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15Oct2015 Pre-Market Commentary: U.S. Stock Futures Index Fractionally Higher, U.S. Dollar Up, Consumer Price Index In The Green

Written by Gary

Interesting numbers this morning. Initial and continuing jobs claims were in the green along with the consumer price index. That sent the U.S. dollar spiking upwards $0.50 and the US futures falling fractionally.

Markets are expected top open higher this morning along with some serious volatility after the Cushing oil reserve report this morning.

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 1.44% while France's CAC 40 is up 1.29% and London's FTSE 100 is up 1.00%.

The first column is what was reported. The second column is what analysts were expecting and the third column is the last report. (from

What Is Moving the Markets

Here are the headlines moving the markets.

Blackstone posts third-quarter loss as asset values drop

(Reuters) - Blackstone Group LP , the world's largest alternative asset manager, reported its first quarterly economic net loss in four years on Thursday, as the stock market plunge weighed on the value of its portfolio, even as it generated more cash.

U.S. consumer prices fall on cheaper gasoline

WASHINGTON (Reuters) - U.S. consumer prices recorded their biggest drop in eight months in September as the cost of gasoline fell, but a steady pick-up in underlying price pressures should allay fears that a disinflationary trend was reasserting itself.

U.S. jobless claims revisit 42-year lows

WASHINGTON (Reuters) - The number of Americans filing new applications for unemployment benefits fell back to a 42-year low last week, suggesting the labor market remained strong despite an abrupt slowdown in job growth in the past two months.

Citigroup profit jumps 51 percent as costs fall

(Reuters) - Citigroup Inc , the No.3 U.S. bank by assets, reported a 51 percent rise in third-quarter profit as a fall in operating, legal and repositioning costs more than made up for lower revenue.

Goldman Sachs profit hit by weak bond trading

(Reuters) - Goldman Sachs Group Inc reported a sharp drop in profit for the second straight quarter as bond trading revenue fell by a third amid turmoil stemming from concerns about global growth.

Germany orders recall of 2.4 million Volkswagen cars

HAMBURG/BERLIN (Reuters) - Germany ordered Volkswagen on Thursday to recall and refit 2.4 million diesel vehicles next year, following the company's admission it rigged emissions tests.

Germany says has ordered VW to recall cars at start of 2016

BERLIN (Reuters) - German Transport Minister Alexander Dobrindt said on Thursday that the country's automotive watchdog had ordered Volkswagen to start a mandatory recall of 2.4 million affected cars at the start of 2016.

Initial Jobless Claims Plunge To 42 Year Lows, Despite Surging Job Cuts

The yawning gap between job cuts (surging most since 2009) and initial jobless claims (hovering near 42 year lows) continues to grow as initial jobless claims collapse 7k this week to 255k - the lowest since 1973. Bear in mind, Goldman's explanation that jobless claims are useless in this part of the business cycle..."this does not signal a booming labor market."

Charts: Bloomberg

But as Goldman Sachs confirms... "this does not represent a booming labor market"

Although payroll employment growth has slowed in recent months, initial claims for unemployment insurance benefits remain very low. The four-week moving average of initial claims has trended lower again this year—despite meaningful layoffs in energy-producing states—and is currently at the lowest level since early 2000 (Exhibit 1). Does this mean that the current rate of nonfarm payroll growth understates the strength of the labor market?

Not necessarily. As we have noted in prior research, the structural relationship between jobless claims and employment growth changes over the business cycle. Unemployment insurance claims are an observable proxy for one type of labor market flow: the number of persons laid-off each month. However ...

Illinois Commits "Fraud On Taxpayers", Lowers Maximum Lottery Payout To Just $600

Susan Rick’s boyfriend won $250,000 from the Illinois Lottery in July.

As the Chicago Tribune reported in August, Rick thought the winnings would allow her to “stop working seven days a week, maybe fix up the house and take a trip to Minnesota to visit her daughter.â€

No such luck.

Instead of real money, Rick’s boyfriend - one Danny Chasteen - got an IOU from the state.

The problem: the state’s inability to pass a budget even after hiring (and subsequently firing) budget “guru†and Laffer disciple Donna Arduin for $30,000 a month meant that any Illinoisan who won more than $25,000 couldn’t immediately be paid.

More specifically, without a budget the comptroller's office doesn’t have the legal authority to make the payments.

Fast forward to Wednesday and the state comptroller’s office made national news when Comptroller Leslie Geissler Munger said Illinois would skip a $560 million November pension payment. By way of recap (via Bloomberg):

The spending standoff between Republican Governor Bruce Rauner and Democratic legislative leaders has extended into its fourth month with no signs of ending. Munger said her office will postpone a $560 million retirement-fund payment next month, and may make the December contribution late.

“This decision is choosing the least of a number of bad options,†Munger told reporters in Chicago on Wednesday. “For all int ...

Goldman Suffers Terrible Quarter After FICC, Prop Trading Revenues Plunge; Banker Comp At Five Year Lows

Once again, Jefferies' one-month early glimpse at Wall Street trading revenues proved to be spot on. After the boutique mid-market banks reported a total collapse in fixed income trading revenues (which ended up negative following massive charge offs), everyone was looking at the biggest hedge fund among the TBTF banks - Goldman Sachs - to see just how bad the trading environment really is. The answer came moments ago, and the answer is bad. Very bad.

First the headline numbers: both headline EPS of $2.90 and adjusted EPS of $2.64 missed the consensus estimate of $3.00, which was the first Goldman EPS miss in 12 quarter, while Goldman's revenues did no better, printing at $6.86 billion, below the $7.07 billion estimate, revenue which was not only an 18% drop from a year ago, but also matches the worst quarterly revenue Goldman has generated since 2011!

Amazing how things change when one can't simply frontrun central banks with impunity, and yes - Tepper was right.

The chart below lays out the details:

First the good news: both Investment banking, at $1.6 billion in revenue and institutional equities, at $1.75 billion, posted Y/Y increases of 6.3% and 9.4%, respectively. The banking rise was to be expected, with Goldman remaining the underwriter of choice for most IPOs and debt offerings, as well as the go to advisor for M&A deals and various corporate buybacks.

The bad news however was dramatic: everyone expected FICC would be down, but plunging 33% to $1.46 billion from $2.2 billion a year ago was certain ...

In Major Shift, Obama Cancels US Troop Withdrawal From Afghanistan

As the old adage goes: if it ain’t broke, don’t fix it, and as the recent bombing of a Doctors Without Borders hospital in Kunduz clearly shows, the US military presence in Afghanistan is doing wonders for stability and security which is presumably why the Obama administration has just done a 180 on troop deployment in the country.

Under Obama’s previous plan, Washington would withdraw most of the 9,800 troops operating in the country by the end of next year, leaving a force of just 1,000.

Now, all 9,800 troops will remain for “most†of next year and 5,500 troops will remain in 2017.

Here’s more from WSJ:

President Barack Obama will say Thursday that he has ordered a significant slowdown in the withdrawal of American troops from Afghanistan, senior administration officials said, a decision that marks a major reversal in his war plan and effectively hands the conflict over to his successor.

Under pressure at home and abroad, Mr. Obama decidedâ€"following a strategy reviewâ€"to maintain the current American force of 9,800 troops in Afghanistan through most of next year, and to leave a force of 5,500 U.S. troops in the country in 2017, when he leaves office, the senior administration officials said.

The announcement will mark a dramatic shift in strategy by scrapping Mr. Obama’s previous plan, in place since last year, to steadily withdraw the 9,800 U.S. troops through 2016 and to leave only about 1,000 at the U.S. embassy by the time he ...

Goldman Earnings Miss as Bond Traders Suffer

Goldman’s quarterly profit tumbled 36% as the big U.S. bank with the greatest dependence on Wall Street was trounced by volatile markets.

Fed Doubts Grow on 2015 Rate Increase

The chances of a Federal Reserve interest-rate increase in 2015 are diminishing amid new signs of anemic economic activity, a disappointing development for central bank officials who have been hoping to move this year after a prolonged period of easy-money policies.

Treasury Bills Sold at Zero Percent Interest Top $1 Trillion

Investors are handing the federal government a lot of free money. The pile of Treasury bills sold at an interest rate of zero since the financial crisis topped $1 trillion this summer and grew further this week.

America's Other Anti-Islamic State Efforts


-- this post authored by Scott Stewart

U.S. C-17 cargo aircraft dropped 122 pallets of small arms and ammunition to rebel groups fighting the Islamic State in northeastern Syria on Oct. 12. The forces belong to the newly minted Syrian Democratic Forces, a coalition of anti-Islamic State Sunni Arab, Kurdish and Assyrian Christian militias.

Early Headlines: Asia Stocks To New Highs, Global Central Bank, Trump Takes Air From Dems, Brexit, China Continues Slowing And More Or Not?, India Attractive For Investment and More

Written by John Lounsbury

Early Bird Headlines 15 October 2015

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.


Futures Movers: Oil prices seesaw as market frets about growing U.S. stockpiles

Concerns about expanding U.S. inventories amid declining consumer spending there are keeping traders subdued

Market Snapshot: U.S. stocks poised for firm gains ahead of trio of Fed speakers

Wall Street is set for a rebound on Thursday, with stock futures keying off gains in Asia and moving sharply higher ahead of a raft of economic data and a trio of Federal Reserve speakers.

London Markets: FTSE 100 eyes first win in four days, but Burberry slides

U.K. stocks are rising, looking to break a losing streak, but Burberry plunges as China’s economic slowdown hits sales at the luxury-products retailer.

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