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05Nov2015 Pre-Market Commentary: Negative Earnings, Higher Jobless Claims, Higher US Dollar And Sliding Oil Prices Are Spooking Investors In An Overbought Market

Written by Gary

U.S. stock future indexes are up fractionally along with Europe and Asia. The US dollar is trading sideways for now in the low 98's. WTI crude has been trading sideways in the low 46's since yesterday and resting on its support. Initial Jobless Claims and Continuing Claims both were higher than expected along with the biggest quarterly drop in earnings since Q3 of 2009 will probably move the averages lower after the opening.

Here is the current market situation from CNN Money

European markets are mixed today. The CAC 40 is up 1.11% while the DAX gains 0.90%. The FTSE 100 is off 0.21%.

How bad is this earnings season? According to Bloomberg, about three-quarters of the S&P 500 have already reported results, with profits down 3.1% on a share-weighted basis due to plunging profits from oil & gas and commodity-related companies. The figures reveal the biggest quarterly drop in earnings since Q3 of 2009, and the second straight period of profit declines. Earnings growth turned negative for the first time in six years last quarter.

What Is Moving the Markets

Here are the headlines moving the markets.

UAW workers at large GM plant in Fort Wayne, Indiana, OK new union pact

DETROIT (Reuters) - United Auto Workers members at the General Motors Co truck plant in Fort Wayne, Indiana, approved a new four-year contract by a wide margin, said the president of the local union hall on Thursday morning.

U.S. jobless claims post largest increase since February

WASHINGTON, Nov 5 (Reuters) - - New U.S. applications for unemployment benefits last week recorded their largest increase in eight months, but remained at levels consistent with a fairly healthy labor market.

U.S. productivity rises in the third quarter, manufacturing strong

WASHINGTON (Reuters) - U.S. nonfarm productivity unexpectedly rose in the third quarter as a decline in self-employed workers contributed to overall hours worked falling for the first time in six years, restraining labor-related production costs.

Molson Coors profit beats on higher demand for premium brews

(Reuters) - Molson Coors Brewing Co reported a better-than-expected quarterly profit, helped by strong demand for its higher-margin brands, which include Blue Moon Belgian White and Leinenkugel's Summer Shandy, in the United States and Europe.

Feeling ignored, Fed jolts markets to prime them for lift-off

NEW YORK/SAN FRANCISCO/WASHINGTON (Reuters) - When the U.S. Federal Reserve tweaked its policy statement last week and put a December rate rise squarely back in play, it took a calculated gamble that reaching for an old and controversial policy tool would get financial markets' attention.

Stock futures up, a day after Yellen points to December rate hike

(Reuters) - U.S. stock index futures were higher on Thursday, a day after Federal Reserve Chair Janet Yellen indicated that an interest rate hike in December was a "live possibility".

Duke Energy profit rises on strong demand, low fuel costs

(Reuters) - Duke Energy Corp , the largest U.S. power company by generation capacity, reported a 5.5 percent rise in quarterly profit from continuing operations, driven by warmer-than-expected weather and lower fuel costs.

Adidas to intensify marketing drive as U.S. sales rebound

BERLIN (Reuters) - German sportswear company Adidas , trying to muscle into Nike's home territory, plans to increase spending on marketing again after high-profile sponsorship deals and celebrity partnerships helped rekindle U.S. sales.

Don't Be Fooled By The Level Of The Stock Market

Submitted by Bryce Coward via Gavekal Capital blog,

We've had some run in stocks over the last several weeks. With today's rally US stocks are now nearly 13% above their late-August low and are in spitting distance of another all-time high.


This would be great news if only other asset classes and the internal leadership of the stock market confirmed the seemingly outright bullish behavior in the headline level of the stock indexes. Instead, what we have seen since that important August low in stocks is:

Global bond yields at a similar level of lower than in August




The most cyclically inclined commodity prices (copper and lumber) basically at the same level as in August

How One Retailer Is Preparing For The Apocalypse

Zero Hedge first revealed Overstock's contingency plans "in preparation for the next collapse" ten days ago. Today, the strategy outlined by Overstock Chairman Jonathan Johnson has resonated across the Atlantic and this morning as the Financial Times catches up to the story of an "online retailer hoarding gold as crisis defense" in which it calls the retailer a "redoubt of doomsday conservatism" adding its policy to prepare for the loss of central-planning control is "redolent of the small band of US survivalists preparing for the end of civilisation."

The FT reports that Jonathan Johnson, Overstock’s "anti-establishment leader", told the Financial Times it has "stashed away $10m in gold and silver coins as an insurance policy against financial apocalypse" and that it keeps "precious metals outside the banking system so the company could pay employees even if lenders slammed shut in a crisis."

Mr Johnson, who is running to be Utah governor, said Overstock also kept extra freeze-dried food so it had enough to feed each employee and one family member for three months.

“We thought there’s a decent chance that there could be a banking holiday at some point caused by a crisis and it could last for two days or two weeks or who knows how long, and we wanted to be in a position where we cou ...

Frontrunning: November 5

BOE Stays Cautious on Rate-Hike Timing as Inflation Outlook Cut (BBG)

China Enters Bull Market (WSJ)

Britain says Islamic State likely brought down Russian plane (Reuters)

Dollar jumps as markets fix on December rate expectations (Reuters)

Activist Investor Bill Ackman Plays Defense (WSJ)

BOJ Survey Data Reveals Signs of Growing Inequality in Japan (BBG)

UAW Warns of General Motors Strike If Workers Fail to Approve Contract (WSJ)

VW told to rip up governance model as emissions scandal deepens (FT)

German Factory Orders Unexpectedly Decline for Third Month (BBG)

China seeks quantum leap to a new economic model (FT)

Big Banks Lock Horns With Personal-Finance Web Portals (WSJ)

Me ...

Activist Investor Bill Ackman Plays Defense

Activist investor William Ackman, with about $2 billion in losses on Valeant Parmaceuticals, is struggling to salvage his big bet on the drug maker.

Municipal Bonds Shine in Bleak Landscape

Muni bonds are returning about 2% this year, beating corporate bonds and many other supposedly higher-performing asset classes.

5th In A 6 Part Macroeconomic Series: How Did Quantitative Easing Interact With Regional Inequality?

from Liberty Street Economics

-- this post authored by Andreas Fuster

Income, or wealth, inequality is not something that central bankers generally worry about when setting monetary policy, the goals of which are to maintain price stability and promote full employment. Nevertheless, it is important to understand whether and how monetary policy affects inequality, and this topic has recently generated quite a bit of discussion and academic research, with some arguing that the Federal Reserve's expansionary policy of recent years has exacerbated inequality (see, for instance, here or here), while others reach the opposite conclusion (see here or here).

4th In A 6 Part Macroeconomics Series: Trends In Debt Concentration In The United States By Income

from Liberty Street Economics

-- this post authored by Donghoon Lee, Matt Mazewski, Joelle Scally, and Basit Zafar

Household debt in the United States expanded before the Great Recession, contracted afterward, and has been recovering since 2013. But how has the distribution of debt across different income groups evolved over time? Who has been driving the recovery of household debt over the past two years? To date, there has been little work on how borrowing patterns for high- and low-income individuals have changed over time, although one notable exception is Amromin and McGranahan. Here, using the New York Fed Consumer Credit Panel (CCP), a quarterly panel data set based on Equifax credit reports, we shed further light on these questions.

In One Chart: In one chart: What other reports say about the October jobs situation

Ahead of the eagerly awaited October jobs report, there are clues to what’s inside from other reports that have already been released.

Economic Report: Jobless claims match highest level in two months

The number of Americans who applied for unemployment benefits at the end of October rose sharply to match the highest level in two months, perhaps a sign of some softening in the labor market. Initial jobless claims in the period running from Oct. 25 to Oct. 31 shot up by 16,000 to 276,000.

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