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17Sep2015 Pre-Market Commentary: U.S. Futures Down Fractionally, Volatility A Certainty Awaiting Federal Reserve Rate Decision

Written by Gary

U.S. stock futures index is fractionally down ahead of one of the most anticipated monetary policy decisions for years. Investors have been sitting on their collective hands all week in anticipation if the Federal Reserve will unveil its first interest rate hike in almost a decade.

Last month analysts were almost certain that the Fed's were going to raise rates, but persistent rumors and worries over China's economy see the Fed waiting until December for an increase. Watch out for volatility and reversing markets in today's session.


Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.24% while the CAC 40 gains 0.18%. The FTSE 100 is off 0.44%.

What Is Moving the Markets

Here are the headlines moving the markets.

Global Markets Await Fed Decision

European stocks and U.S. futures edged lower ahead of a decision from the U.S. Federal Reserve later in the day on whether to raise interest rates for the first time in almost 10 years.

With no U.S. export financing, GE says will build engine center in Europe

WASHINGTON (Reuters) - General Electric Co said on Thursday it plans to create a development center for turboprop engines in Europe, citing a lack of U.S. export financing after Congress allowed the U.S. Export-Import Bank's charter to lapse in June.

Airlines liable for compensation in case of unforeseen technical faults: EU court

BRUSSELS (Reuters) - Airlines have to pay passengers compensation when flights are canceled or delayed due to unforeseen technical problems, the European Union's top court ruled on Thursday, handing a victory to consumers.

Frontrunning: September 17



Wall Street Has Doubts About Fed Lifting Interest Rates (WSJ)

Global stocks at three-week highs as Fed decision looms (Reuters)

Charting the Markets: The World Awaits the Fed (BBG)

Powerful quake off Chile slams waves into coastal towns; eight killed (Reuters)

As Fed Storm Brews, Europe Stocks Seen Weathering Turmoil Best (BBG)

Fiorina's rise adds another insurgent to U.S. election fray (Reuters)

No One Performed Better Than Carly Fiorina in Second Republican Debate (BBG)

Syrian army starts using new weapons from Russia - military source (Reuters)

Nine Blueprints for How to Handle the Stock Market on Thursday (

Even as Fed mulls hike, markets see chance of another ECB cut

LONDON (Reuters) - A year after Mario Draghi said European Central Bank interest rates had reached bottom, euro zone money markets are discounting a fair chance they could be lowered again - regardless of rising interest rates across the Atlantic.

Rail Week Ending 12 September 2015: Tremendous Unimprovement After Previous Week's Improvement

Week 36 of 2015 shows same week total rail traffic (from same week one year ago) collapsed according to the Association of American Railroads (AAR) traffic data. Intermodal traffic significantly declined year-over-year, which accounts for approximately half of movements. and weekly railcar counts continued in contraction. It could be that the data last week was screwed up - and the data this week was an adjustment.

Futures lower as Fed decision looms

(Reuters) - U.S. stock index futures were lower on Thursday ahead of the Federal Reserve's interest rate decision.

The Fed's Long Awaited Decision Day Arrives, And Chinese Stocks Wipe Out In The Last 15 Minutes

The long awaited day is finally here by which we, of course, mean the day when nobody has any idea what the Fed will do, the Fed included.

Putting today in perspective, there have been just about 700 rate cuts globally in the 3,367 days since the last Fed rate hike on June 29, 2006, while central banks have bought $15 trillion in assets, and vast portions of the world are now in negative interest rate territory.

As we noted yesterday, while the fed funds market implies a 32% probability of a rate hike one day ahead of the decision (which compares to 70% in 1994, 76% in 1999 and 92% in 2004) investors are even more torn, with 57% of respondents in an RBS survey saying the Fed should hike today, but only 42% expecting the Fed will announce a rate hike at 2pm. Of the 113 estimates on Bloomberg, 59 are calling for the Fed to stay put and 51 are calling for a 25bp hike, with the remaining 3 estimates calling for a 12.5bp move.

"Experts" and "pundits" haven't reached a consensus either: Goldman Sachs, the World Bank, IMF, and people like Larry Summers are imploring the Fed to retain ZIRP for a little while longer while individuals such as Axel Weber (former Bundesbank head and current UBS chairman), Haruhiko Kuroda, the G-20, and a bunch of EM central bankers all want to see liftoff occur.

The Fed itself is not sure what to do: according to many a hawkish move would be not to hike but layer the statement with many caveats how strong the economy is (even as the Fed again chickens out) while the dovish thing would be a "one and done" rate hike with the Fed potentially unleashing a recession-inducing curve inversion.

Then there is the problem with the Fed's rate hike machinery: the Reverse Repo-IOER corridor has never actually been tried in ...

Oil slips as Japan data outweighs U.S. stock draw

LONDON (Reuters) - Oil prices fell on Thursday after weak Japanese data sounded alarm bells over the prospects for global growth, outweighing the bullish impact of a bigger-than-expected decline in U.S. crude oil stocks.

Gold Near Highs In Currencies Globally - Terrorism, War and Currency Devaluations

Gold has risen to near record highs in many currencies internationally. Bullion is again acting as a safe haven for people throughout the world whose currencies are devaluing and for those who are fleeing instability, terrorism and war.


Gold is not reaching record highs per se, rather these paper currencies are losing their value or are being devalued. People throughout the world who own safe haven gold are, again, protecting their purchasing power.

Yet you would not know this looking at the many negative headlines and sentiment surrounding gold. Our Western-centric views lead to a simplistic focus on gold solely in dollars, euros and pounds. For most of humanity, gold's price in dollars is irrelevant. What is relevant is gold in their local currency terms.

The gold charts from Nick Laird's excellent www.sharelynx.com clearly show this important and little known fact.

People in all continents of the world are being protected by owning gold. People in the Ukraine in Europe, in Syria in the Middle East, in South Africa in Africa and indeed, in Brazil and Argentina in South America are all seeing their currencies devalue rapidly as competitive currency devaluations and currency wars intensify.

The direct experien ...

Global stocks at three-week highs as Fed decision looms

LONDON (Reuters) - World stocks inched to a three-week high on Thursday while the dollar drifted lower against other currencies, as investors consolidated positions ahead of a nail-biting U.S. Federal Reserve interest rate decision.

Kyle Bass Bearish on Emerging Markets for at least 2 More Years. Looking to Short Currencies

Kyle Bass, the founder and manager of Hayman Capital and the man who spotted and shorted successfully the subprime bubble was interviewed today at CNBC. He shared his macro views during the "Squawk on the Street" and revealed that he is bearish emerging markets and believes that the Chinese economical issues are just starting and that's because the banking sector still has more bad debts to reveal and write-off. According to Kyle the loans pass due in 90 days grew by the whooping 167% just for half an year. He thinks that it will take at least 2-3 quarters until the banking sector reaches its NPL peak and thinks that this will force the government to recap its banks. But Kyle shares that it will be at least 2 more years until the emerging market slowdown is over and banking problems are fixed.

Altice expands in U.S. with $17.7 billion Cablevision deal

PARIS (Reuters) - European telecoms group Altice will become a major force in the lucrative U.S. cable market after it agreed to buy fourth-largest operator Cablevision for a mix of cash and shares in a deal worth $17.7 billion including debt.

Pepsi, Coke, Dr Pepper and the At-Home Carbonation Market: Let The Games Begin!

Competition in the U.S. at-home carbonation market is about to take off. PepsiCo is extending its distribution deal with the pioneer of at-home carbonation systems, SodaStream, and The Coca-Cola Company and Dr Pepper Snapple are about to launch their products with the Keurig Kold. As sales of carbonated soft drinks continue to fizz out, at-home carbonation emerged as an additional platform for soft drink consumption. This market might not be able to bring back consumers to the CSDs, but due to the ease of carrying compact flavor sachets, and the convenience of in-house consumption, the intake-rate of avid customers could increase.

Brewer AB InBev seeks $275 billion tie-up with SABMiller

BRUSSELS/LONDON (Reuters) - Anheuser-Busch InBev, the world's largest brewer, has approached rival SABMiller about a takeover that would form a colossus producing a third of the world's beer.

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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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