U.S. stock futures are fractionally down as Fed rate decision looms. The U.S. stock futures show little change, with investors continued to be cautious as they wait for the Federal Reserve's much-anticipated two-day meeting regarding a possible interest-rate hike.
Many investors are hesitant to make big trades ahead of the decision, and U.S. economic data published yesterday did little to show which way the Fed will swing.
Here is the current market situation from CNN Money
European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.43% while London's FTSE 100 is up 1.15% and Germany's DAX is up 0.62%.
Snapping a major two-day slump, China's Shanghai Composite Index jumped 4.9% to 3,152.26 at the close, with all of the gains coming one hour before markets shut in a pattern that's generally interpreted as government intervention. Volumes, however, remained subdued; the 10-day average volume in Shanghai has been sliding steadily since August and trading volumes are now down 28% below their 30-day average.
Investors may be mixed on what the Federal Reserve will do with interest rates this week. But they are more aligned on what they expect to happen next with rates: not much.
CHICAGO (Reuters) - Package delivery company FedEx Corp posted a higher quarterly profit on Wednesday, but missed Wall Street expectations due to weak global economic conditions and the strong U.S. dollar.
On Tuesday evening we brought you a fresh look at the worrisome deceleration in the pace of global trade, on the way to reiterating a point we've been keen to drive home over the last six or so months. Specifically, the post-crisis world may have witnessed a kind of seismic shift wherein depressed global trade has become structural and endemic rather than cyclical and transient.
To quote WTO chief economist Robert Koopman. "It's almost like the timing belt on the global growth engine is a bit off or the cylinders are not firing as they should."
Yes, it is "almost" like that and as it turns out, the OECD is starting to come to the same conclusion even if they're predisposed to cheer the relative strength of America's cleanest dirty shirt economy. On Wednesday, OECD cut their forecast for global growth to 3% in 2015 and 3.6% in 2016. Here's the full breakdown:
And here's some commentary from OECD Chief Economist Catherine L. Mann:
"Global growth prospects have weakened slightly and the outlook is clouded by important uncertainties. Emerging economies have vulnerabilities that could be exposed by rising US interest rates and/or a sharper-than-expected slowdown in China, giving rise to financial and economic turbulence that could also exert a significant drag on advanced economies. Continued policy stimulus is warranted to support global demand, but th ...
Every quarter we pay particular interest to the results reported by Fedex not only due to its position as the leading company in worldwide logistics but due to its status as a bellwether in global trade. And not surprisingly, following a bevy of reports here and elsewhere confirming the plunge in global trade, Fedex did not disappoint, or rather it did when it reported non-GAAP EPS of $2.42 (which included one extra day att the company's operating segments) missing already reduced consensus expectations of $2.45, but it also cut its full year 2016 EPS guidance from $10.60-$11.10 to $10.40-$10.90 (below the consensus $10.83) proving yet again that hopes for EPS growth are just as misplaced as those for multiple expansion at a time when the Fed is preparing to hike rates and as China unleashes Quantitative Tightening.
Specifically, the company announced that a boost in operating income at FedEx Express "were partially offset by higher incentive compensation accruals, higher self-insurance reserves and operating costs at FedEx Ground, and lower-than-anticipated volume at FedEx Freight. Fuel had a slightly negative net impact to operating income."
At Express, FedEx managed to grow operating income by 45% even as revenues dropped 4% Y/Y to $6.59 billion "as lower fuel surcharges and unfavorable currency exchange rates more than offset improved base rates. U.S. domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. U.S. domestic revenue per package decreased 3% due to lower fuel surcharges, partially offset by strong base rates."
If Express saw a rebound in profits despite a rise in revenues, the company's Ground segment did the opposite with operating income declining 1% to $537 million "as lower fuel surcharges and unfavorable currency exchange rates more than offset improved base rates. U.S. domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. U.S. domestic revenue per ...
Maybe China's Plunge Protection, aka "National", Team did not enjoy Bloomberg's poking fun of its investing "success" ("the 46 companies that reported China's Securities Finance Corp as a top 10 shareholder in the past two months lost an average 29 percent since the announcement, versus a 21 percent drop for the Shanghai Composite Index), maybe China was just embarrassed at the biggest 2-day drop in over a month despite increasingly grotesque and entertaining (if not for the sellers) market manipulation measures, or perhaps the PBOC simply wanted to close above 3000 the day the Fed starts its "most important meeting ever", but for whatever reason starting in the last hour of trading and continuing until the close, the Shanghai Composite - after trading largely unchanged - went from red on the day to up 4.9% after hitting 5.9% minutes before the close - the biggest one day surge since March 2009 - and nearly erasing the 6.1% drop from the past two days in just about 60 minutes of trading, providing a solid hour of laughter to bystanders and observers in the process.
Some observations on the move from Bloomberg:
Shanghai Composite Index closes 4.9% higher, biggest gain since Aug. 27, after surging as much as 5.9% in late trading.
ChiNext +7.2%, biggest jump on record, as 62 of 79 stocks traded rise 10%
Volume remains light, with Shanghai ~47% below 100-day avg
More than 300 SHCOMP stks up limit 10%; Biggest index movers incl. PetroChina, CRRC Corp., China Shipbuildi ...
LONDON (Reuters) - Oil rose on Wednesday after an unexpected drawdown in U.S. stockpiles and an increase in U.S. gasoline prices, but concerns remained about a global surplus, falling Asian demand and whether the Federal Reserve would raise interest rates.
LONDON/BRUSSELS (Reuters) - Anheuser-Busch InBev , the world's biggest beer maker, has approached rival SABMiller about a takeover that would form a brewing colossus that makes around a third of the beer drunk globally.
Who would have thought that decades of ZIRP, an aborted attempt to hike rates over a decade ago, and the annual monetization of well over 10% of sovereign debt would lead to a toxic debt spiral, regardless of how many "Abenomics" arrows one throws at it? Apparently Standard and Poors just had its a-ha subprime flashbulb moment and moments ago, a little over 4 years after it downgraded the US from its legendary AAA-rating which led to angry phone calls from Tim Geithner and a painful US government lawsuit, downgraded Japan from AA- to A+. The reason: rising doubt Abenomics is working.
Apparently S&P has never heard of the Magic Money Tree theory concocted by economists who have never traded an asset in their lives, in which "countries that print their own currency" have nothing to fear about a 250% debt/GDP ratio. In fact, the only fear is that it is not big enough.
Expect the market's reaction to be that since Abenomics has not worked yet, some nearly three years after it was launched then Japan will be forced to do even more of it, simply because it has no choice - it is now all in, the problem of course being that the BOJ is simply running out of stuff to monetize as even the IMF warned two weeks ago...
Here is the S&P's full downgrade.
Japan Ratings Lowered To 'A+/A-1'; Outlook Is Stable
Economic support for Japan's sovereign creditworthiness has continued to weaken in the past three to four years. Despite showing initial promise, the government's strategy to revive economic growth and end deflation appears unlikely to reverse this deterioration in the next two to three years.
We are lowering our sovereign credit ratings on Japan to 'A+/A-1' ...
LONDON (Reuters) - World share markets rose on Wednesday, albeit in thin volume, and short-term U.S. bond yields held near 4 1/2-year highs as investors braced for the possibility of the first interest rate hike in the United States in almost a decade.
PARIS (Reuters) - The global economic outlook has grown darker than it was only a few months ago, but the United States is doing well enough that its central bank should go ahead with its first rate increase since the financial crisis, the OECD said on Wednesday.
TOKYO (Reuters) - Suzuki Motor Corp is buying back the 19.9 percent stake held by top shareholder Volkswagen AG for up to $3.9 billion, after an international arbitration court last month ordered the German automaker to sell its holding.
FRANKFURT (Reuters) - (Company corrects the 15th paragraph beginning "The malicious programme..." to clarify that the nickname SYNful refers to the signal routers sent to open up communication with other routers, rather than how the implanted software jumps between routers.)
SAN FRANCISCO (Reuters) - Apple Inc. faces significant challenges selling its larger and more powerful iPad Pro to businesses because companies are reluctant to switch software vendors and use an expensive device that lacks specialized business apps, analysts said.
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.
DETROIT (Reuters) - A tentative labor contract covering 40,000 U.S. workers at Fiat Chrysler Automobiles NV could eventually end a controversial two-tier pay system and could offer a new approach to curbing medical costs, the company's chief executive officer said Tuesday.
SINGAPORE (Reuters) - Despite the long drum roll anticipating what could be the U.S. Federal Reserve's first monetary tightening in years, the odds of the Fed lifting interest rates this week have lengthened so much that emerging markets could be hit hard if it happened.
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