Written by Gary
U.S. stock futures indexes are down 0.8% in early premarket trading, China’s markets gets whacked, SP500 and U.S. dollar at support with Global Markets floundering. First time in five years jobless claims rise while gold surges above key technical level. Markets Are expected to gap down on the opening bell.
Here is the current market situation from CNN Money | |
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What Is Moving the Markets
| Here are the headlines moving the markets. | |
 | 15 August 2015 Initial Unemployment Claims Rolling Average Degrades MarginallyWeekly Initial Unemployment Claims
The market was expecting the weekly initial unemployment claims at 265,000 to 274,000 (consensus 270,000) vs the 277,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 266,000 (reported last week as 266,250) to 271,500. The rolling averages generally have been equal to or under 300,000 since August 2014. |
| Jobless claims up slightly; labor market still improving WASHINGTON, (Reuters) – The number of Americans filing new applications for unemployment benefits unexpectedly rose last week, but the trend remained consistent with solid labor market momentum that could keep the Federal Reserve on track to raise interest rates this year. |
| Gold Surges Above Key Technical Level, Silver Regains Last Week’s LossesGold has filled the gap from the mid-July China crash and broken above its 50-day moving average for the first time since June. Silver is surging once again this morning reoundtripping to last week’s pre-flush highs…as The US Dollar limps lower. Gold breaks above the 50DMA for first time since June…
Recovering all of the flash crash losses…
And Silver roundtrips from last week’s plunge…
Charts: Bloomberg |
| More takeovers seen for small U.S. banks as rates stay low (Reuters) – Consolidation among U.S. banks, particularly capital-squeezed small- and mid-cap lenders, is set to rise in the next year or two due to persistently low interest rates, RBC banking analyst Gerard Cassidy said. |
| Turkey On The Brink As Calls For Martial Law, Civil War Send Lira Plunging AgainFor anyone who might have missed it, Turkey is quickly descending into chaos on all fronts. The lira is putting to new lows against the dollar on a daily basis as confidence suffers from a worsening political crisis which began in June when AKP lost its parliamentary majority for the first time in over a decade throwing President Recep Tayyip Erdogan’s plan to transform the country’s political system into an executive presidency into doubt. Not one to give up easily (especially when it comes to consolidating his power), Erdogan proceeded to launch an ad hoc military offensive against the PKK in an attempt to undermine support for the pro-Kurdish HDP ahead of new elections which, thanks to the willful obstruction of the coalition formation process, are now virtually inevitable. Turkey’s central bank hasn’t helped matters and the lira legged lower on Wednesday after it was made clear that a rate hike was not in the cards until Fed liftoff is official.
Citi has taken a look at the situation and determined that in fact, the lira is the most vulnerable of all EM currencies they track:
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| Valeant to buy ‘female Viagra’ maker Sprout Pharma (Reuters) – Canada’s Valeant Pharmaceuticals International Inc said it would buy privately owned Sprout Pharmaceuticals, whose drug became the first approved treatment this week for low sexual desire in women, for about $1 billion plus milestone payments. |
| Currency Wars Continue As Kazakh Currency Crashes 25% After Peg AbandonedOn Tuesday we remarked on the increasingly perilous plight of yet another country whose economy has come under increased pressure from plunging oil prices and China’s move to devalue the yuan: Kazakhstan. Just one day after allowing the tenge to fall sharply in the interbank market and no longer able to take the pain from falling crude prices, the country moved to a free float for the tenge overnight, causing the currency to plunge by a quarter.
The move is clearly a desperate attempt to preserve export competitiveness in the face of a falling rouble and a devalued yuan. This is the third time the country’s central bank has devalued the currency since 1999 – the last time was in February of 2014. Although central bank governor Kairat Kelimbetov put on a brave face and very rationally explained that “this is not a devaluation, this is a transition to a freely floating rate when the market itself determines a balanced exchange rate on the basis of demand and offer,” it’s quite clear that the situation for the country’s exporters had become dire and bringing the tenge more inline with moves seen in the currencies of China and Russia (Kazakhstan’s top trading partners) was probably long overdue. Here’s Bloomberg:
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| Rail Week Ending 15 August 2015: Continued Deterioration Of Year-over-Year Rolling AveragesEconintersect: Week 32 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. and weekly railcar counts continued in contraction.
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| Frontrunning: August 20Crude prices fall towards $40 on global glut (Reuters) China Central Bank Injects Most Funds Since February as Money Rates Increase (BBG) Divided Fed Puts Yellen on Hot Seat (Hilsenrath) So Long September: Bond Traders Defer Their Date With the Fed (BBG) More Foods Boast Non-GMO Labels—Even Those Without GMO Varieties (WSJ) UN to let Iran inspect alleged nuke work site (AP) IAEA says access to Iran’s Parchin military site meets demands (Reuters) Time to End Quarterly Reports, Law Firm Says (WSJ) ETFs Forced to Get ‘Smart’ Hedging Dollar With Easy Money Gone (BBG) A Family Drama Splits Far Right in France ( |
| Stock futures fall as oil weighs, Fed notes global growth fears (Reuters) – U.S. stock index futures fell sharply on Thursday, a day after minutes from the latest Federal Reserve meeting highlighted concerns over the state of the global economy and as oil prices hit their lowest since 2009. |
| Gold: Best defence in a genuine currency war, says FrisbyGold: Best defence in a genuine currency war, says Frisby Every investment needs a good story if it’s going to fly. “The internet is going to change the world”, drove the dotcom bubble. “They’re not building any more land,” drove buy-to-let. “The Chinese want the things we take for granted — and there are just so many of them,” drove commodities. One of the reasons for gold’s demise is that its story lost its magic. It no longer seemed relevant. I’ve said before that gold needs a new narrative. I didn’t think it would come so quickly. But I think one may be starting to form. The big financial story of last week was China’s repeated devaluation of the yuan. In just about every related article — and in many of the headlines — the phrase ‘currency wars’ has appeared. It’s all over the papers, TV and the internet. Read the full article by Dominic Frisby on MoneyWeek here.
DAILY PRICES Today’s gold prices: USD 1,137.95, EUR 1,019.80 and GBP 7128,54 per ounce. Yesterday, gold finished trading with a gain of 1.34% or $15.00, closing at $1,132.70/oz. Silver rose 2.55% or $0.38, closing at $15.26/oz. … |
| The Evolution Of Workups In The U.S. Treasury Securities Marketby Liberty Street Economics — this post authored by Michael Fleming, Ernst Schaumburg, and Ron Yang Fourth in a five-part series. The market for benchmark U.S. Treasury securities is one of the deepest and most liquid in the world. Although trading in the interdealer market for these securities is over-the-counter, it features a central limit order book (CLOB) similar to that found in exchange-traded instruments, such as equities and futures. A distinctive feature of this market is the “workup” protocol, whereby the execution of a marketable order opens a short time window during which market participants can transact additional volume at the same price.
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| Growth fears hit stocks, oil, emerging markets LONDON (Reuters) – Stocks, oil and emerging market currencies fell on Thursday as fading expectations for an imminent U.S. interest rate hike stoked anxiety about the health of the global economy. |
| Dazed And Confused: Futures Tumble Below 200 DMA, Oil Near $40, Soaring Treasurys Signal Deflationary DelugeIt is unclear what precipitated it (some blamed China concerns, fears of rate hikes, commodity weakness, technical picture deterioration although it’s all just goalseeking guesswork) but overnight S&P futures followed yesterday’s unexpected slide following what were explicitly dovish Fed minutes, and took another sharp leg lower down by almost 20 points, set to open below the 200 DMA again, as the dazed and confused investing world reacts to what both the Treasury and Oil market signal is a deflationary deluge. Indeed, oil is about to trade under $40 while the 10Y Treasury was last seen trading at 2.07%. Incidentally, the last time oil was here in March of 2009, the Fed was about to unleash QE 1. This time, so called experts are debating if the Fed will hike rates in one month or three. Not helping matters was China’s national plunge protection team, after Chinese shares fell over 3% and the Shanghai Composite closed a mere eight points above its 200-day moving average. This happens the same day China’s central bank injected the most funds in open-market operations since February as intervention to prop up the yuan strained the supply of cash and drove a key money-market rate to a four-month high. Ironically the “targeted” liquidity injections actually dampened expectations of further monetary easing. According to Bloomberg, the People’s Bank of China pumped a net 150 billion yuan ($23 billion) into the financial system this week, data compiled by Bloomberg show. That’s the most since before the Chinese New Year holiday, when seasonal demand for cash spikes. The authorities are providing another 170 billion yuan through loans and an auction of deposits. Yuan purchases risk driving borrowing costs higher at a time of slowing economic growth unless the monetary authority releases … |
| U.S. crude prices fall towards $40 on global glut LONDON (Reuters) – U.S. crude oil prices fell to almost $40 a barrel on Thursday, their lowest since the global financial crisis of 2009, as supplies rose in North America and the Middle East, filling stockpiles to record levels. |
| Moving Toward A Geopolitical Marketplaceby STRATFOR — this post authored by Jay Ogilvy This column frames a question to which I do not have the answer. Or think of it as a historical agenda: How can we bring the logic of free market exchange into the domain of geopolitical conflict? Why would we want to do such a thing? It’s not simply a matter of substituting gold for guns, or nonviolent exchange for violent exchange. The question I am posing is not based on some utopian hope for perpetual peace. The distinction I want to focus on is the difference between zero-sum conflict and positive-sum exchange. |
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