Global stocks are mixed today and little changed dispute a sliding China market because of a negative early tone off of disappointing economic reads. The Shanghai Composite Index fell 2.7%
Oil prices also retreated fractionally this morning in Asia after several banks and Morgan Stanley warned oil fundamentals appear to be slipping again outside the U.S., issuing a weak outlook for demand.
Markets are expected to open fractionally in the green, mostly flat, then decline for the morning dip as investors await The Fed's rate decision on Thursday.
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 0.39% while London's FTSE 100 is off 0.19% and Germany's DAX is lower by 0.12%.
Worried how stocks will react to the Fed's announcement this Thursday? Well don't, because no matter what the Fed announces, the outcome will be favorable. At least that is JPM's pitch.
The reason: according to equity strategist Mislav Matejka, either announcement should "be received well" by the market. To wit:
The eagerly awaited Fed meeting is upon us. Regardless of the actual decision, we suggest that the market impact could end up being positive. If the Fed does raise rates, but at the same time reassures the market that this will be a gradual process, it would be received well. If, on the other hand, the Fed delays the move, this could be interpreted as a signal that the Fed is aware of and is responding to recent market concerns. A delay could dampen the link between the DXY and commodity prices.
To be sure, JPM realizes that a rate delay is confirmation that not all is well with the economy, and that another big chunk of Fed credibility will be lost, but who cares: at the end of the day, it is all about stocks or as Goldman calls it "risk management."
Even though inaction might be seen as prolonging market anxiety, the key in our view is that investors get to know what the new Fed's reaction function is. One of the main current investor concerns is over the lack of clarity from central banks. We believe that the policymakers are still on the side of the risky assets and will act supportively; the ECB opening the doors to QE2 is a case in point.
This takes us back to what Bank of America's Michael Hartnett said ten days ago happens if the Fed does not hike. Among his key observations, the bolded one is key:
Silver has had a rough year, slumping to major new secular lows. After sliding on balance for years now, even the diehard silver bulls are losing faith in their metal.
Silver in USD â€" 10 Years
Despite its vexing slumber, silver's price-appreciation potential from today's levels remains enormous. Between radical under-investment and very high speculator silver futures shorting, silver is poised to see massive buying as gold recovers.
Like all markets, silver is forever cyclical. It perpetually meanders from in favor to out of favor and back again. And after falling on balance for years as QE3 sucked capital and interest away from portfolio diversification with alternative investments, silver is way overdue to reverse into its next major bull.
The brave contrarians willing to buy silver and its miners low before this becomes widely apparent stand to earn fortunes.
Editors note: Adam Hamilton of Zeal Speculation and Investment was one of the few contrarian analysts who correctly predicted that silver would rise from below $5 to nearly $50 per ounce in the early 2000s. Adam is calling for similar gains for depressed silver today and his latest research is well worth a read â€" "Silver's Vexing Slumber"
Today's Gold Prices: USD 1108.00, EUR 977.98 and GBP 716.97 per ounce.
The Organization of the Petroleum Exporting Countries has cut its forecast of oil supplies from nonmember countries in 2015, a sign that crude's price collapse is hitting U.S. shale drillers and other competing sources.
BEIJING (Reuters) - A China unit of Volkswagen will recall 78,000 vehicles over a potential defect that could prevent driver-side air bags from deploying properly, China's safety regulator said on Monday.
FRANKFURT (Reuters) - Chief Executive Sergio Marchionne has canceled his appearance at the Frankfurt auto show this week after Fiat Chrysler Automobiles (FCA) was picked as the target company in labor talks in the United States, a company spokesman said on Monday.
Yesterday when we commented on the Chinese open for trading, we noted that US equity futures, up between 10-15 points at the time on hopes for even more central bank intervention (even if a September rate hike is now largely off the table as far as the market is concerned) we warned that algos still appear unaware that the most bullish catalyst - Gartman's short position - has been stopped out and as such "algos are flying blind." Since then US futures have trimmed their gains by half and at this rate we may even open red, depending on whether Gartman once again flop-flipped, this time to bullish.
But while any moves in the US stock market ahead of Thursday are largely irrelevant, as only Yellen's statement in 4 days will unleash epic algo buying or short covering (yes, according to JPM the Fed statement is bullish no matter what), it is what happened in China that is concerning, because while we had expected Chinese stocks to go nowhere in particular now that index future trading volumes have plunged by 99% or perhaps rise on hopes of even more easing after the latest terrible economic data, the Shanghai Composite dropped 2.7%, but it was the retail darling Shenzhen Composite which tumbled 6.7% - its worst selloff since August 25, while China's Nasdaq, the ChiNext crashed -7.5%.
Is China startting to losing control again? Judging by the latest PBOC data, ...
In the seven years since the world's central banks responded to the financial crisis by slashing interest rates, more than a dozen in advanced economies have tried to move rates back upâ€"but not a single one has been able to keep them there.
-- this post authored by A. Lee Smith and Thealexa Becker
Since 2008, the Federal Reserve has relied on unconventional policy measures to fulfill its dual mandate. These unconventional tools became necessary when the effective lower bound on nominal rates prevented further cuts in the target federal funds rate. One such tool used in the aftermath of the Great Recession has been forward guidance, which is communication about the future path of policy rates. But has forward guidance, as recently practiced by the Federal Open Market Committee (FOMC), been effective?
FRANKFURT (Reuters) - German premium carmakers BMW , Mercedes-Benz and Audi are snapping up software experts as tech firms such as Google threaten to outflank them in the race to develop a self-driving car.
LONDON (Reuters) - Stocks rose on Monday, shrugging off tepid Chinese economic data while the dollar weakened before a U.S. Federal Reserve decision on whether to raise interest rates for the first time since 2006 later this week.
(Reuters) - Shares of Alibaba Group Holding Ltd , which recently slipped below their initial offering price after having rocketed 75 percent in their first two months of trading, could lose another 50 percent of their value, Barron's said in the cover story of its Sept. 14 issue.
Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
Econintersect wants your comments,
data and opinion on the articles posted. As the internet is a
"war zone" of trolls, hackers and spammers - Econintersect must balance its
defences against ease of commenting. We have joined with Livefyre
to manage our comment streams.
To comment, using Livefyre just click the "Sign In" button at the top-left corner of
the comment box below. You can create a commenting account using your
favorite social network such as Twitter, Facebook, Google+, LinkedIn or
Open ID - or open a Livefyre account using your email address.
You can also comment using Facebook directly using he comment block below.
Econintersect Live Market
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com