank's capital position: "If we decide we need capital .. we will raise capital. If we decide we don't need it, we won't."
Fair enough, but the underlying business looks to be headed down hill in a hurry as the bank is quite clearly the latest example of an EM casualty. For instance, impairments soared, especially among corporate and institutional clients, where "continued weak commodity markets" contributed to a 158% increase. China and Ind ...
Federal Reserve Bank of Atlanta President Dennis Lockhart said the economy is ready for the first increase in short-term rates in more than nine years and it would take a significant deterioration in the data to convince him not to move in September.
-- this post authored by Jaison R. Abel and Richard Deitz
We often hear that women earn "77 cents on the dollar" compared with men. However, the gender pay gap among recent college graduates is actually much smaller than this figure suggests. We estimate that among recent college graduates, women earn roughly 97 cents on the dollar compared with men who have the same college major and perform the same jobs. Moreover, what may be surprising is that at the start of their careers, women actually out-earn men by a substantial margin for a number of college majors.
Curious why after its massive drubbing yesterday, which led to the second highest volume day for AAPL stock in 2015, the phone market is down another 1.3% this morning? The reason: Wall Street's momentum chasing penguins have re-emerged, and moments ago Bank of America, right on time as in just after the stock broke its 200 DMA and entered a correction, decided to downgrade AAPL from Buy to Neutral, lowering its price target from $142 to $130.
The reasons for the downgrade from the report:
Long term winner but iPhone deceleration creates headwinds, move to Neutral
Deceleration in iPhones creates near term headwinds
We downgrade shares of Apple Inc. (ticker: AAPL) to Neutral from Buy with a PO of $130. Although the long term opportunity is significant, we expect near term pressure on shares driven by (1) significant slowdown in revenue growth as iPhone growth decelerates and other initiatives like Apple Watch, Apple Pay, Apple Music take time to ramp, (2) China now accounts for ~25% of iPhone sales (C2Q) and share gains will be more difficult to come by, (3) the stock price is correlated to gross profit dollar growth (Figure 6), which despite the mix benefit of the iPhone will decelerate significantly over the next few quarters, (4) the magnitude of the beats is diminishing creating higher risk to negative revisions particularly as the Apple watch expectations are likely too elevated in 2016 , (5) the iPhone 6S/6S+ are likely to be an incremental upgrade (force touch), but not likely compelling enough for driving a significant change in the pace of share gains, and (6) we do not see incremental capital return announcements beyond the already announced plans in the near term.
In many ways the overnight session has been a mirror image of yesterday, with the dollar accelerating its Lockhart-commentary driven rise, which curiously has pushed ES higher perhaps as a result of more USDJPY correlation algos being active and various other FX tracking pairs. Indeed, the weak yen is all that mattered in Japan, where the Nikkei 225 (+0.5%) rose amid JPY weakness, despite opening initially lower as index heavyweight Fast Retailing (-4.5%) reported a 2nd consecutive monthly decline in Uniqlo sales. Elsewhere in mirror images, China slid 1.7%, undoing about half of yesterday's 3.7% jump, and is now down for 4 of the past 5 days.
As a reminder, the key event yesterday interview by Fed centrist, Atlanta Fed President Lockhart, who said that the US economy is ready for a rate rise and that it would take a significant deterioration in data to convince him that a move in September would not be warranted: the result was sending the USD and yields surging and stocks sliding.
Speaking to the WSJ, Lockhart said that â€'my priors going into the September meeting as of today are that the economy is ready and it is an appropriate time to make a change'. Lockhart also said that â€'I think there is a high bar right now to not acting' and that â€'it will take a significant deterioration in the economic picture for me to be disinclined to move ahead'. There was some mention from Lockhart in the article that inflation could come under pressure in the time ahead with the recent decline in the oil market, although Lockhart said that he was â€'reasonably confident' inflation is on a path towards its goal given the slack in the labour market and broader economy is diminishing.
The comments were interesting given that Lockhart is seen as something of a centrist in the Fed camp who moves with the consensus. Lockhart had also previously said back in May that he is more prepared to take the risks of waiting rather than being too early. In his c ...
HONG KONG (Reuters) - Alibaba Group Holding Ltd is hoping a Canadian Olympic gold medallist once tipped to be the next chief executive of Goldman Sachs Group Inc will help them make it big in the United States.
HOUSTON (Reuters) - As oil prices entered a second steep slide a few weeks ago, bullish traders and analysts had hoped for a repeat of the sharp but short dip that occurred early in the year - a speculative slide below $50 a barrel followed by a quick recovery.
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