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15Sep2016 Pre-Market Commentary: Markets Open Flat After So, So US Data Reporting, Suggesting We May Not Have A Fed Rate Raise This Year

Written by Gary

US stock future indexes pointed to a lower opening SPY - 0.3%) after US data was reported (below), but opened flat and in the green on solid green volume. However, the bears took control and stopped the rise for now.


Here is the current market situation from CNN Money

European markets are mixed. The FTSE 100 is higher by 0.20%, while the DAX is leading the CAC 40 lower. They are down 0.33% and 0.32% respectively.

The first column is what was reported this morning. The second column is what analysts had forecast and the third column is the previous report. Full calendar HERE.

What Is Moving the Markets

Here are the headlines moving the markets.

U.S. retail sales fall more than expected on weak autos

WASHINGTON, (Reuters) - U.S. retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods, pointing to cooling domestic demand that could further diminish expectations of a Federal Reserve interest rate increase next week.

U.S. jobless claims rise less than expected as labor market firms

WASHINGTON, (Reuters) - The number of Americans filing for unemployment benefits rose less than expected last week, pointing to a further tightening n labor market conditions.

Americans blame Washington gridlock for slow economic growth: study

BOSTON (Reuters) - Americans blame political gridlock in Washington for the country's declining economic competitiveness and hold both Democrats and Republicans responsible, a Harvard Business School study released on Wednesday found.

Bayer's Monsanto acquisition to face politically charged scrutiny

WASHINGTON D.C./NEW YORK (Reuters) - As the global agricultural sector races to consolidate, Bayer AG's $66 billion all-cash deal to acquire Monsanto Co will test growing political and consumer unease in the United States and abroad over the future of food production.

Apple says initial quantities of iPhone 7 Plus sold out

SAN FRANCISCO (Reuters) - Initial quantities of the iPhone 7 Plus have sold out globally as Apple Inc prepares to roll out its new gadget in stores, the company said Wednesday.

Shareholder adviser Glass Lewis backs AB InBev takeover of SABMiller

LONDON (Reuters) - Investor advisory firm Glass Lewis has recommended SABMiller shareholders vote in favor of its takeover by Anheuser-Busch InBev , adding to the likelihood of the $100 billion-plus beer mega-merger getting done.

Walmart Canada to extend Visa ban to more stores from October 24

(Reuters) - Walmart Canada will stop accepting Visa Inc cards at its 16 stores in the province of Manitoba starting on Oct. 24, a spokesman said on Wednesday, raising the stakes in a high-profile fee dispute.

Bank of England sticks with rate cut signal despite Brexit bounce

LONDON (Reuters) - The Bank of England said on Thursday it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain's economy was proving less severe than it expected only last month.

Empire Fed Mysteriously Rises Even As All Components Deteriorate

Over the past year we have seen numerous occasions where regional Fed diffusion indexes posted a headline rebound despite all their components deteriorating. Today was one such day, when moments ago the NY Fed released the Empire State Mfg Survey, which "somehow" rose from -4.21 to -1.99 (it still missed expectations of a -1.00 print). We say somehow because the "rise" happened even as every component in the index declined, to wit:



New orders fell to -7.45 vs 1.04

Shipments tumbled to -9.38 from 9.01

Unfilled Orders fell to -11.61 from -9.28

Delivery time fell to -4.12 from -6.25

Inventory fell to -12.5 vs -4.12

Number of employees fell to -14.29 vs -1.03

Work hours fell to -11.61 vs 2.06

Prices received fell to 1.79 from 2.06

There was just one component which rose - the one which should fall, namely prices paid, which rose from 15.46 to 16.96, and since this is the one component which cuts into profits (as prices received declined), one can summarize that effectively every single component in the Empire Fed declined. And yet, the headline index rose.

At least the Empire Fed narrative did not try to spin the situation, admitting that "Business Conditions Remain Weak"

Echoing their August assessment, manufacturing firms in New York State reported a slight decline in business activity in September. The general business conditions index inc ...

Retail Sales Growth Tumbles To 6 Month Lows, Stuck In Recession Territory

Having warned that retail sales could be weak (based on BofA's credit card data), year-over-year growth in retail sales rose just 1.9% (its weakest since March's plunge) and worryingly in historical recession territory. MoM data was disappointing across the entire spectrum with actual contractions versus expectations of gains (Core -0.1% vs +0.3% exp, and Control -0.1% vs +0.4% exp). While clothing and food services saw spending increase, a drop in gasoline spending along with a tumble in 'retailers' down 2.4% MoM and sporting goods weighed the overall index down.

Retail sales less autos fell 0.1% in Aug., est. 0.2% - MISS
Retail sales fell to $456.321b in Aug. vs $457.669b in July - MISS
Retail sales ex-auto dealers, building materials and gasoline stations unchanged in Aug. - MISS
Retail sales 'control group' fell 0.1% m/m in Aug., est +0.4% - MISS

The July bounce is over...

Full breakdown...

This is not what Janet wanted... (or maybe it is)

Charts: Bloomberg

Initial Jobless Claims Confirm Hillbama's "Everything Is Awesome" Meme; But...

Initial jobless claims continue to live in a distorted world of its own... Against expectations of 265k, claims beat with a 260k print - flat to last week and stuck near 42 year lows suggesting we've almost never been better.

Forward-looking expectations of employment in Services and Manufacturing sectors looks bad... and did not end well last time...

Even The Fed's own 'data' disagrees with The Department of Labor...

And finally actual activity refuses to play along with the Department of Labor's guess at initial jobless claims...

So, to summarize, actual activity, Fed data, and business expectations of employment are all deteriorating - as claims hovers at 42 year lows. What's wrong with these pictures?

Trump Heckled In Flint: I Didn't Invite You Here To "Give A Political Speech"

In a continued attempt to reach out to African-American voters, Trump visited Flint, Michigan yesterday to tour contaminated water facilities. After his tour he stopped by the Bethel United Methodist Church where things didn't go quite as planned. After a few opening remarks, Trump began to throw a couple of jabs at Hillary and that's when Reverend Faith Green Timmons stepped in to shut him down:

"Mr. Trump, I invited you here to thank us for what we've done in Flint, not give a political speech."

"OK. That's good. Then I'm going back onto Flint, OK? Flint's pain is a result of so many different failures," Trump said.

According to NBC and CBS, Trump also took the opportunity to slam Ford's recent decision to move all of their small-car production to Mexico.

"It used to be cars were made in Flint and you couldn't drink the water in Mexico. Now, the cars are made in Mexico and you can't drink the water in Flint. That's not good."

"We shouldn't allow it to happen," Trump said during a speech in Michigan, the center of U.S. car production. "They'll make their cars, they'll employ thousands and thousands of people not from this country and they'll sell the cars right through our border. No tax, no nothing, and we'll have nothing but more unemployment in Flint and in Michigan," he said in the speech in Flint.

Trump was also heckled by another woman ...

Snapchat Clone Snow Drifts Into Messaging Mainstream

Korean tech giant Naver could have another hit on its hands, with a Snapchat clone called Snow.

China's Credit Fire Hose Floods Housing Market

The boom in mortgage loans adds to the list of strains tugging at China's fragile—and interconnected—financial system.

Monsanto Deal Offers Cheap Crop Insurance

Skepticism abounds over Bayer's acquisition of seed giant Monsanto. But Monsanto is a risk worth taking, despite antitrust concerns.

Headline Retail Sales Down In August 2016 - But Our Analysis Says Otherwise.

Written by Steven Hansen

Retail sales were down according to US Census headline data - and well under expectations. Our analysis paints a much better picture of retail sales - with the three month rolling averages showing 2.5 % year-over-year growth.

Economic Report: Industrial output weakens in August

Industrial output fell 0.4% in August after two straight gains, the Federal Reserve said Thursday.

Market Snapshot: U.S. stock futures lose steam after data deluge

U.S. stock-market index futures on Thursday pared some of their early gains, following a deluge of mixed bag of economic reports.

Need to Know: The stock meltdown is coming. Here's your investing game plan

Lots of pundits say the market has come too fast, too far and the cooling off must begin. Our call of the day has a game plan for the average investor with a corporate 401(k) and limited options.

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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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