30Jul2015 Pre-Market Commentary: U.S. Futures Tumble After GDP Comes In Higher, Oil And Dollar Steady, Saudis To Cut Oil Output

Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.65% while France’s CAC 40 is up 0.48% and Germany’s DAX is up 0.15%.

U.S. Economy Grew 2.3 Percent in 2nd Quarter

The rebound, after a discouraging first quarter, was largely expected, and continued the slow but steady recovery trajectory of the last six years.

The Energy Layoffs Resume: Shell Fires 6,500, Whiting Cuts 2015 Budget 2 Weeks After Raising It

Yesterday it was US and Italian energy giants Chevron and Saipem which announced a total of over 10,000 new job cuts in the aftermath of oil sliding back under $50 and resuming its downward trend. This is how we framed it: “in Q2, after the price of oil staged a substantial rebound of about 50% from the year to date lows in the $40’s, energy-related layoffs trickled to a halt as corporations hoped the worst is behind them, and as a result would merely bide their time before redeploying their workforce toward exploration and production. Alas, this was not meant to be, and as the events of the last month have shown, oil has resumed its downward slide. And, as expected, so have layoffs.”

Today, we got more confirmation of this when Royal Dutch Shell, still basking in the glow of its proposed $70 billion mega-acquisition of BG Group, announced it would axe 6,500 jobs this year and step up spending cuts, responding to an extended period of lower oil prices which contributed to a 37 percent drop in the oil and gas group’s second-quarter profits.

In addition, the Anglo-Dutch company is also increasing asset disposals to $50 billion between 2014 and 2018 as it pushes ahead with its proposed $70 billion acquisition of BG Group.

Reuters reports: “We have to be resilient in a world where oil prices remain low for some time, whilst keeping an eye on recovery,” Chief Executive Officer Ben van Beurden said.

Shell said it anticipated 6,500 staff and direct contractor reductions globally in 2015 from a total of nearly 100,000 employees, as it grapples with a halving in oil prices to around $55 per barrel in a year.

Like rivals BP, Statoil and Total it announced reducti …

Procter & Gamble sales fall for sixth straight quarter

(Reuters) – Procter & Gamble Co , the world’s largest consumer products maker, reported its sixth straight fall in quarterly sales, as the stronger dollar continued to weigh on the value of sales from overseas markets.

Conoco results beat estimates, cuts capex amid low oil price

(Reuters) – ConocoPhillips , the largest U.S. independent oil and gas company, reported quarterly results that beat analysts’ expectations Thursday and said it would cut capital expenditure as low crude oil prices persist.

Procter & Gamble Sales Fall for Sixth Straight Quarter

Procter & Gamble Co., the world’s largest consumer products maker, said the stronger dollar continued to weigh on the value of its sales from overseas markets.

Frontrunning: July 30

Second-quarter GDP seen rebounding on consumer spending, housing (Reuters)

China Stocks Fall as Traders Puzzle Over Sudden Late-Day Swings (BBG)

Dents and Scratches May Hold Crash Clues for MH370 Investigators (BBG)

European ‘alliance of national liberation fronts’ emerges to avenge Greek defeat (Telegraph)

Thomas Cook warns on earnings over Greece (MW)

Largest Greek toy seller Jumbo warns of hit from capital controls (Kathimerini)

Russia vetoes bid to set up tribunal for downed flight MH17 (Reuters)

Chevron and Exxon Get the Plaudits, but Some Smaller Drillers Faring Well (WSJ)

Schäuble outlines plan to limit European Commission powers (FT)

UBS …

Blackstone sells stake in Indian auto parts maker to consortium

(Reuters) – A fund run by U.S. private equity firm Blackstone Group has sold its 97.9 percent stake in Indian auto components maker Agile Electric Sub Assembly to a group of buyers, including Japan’s Igarashi Electric Works, for an undisclosed amount.

Royal Dutch Shell Cuts Its Way to a New Look

The U.K. oil and gas major is chopping jobs, costs and investment. That looks like as much an image makeover, as a financial one.

Gartman Is No Longer Bearish

In a world in which not even the Fed has any clue how to read “some” economic data while ignoring others ahead of what is setting up as the most important rate hike, a “jarring” one in the words of Lloyd Blankfein, there is one certain indicator left: Dennis Gartman. Here is the latest.

We turned openly, but moderately, bearish of shares late last week and for a day or two we appeared to have been wise in our decision. Clearly that wisdom has waned rather materially in the course of the last two trading sessions and following the Fed’s non-decision yesterday we found ourselves covering in the calls we had written against our “tanker” shares as well as covering in some of the derivatives we had had in place, thus taking our net position in our retirement funds from one that was modestly net bearish to one that is nearly net market neutral.

Finally, we find it interesting how suddenly the market has fallen out of hatred for the simple markets such as steel, copper, railroads, shipping et al and has fallen into veritable “lust” for those same industries. Here at TGL we are always far more amenable to owning these simple companies than we are to owning Big Pharma and high technology for we can count the number of rail cars moving; we can count the number of containers aboard ships; we can count mining sums and steel smelted et al. These simple companies endemic to global economic growth are and have been and always shall be our favorites. Give us millions of tonnes of cold, rolled steel any time over “eyeball counts,” “gigs” and the like.

We, on the other hand, will settle for the daily flip-flop.

Rail Week Ending 25 July 2015: Rail Data Still Soft But Marginally Better Than Previous Week

Econintersect: Week 29 of 2015 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. Intermodal traffic expanded year-over-year, which accounts for approximately half of movements – but weekly railcar counts continued in contraction.

Deutsche Bank Beats Forecasts

Deutsche Bank reported a sharp rise in second-quarter profit driven by unexpectedly strong investment banking revenues and lower overall taxes, but warned challenges remain.

Greek PM suggests party referendum to overcome split in Syriza

ATHENS (Reuters) – Greek Prime Minister Alexis Tsipras on Thursday called for his Syriza party to hold an emergency congress next month to overcome divisions but said a snap party referendum would be acceptable if leftist dissenters wanted a quicker solution.

Chinese Stocks Tumble In Close Of Trading “Causing Panic”, US GDP To Be Revised Higher On Seasonal Adjustments

We start off the overnight wrap up with the usual place, China, where in a mirror image of Wednesday’s action, stocks once again started off uneventful, then gradually rose in the afternoon session and meandered near unchanged territory until the last half hour, when out of the blue they tumbled to close near the day’s low, some 2.2% below yesterday’s closing level.

BREAKING: Shanghai benchmark index mysteriously sinking in last 5 mins of trading, down 2.2% and causing panic again pic.twitter.com/YAcDVSGXrW

— George Chen (@george_chen) July 30, 2015

Bloomberg adds that drugmakers and technology companies led declines. A gauge of 100-day price-swings rose to the highest level in six years. Trading volumes in Shanghai have halved from their peaks in June, while margin debt, which had fueled a world-beating rally for China’s stocks, declined to a four-month low.

All 10 industries in the CSI 300 slid more than 2 percent, led by a 4.1 percent slump in the gauge of health-care companies. Lepu Medical Technology Co. plunged 8.3 percent, while Hualan Biological Engineering Inc. slid 5.2 percent. The drug sub-index has been the best performer over the past three month, falling 5.6 percent versus the 20 percent slump for the CSI 300.

Volatility has increased this week as Monday’s 8.5 percent plunge by the benchmark gauge shredded a calm induced by unprecedented state intervention.

“There were no major macro developments,” said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. “

Health insurer Cigna’s profit rises as it adds more members

(Reuters) – Health insurer Cigna Corp, which agreed to be bought by Anthem Inc for $47 billion this month, reported a 2.6 percent rise in quarterly profit as it added more members in its commercial and government businesses.

Shell to axe 6,500 jobs and cut spending to cope with lower oil prices

LONDON (Reuters) – Royal Dutch Shell is to axe 6,500 jobs this year and step up spending cuts, responding to an extended period of lower oil prices which contributed to a 37 percent drop in the oil and gas group’s second-quarter profits.

Failed FT bid shows Axel Springer caught between tradition and ambition

FRANKFURT/BERLIN (Reuters) – Axel Springer’s failure to clinch a deal to buy the Financial Times lengthens a line of setbacks in a decade-old quest by Germany’s biggest news publisher to expand abroad.