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15Sep2015 Pre-Market Commentary: U.S. Futures Flat Ahead Of Federal Reserve's Rate Decision, China Down Significantly, U.S. Dollar Rising

Written by Gary

China's market slumped 3.6% and the Bank of Japan kept its monetary policy unchanged ahead of a much anticipated U.S. Federal Reserve decision Thursday. Dow and S&P futures were both flat until the Empire manufacturing remained in contraction territory and advanced retail sales came in at 0.2%, expecting 0.3%.

European stocks are mildly lower in mid-day trading and U.S. markets are expected to open flat in an otherwise quiet session.

Here is the current market situation from CNN Money

European markets are mixed. The DAX is higher by 0.04%, while the CAC 40 is leading the FTSE 100 lower. They are down 0.31% and 0.07% respectively.

What Is Moving the Markets

Here are the headlines moving the markets.

Headline Retail Sales Mixed In August 2015.

Written by Steven Hansen

Retail sales improved according to US Census headline data but were on the low side of expectations. Our view is that this month's data was weaker than last month but there was an improvement of the rolling averages. Consider that the headline data is not inflation adjusted and prices are currently deflating making the data better than it seems.

Carmakers curb China output as sales growth stalls

FRANKFURT/BEIJING (Reuters) - Volkswagen and other major carmakers have begun reining in Chinese output, wages and other costs, industry sources told Reuters, as executives at the Frankfurt auto show put a brave face on a sharp slowdown in the world's biggest vehicle market.

Gauge of U.S. consumer spending rises in August

WASHINGTON, Sept 15 (Reuters) - U.S. consumer spending appeared to grow at a fairly healthy pace in August, pointing to solid domestic demand that could persuade a cautious Federal Reserve to hike interest rates on Thursday.

GM executives stick to Europe profit goal for 2016

FRANKFURT (Reuters) - General Motors executives said they remained committed to meeting their goal of reaching profitability in Europe by 2016, brushing aside concerns that a downturn in Russia could put their goal at risk.

BMW Chief Faints On Stage During Frankfurt Auto Show

Back in June we noted that for luxury car manufacturers, the Chinese cash cow is dying. "The enormous growth rates luxury-car makers like us have seen in China in recent years won't continue," Porsche CFO Lutz Meschke warned at an event in Atlanta in May and needless to say, the picture has not brightened since then.

The dramatic bursting of China's equity bubble along with nervousness around the botched attempt to transition smoothly towards a new currency regime has left the country on edge, and although the Tianjin explosion did wonders to vaporize a bit of excess auto inventory, it didn't do much to calm the country's frayed nerves. Xi's anti-corruption campaign hasn't done anything for the luxury space either.

Here's what Barclays had to say Monday on the way to slashing GDP growth forecasts for China: "The stock market crash and rising CNY depreciation expectations are also hurting investor and consumer confidence, adding downward pressure to growth in the coming quarters. Looking into 2016, we believe the three major headwinds highlighted in the medium term - excess capacity in many industries, oversupply in the housing market and high debt burdens (especially among local governments) - together with anti-corruption and policy uncertainties will continue to weigh on growth."

As Reuters reports, with economic growth decelerating at a rapid pace (as telegraphed by the yuan deval) and with trillions in paper gains having vanished from the SHCOMP and Shenzhen, luxury automakers are cutting costs and production for their China ventures. Here's more:

Cisco router break-ins bypass cyber defenses

FRANKFURT (Reuters) - Security researchers say they have uncovered clandestine attacks across three continents on the routers that direct traffic around the Internet, potentially allowing suspected cyberspies to harvest vast amounts of data while going undetected.

Why Morning Is the Worst Time to Trade Stocks

Rising stock-market volatility is proving especially costly for retail investors who typically buy and sell stocks soon after the market opensâ€"often the most perilous time of the trading day.

Taco Bell joins fast-food booze bandwagon with new U.S. eateries

(Reuters) - Yum Brands Inc's Taco Bell chain next week will debut a new restaurant concept that dumps the drive-thru and brings on the booze as it seeks to appeal to hip, young city dwellers and fend off popular rival Chipotle Mexican Grill Inc .

The Most Loved Stock Market Rally In History

Via Dana Lyons' Tumblr,

One survey recently recorded the highest level of expectations for a market rally in its (admittedly brief) history.

Not too long ago, stock market bulls were fond of dubbing this cyclical rally "the most hated bull market in history". The premise was that, despite the considerable gains accrued by the market since the 2009 lows, investors were relatively slow to embrace the rally. We would say that based on various money flow and sentiment metrics, there was probably some truth to that notion, up until perhaps mid-2013. Since then, we have seen a notable pickup in investors' collective "embrace" of stocks. In fact, according to the University of Michigan's Survey of Consumers, respondents' expectations for a stock market rally have never been higher than they were in June. That should be a red flag from a contrarian sentiment basis.


As shown in the chart, the UM survey asks people for their "probability of an increase in the stock market in the next year". Taking the mean response to that question, June's reading of 63.1 is the highest ever recorded in their survey, surpassing the previous record of 62.2 from July 2007. So much for the most hated rally in history.

Okay, okay, so the data series has only been around since 2002, giving us just 2 cyclical bull markets in which to judge. We fully acknowledge that and acknowledge the unqualified hyperbole of this post's title. Let that be a preemptive admission for the flood of feedback waiting to point that ou ...

World Bank economists warn Fed hikes may be bumpy for emerging markets

WASHINGTON (Reuters) - A rise in market expectations for U.S. interest rates as the Federal Reserve starts to normalize policy could cut capital inflows to emerging markets by as much as 45 percent, World Bank economists said in a paper published on Tuesday.

Rules for 'dark pool' trading need strengthening: report

WASHINGTON (Reuters) - U.S. regulators need to accelerate their efforts beef up the rules governing "dark pool" trading platforms to better protect investors from poor trade execution and conflicts of interest, according to a new report released Tuesday.

Futures little changed as investors await Fed

(Reuters) - U.S. stock index futures were little changed on Tuesday, with investors wary of making big bets ahead of this week's Federal Reserve meeting and concerns about China persisting.

Frontrunning: September 15

China stocks resume sharp slide as economic worries mount (Reuters)

OECD head says sees further cut to global growth forecasts (Reuters)

The U.S. Dollar Is Gaining Like It's the 1980s â€" For Better or Worse (BBG)

Glencore Slumps to Record Low, Erasing Gains Since Debt Plan (BBG)

Woman killed, 400 homes destroyed by California wildfire (Reuters)

Why Morning Is the Worst Time to Trade Stocks (WSJ)

German Investor Confidence Damped by Weaker Emerging Markets (BBG)

One U.S. Banker Is Ready to Raise His Rates, With or Without the Fed (BBG)

Fired Currency Traders Won't Leave Quietly (BBG)

Hundreds of Latinos protest at Trump r ...

"That is real gold. The alternative is paper gold...other people's promises."

One of the best interviews we have seen about gold in recent weeks took place last week. It was a Bloomberg interview which involved Peter Hambro being interviewed by Francine Lacqua and Manus Cranny on Bloomberg Television's "The Pulse."

Some of the great quotations from this refreshing interview included:

  • "I believe it [gold] is [still the safe haven] [This gold coin] 2000 years ago buys the same amount of bread today as it did when Jesus Christ was born. That is a real safe haven asset…

China Stocks Drop Most Since Late August, BOJ Disappoints Bailout Addicts; US Futures Flat

Almost two weeks after we explained why any hope for a QQE boost by the BOJ is a myth, and that any increase in monetization will simply lead to a faster tapering and ultimately halt of Kuroda's bond purchases...

... the market finally grasped this, when overnight the BOJ not only did not easy further as some - certainly the USDJPY - had expected, but kept its QE at the JPY80 trillion level and failed to offer any hints of further easing that many had hoped for, pushing the Nikkei down from up almost 400 point intraday to virtually unchanged and sending the USDJPY back under 120. JGBs also traded lower on concerns there may not be much more QE to frontrun.

As Bloomberg reports, "the move by Governor Haruhiko Kuroda and his colleagues leaves the onus on Prime Minister Shinzo Abe's government to compile a stimulus package to boost what evidence indicates is a lackluster recovery in the second half of the year so far. Kuroda repeatedly told reporters on Tuesday that the bank sees a gradual recovery continuing in the economy." Which is ironic considering many now see Japan's GDP sliding in Q3 confirming the 5th recession in the past 8 years.

Still, the "experts" continue calling for further bailouts: economists from Goldman Sachs Group Inc. and Citigroup Inc. are among those who project a boost in stimulus on Oct. 30. "If the downside risks wors ...

The Logic And Risks Behind Russia's Statelet Sponsorship


-- this post authored by Reva Bhalla

Mother Russia can be quite generous when it comes to her collection of statelets. In the early 1990s, when a broken Russia had no choice but to suck in her borders, a severely distracted Kremlin still found the time and money to promote and sponsor the fledgling breakaway territories of South Ossetia and Abkhazia in Georgia and Transdniestria in Moldova. And as Russia became more economically coherent over the years, the number of Russian troops in these territories grew, and a bigger slice of the Russian budget was cut out to keep the quasi-states afloat.

Jaguar Land Rover sales will rise in 2015 despite China drop: CEO

FRANKFURT (Reuters) - Luxury carmarker Jaguar Land Rover expects sales this year to exceed those in 2014, with Britain, Europe and the United States compensating for a sharp decline in the Chinese market, its chief executive said.

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