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28Oct2015 Pre-Market Commentary: Futures Up Fractionally, FOMC Meeting Today, Expect Market Volatility

Written by Gary

The big question today is, Will the Fed acknowledge a weaker economy and put off a rate hike in 2015? The Fed is expected to keep interest rates basically unchanged, will there be anything in the minutes for investors to digest in terms of the timing of an upcoming hike?

U.S. stock future indexes are up fractionally and markets are expected open likewise, but be prepared for volatility.


Here is the current market situation from CNN Money

European markets are higher today with shares in Germany leading the region. The DAX is up 0.52% while London's FTSE 100 is up 0.46% and France's CAC 40 is up 0.42%.

What Is Moving the Markets

Here are the headlines moving the markets.

Cost-cutting helps Walgreens beat profit estimates

(Reuters) - Drugstore chain operator Walgreens Boots Alliance Inc reported a better-than-expected quarterly profit, helped by lower costs achieved through its cost-cutting plan.

Northrop third-quarter results beat forecasts, 2016 profit outlook raised

WASHINGTON (Reuters) - Hours after winning a multibillion-dollar contract to build a new U.S. bomber, Northrop Grumman Corp on Wednesday reported higher-than-expected quarterly revenues and earnings and increased its profit outlook for the full year.

VW slumps to first quarterly loss in at least 15 years

BERLIN (Reuters) - Volkswagen posted its first quarterly loss in at least 15 years on Wednesday and said the 6.7 billion euros ($7.4 billion) set aside to cover the costs of its rigging of diesel emissions tests was likely just a start.

Hershey cuts forecast on weak demand, higher marketing costs

(Reuters) - Chocolate maker Hershey Co cut its full-year profit forecast, hurt by weak demand in North America and higher marketing costs ahead of the holiday season.

Valero pumps out strong profit as refining margins rise

(Reuters) - U.S. refiner Valero Energy Corp reported a better-than-expected quarterly profit, helped by robust demand for refined products and lower crude costs.

Stock futures rise after Apple results; Fed statement awaited

(Reuters) - U.S. stock index futures were higher on Wednesday, after Apple reported strong quarterly results and ahead of a statement by the Federal Reserve on interest rates.

Global shares rise as Riksbank helps ease Fed wait

LONDON (Reuters) - European stocks rose for the first time in three sessions on Wednesday after Sweden's central bank increased its bond-buying but other assets were steady as investors wait to see if the Federal Reserve will clarify its rate hike plans later.

Walgreens to buy rival Rite-Aid for $9.4 billion

(Reuters) - Drugstore chain Walgreens Boots Alliance Inc said on Tuesday it would acquire smaller peer Rite Aid Corp for $9.4 billion to widen its footprint in the United States and negotiate for lower drug costs.

Barclays says to pay new chief Staley up to $12.6 million a year

LONDON (Reuters) - Barclays Plc said it will pay incoming chief executive James "Jes" Staley up to 8.24 million pounds ($12.6 million) a year after appointing the former JPMorgan investment bank boss to one of the most prominent posts in British business.

Frontrunning: October 28



Global shares rise as Riksbank helps ease Fed wait (Reuters)

Asian Stocks Retreat Before Fed as Material Shares Lead Losses (BBG)

For Fed, a Rates Puzzle Looms (WSJ)

What the Superforecasters Say About When the Fed Will Lift Rates (BBG)

U.S. Looks at Proposals to Step Up Fight Against Islamic State (WSJ)

China Steel Head Says Demand Slumping at Unprecedented Speed (BBG)

VW slumps to first quarterly loss in at least 15 years (Reuters)

Taliban overrun district in quake-hit northern Afghanistan (Reuters)

John Cryan's Biggest Challenges at Deutsche Bank in Five Charts (BBG)

Saudi-led coalition drops weapons for allies in Yemeni city (Reuters)

Inside the Old Psych Hospital Reborn As a Home for Money Managers (

Sweden Launches MOAR QE, As Krugman Paradise Quadruples Down After Dovish Draghi

Over the last six months, we’ve documented Sweden’s descent into the Keynesian Twilight Zone in great detail.

Once upon a time, the Riksbank actually tried to raise rates, only to be lambasted by a furious Paul Krugman who accused the central bank of unnecessarily transforming Sweden from “recovery rockstar†to deflationary deathtrap. Tragically, the Riksbank listened to Krugman and reversed course in 2011. Before you knew it, rates had plunged 35 basis points into NIRP-dom. Unemployment subsequently fell, but the promised lift in inflation didn’t quite pan out. Sweden did, however, get a massive housing bubble for their trouble:

h/t @auaurelija

Obviously, those charts beg the question of why in the world Sweden (or Denmark, or Norway for that matter... or hell, even the US) are trying to contend that there's no inflationary impulse, but let's leave that for another day.

As for the Riksbank’s QE program, things began to go awry ...

Markets On Hold Awaiting The Fed's Non-Announcement As Central Banks Ramp Up Currency Wars

We would say today's main event is the culmination of the Fed's two-day meeting and the announcement slated for 2 pm this afternoon, however with the 90 economists polled by Bloomberg all expecting no rate hike, today's Fed decision also happens to be the least anticipated in years (which may be just the time for the Fed to prove it is not driven by market considerations and shock everybody, alas that will not happen). And considering how bad the economic data has gone in recent months, not to mention the recent easing, hints of easing, and outright return to currency war by other banks, the Fed is once again trapped and may not be able to hike in December or perhaps ever, now that the USD is again surging not due to its actions but due to what other central banks are doing.

In fact, the biggest central bank announcement today may not be from the Fed at all, but what the Swedish Riksbank did a little over two hours ago, when it kept its interest rate at the already record low -0.35%, but boosted its QE by a further SEK65 billion, in the process slamming its currency and sending bond yields tumbling. This is what it said:

Overall, the Executive Board's assessment is that monetary policy needs to be more expansionary in order to underpin the positive development in the Swedish economy and safeguard the robustness of the upturn in inflation. The Executive Board has therefore decided to extend the government bond purchasing programme by an additional SEK 65 billion so that purchases will amount to SEK 200 billion in total by the end of June 2016. The repo rate is left unchanged at ?0.35 per cent but an initial raise in the rate will be deferred by approximately six months compared with the ...

Global Stocks Steady Before Fed Rate Decision

Global stock markets steadied as investors cautiously awaited the latest clues on the timing of the Federal Reserve’s planned increase in interest rates.

For Fed, a Rates Puzzle Looms

Surging levels of cash in U.S. money markets threaten to undermine the Federal Reserve’s control over short-term interest rates.

Documentary Of The Week: Why Economists Disagree.

Written by John Lounsbury

Econintersect: This is the first lecture in the introductory course in economics at Kingston University. Economists clearly disagree with each other, in a manner that is quite unlike both the physical sciences and other social sciences. This lecture discusses why this is so, making an analogy to the state of astronomy back at the time of Copernicus and Galileo, where new observations and a new model challenged the view that the Earth was the center of the Universe. Introduced are the 8 or so main approaches to economics, from both "Freshwater" and "Saltwater" variants of Neoclassical economics, through to Econophysics.

stevekeenstripphoto380

Earnings Outlook: What to expect in PayPal's earnings

Investors will get a look at how the payments business has fared since splitting from eBay, as PayPal reports third-quarter earningsâ€"its first post-split earningsâ€"after the bell Wednesday.

The Ratings Game: Apple's cash machine makes the stock a bargain: analysts

Many analysts are cheering Apple’s latest quarterly report, with Pacific Crest’s team upgrading their rating for the iPhone maker’s stock to overweight, while BTIG argues the stock is cheap.

Earnings Summary for Today

Earnings Calendar provided by Investing.com.

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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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