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22Oct2015 Pre-Market Commentary: Futures Flat To Fractionally Higher, Oil Remains Low, U.S Dollar Soaring, ECB Rate Remain Same

Written by Gary

U.S. stock futures indexes are up fractionally after Chinese stocks recovered today from an unexpected selloff yesterday. However, investors remain wary of continued weakness in the world's second largest economy. The SP500's 2040 resistance remains a roadblock as expected and further testing of the 2020 level will be on the menu this morning. Markets are expected to open higher and then move fractionally lower.

Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.79% while the CAC 40 gains 0.17%. The FTSE 100 is off 0.04%.

ECB President Mario Draghi said today QE will continue until Sept. 2016 or beyond if needed; QE to last until inflation adjusts toward ECB goal.

Oil prices remain low and charts indicate the path to least resistance is down once the 44 level is taken out.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. jobless claims up slightly, four-week average lowest since 1973

WASHINGTON (Reuters) - The number of Americans filing new applications for unemployment benefits rose less than expected last week, remaining at levels consistent with a fairly healthy labor market.

McDonald's global same-restaurant sales rise

(Reuters) - McDonald's Corp reported its first rise in quarterly global same-restaurant sales in more than a year as demand recovered in China, where it had struggled after a food safety scandal, and menu changes boosted sales in the United States.

Dow Chemical reviewing options for agri unit

(Reuters) - Dow Chemical Co said it would "review all options" for its agrosciences business, after the unit reported its third straight quarter of sales decline on Thursday.

United Air sees further decline in unit revenues; profit misses view

(Reuters) - United Continental Holdings Inc said on Thursday it expects a steep decline in unit revenue to continue into the fourth quarter as the strong U.S. dollar dents foreign sales, and reported quarterly earnings that came in below analysts' expectations.

Caterpillar third-quarter profit tumbles

(Reuters) - Caterpillar Inc on Thursday reported a lower quarterly net profit as global machinery sales fell during the third quarter as worldwide construction activity, mining and drilling for oil and gas remained severely weak.

Higher royalties, ice cream sales help Dunkin' beat estimates

(Reuters) - Dunkin' Brands Group Inc reported better-than-expected quarterly revenue and profit, helped by a rise in royalties from franchisees and higher sales at Baskin-Robbins ice cream shops.

Nasdaq profit jumps on higher trading volumes, Dorsey Wright deal

(Reuters) - Transatlantic exchange operator Nasdaq Inc reported a 12 percent jump in quarterly profit, helped by the acquisition of data analytics firm Dorsey Wright and higher equity trading volumes.

Everything's Deflating And Nobody Seems To Notice

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Whenever we at the Automatic Earth explain, as we must have done at least a hundred times in our existence, that, and why, we refuse to define inflation and deflation as rising or falling prices (only), we always get a lot of comments and reactions implying that people either don't understand why, or they think it's silly to use a definition that nobody else seems to use.

-More or less- recent events, though, show us once more why we're right to insist on inflation being defined in terms of the interaction of money-plus-credit supply with money velocity (aka spending). We're right because the price rises/falls we see today are but a delayed, lagging, consequence of what deflation truly is, they are not deflation itself. Deflation itself has long begun, but because of confusing -if not conflicting- definitions, hardly a soul recognizes it for what it is.

Moreover, the role the money supply plays in that interaction gets smaller, fast, as debt, in the guise of overindebtedness, forces various players in the global economy, from consumers to companies to governments, to cut down on spending, and heavily. We are as we speak witnessing a momentous debt deleveraging, or debt deflation, in real time, even if prices don't yet reflect that. Consumer prices truly are but lagging indicators.

The overarching problem with all this is that if you look just at -consumer- price movements to define inflation or deflation, you will find it impossible to understand what goes on. First, if you wait until prices fall to recognize deflation, you will tend to ignore the deflationary moves that are already underway but have not yet caused prices to drop. Second, when prices finally start falling, ...

Caterpillar Shares Tumble After Company Misses Across The Board, Revenues Plunge 19%, Guidance Cut

It never fails: a month ago, after showing CAT's abysmal global retail sales, just three days later the company announced a historic business restructuring in which in addition to slashing its guidance, and confirming the China slowdown is now a recession if only in the manufacturing sector so far, it also announced it would fire 10,000, sending its stock crashing.

Then, yesterday, ahead of today's earnings we again showed that when it comes to global demand for CAT products, there is simply no demand, and this particular dead cat refuses to bounce, with 34 consecutive months of declining revenues as well as 11 consecutive months of doubler digit sales declines.

We hoped this data would soften the blow from today's CAT Q3 earnings which were clearly going to be ugly, and surely worse than consensus estimates.

Moments ago we got said earnings and as expected, they were indeed far worse than expected, with CAT reporting adjusted EPS of $0.75 ($0.62 GAAP), below consensus estimate of $0.77, while revenue of $11.0 billion also missed expectations of $11.33.This takes place even as CAT repurchased $1.5 billion in stock in Q3, or about 75% of the total $2.0 billion in buybacks it conducted in all of 2015 (compared to $8 billion in the past three years).

And the punchline: the company cut its 2015 EPS outlook from $5.00 to $4.60, even as it still keeps its full year revenue guidance at $48 billion adding that 2016 sales/rev is about 5% lower than 2015. It now sees 2016 revenues down 5% from 2015.

Some more highlights:

Q3 Revenue: $10 ...

ECB Keeps All Three Interest Rates Unchanged

Nothing material was expected to be announced by the ECB ahead of today's Mario Draghi conference in 45 minutes, and sure enough, nothing was, with the ECB reporting that all three key rates remained unchanged. From the release:

At today's meeting, which was held in Malta, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Perhaps notable is that at the same time, the ECB announced that it had cut the ELA ceiling for Greek banks from €87.9 billion to €86.9 billion, showing that after one month, Greek banks had managed to add about a billion in liquidity. At this rate the ECB's ELA may be removed entirely some time in 2020.

More at half past the hour when Mario Draghi speaks.

Stocks Steady as ECB Keeps Rates on Hold

Global stocks were mostly steady after the European Central Bank kept interest rates on hold Thursday, with investors looking ahead to comments from ECB President Mario Draghi for clues on the likelihood of further monetary stimulus.

Inside Swiss Banks' Tax-Cheating Machinery

Dozens of Swiss banks have been spilling their secrets to the Justice Department this year about how they encouraged U.S. clients to hide money abroad.

Nasdaq Acquires SecondMarket, Profit Rises 12%

Nasdaq said it has acquired SecondMarket Solutions, expanding the exchange operator’s offerings to facilitate trading in securities of privately held companies.

Metals Stocks: Gold struggles for direction ahead of data, ECB meeting

Gold futures switched between modest gains and losses in early Thursday trade as metals investors awaited U.S. economic reports on employment and guidance from European Central Bank President Mario Draghi.

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