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28Aug2015 Pre-Market Commentary: Stock Future Indexes Sliding Off Yesterday's Closing Numbers, Oil Off Highs, Friday's Markets Set To End Roller Coaster Week With A Whimper

Written by Gary

U.S. stock futures index down fractionally, oil off yesterday's highs, but steady after violent swings in financial markets over the last 10 days. Investors are experiencing nervousness after several past weekend surprises and may sit this one out as today's session is set to end with a whimper.


Here is the current market situation from CNN Money

European markets are lower today with shares in Germany off the most. The DAX is down 0.67% while France's CAC 40 is off 0.61% and London's FTSE 100 is lower by 0.58%.

What Is Moving the Markets

Here are the headlines moving the markets.

Fed Urged to Press Ahead With Rate Rise

After months of forewarning by the Federal Reserve that it is preparing to raise short-term interest rates, some international officials have a message: Get on with it already.

Fed's Bullard says market swings not hitting economic outlook: Bloomberg

(Reuters) - Violent swings in financial markets over the last 10 days will probably not change the Federal Reserve's view that the U.S. economy is on a firm footing, a top Fed official said on Friday.

Stock futures fall after two-day market rally

(Reuters) - U.S. stock index futures fell on Friday, after a two-day market rally, suggesting nervousness heading into the weekend after a hair-raising ride for global markets in the past few days.

British payments glitch at HSBC leaves thousands without wages

LONDON (Reuters) - HSBC reported a computer glitch on Friday which it said prevented some of its British business customers from making payments, leaving thousands of workers without wages ahead of a three-day weekend.

Chinese Stocks To Plunge Another 35%, BofA Says

On Monday and Tuesday, China's plunge protection team attempted to step out of the market. The result: a 15% decline on the SHCOMP, the shockwaves from which reverberated in equity markets across the globe.

After Wednesday's ad hoc policy rate cuts failed to shore up sentiment, the PBoC was forced to come face to face with the harsh reality that massive capital markets intervention is very difficult to unwind once implemented and indeed, China isn't alone in grappling with the rather undesirable consequences of pulling back central bank support for markets.

Rather than watch as the SHCOMP crashed through key level after key level, China looks to have stepped back into the market on Thursday and again on Friday in a desperate attempt to restore order ahead of a military parade next month which Beijing apparently sees as an opportunity for Xi Jinping to project the country's growing power to the rest of the world.

Here is a quick summary of the last week seen through the perspective of Chinese stocks.



Aug 20: -3.4%

Aug 21: -4.3%

Aug 24: -8.5%

Aug 25: -7.6%

Aug 26: -1.3%

Aug 27: 5.3%

Aug 28: 4.8%

But as is the case with the PBoC's open FX interventions, some doubt how long China will be willing to spend money to prop up stocks and at least one analyst thinks that Chinese equities are in for ...

Stock futures fall after two-day market rally

(Reuters) - U.S. stock index futures fell on Friday, after a two-day market rally, suggesting nervousness heading into the weekend after a hair-raising ride for global markets in the past few days.

Big Oil Faces Prospect of Lower Refining Profits

For much of the past year, the world's biggest energy companies suffered through an oil-price rout with one silver lining: Their little-loved refineries were churning out big profits again. Now, that bright spot could be fading, even as oil prices sink.

Frontrunning: August 28



Stock Halts Added to Monday's Market Chaos (WSJ)

Fed Up Investors Yank Cash From Almost Everything Just Like 2008 (BBG)

Drop in Stock Futures Signal Halt to S&P 500's Relief Rally (BBG) - at least until the BOJ ramps USDJPY up again

Hacker Killed by Drone Was Islamic State's â€'Secret Weapon' (WSJ)

Greece's Syriza to win election but face setback, poll shows (Reuters)

Puerto Rico Spends More Than $60 Million on Debt Restructuring (BBG)

China's Moves Won't Help U.S. Tech Firms (WSJ)

How the IMF's misadventure in Greece is changing the fund (Reuters)

Japan inflation stalls and spending slides, keeps BOJ under pressure (Reuters)

Hundreds die as desperate migrants head for Eu ...

Entry And Exit Leads To Zero Profit For Bitcoin Miners

by Liberty Street Economics

-- this post authored by Rod Garratt and Rosa Hayes

In a previous post, we discussed bitcoin miners' incentives to undertake a 51 percent attack given the current condition of the bitcoin market. We also speculated that high profits and free entry would cause more miners to enter the market, driving marginal mining profits to zero in the long run. Since then, the price of a bitcoin has declined over 40 percent and both the hash rate and the difficulty level of the bitcoin mining problem, which adjusts automatically to changes in the hash rate, appear to have leveled off. Our most recent calculations suggest the long run may have arrived.

The Complete Jackson Hole Schedule

Over the past several years, the two-day Jackson Hole symposium had garnered a particular prominence among economists and market watchers as this is where various key inflection points by the Fed were hinted, leaked or announced, including QE2, QE3 and the taper. This year, however, the gathering of central bankers in Teton County, will be less exciting due to the absense of the most important central banker in the world: Janet Yellen, which means the highlighter will be Vice-Chairman Stanley Fischer when he speaks tomorrow at 10:25pm which will be a key event given the recent market turmoil.

Fischer must be on draft #3 of his speech, and surely less dovish than he might have been 36-48 hours ago as markets round the world have seen a remarkable recovery however the gyrations must be making the Fed very nervous about a move in just under 3 weeks. Most DM markets are back to where they were before the original sharp sell-off on Monday with the DAX pretty much recovering all its losses after dipping -7.8% for the week at one point. As DB accurately puts it, "a combination of the latest plate spinning from China and thin trading liquidity but heavy volumes have driven the sharp up move."

Bloomberg TV will have extensive one on ones with various central bankers as follows: be especially careful for the Bullard interview - last time he spoke during a market correction he sent stocks soaring to all time highs, although this year Dudley may have taken his role.

7:30am: Fed's Bullard on Bloomberg TV

9:15am: Fed's Kocherlakota, Mester on Bloomberg TV

12:25pm: Swiss National Bank's Jordan speaks in Jackson Hole

2:15pm: Fed's Lockhart on Bloomberg TV

4:15pm: Reserve Bank of India's Rajan on Bloomberg TV

10:25pm: Bank of England's Carney speaks in Jackson Hole

So for those who time their buying programs with the appearance of their central bankers,here is the full schedul ...

Rail Week Ending 22 August 2015: Some Improvement But Continued Deterioration Of Year-over-Year Rolling Averages

Econintersect: Week 33 of 2015 shows same week total rail traffic (from same week one year ago) marginally expanded according to the Association of American Railroads (AAR) traffic data. Intermodal traffic expanded year-over-year, which accounts for approximately half of movements. but weekly railcar counts continued in contraction.

China's central bank likely to ease policy again by end-December: Reuters poll

(Reuters) - China's central bank is highly likely to ease monetary policy again by the end of this year, according to economists surveyed by Reuters, as it seeks to support a rapidly cooling economy and calm financial markets.

Carlyle in talks on $770 million takeover of UK's Innovation Group

LONDON (Reuters) - U.S. private equity firm Carlyle is in advanced talks about buying Innovation Group for 40 pence a share in cash, valuing its equity at almost 500 million pounds ($769 million), the British software company said on Friday.

Fed's Balance Sheet 26 August 2015 Declined

Total Fed Balance Sheet:

Fed's Balance Sheet week ending balance sheet was $4,436 trillion..

Pentagon teams up with Apple, Boeing to develop wearable tech

NEWPORT BEACH, Calif. (Reuters) - The Pentagon is teaming up with Apple, Boeing, Harvard and others to develop high-tech sensory gear flexible enough to be worn by people or molded onto the outside of a jet.

Accused U.S. 'flash crash' trader fails to have UK extradition case postponed

LONDON (Reuters) - A London-based day-trader accused by the United States of market manipulation that contributed to the Wall Street "flash crash" in 2010, failed to persuade a court on Friday to postpone his extradition hearing.

Oil steadies after strong gains as equities rally

LONDON (Reuters) - Oil prices steadied on Friday after bouncing back from six-and-a-half-year lows on recovering equities markets, strong U.S. economic growth and news of low crude supplies from Nigeria.

Prosecutor seeks to summon Murdoch in Deutsche Bank trial

MUNICH (Reuters) - Munich prosecutors requested that 30 additional witnesses including Rupert Murdoch, publisher Friede Springer and Axel Springer Chief Executive Mathias Doepfner be summoned in a trial against Deutsche Bank executives.

Wild week for markets set to end with whimper

LONDON (Reuters) - A white-knuckle ride for global markets this week looked set to end with a whimper on Friday, with equities and commodities giving up some of their eye-popping bounces as investors turned their focus back to central banks' ability to avert deflation.

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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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