02Aug2016 Pre-Market Commentary: US Futures Down Fractionally, WTI Crude Prices In Mid 40 Handle, Gold Edging Up And The US Dollar Sinking Lower

Here is the current market situation from CNN Money

European markets are broadly lower today with shares in France off the most. The CAC 40 is down 1.50% while Germany’s DAX is off 1.27% and London’s FTSE 100 is lower by 0.37%.

Pfizer’s revenue, profit edge past estimates

(Reuters) – Pfizer Inc reported better-than-expected quarterly revenue and profit, driven by sales of newer drugs and the acquisition of hospital products company Hospira.

Futures lower ahead of economic data

(Reuters) – U.S. stock index futures were slightly lower ahead of a set of economic data, including a report on consumer spending, and as investors assessed earnings from major companies.

Fed’s Kaplan urges patience in raising rates, points to global risks

(Reuters) – A raft of global risks that could adversely affect the United States remain on the horizon and require close monitoring, Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday.

China regulator says Didi, Uber deal will need Mofcom approval

BEIJING (Reuters) – A merger between Chinese ride-hailing firm Didi Chuxing and the China unit of U.S. rival Uber could face its first hiccup after China’s commerce ministry (Mofcom) said on Tuesday it had not received a necessary application to allow the deal to go ahead.

Oil takes breather from losses but oversupply concerns remain

LONDON (Reuters) – Oil edged higher on Tuesday after falling by up to 10 percent in just one week, but investors remained concerned about oversupply weighing on prices.

Buffett rebukes Trump, questions his business skill

OMAHA, Neb. (Reuters) – Billionaire investor Warren Buffett on Monday campaigned alongside U.S. Democratic presidential candidate Hillary Clinton at a rowdy rally in his home state of Nebraska, where he challenged Republican Donald Trump to release his tax returns and questioned Trump’s business acumen.

German state of Bavaria to sue VW over emissions scandal

BERLIN (Reuters) – Germany’s state of Bavaria will sue Volkswagen for damages caused by the diesel emissions scandal, the state’s finance ministry said on Tuesday, adding to the carmaker’s litigation risks.

Emerson Electric to sell businesses for $5.2 billion

(Reuters) – Emerson Electric Co , a maker of factory automation equipment, said it would sell two units for a total of $5.2 billion as the company focuses on its high-growth businesses.

Carlyle could make a pair of $2 billion acquisitions in Japan: executive

TOKYO (Reuters) – Private equity firm Carlyle Group said it could make a pair of acquisitions in Japan worth $2 billion apiece, a strategic departure from a previous focus on smaller deals as big Japanese firms are gearing up for spinoffs of larger assets.

How And When Does This Mess End?

Submitted by Michael Shedlock via MishTalk.com,

A concerned reader wants to know if there are any precedents for the monetary printing we see today, and also when and how this all ends.

Hello Mish,

I wish to get your opinion as to how, or the possible sequence of end games to this bubble economy.

The Fed, ECB, and BoJ all print trillions of $$ to keep bubble inflated. Are there any historical times that match we have seen here?

Are there any measurements that would trigger an avalanche of storms in stock market and economy?

I just cannot believe this bubble will keep going perpetually.

Sean

What Cannot Go On Won’t

What cannot go on won’t, but that’s about all anyone can say at the moment.

There are no precedents for the trio of negative interest rates and massive amounts of QE by numerous countries simultaneously in a clear game of competitive currency devaluations.

Even if there was a precedent, there would not be any guarantees things would play out the same.

End Game Speculation

We are all speculating how this ends. No one can tell you because no one knows.

There are too many variables in play.

Does Japan or China start the mother of all currency wars?

Does Trump start a global trade war? Hillary?

Does the US get drawn into a China-Japan war over rocks in the South China Sea?

Will the 5-Star movement win in the next Italian election, then take Italy out of the eurozone?

Why Japan’s “Massive” ¥28 Trillion Fiscal Stimulus Plan Was A Disappointment

Last week, when details of Japan’s “massive” JPY28 trillion stimulus plan emerged, we pointed out the “minor” snag that assured the plan would be a disappointment: only about JPY7 trillion of this amount would be in the form of new spending. Overnight, Japan finally revealed the full plan, and as expected it was met with significant disappointment by the market, which sent the Yen soaring to new multi-week highs, with the USDJPY tumbling under 102 which, together with a very poorly received 10Y auction, sent Japanese bond yields surging.

So what was in the plan?

First the good news: as the FT writes, “Shinzo Abe has put Japan at the forefront of a global shift away from austerity and back towards looser fiscal policy as he launched a new ¥4.6tn ($45bn) stimulus to boost a struggling Japanese economy.”

However, as previewed here last week, while Abe proclaimed a total package of ¥28.1tn, the actual new government spending is ¥6.2tn, of which ¥4.6tn — 0.9 per cent of gross domestic product — will fall in the current fiscal year. The package includes ¥2.5tn in welfare spending, ¥1.7tn for infrastructure, ¥0.6tn for small and medium-sized businesses hit by “uncertainty due to Brexit”, and ¥2.7tn for reconstruction after an earthquake on the southern island of Kyushu earlier this year.

The Japan Ministry of Finance released the following breakdown of key stimulus component:

Silver Kangaroo Coins – Sales Surge To Over 10 Million

Silver kangaroo coins have seen sales surge to over 10 million coins which is double the expected demand for the year.

Silver Kangaroo Coins 1 oz (2016)

Introduced to the market less than 11 months ago in September 2015 at a launch attended by GoldCore, sales of the new release Perth Mint’s 2016 Australian Kangaroo 1 ounce silver bullion coin were anticipated to reach 5 million coins in their introductory first year. Yet sales of the silver coins have already surged to a whopping 10 million coins.

Commenting on the new silver coin’s worldwide success, the CEO of the Perth Mint, Richard Hayes said:

”Now that we can better gauge the popularity of the release, we predict sale …

Frontrunning: August 2

European shares hit two-week lows, yen rises as Japan backs stimulus (Reuters)

Australia Rejoins Global Disinflation Fight With Record Low Rate (BBG)

Japan Cabinet Approves $274 Billion Stimulus Package (WSJ)

Yen Surges to Three-Week High as Japan Stimulus Underwhelms (BBG)

Warren Buffett Takes On Donald Trump at Hillary Clinton Rally in Nebraska (WSJ)

Trump campaign asks Capitol Hill to back him in Khan controversy (Reuters)

Government Spending Makes a Comeback While Austerity Starts to Fade (BBG)

Rio’s Olympics Woes Sour IOC on Developing World as Games Site (WSJ)

Overseas Yield Hunters Bag Record Share of U.S. Corporate Debt (BBG)

Turkish government has taken over military factories, shipyards, PM says (Reuters)

China regulator …

Uber in China: Why Foreigners Never Win in Tech

Ride-hailing service Uber was smart to bolt China while it could still get a ride out of town.

Japanese Banks Show Glimmer of False Hope

Japanese banks reported strong trading income, generated by selling down a dwindling portfolio of government bonds. This won’t last.

Ghost of Glass-Steagall Returns to Haunt Bankers

Shareholders wouldn’t likely benefit from the forced breakup of any of the major banks.

Leading Index Review: June 2016 Philly Fed Leading Index Forecasts Insignificant Improvement In Rate of Growth

Written by Steven Hansen

This post is a review of all major leading indicators follows – and no leading index is particularily strong. A summary of the indices are at the end of this post.

Economic Report: Consumer spending rises 0.4% in June, stays on hot streak

Consumers boosted spending by 0.4% in June — the third straight strong increase — in a good sign for the economy. But they’ve also been saving less to fund their purchases.

The Wall Street Journal: Edgewell swings to profit, but misses expectations

Edgewell Personal Care’s profits rose but the company missed earnings estimates.

Didi’s acquisition of UberChina has brought together five ride-hailing rivals

Didi Chuxing’s takeover of Uber’s China operations has temporarily pushed five dominant ride-hailing companies together.