02Aug2019 Pre-Market Commentary: Wall Street’s Economic Report Generally Good, DOW Down 85 Points, Payrolls Rise 164K, Trade Deficit Narrows, Wages Increased 3.2%, US Dollar Slips Fractionally

Here is the current market situation from CNN Money

European markets are sharply lower today with shares in France off the most. The CAC 40 is down 2.77% while Germany’s DAX is off 2.57% and London’s FTSE 100 is lower by 1.82%.

Oil prices rebound more than 2% after plunging on Trump’s tariff plan

Oil prices rose more than 2% on Friday, regaining some ground after their biggest falls in years on U.S. President Donald Trump’s threat to impose more tariffs on Chinese imports.

Exxon Mobil profit sinks on weakness in natural gas, chemicals, refining

Exxon Mobil Corp reported a 21% drop in quarterly profit on Friday, hit by weaker natural gas prices, lower refining profits and a loss in its U.S. chemicals business.

Sprint loses fewer-than-expected phone subscribers, shares rise

Sprint Corp on Friday reported fewer-than-expected losses in quarterly net phone subscribers who pay a monthly bill, as the U.S. wireless carrier’s cheaper plans helped it retain customers amid its pending merger with larger rival T-Mobile US .

Trump tariff salvo batters European stocks, sparks bond rally

European stocks posted their biggest drop of 2019 on Friday and German bond yields hit record lows after U.S. President Donald Trump fired his latest trade war salvo at China, jolting markets and sparking a frenzied bid for safe-haven assets.

Ferrari shares fall after it fails to upgrade guidance despite earnings rise

Shares in Ferrari went into reverse on Friday as the Italian luxury carmaker failed to lift its guidance for 2019 despite strong results in the first part of the year.

Fed, trade confusion upending Wall Street investment playbooks

As Federal Reserve Chair Jerome Powell on Wednesday described why the central bank’s interest rate cut should not be seen as the start of a lengthy easing cycle, the U.S. stock market was losing value at a rate of over $25 billion a minute.

Exclusive: Novelis must offer concessions or face EU veto to $2.6 billion Aleris deal – sources

U.S. aluminum maker Novelis [NVLXC.UL] must offer concessions to European Union competition authorities by Aug. 9 to gain approval for its $2.6 billion takeover of aluminum processor Aleris [TXPACA.UL], sources close to the matter said.

Exchange operator Cboe profit beats on options and futures trade

Cboe Global Markets Inc beat analysts’ estimates for quarterly profit on Friday, as strength in the exchange operator’s options and futures business offset a softer trading environment in other areas.

Exclusive: Full restart of Codelco’s Chuquicamata smelter delayed until end of October – sources

(This Aug. 1 story corrects to show that the smelter is ramping up; adds Codelco statement)

Trader Warns: No Matter Where We End Today, It Will Look Ugly

Authored by Richard Breslow via Bloomberg,

There has been a lot of talk recently about intervention. And we certainly need one. Looking at the charts this morning, one word comes to mind — failure. True, traders are still trying to sort their positions out from earlier in the week, so it’s problematic to come to too many this-will-lead-to-that conclusions. But even with the dollar starting the day looking like it suffered another failed breakout, a lot of assets that should welcome this development, like emerging markets, have taken no comfort. This might be a short-term phenomenon, but it merits very close monitoring.

Entire German Curve Drops Below Zero For First Time Ever

Somewhere, Albert Edwards is dancing a jig as the ice age he predicted will grip the world, appears to finally be here.

While global equities are sharply lower today following the end of the US-China trade ceasefire, it’s nothing compared to what is going on in the bond market, where one day after the 10Y US Treasury plunged a whopping 6% to 1.832% – the biggest one day drop since Brexit – to the lowest since the Trump election…

Here Is What Trump’s Mysterious “European Trade Announcement” Will Be About

Global markets are reeling Friday morning after President Trump announced his plan to slap 10% tariffs on the remaining ~$300 billion in Chinese imports, sparking fears that the world’s two largest economies would hunker down for a prolonged and destabilizing trade war. But adding to the market’s anxieties, journalists noticed an entry on President Trump’s itinerary ominously titled “announcement on European trade” slated for 1:45 pm ET.

July Payrolls Preview: Beware The Census Hiring Surge

Now that the Fed is once again extremely sensitive to incoming data – or at least that’s what the market thinks – and especially bad incoming data as today’s disappointing ISM demonstrated, which sent stocks surging on hopes of more rate cuts (at least until Trump’s subsequent tariff shocker), today’s payrolls report is suddenly extremely important for the Fed’s reaction function: a strong beat has the potential to crush stocks and send yields sharply higher, and of course, vice versa. That said, a beat to the relatively modest consensus expectation of 165K is virtually assured due to the wildcard that is census hiring which will be between 10K and 50K, and which the BLS will surely fully milk following political instructions from “above.”

So with that in mind, here is a summary of what consensus expects, courtesy of RanSquawk:

US nonfarm payrolls are seen coming in at 165k in July, a reading which would push the three-month average down to 153k from 171k in June. The jobless rate is seen unchanged at 3.7%, though the Conference Board’s consumer confidence data does signal some potential downside. We have seen only a partial slate of business surveys ahead of the NFP report, and they seem to signal some cooling in labour market momentum.

EXPECTATIONS:

Non-farm Payrolls: Exp. 165k, Prev. 224k.

Unemployment Rate: Exp. 3.7%, Prev. 3.7%. (FOMC currently projects 3.6% unemployment by the end of 2019, and 4.2% in the longer-run).

U6 Unemployment Rate: Prev. 7.2%.

Labour Force Participation: Prev. 62.9%.

Avg. Earnings Y/Y: Exp. 3.1%, Prev. 3.1%;

Avg. Earnings M/M: Exp. +0.2%, Prev. +0.2%.

Avg. Work Week Hours: Exp. 34.4hrs, Prev. 34.4hrs.

Private Payrolls: Exp. 160k, Prev. 191k; Manufacturing Payrolls: Exp. 5k, Prev. 17k; Government Payrolls: Prev. 33k

The Street expects 164k nonfarm p …

A former governor tells why raiding RBI reserves is a bad idea

A former governor tells why raiding RBI reserves is a bad ideaD Subbarao said we should be very wary and careful while determining the value of the excess reserves.

Modi may stall another Budget proposal

Modi may stall another Budget proposalThe government is also looking for ways to ease concerns of foreign portfolio investors.

Here’s what you pay to bail out public banks

Here’s what you pay to bail out public banks It could take years to bring down bad loans and boost bank lending to the 2006/11 boom levels.

Rail Week Ending 27 July 2019: Economic Intuitive Sectors Remain In Contraction

Written by Steven Hansen

Week 30 of 2019 shows same week total rail traffic (from same week one year ago) contracted according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors rolling averages remain in contraction – and marginally improved.

MarketWatch First Take: Tech-spending alarms are ringing amid Trump’s latest China-trade volley

Data storage developer NetApp Inc. has joined a small but growing chorus of companies crying that IT spending is slowing down, due in part to uncertainty associated with President Trump’s trade war with China.

Cannabis Watch: Short sellers are increasing bets that cannabis stocks will fall

Short sellers, or those betting stocks will fall, have steadily increased their exposure to the cannabis sector this year with short interest in the top 20 most shorted stocks climbing 78% to $1.89 billion, according to financial analytics firm S3 Partners.

Economic Report: U.S. trade deficit falls slightly in June amid festering China dispute and softening global economy

The nation’s trade deficit fell slightly in June owing to sizable drop in exports tied to a slowing global economy, reflecting a more challenging environment for the United States. The deficit slid 0.3% to $55.2 billion.