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17Aug2015 Pre-Market Commentary: Premarkets Falling Sharply As Empire Manufacturing Fell To 2009 Lows, Investors Concerned About China's Woes And Other Gobal Weaknesses

Written by Gary

U.S. stock futures started out flat this morning, then started to fall after the US Empire Manufacturing report came out at -14.92 actual vs 4.50 estimate. U.S. dollar also started to fall precipitously and oil remained steady, but very near its 6-1/2 lows.

Investors are worried about China's flat economy, commodity collapse, credit markets starting to roll over and an overvalued U.S. markets. U.S. Markets are expected to open sharply lower and regain fractionally by mid morning.

Here is the current market situation from CNN Money

European markets are mixed. The CAC 40 is higher by 0.06%, while the DAX is leading the FTSE 100 lower. They are down 1.07% and 0.54% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Key Events In The Coming Week: FOMC, Housing Starts, CPI, TIC Data

It was a quiet start to the week today with just the June Euro area trade balance (which rose €21.9bn vs €23.1 bn expected, up from €21.3 bn) in the European timezone and Empire manufacturing and NAHB housing market index for August this afternoon in the US. Under the radar, but perhaps the most news today, is the June TIC data which will likely confirm the ongoing liquidation of "FX Reserves" aka TSYs by "Belgium" aka China. Expect another $15-20 billion drop in Belgian Treasury holdings in the month of June.

It's straight to the UK on Tuesday where we get the July CPI/RPI/PPI reports. There's important housing data out of the US on Tuesday meanwhile with July building permits and housing starts. The Atlanta Fed will update its Q3 GDP nowcast after the housing data. It is currently at 0.7%.

It's a busy start to the morning on Wednesday as we begin in Japan with July trade data and the Conference Board leading indicators. There's no notable releases in Europe on Wednesday, however it'll be all eyes on the US as we get a couple of bumper releases with the July CPI report and the release of the FOMC minutes later in the evening from the July 28th/29th meeting.

Turning to Thursday we get more important data out of the UK with July retail sales, while German PPI is also expected in the morning. It's set to be busy in the US again on Thursday with existing home sales, Conference Board leading index, initial jobless claims and the Philadelphia Fed business outlook reading for August.

It's a pretty quiet end to the week on Friday with just German consumer confidence, Euro area consumer confidence and UK public sector net borrowing data in Europe, while in the UK we get the flash August manufacturing PMI print. Fedspeak wise, it'll be worth keeping an ear out for Williams and Kocherlakota on Thursday.

And here is a summary table from BofA:

Estee Lauder sales fall first time in three quarters

(Reuters) - Cosmetics maker Estee Lauder Cos Inc's net sales fell for the first time in three quarters, hurt by a stronger dollar and less demand for Clinique and Estee Lauder skin care products.

Oil Price Starts Week in the Red

The oil price kicked off the week in the red as the market remained under selling pressure, with U.S. oil prices dropping below $42 a barrel and Brent crude down 1.2% at $48.61.

Toxic Rain Feared In Tianjin As Death Toll Rumored At 1,400

The fallout from last week's massive explosion in the Chinese port of Tianjin continues to worsen, despite Beijing's best efforts to play down the danger to the public.

The official death toll from the apocalyptic blast - which was described by witnesses as akin to a nuclear explosion - has risen to 114. Some reports suggest the number of people confirmed killed may ultimately rise to 1,400. Some 6,000 have been displaced and more than 700 are reported injured. "The whole sky was lit up, and the blast wave sent me into the air," a first responder told local media, describing the scene that unfolded last Wednesday. "My helmet was gone. It was like a different world, with flames falling like raindrops on my head."

Speaking of raindrops, authorities now fear that storms in the area could transform sodium cyanide (which is water soluble) present on the scene into hydrogen cyanide. Here's the CDC's definition of hydrogen cyanide:

Hydrogen cyanide (AC) is a systemic chemical asphyxiant. It interferes with the normal use of oxygen by nearly every organ of the body. Exposure to hydrogen cyanide (AC) can be rapidly fatal. It has whole-body (systemic) effects, particularly affecting those organ systems most sensitive to low oxygen levels: the central nervous system (brain), the cardiovascular system (heart and blood vessels), and the pulmonary system (lungs). Hydrogen cyanide (AC) is a chemical warfare agent (military designation, AC). It is used commercially for fumigation, electroplating, mining, chemical synthesis, and the production of synthetic fibers, plastics, dyes, ...

Noble Group open to selling core businesses to boost confidence: CEO

SINGAPORE (Reuters) - Noble Group is open to selling its core businesses, its chief executive said, as Asia's biggest commodities trader pursues options to boost market confidence after a bruising accounting dispute.

Hanergy's High Demands for Rehabilitation

Solar firm Hanergy is bringing its profits down to earth. But the next step "getting paid by its parent"comes with strings attached.

UK's Morrisons in talks to sell convenience stores

LONDON (Reuters) - Morrisons , Britain's fourth-largest grocer, is in advanced talks to sell its convenience stores to investment firm Greybull Capital as new chief executive David Potts seeks to focus the business on its traditional supermarket estate.

Frontrunning: August 17

Oil moves nearer six-year low on Japan data, oversupply (Reuters)

Commodity Slide Spurs Treasuries as Emerging Markets Extend Drop (BBG)

Because 7 years is "just right" - BOE Official Says Don't Wait Too Long on Rates (WSJ)

How Medicare Rewards Copious Nursing-Home Therapy (WSJ)

Millennials Are Developing Parents' Taste for Jaguars, Cadillacs (BBG) ... and even more debt

Mexican Billionaire's Firms Swept Up in U.S. Probe of Citigroup (BBG)

Japan economy shrinks in second quarter in setback for 'Abenomics' (Reuters)

Hedge Funds Resume Flight From Oil as Prices Sink to 6-Year Lows (BBG)

China's Woes Echo in U.S. Earnings (WSJ)

B ...

Has U.S. Treasury Market Liquidity Deteriorated?

by Liberty Street Economics

-- this post authored by Tobias Adrian, Michael Fleming, Daniel Stackman, and Erik Vogt

First in a five-part series. The issue of financial market liquidity has received tremendous attention lately. This partly arises from market participants' concerns that regulatory and structural changes have reduced dealers' market making abilities, but also from events such as the taper tantrum and the flash rally, in which Treasury prices fluctuated sharply amid seemingly little news. But is there really evidence of a sustained reduction in Treasury market liquidity?

Oil moves nearer six-year low on Japan data, oversupply

LONDON (Reuters) - Oil fell towards six-year lows on Monday, on data showing the economy of Japan, the world's third biggest oil consumer, contracted in the second quarter.

Introduction To A Series On Market Liquidity

by Liberty Street Economics

-- this post authored by Tobias Adrian, Michael Fleming, and Ernst Schaumburg

Market participants and policymakers have recently raised concerns about market liquidity - the ability to buy and sell securities quickly, at any time, at minimal cost. Market liquidity supports the efficient allocation of capital through financial markets, which is a catalyst for sustainable economic growth. Changes in market liquidity, whether due to regulation, changes in market structure, or otherwise, are therefore of great interest to policymakers and market participants alike.

Germany's Mann + Hummel agrees to buy U.S. firm Affinia

FRANKFURT (Reuters) - German car parts maker Mann + Hummel is buying Affinia , the American company said in a statement on Monday, confirming the third example of a German business acquiring a U.S. counterpart over the past year.

Doomsday Clock For Global Market Crash Strikes One Minute To Midnight

Doomsday Clock Strikes One Minute To Midnight For Global Market Crash

It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.

China currency devaluation signals endgame leaving equity markets free to collapse under the weight of impossible expectations.

Photo: Reuters

The Telegraph's John Ficenec has written an excellent piece warning of a possible market crash in the coming weeks.

He identifies eight key "signs things could get a whole lot worse."

1 - China slowdown
2 - Commodity collapse
3 - Resource sector credit crisis
4 - Dominoes begin to fall
5 - Credit markets roll over
6 - Interest rate shock
7 - Bull market third longest on record
8 - Overvalued US market


John Ficenec is a market and finance expert and is Editor of the Questor column at Telegraph Media Group working across the Daily and Sunday titles and online. He is a qualified accountant who trained at KPMG before moving into asset management and the private equity in ...

IMF involvement in Greece bailout indispensable: German Finance Minister

BERLIN (Reuters) - The International Monetary Fund's involvement in Greece's third bailout remains indispensable for Germany, a Finance Ministry spokesman said on Monday.

European stocks rebound from worst week in six

LONDON (Reuters) - European stocks rebounded from last week's heavy selloff on Monday and the dollar rose broadly, with investors reassured by stability in China's yuan exchange rate after it was fixed slightly higher for the second day running.

Futures Flat As Oil Drops To Fresh 6 Year Low; EM Currencies Crumble Under Continuing FX War

It was a relatively quiet weekend out of China, where FX warfare has taken a back seat to evaluating the full damage from the Tianjin explosion which as we reported on Saturday has prompted the evacuation of a 3 km radius around the blast zone, and instead it was Japan that featured prominently in Sunday's headlines after its Q2 GDP tumbled by 1.6% (a number which would have been far worse had Japan used a correct deflator), and is now halfway to its fifth recession in the past 6 year, underscoring Abenomics complete success in desrtoying Japan's economy just to get a few rich people richer. Of course, economic disintegration is great news for stocks, and courtesy of the latest Yen collapse driven by the bad GDP data which has raised the likelihood of even more Japanese QE, the Nikkei closed 100 points, or 0.5% higher.

Chinese stocks also rose by 0.7% to just shy of 4000 as a result of margin debt soaring once more, rising by $13 billion, and the longest streak in 2 months. What else can one say about Chinese investors except that they sure learned their lesson.

And while markets are levitating around the globe, if not so much in the US for now where futures are just fractionally in the red, which we expect will change in the now patented volumeless levitation into the market open and then close, economies are grinding to a halt, as express by the price of WTI, which earlier today dropped to a fresh 6 year low below $42 after Iran said OPEC production may rise to a record after sanctions on the
country are lifted and as U.S. drilling activity increased, although the black gold has since recouped some of its lo ...

China's Currency Move Rattles African Economies

The shock waves from China's yuan devaluation are ricocheting through African economies, stoking anxiety that the continent's biggest trading partner might be losing its appetite for everything from oil to wine.

Japan economy shrinks in second quarter in setback for 'Abenomics'

TOKYO (Reuters) - Japan's economy shrank at an annualized pace of 1.6 percent in April-June as exports slumped and consumers cut back spending, adding pressure on Prime Minister Shinzo Abe to step up his policy drive to lift the economy out of decades of deflation.

Business Investment Changes Its Stripes

The latest economic expansion hasn't shown a rise in corporate investment the way past ones have, but many economists say data don't capture powerful new trends in technology and business practices.

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