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03Sep2015 Pre-Market Commentary: Futures Up Fractionally, Oil Showing Weakness, Jobless Claims Up, U.S. Dollar Shows New Strength, Sideways Movement Seen For Next Several Sessions

Written by Gary

U.S. stock futures index is up almost one percentage point as investors await the latest news from the ECB on a rate decision (no change) and the jobless and continuing claims (higher) reports this morning. The pre-markets barely moved and we will have to wait for the opening to get a feel of market direction.


Here is the current market situation from CNN Money

European markets are sharply higher today with shares in Germany leading the region. The DAX is up 2.18% while London's FTSE 100 is up 1.64% and France's CAC 40 is up 1.01%.

Most likely the markets will open higher and then make the morning 'dip'. After that anything could move the markets, but I do not see a plunge in the making. I see more sideways movement coming as the markets continue to correct for the selloff last week.

What Is Moving the Markets

Here are the headlines moving the markets.

July 2015 Trade Data Is Mixed With Deceleration of the Rolling Averages

Written by Steven Hansen

A quick recap to the trade data released today paints a mixed picture. The unadjusted three month rolling average value of imports and exports decelerated month-over-month,. Many care about the trade balance (which decreased marginally relative to last month), but trade balance simply has little correlation to economic activity. Note that inflation adjusted data paints a prettier picture economically as there is deflation in this sector.

Analysis: The ECB's September Press Conference

The ECB left interest rates unchanged at record lows amid a sluggish eurozone economy and persistently weak inflation. Investors are looking for clues on whether thinking on stimulus has changed in light of turbulent financial markets and worries about China.

U.S. jobless claims rise; trend shows labor market still strong

WASHINGTON, Sept 3 (Reuters) - The number of Americans filing new applications for unemployment benefits rose more than expected last week, but the underlying trend remained consistent with a strengthening labor market.

Mario Draghi's Panic Button, Birthday Presser - Live Feed

Now that the formalities are out of the way with rates unchanged, the fireworks can begin as Mario Draghi gets set for his post-meeting presser where markets hope to hear that the ECB is set to expand QE in the face of collapsing EMU inflation expectations, mounting global headwinds, rising volatility, and EM chaos.


DRAGHI SAYS ISSUE SHARE LIMIT FOR QE RAISED TO 33% FROM 25%

GERMAN BUNDS EXTEND GAIN AS DRAGHI RAISES QE ISSUE SHARE LIMIT

Full preview is here, watch live below.

(live feed)

VW CFO Poetsch to be proposed as chairman: source

FRANKFURT (Reuters) - The executive committee of Volkswagen's supervisory board was meeting on Thursday to propose finance chief Hans Dieter Poetsch as the carmaker's supervisory board chairman, a source familiar with the matter said.

For The Average American, A Modest 10% Correction Is Now A "Market Crash"

To most Wall Street pundits and strategists, the recent 10% correction in all three US key indices can be summarized with one word, or rather, acronym: BTFD. After all, someone has to pay those year-end bonuses, and that becomes problematic if the S&P is down on the year. Nevermind that none of these pundits actually predicted the correction, even though as we warned repeatedly, with the vol of all other products screaming, equity VIX was in its own little world for most of 2015 until two weeks ago, when reality finally caught up with it.

But what about the average American: how does Joe Sixpack feel about the recent 10% drop in the S&P? For the answer we went straight to the source - google trends. What it revealed was disturbing.

As the chart below shows, in the age of artificially supressed volatility, even a plain vanilla market correction now generates the type of emotional shock comparable to the biggest market collapse since the Great Depression, and judging by the Google Trends chart, searches for "market crash" are on par with those recorded during late 2008!

Worse, due to SEO optimizing algos which seek to give readers precisely what they are looking for, many websites which have algo-written headlines and news, have been perpetuating the shock from the market drop, by blasting headlines that while seeking to be click bait, merely encourage the fear witnessed in the recent two weeks, thus exacerbating the impact of the market drop.

One wonders what would happen if there is a bear market, or worse: a real crash, comparable to the 60% plunge witnessed when Lehman failed?

Total 2015 Job Cuts To Be Biggest Since 2009: Challenger

Moments ago Challenger reported August job cuts, which at 41,186 were a 60% drop from the 115,730 reported last month (the highest since September 2011), which however was driven by a one-time mass layoffs last month in military staffing. Putting August in its correct perspective, the number was 2.9% higher than the same month a year ago, when 40,010 planned job cuts were announced.

What is troubling is that this marks the seventh month this year that the job-cut total was higher than the comparable month from 2014.

What is worse is that for all the euphoria about initial claims printing at or near record lows, the reality as measured from the bottom-up, is far different and as Challenger notes, so far in 2015 employers have announced 434,554 job cuts: that is up 31 percent from the 332,931 planned layoffs in the first eight months of 2014.

What is worst, and what reveals the true picture of the economy, is that with monthly totals averaging 54,319, 2015 job cuts are on track to exceed 650,000 for the year, which would be the highest year-end tally since 2009 (1,272,030).

In other words, not only is the economy no longer growing at its previous pace, but due to the ongoing oil rout, tens of thousands of highly-paid workers mostly in the oil space are getting pink slips just as the Fed is preparing to tighten. Putting a number to that estimate, Challenger says that "since the beginning of the year, oil prices have been blamed for 82,268 layoffs, mostly in the energy sector, but also among industrial goods manufacturers that supply equipment and materials for oil exploration and extraction."

ECB seen cutting inflation outlook, hinting at more policy action

FRANKFURT (Reuters) - The European Central Bank is set to cut its inflation forecasts on Thursday but hold back from concrete policy action, promising only to beef up its bond-buying program if growth and inflation prospects weaken further.

Exclusive: Japan Display CEO hints at strong Apple orders ahead of new iPhone launch

TOKYO (Reuters) - Japan Display Inc's new chief executive said on Thursday the screen maker's "biggest client", widely understood to refer to Apple Inc , is increasing orders ahead of the expected launch of a new iPhone this month.

Futures higher but investors remain cautious

(Reuters) - U.S. stock index futures were higher on Thursday but investors remained wary of taking big positions a day before the release of the monthly jobs report, which may be a critical factor in the Federal Reserve's interest rate decision.

ECB Keeps Rates Unchanged, Focus Turns To Draghi Press Conference

As expected, there was no change in the ECB's three key interest rates, with the main refi, lending and deposit rates staying where they were at 0.05%, 0.30% and -0.20%, respectively.

From the press release:

At today's meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

This is not a surprise. The question is whether Draghi will hint at, or outright boost, QE in 45 minutes, how much he will cut Europe's GDP and inflation outlook, and whether there will be another confetti shower.

Stay tuned

E.C.B. Leaves Rates Unchanged

The European Central Bank is expected to keep its main rate at close to zero for some time, as the annual rate of inflation in the eurozone is 0.2 percent.

In Risky Move, Riksbank Holds Rates But Warns Will Cut If ECB Boosts QE

In July, Sweden's Riksbank did a funny thing - they doubled down on QE even after it became clear that QE had failed. And we don't just mean "failed" in the somewhat abstract sense that all global QE has failed when it comes to bringing about a robust recovery and shaking the global economy out of the demand doldrums. We mean it actually failed. As in, the Riksbank sucked up so much of the available high quality collateral that 10Y yields and the krona started moving in the wrong direction in a very non-accommodative self-feeding loop.

Be that as it may, not everyone was convinced that demonstrable evidence of failure would be enough to deter further easing at Thursday's meeting, but lo and behold, the Riksbank stood pat.



SWEDEN'S RIKSBANK LEAVES KEY RATE UNCHANGED AT -0.35 %

Of course in a world where everyone has been forced to adopt an overwhelming easing bias, being complacent can be a death sentence, so we can only assume that the Riksbank might be simply hoping against hope that everyone else also remains on hold so that it's not forced to triple down on the first official QE failure and indeed, the consensus seems to be that the bank's perceived complacency will be temporary - very temporary. Here's a look at some analyst commentary courtesy of Bloomberg:

...

Frontrunning: September 3



U.S. Treasury's Lew says China will be held accountable on currency (Reuters) ... but not Japan

Bank of Japan Not Convinced of Need for Further Easing (WSJ)

Stocks Advance With Commodities on Signs of European Revival (BBG)

ECB Said to Seek 645 Million Euros of Dutch, Irish Mortgage Debt (BBG)

IMF Says China Slowdown, Other Risks Threaten Global Outlook (WSJ)

Xi Says China No Threat, Announces Military Cuts at Parade (BBG)

China holds massive military parade, to cut troop levels by 300,000 (Reuters)

Migrants leave Budapest for Austrian frontier; pressure builds for EU action (Reuters)

Inside Uber's Fight With Its Chinese Nemesis, Didi Kuaidi (

August 2015 Job Cuts Drop After July Surge

from Challenger Gray and Christmas

Monthly job cuts plunged by more than 60 percent in August after surging to a four-year high in July on massive cuts in military staffing.

With U.S. Factory and Boston Transit Deal, Inroad for Chinese Rail Firm

China Rolling Rail Stock Corporation is building a plant in Springfield, Mass., and under a $566 million contract will assemble 284 Boston subway cars.

Oil rangebound as equity rally offsets inventory rise

LONDON (Reuters) - Crude prices traded in a narrow range on Thursday as optimism over equity markets helped offset a surprise increase in U.S. oil inventory levels and a firm U.S. dollar.

Europe Rethinks The Schengen Agreement

from STRATFOR

The treaty was a key step in the creation of a federal Europe. By eliminating border controls, member states gave up a basic element of national sovereignty. The agreement also required a significant degree of trust among its signatories, because it put the responsibility for checking foreigners' identities and baggage on the country of first entry into the Schengen area. Once people have entered a Schengen country, they can move freely across most of Europe without facing any additional controls.

With China's Market Chaos Offline, Futures Levitate On ECB Easing Hopes

With China closed today, the usual overnight market manipulation fireworks out of Beijing were absent but that does not meant asset levitation could not take place, and instead of the daily kick start out of China today it has been all about the ECB which as we previewed two days ago, is expected - at least by some such as ABN Amro - to outright boost its QE, while virtually everyone else expects Draghi to not only cut the ECB's inflation forecast, which reminds us of the chart which in March we dubbed the biggest hockeystick ever (we knew it wouldn't last)...

... but to verbally jawbone the Euro as low as possible (i.e., the Dax as high as it will get) even if the former Goldmanite does not explicitly commit to more QE.

Elsewhere in Asia, stock markets traded mostly higher amid a rebound in the recent global stock market rout, with Chinese markets closed for Victory Day. The Nikkei 225 (+0.5%) outperformed as risk on sentiment saw all sectors trade in the green, driven by another burst of USDJPY levitation early in the session. ASX 200 (-1.4%) bucked the trend after Myer (-16.81%) fell the most on record following reports of a share sale, while a miss on Australian retail sales also weighed on sentiment. 10yr JGBs traded lower as strength in Japanese equities dampened demand for safer assets, while a well-received enhanced liquidity auction failed to spark demand.

No concern yet regarding financial institutions from market turmoil: Jack Lew

WASHINGTON (Reuters) - U.S. Treasury Secretary Jack Lew said financial market turmoil has yet to cause enough stress in financial institutions to warrant concern, CNBC reported on Thursday.

Global stocks enjoy relief rally ahead of ECB, but investors wary

LONDON (Reuters) - World stocks rose on Thursday, lifted by the strong rally on Wall Street the previous day, but investors were cautious ahead of a potentially critical 24 hours that will include a European Central Bank policy meeting and the latest U.S. jobs data.

Hyperinflation Cannot Be Prevented By Debt/Deflation

Hold your real assets outside of this system in a private non-government controlled facility --> http://www.321gold.com/info/053015_sprott.html

Hyperinflation Cannot Be Prevented By Debt/Deflation

Written by Jeff Nielson (Click For Original)

Hyperinflation Cannot Be Prevented By Debt/Deflation - Jeff Nielson

A repetitive flaw continues to circulate throughout much of the ...

Move Over Entrepreneurs, Make Way for Speculation!

by Keith Weiner

Once upon a time, before banks and before even private lending, there was only one way to prepare for retirement. People had to hoard something durable. Every week, they would set aside part of their wages to buy salt (later, it was silver). Assuming it didn't get wet, the salt accumulated until they couldn't work any longer. Then, they would begin selling it off to buy groceries.

This was the best they could do. By modern standards, it wasn't a very good method. Stockpiling a commodity does not finance business growth, so the hoarder contributed no capital to the economy. And, it carries a very big risk: what if you run out before you die?

The development of lending was a revolutionary breakthrough. Lending allowed the retiree to do business with the entrepreneur. The retiree has wealth, but no income. The entrepreneur is the opposite, with income but not wealth. The retiree lets the entrepreneur use his wealth, in exchange for an income. The entrepreneur is happy to pay interest, in order to grow his business and increase profits.

At times throughout the centuries, governments prohibited lending at interest. They called it a pejorative nameâ€"usury. Sometimes, people could work around the law, but when they had to obey lending ceased. No one will risk his wealth, or even forego possession of it, without getting something in return.

Today lending is not illegal, but the Fed has been driving down interest for over three decades. Its administered short-term rate is basically zero. Central bank apologists assert that this will help the economy. It hasn't yet, and it never will. However, the main concern by both Fed defenders and foes alike is the worry that prices might rise. Well, prices aren't rising now. So the former are smug and the latter are frustrated.

They miss the real harm of zero interest.

The Fed can force the rate to zero, but it cannot change economic la ...

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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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