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R.T.M. ~ Frontrunning ~ 33rd Ed., Vol.2 ~ August 15th - 19th

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#1
Global Stocks Rise, US Futures Near All Time Highs As Flood Into Emerging Markets Continues


by Tyler Durden
Aug 15, 2016 6:47 AM


European shares advanced, with gains in automakers
helping Germany’s benchmark DAX Index turn positive for the year for
the first time. Stocks rose around the world, led by emerging-markets, as oil climbed further after its best week since April and traders pushed back bets on higher U.S. interest rates. S&P futures advance and Asian stocks little changed as rising oil prices bolstered investor sentiment. That said, volumes are even more lethargic than usual as peak vacation season hits, and the volume for the Stoxx 600 is 70% below average with much of Europe on official holiday due to Assumption day.

While Developed Markets have been sleepy, the MSCI Emerging Markets Index climbed to the highest level in more than a year, with Chinese equities rallying the most since May on speculation of more property takeovers. The MSCI emerging markets gauge rose 0.4% at 10:24 a.m. in London, gaining for an eighth day to the highest since July 2015. The ruble strengthened as oil extended gains on speculation that producers will revive talks to stabilize prices. European shares rose modestly, pushing Germany's DAX into the green YTD for the year for the first time. Helping EMs, the Bloomberg Dollar Spot Index declined for a second day.



Continued expectations of easy monetary policies, meant that global equities are trading near a one-year high as evidence of uneven growth in the world’s biggest economies fuels optimism that central banks will come to the rescue by way of additional stimulus and looser monetary policy. The probability that the Federal Reserve will increase interest rates this year eased to 42% in the futures market on Friday following the release of the disappointing U.S. retail sales figures, from 49% a day earlier.

“Interest rates will stay low and the dollar should be quite stable,” said Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Helsinki. “That is supportive for emerging-market currencies. The oil price recovery is supportive for sentiment too.”

Oil prices rebounded in early trading, forcing more shorts to cover after comments by the Russian Energy Minister Novak who stated that Russia are consulting with Saudi Arabia, other countries to achieve oil market stability. However, the initial euphoria has fizzled and oil was largely unchanged at last check.

Among other notable overnight movers, in addition to the ongoing strength in EMs indices, now up for an 8th consecutive day, China's Shanghai Composite jumped 2.4% as a measure of real estate companies had its steepest two-day rally in almost a year after stake purchases by China Evergrande Group fueled optimism of more mergers. The Stoxx Europe 600 Index added 0.1%, with volume 70 percent lower than the 30-day average for the time of day.

The DAX Index rose as much as 0.8%. Volkswagen added 1.4 percent, helping automakers to a rebound from Friday’s decline to post the best performance of the 19 industry groups on the Stoxx 600. Statoil ASA was among the best-performing oil stocks as crude extended its advance above $44 a barrel. Glencore Plc dragged raw material producers lower. Hennes & Mauritz AB advanced 1.9 percent after reporting a better-than-expected 10 percent increase in July sales.

S&P 500 Index futures advanced 0.2%, after U.S. equities slipped from their highs on Friday following disappointing retail sales and consumer confidence data. Later today, the latest NY Fed "Empire Manufacturing" report is expected to rise modestly by 2, after last month's 0.55 print.

Market Snapshot
  • S&P 500 futures up 0.2% to 2184
  • Stoxx 600 up 0.2% to 347
  • FTSE 100 up 0.2% to 6929
  • DAX up 0.3% to 10742
  • German 10Yr yieldunchanged at -0.11%
  • Italian 10Yr yield down less than 1bp to 1.04%
  • Spanish 10Yr yield down less than 1bp to 0.92%
  • S&P GSCI Index up 0.3% to 354.3
  • MSCI Asia Pacific down less than 0.1% to 140
  • Nikkei 225 down 0.3% to 16870
  • Hang Seng up 0.7% to 22933
  • Shanghai Composite up 2.4% to 3125
  • S&P/ASX 200 up 0.2% to 5540
  • US 10-yr yield down 1bp to 1.5%
  • Dollar Index down 0.08% to 95.65
  • WTI Crude futures up 1.3% to $45.08
  • Brent Futures up 1.1% to $47.51
  • Gold spot up 0.4% to $1,342
  • Silver spot up 0.8% to $19.87
Top Global Headline News
  • Here comes the Brexit-era British economy in hard numbers; inflation, retail sales, jobs may show how vote impacted U.K.
    • Londoners cut house prices to lure buyers in slowing market
    • British millennials are ‘collateral damage’ as pension gap grows; younger workers will have to save more or work for longer
    • Hedge funds make record bearish pound bets on Brexit pessimism
  • Loonie breaks from oil as bears shift focus to economic woes
  • Yuan tumbles most in six weeks as data reignite economy concerns
  • Honeywell to Buy JDA Software for $3 Billion, WSJ Says; The transaction could be announced as soon as Monday
  • Entertainment One Gains as KKR Weighs Bid to Top ITV’s Proposal; KKR emerged as a potential bidder for the film and television distributor, which rejected a proposal by broadcaster ITV Plc last week.
  • Noble Group’s Liquidity Crunch to Be ‘Temporary,’ Fitch Says: The demphasis on scale to remain until NAES sale, agency says. So-called liquidity ratio seen rising back above level of 1
  • AngloGold Says Dividends May Return Next Year as Cash Flow Rises: Bullion miner’s board will debate new dividend policy. First-half cash flow tripled to $108 million on higher prices
  • Treasuries Fall Behind Company Debt as Pimco Pursues Credit: Corporate bond spread over Treasuries is smallest in a year. Pimco’s Kiesel sees significant opportunity in corporate debt
  • World’s Biggest Shipping Firm Warns Against U.S. Protectionism: Maersk, a Danish conglomerate that owns the world’s largest container shipping company, is voicing concern as a potential shift in U.S. policy threatens to reduce global trade.
* * *

Looking at regional markets, we start in Asia, where sentiment was lifted by the upside in WTI and Brent crude futures with the latter making a break above USD 47.00/bbl, following comments by Russia that it may join Saudi Arabia is limiting production, although the bounce promptly faded shortly after. The Nikkei 225 (-0.3%) was the notable laggard in the wake of the first look at the soft Japanese Q2 GDP figures. ASX 200 (+0.2%) had been weighed on by banking heavyweight NAB following their earnings, however losses were later pared amid the rise in oil prices. Shanghai Comp (+2.4%) and Hang Seng (+0.2%) traded higher amid reports that the Shenzhen-HK stock link could be announced as soon as next week. JGB's continued to extend on losses despite the soft Japanese GDP readings, with some attributing the weakness to Fridays comments where Japan Post announced that they have reduced their JGB holdings again and may invest around half of their JGB redemptions in foreign bonds.

Top Asian News:
  • The Tokyo Whale’s Unstoppable Rise to Shareholder No. 1 in Japan: BOJ set to become top owner of 55 cos. in the Nikkei 225
  • Japan Economy Grew Less Than Expected as Business Spending Fell: 2Q GDP rises annualized 0.2% vs est. +0.7%
  • Singapore Home Sales at Highest in a Year as Prices Drop: Developers sold 1,091 units last month versus 536 in June
  • Wanda Commercial Investors Said to Pass $4.4 Billion Buyout: Decision paves way for Hong Kong’s biggest privatization deal
  • WeChat Coming Soon at 35,000 Feet as China Eases Phone Rules: Standards by early 2017 may allow mobile phone use on planes
In a very quiet morning European equities have traded higher, with volumes very thin due to Assumption day. In major indices, the DAX (+0.3%) has moved into positive territory for the year for the first time, with healthcare and energy names outperforming throughout Europe, while materials remain the laggard. In fixed income market, today sees no major supply and amid the light newsflow Bunds have been trading flat throughout the morning, while today saw 10 year Gilt yields continue their decline to reach 0.50% for the first time, a total fall of 88bps since the Brexit vote just under 2 months ago. Also of note, today we shall be looking out for the BoE's 3-7year Gilt purchase, which could garner particular focus given that last week saw the BoE fail to purchase the full allotment.

Top European News:
  • William Hill Rejects Increased Offer From Suitors 888, Rank: Bidders improve stock element of proposal for U.K. bookmaker. William Hill shares decline as much as 1.7% in London
  • VW Gets German Regulator’s Approval to Fix 460,000 Diesel Autos: Approval includes models of Volkswagen Polo, Seat Ibiza.
In FX, the dollar weakened against most of its major peers amid receding chances of a Fed rate increase this year. The greenback fell 0.4 percent against the yen. China’s yuan dropped 0.12 percent to 6.6408 against the dollar, according to prices from the China Foreign Exchange Trade System. China’s broadest measure of new credit grew the least in two years in July, a report showed on Friday, after data indicated industrial production and investments also weakened. Sterling reached a one-month low Monday before reports on inflation, retail sales and unemployment benefit claims for July, which will provide more detail on how the economy is faring after the June 23 Brexit referendum. Hedge funds were the most bearish on the pound on record in the week ended Aug. 9, after the Bank of England cut interest rates and boosted its stimulus plan the previous week. The pound fell to as low as $1.2901 on Monday, the weakest level since July 11. Russia’s ruble led gains among the world’s 32 major currencies, climbing 0.7 percent versus the dollar. The Mexican peso advanced 0.6 percent, and South Africa’s rand 0.4 percent. Thailand’s baht climbed 0.6 percent after a report showed the economy grew a more-than-estimated 3.5 percent in the second quarter.

In commodities, both WTI and Brent crude futures enter the North American crossover in positive territory, albeit off best levels. Initial upside for prices emanated from comments by the Russian Energy Minister Novak who stated that Russia are consulting with Saudi Arabia, other countries to achieve oil market stability. With newsflow otherwise relatively light, prices have also been tracking some of the fluctuations seen in the USD-index as participants await any further commentary from OPEC/non-OPEC producers on what to expect next month. Elsewhere, precious metals markets have seen a particularly subdued session overnight with silver remaining below USD 20/oz. Gold rose for the first time in three days as the dollar traded near its lowest level since June, boosting demand for a haven. Bullion for immediate delivery rose 0.3 percent to $1,339.97 an ounce. In base metals, copper prices in London printed a one-month low as demand concerns continue to hamper prices with price action otherwise relatively contained.

It is a quiet session in US economic data, with just the NY Fed Empire manufacturing survey (+2.00 expected; +0.55 previous) and NAHB housing market index (60 expected; 59 previous) for August to watch.

* * *

Bulletin Headline Summary from Bloomberg and RanSquawk
  • European equities enter the North American crossover in positive territory alongside modest upside in energy prices
  • FX markets continue to remain rangebound with newsflow once again light and Europe celebrating Assumption Day Holiday
  • Looking ahead, the main highlight on the calendar is the NY Empire State Manufacturing Index at 1330BST
  • Treasuries mostly steady in overnight trading, global equities rally to near one-year highs while WTI crude near $45/barrel amid Saudi stabilization rhetoric.
  • Global markets may be muted due to Assumption Day
  • Japan’s economy grew less than forecast in the three months through June 30 as business spending contracted for a second-straight quarter and exporters struggled with the resurgent yen
  • In a sign of how worried it is about Japan’s economy, the International Monetary Fund is urging the country to resurrect a radical strategy once employed by former U.S. presidents Nixon, Ford and Carter -- only in reverse
  • The European Union is considering adding to protections for banks’ riskiest debt securities by requiring that lenders pay coupons on such bonds before stock dividends and staff bonuses
  • Speculators are the most bearish on the pound since records began as they await data that will give the clearest picture yet of the effects of Britain’s decision to leave the European Union
  • Taliban militants captured a key district about 100 miles north of Afghanistan’s capital, which itself was hit by a bombing on Monday, a blow to the government in Kabul that’s coming under further pressure from a renewed surge in fighting
US Event Calendar
  • 8:30am: Empire Manufacturing, Aug., est. 2.00 (prior 0.55)
  • 10:00am: NAHB Housing Market Index, Aug., est. 60 (prior 59)
  • 4:00pm: Total Net TIC Flows, June (prior -$11b); Net Long-term TIC Flows, June (prior $41.1b)
DB's Jim Reid completes the overnight recap

British, this week will be where we get our first major glimpse of hard post-Brexit data following a raft of weak sentiment surveys released so far. First up is July inflation (CPI and PPI) tomorrow and although it might be too early to see too much of an impact of a 12% trade weighted decline in sterling since the referendum it'll be interesting if we get a few clues as to higher inflation ahead. I suppose the Euro and Yen have had big bouts of depreciation in the last couple of years without lasting impacts on inflation but the UK imports more relatively. It's also interesting that gilts have been one of the best performing assets since the referendum (50 years up over 30% and well over 50% YTD) even as inflation forecasts have risen. That's financial repression for you. Over the rest of the week the UK highlights are July unemployment (Wednesday), retail sales (Thursday) and the public finance data (Friday). The latter being interesting as we edge closer to the Autumn statement where looser fiscal policy is expected.

Staying with data, disappointments in the US on Friday halted the recent rally in equity markets. Over in Europe the STOXX (-0.13%) and DAX (-0.27%) slipped from their post-Brexit highs while the FTSE (+0.02%) was largely flat. US markets also saw the S&P 500 (-0.08%) dip from all-time highs in the face of broadly weak data (discussed later). On the whole the week did see the European markets gain with the STOXX up +1.38% while the S&P see-sawed to essentially end the week flat.

European credit saw iTraxx Main largely unchanged on the day and the week as a whole, while Crossover tightened by -3bps on the day and by nearly -9bps on the week. US CDX indices were fairly static on the day and pretty much flat on the week.

Soft data appeared to impact rates markets the most as German 10Y and US 10Y yields dropped by -2bps and -5bps respectively on the day, falling by -4bps and -8bps on the week after the post payrolls spike the Friday before. UK yields continued to drop to fresh new lows, with 10Y yields dropping by -2bps on the day and -15bps on the week. UK 30Y yields however rose by +2bps from their all time lows, bringing their cumulative drop to about -25bps on the week.
Asian stocks are mostly higher this morning with the Nikkei (-0.3%) an exception after Japan GDP came in below expectations (+0.2% vs +0.7% annualised QoQ). Chinese stocks climbed to a seven-month high (up 2-3% across the board) with activity high as property developers saw M&A hopes and reports that the delayed exchange link with Hong Kong will be announced shortly. There is also talk that weak new credit numbers late on Friday, which rounded off a soft monthly data dump from earlier in the day, increases the likelihood of more stimulus before YE. Oil is up +0.75% overnight after climbing +6.4% last week as hope that a production freeze might be possible next month at a side meeting at the international energy summit in Algeria.

Digging into the data on Friday now. The US saw a busy session of broadly weak data reinforcing the tepid growth story. July retail sales numbers disappointed (0.0% mom vs. +0.4% expected), although June’s numbers were revised higher (+0.8% mom vs. +0.6% before revisions). Auto sales helped support the headline number as ex-auto sales contracted by -0.3% mom (vs. +0.1% expected). This slowdown in consumer spending is certainly concerning given that it was the primary driver of US growth in the past quarter. Producer inflation also unexpectedly fell into deflationary territory in July (-0.4% mom vs. +0.1% expected; +0.5% previous) with the biggest drop in the index since last September. US business inventories for June also clocked in marginally above expectations (+0.2% mom vs. +0.1% expected; +0.2% previous) as the inventory to sales ratio remains elevated. The UMichigan consumer sentiment indicator for August picked up but less than forecast (90.4 vs. 91.5 expected; 90.0 previous) as the current economic conditions index declined to a five month low of 106.1 (vs. 109.5 expected; 109 previous). Inflation expectations for the next year also declined to 2.5% (vs. 2.7% previous).

Earlier in Europe we saw some preliminary Q2 GDP numbers, with Germany slowing but still beating expectations (+0.4% QoQ vs. +0.2% expected; +0.7% previous) while Italy unexpectedly stagnated (0.0% QoQ vs. +0.2% expected; +0.3% previous). Eurozone growth was in line with expectations (+0.3% QoQ vs. +0.3% expected; +0.3% previous). The final July CPI numbers for Germany (+0.4% mom vs. +0.4% expected) and Spain (-1.3% mom vs. -1.3% expected) held no surprises. Eurozone industrial production surprised on the upside in June (+0.6% mom vs. +0.5% expected) after growth rebounded back into positive territory (-1.2% previous).

Taking a look now at the week ahead. It’s a quiet start today with nothing notable out of Europe and just the NY Fed Empire manufacturing survey (+2.00 expected; +0.55 previous) and NAHB housing market index (60 expected; 59 previous) for August to watch in the US. Tuesday will see nothing significant out of Asia, but Europe is busier with the aforementioned UK inflation data dump for July and the German ZEW survey report for August due. Over in the US we will see housing starts, industrial production and CPI data for July. Wednesday brings us labour data for the UK in the form of jobless claims, earnings and unemployment numbers. There’s no data out of the US but the Fed will release the minutes for the July FOMC meeting. Thursday kicks off in Asia with trade data out of Japan. Over in Europe we will see July retail sales data out of the UK and July CPI numbers for the Eurozone. The US will see more jobless claims numbers for the second week of August, as well as the Philadelphia Fed Business Outlook for August. It’s a quiet end to the week, as Friday opens in Japan with the June print for the All Industry Activity Index due. Over in Europe we will see the July PPI print for Germany while there is no data due in the US.

http://www.zerohedge.com/news/2016-...l-time-highs-flood-emerging-markets-continues
 

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#2
Frontrunning: August 15


by Tyler Durden
Aug 15, 2016 7:34 AM
  • China shares hit seven-month high; world yields keep falling (Reuters)
  • Dollar pinned down by easing Fed rate hike expectations (Reuters)
  • Russia says oil market talks with Saudi developing (Reuters)
  • Secret Ledger in Ukraine Lists Cash for Donald Trump’s Campaign Chief (NYT)
  • The No-Pivot Election: Clinton and Trump Make No Policy Concessions (BBG)
  • Democrats Brace for More Leaks From Hackers (WSJ)
  • Huma Abedin’s Overlapping Jobs Renew Focus on Clinton Conflicts (BBG)
  • Search at New York's JFK airport finds no signs of gunfire (Reuters)
  • Banks’ CoCo Bond Payouts Gain Greater Protection in EU Proposals (BBG)
  • One person shot, officer injured in second night of Milwaukee protests (Reuters)
  • Prices of UK homes for sale see biggest fall in 9 months in August (Reuters)
  • In Bangladesh Cyberheist, Strange Requests, Odd Misspellings and Little Scrutiny by Fed (WSJ)
  • Give us EU visa freedom in October or abandon migrant deal, Turkey says (Reuters)
  • Saudi King Orders One Month Pay to Front Line Personnel in Yemen (BBG)
  • Hillary Clinton’s Free College-Tuition Plan Coming Up Short on Specifics (WSJ)
  • This Basically Anonymous Fund Manager Oversees $800 Billion (BBG)
  • Reward Offered in NYC Imam Slaying as Families Seek Answers (BBG)
  • One wounded in Cologne attack; no sign of terrorism (Reuters)
  • Mexico’s Richest Man Wants a Three-Day Workweek (BBG)

Overnight Media Digest

WSJ

- Two websites whose operators are believed to have ties to the Russian government now serve as portals for leaking sensitive information about the Democratic Party and its supporters. http://on.wsj.com/2bw1cut

- Wisconsin Governor Scott Walker declared a state of emergency in Milwaukee on Sunday and activated the state's National Guard, a day after violence erupted in the city spurred by the fatal police shooting of an armed man following a traffic stop. http://on.wsj.com/2bw2ZQ7

- Google parent Alphabet Inc is rethinking its high-speed internet business after initial rollouts proved more expensive and time consuming than anticipated, a stark contrast to the fanfare that greeted its launch six years ago. http://on.wsj.com/2bhBuW8

- Private-equity firm TPG has agreed to buy cable-television providers RCN and Grande Communications for about $2.25 billion including debt. http://on.wsj.com/2bwkU9x


FT

- A consortium led by 8 Miles has bought a minority stake in Nigerian biscuit maker Beloxxi for $80 million in a deal described as a bet on the company's ability to meet the rising demand of the consumer class.

- PwC is being sued for $5.5 billion for failing to detect fraud that led to a bank collapse during the global financial crisis. The case, the biggest against an auditing firm, had been filed in a Miami state court.

- UKspace, the trade body for the space sector, has written to Science Minister Jo Johnson, of the need to see that UK retains its place as a key supplier and beneficiary of the 10 billion euros Galileo programme, which is funded entirely by the EU.


NYT


- Twitter is in talks with Apple to bring the Twitter app to Apple TV, which would potentially let millions of Apple TV users watch the streaming NFL games. http://nyti.ms/2aUYcI6

- Handwritten ledgers show $12.7 million in undisclosed cash payments designated for Donald Trump's campaign chairman Paul Manafort from former Ukrainian President Viktor Yanukovych's pro-Russian political party from 2007 to 2012, according to Ukraine's newly formed National Anti-Corruption Bureau. http://nyti.ms/2aUYNJL

- The Treasury's schedule of financing this week includes Monday's regular weekly auction of new three- and six-month bills and an auction of four-week bills on Tuesday. http://nyti.ms/2aUYChQ


Canada

THE GLOBE AND MAIL

** Canada's national home prices rose 2 percent in July, the second-largest jump since Teranet-National Bank began tracking the market through its house price index in 1999. Overall home prices were up nearly 11 per cent from the same period last year. In a trend that has dominated much of the year, prices soared in Toronto and Vancouver, along with neighbouring Hamilton and Victoria, while sinking in Alberta, Quebec and the Atlantic provinces. (bit.ly/2bhjaiy)

NATIONAL POST

** Five years after Alberta raised a record-setting $3.5 billion at auctions of provincially owned oil and gas drilling rights, sales are on pace this year to set a historic low - part of a downward trend seen across Western Canada. Through the first seven months of this year, companies invested just over $75 million for the right to drill for oil and gas on Crown land, according to the provincial Energy Department.

If sales continue at the same pace through the balance of 2016, they will add up to about $125 million - more than $100 million less than any annual figure in records going back to 1978 when the province adopted a scheduled sales process.(bit.ly/2bhjJZP)

** The Commissioner of Complaints for Telecommunications Services (CCTS) ejected Vois Inc from its organization last week for failing to heed its binding decision to repay its customers. This puts the company in violation of Canadian Radio-television and Telecommunications Commission (CRTC) regulations that require participation with the complaints-handling body. It's not clear what sort of penalty Vois will ultimately receive in a case that tests how much clout Canada's telecom watchdogs actually have to stop companies from ignoring their rules. (bit.ly/2bhkO3R)


Britain

The Times

- DS Smith, the provider of specialist packaging for Amazon and fast-moving consumer goods groups, has already diverted tens of millions of pounds of investment out of the UK to a new plant near Frankfurt. CEO Miles Roberts is to meet David Davis, secretary of state for exiting the European Union, to urge the minister to keep British manufacturing within the single market of trade and labour mobility. http://bit.ly/2aWtyds

- The Serious Fraud Office's criminal investigation into bribery and corruption allegations at Airbus is certain to broaden into an international inquiry by the US Department of Justice, a senior lawyer has warned. Airbus has admitted failing to provide full disclosure on its use of middlemen - third-party agents who smooth sales in emerging markets. http://bit.ly/2aWtYAA

The Guardian

- Large shareholders in Sports Direct are considering voting against the reappointment of the company's chairman and other directors at next month's annual general meeting in a bid to force change at the top of the embattled chain. http://bit.ly/2aWtM4i

- London could bear the brunt of a post-Brexit vote downturn, according to economic indicators in the weeks since the EU referendum pointing to job cuts, falling house prices and a decline in business activity in the capital. http://bit.ly/2aWw1Ex

The Telegraph

- The bosses of European and American corporate giants will be called to Westminster to give evidence about how the UK can beef up its defences against foreign takeovers and potentially bring employee representative on boards. http://bit.ly/2aWweIb

- BHS workers have accused the retailer of holding them "to ransom" after threatening long-serving staff they will lose redundancy pay if they leave while repeatedly pushing back notice dates. It has also emerged that liquidators Hilco are using BHS's remaining 57 open shops to clear thousands of pounds worth of non-BHS goods, including Denby China - which is owned by Hilco - in a move staff branded "bizarre and insulting". http://bit.ly/2aWvWB0

Sky News

- British Home Stores' flagship branch on London's Oxford Street has closed for the final time, with all of the troubled chain's remaining outlets to shut by next Saturday. http://bit.ly/2aWw7MG

The Independent

- Deliveroo will now give workers the chance to opt out of what it claimed was a pilot scheme that pays 3.75 pounds per delivery rather than the current terms of 7 pounds an hour and 1 pound per delivery. It will also guarantee at least 7.50 pound an hour and petrol for those who continue to participate, following protests by hundreds of delivery riders in London. http://ind.pn/2aWwIOd

http://www.zerohedge.com/news/2016-08-15/frontrunning-august-15
 

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#5
Infographic: The Chinese Gold Market
By: Koos Jansen
This Chinese Gold Market infographic guides you through the largest physical gold trading market in the world, China. An impressive 16,000 tonnes of gold are held within China's borders. Did you know that the Chinese wholesale demand for physical gold was an astounding 2,596 metric tonnes in 2015? This was supplied by China mining more gold than any other country in the world as well as importing more gold than any other country.

Gold and Silver Market Morning: Aug-15-2016 -- Gold and silver prices still consolidating!
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch
As the time approaches when the Yuan becomes one of the world’s ‘hard’ currencies it is meeting the definition of being widely traded in the global monetary system. Just to what extent remains to be publicized. Certain Capital Controls still persist but the silence on this ahead of the incorporation of the Yuan in the IMF’ Special Drawing Rights is deafening.
 

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#6
Mornings With "V" 08.15.16
ROGUE MONEY


Streamed live 23 minutes ago
Breaking The News down Guerrilla Style
 

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#7
Japan Helicopter Money | Andrew Hoffman
FinanceAndLiberty.com


Published on Aug 14, 2016
This video was posted with permission from http://FinancialSurvivalNetwork.com

FINANCE AND LIBERTY:
SUBSCRIBE (It's FREE!) for more ►http://bit.ly/Subscription-Link
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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#10
Gold Seeker Closing Report: Gold and Silver Gain With Stocks
By: Chris Mullen, Gold-Seeker.com
Gold gained $7.45 to $1342.05 in Asia before it fell back to almost unchanged at $1335.88 at about 9AM EST, but it then climbed to a new session high of $1343.80 by late morning in New York and ended with a gain of 0.36%. Silver rose to as high as $20.023 and ended with a gain of 0.61%.
 

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#11
$9 000 000 000 000 MISSING From The Federal Reserve SHOCKING FOOTAGE
biblesnbarbells


Published on Aug 15, 2016
Rep. Alan Grayson questions the FED inspector General where $9 TRillion dollars went... and Inspector General Elizabeth Coleman does not know.
 

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#12
Rebirth of a Nation
By: Jeff Thomas
Regular readers of this publication will be familiar with my frequent comments that all countries have a shelf-life – that they experience a slow rise, typified by a strong work ethic and a free-market philosophy, which results in a highly productive country. That productivity later results in a high level of sympathy for the disadvantaged, which political leaders turn into a justification for government largesse. That, in turn, results in a population that grows complacent and, eventually apathetic, culminating in a decline into totalitarianism.
 

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#14
FWIW..................

ALERT: Bone Chilling 1988 Economic Prediction
Fabian4Liberty


Published on Aug 15, 2016
The Economist 1988 Article
https://socioecohistory.wordpress.com...″-the-economist-magazine/

Bone Chilling 1988 Economic Prediction

Over the last week several people emailed me an article I had read a few years ago about a one world currency and global economic reset.

I had forgotten The Economist 1988 article that among other things claimed:

"In all these ways national economic boundaries are slowly dissolving. As the trend continues, the appeal of a currency union across at least the main industrial countries will seem irresistible to everybody except foreign-exchange traders and governments."

Pretty chilling considering the state of the world today.
 

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#15
Tumbling Dollar Sends USDJPY Under 100, Oil Over $46 As Gold Spikes; Futures Flat


by Tyler Durden
Aug 16, 2016 6:43 AM

Overnight, John Williams' latest uberdovish paper "Monetary Policy in a Low R-star World", which we profiled yesterday, and which suggests lower rates for far longer, made the rounds and has led to a steep 0.8% drop in the Bloomberg Dollar spot Index, which sank to its weakest since June while the yen strengthened 1.2 percent, slipping briefly below 100 against the greenback, dropping as low as 99.95 for the first time since June 24, pushing oil and gold higher, and Asian shares lower.



The dollar is losing ground as lackluster data in the world’s biggest economies fuel speculation the Fed will refrain from raising interest rates. The Citigroup Inc. U.S. Economic Surprise Index, which measures whether data beat or miss analyst forecasts, reached the lowest in more than a month. As a result, the latest surge in the Yen, noted overnight when various stops were tripped, sent the Nikkei sharply lower by 1.6%, and has put further pressure on the BOJ to come devalue its currency. “The yen is being driven by the dollar’s weakness, spurred by increasing expectations the Federal Reserve won’t raise rates this year,” said Nicholas Teo, a strategist at KGI Fraser Securities in Singapore. “This complicates things for Japanese policy makers seeking to stimulate Japan’s economy. If the Fed doesn’t move this year, there’s a risk of steeper moves next year. That’s very dangerous.”

“The unevenness seen over the last couple of weeks in U.S. data has diminished the relative appeal of pursuing dollar strength,” said Ned Rumpeltin, the European head of foreign-exchange strategy at Toronto Dominion Bank in London. Minutes of the last Fed meeting due this week “will be an important platform to signal whether they hope to keep the potential for a 2016 rate hike on their agenda, although markets think that chance is fairly remote right now.”

The pound jumped as U.K. inflation accelerated in July more than economists predicted. Precious metals advanced while European stocks slipped.

Global stocks were modestly lower pressured by rising local currencies, and edged away from one-year peaks on Tuesday as a stellar rally stalled, while the dollar hit a one-month low against the yen as recent weak U.S. economic data was seen limiting the scope for a near-term rate hike. Asian shares rose to a one-year peak, lifted by a rise in U.S. stocks to record highs a day earlier and expectations that monetary policy around the world will remain lower for longer than anticipated to support growth. But, in a sign that the rally in world shares may be losing momentum, Chinese stocks pulled back from seven-month highs following a sharp correction in bank shares and Japan's Nikkei fell more than 1.5 percent to its lowest level in just over a week as the yen firmed.

Meanwhile, the skepticism over the low-volume levitation remains: “If you look at the previous days, we had upturns every couple of days, but not based on healthy volumes -- that’s very often a sign that the reaction in the other direction could follow,” said Soeren Steinert, an associate director for equities trading at Quoniam Asset Management, which oversees the equivalent of $29 billion. “There’s an increasingly lower probability of a Fed rate hike this year, and that’s priced in. Brexit you don’t hear about any more. And the earnings season is over, so what’s the trigger for the upside?”

Quoted by Reuters, Michael Hewson, chief market analyst at CMC Markets said that "Equity markets are looking a bit frothy and what's dragging them down is a bit of softness in the oil price and yen strength. Investors are a bit nervous but ultimately in a low-yield world, stocks remain a decent bet for yield." That's ok, that's what central banks are there for: to ease investor nerves.

While European shares opened broadly lower, edging away from Monday's seven-week highs as markets in London, Paris and Frankfurt slipped 0.4-0.9 percent in early trade, they have since rebounded somewhat and the the Stoxx Europe 600 Index was trading about 0.1% lower. Schindler Holding AG led industrial-goods companies lower, sliding 3.6 percent after forecasting a decline in the global elevator and escalator market. Electrolux AB, which gets more than a third of its revenue from North America, lost 2.1 percent after a report showed U.S. shipments of major home appliances fell in July. Antofagasta Plc helped push a measure of commodity producers to the best performance of the 19 industry groups on the Stoxx 600, climbing 3.4 percent. The company said first-half earnings rose and announcing an interim dividend of 3.1 cents a share. Linde AG jumped 5.8 percent, propelling a gauge of chemical stocks higher, after people familiar with the matter said Praxair Inc. has held merger talks with the German industrial-gas company.

S&P 500 Index futures were little changed, with the index having risen to fresh highs on Monday.

In the commodity complex, oil gained, after erasing an earlier loss as the weakness in the dollar overtook speculation that the Organization of Petroleum Exporting Countries will struggle to agree any kind of limit on production next month. West Texas Intermediate crude advanced 0.7 percent to $46.04 a barrel and Brent gained 0.5 percent to $48.58. And speaking of OPEC, after Nigeria overnight expressed doubt any supply cut would take place, when Nigerian petroleum minister Emmanuel Kachikwu said that "on oil production cuts by OPEC, optimism on my part is quite sparse but I believe engagement with the 70% oil producers might have impact," earlier today Iran also poured cold water over expectations of a September production freeze:
  • IRAN HAS YET TO DECIDE ON JOINING OPEC'S INFORMAL TALKS IN SEPTEMBER - OIL MINISTRY SPOKESWOMAN
  • IRAN DOESN'T EXPECT TO REACH PRESANCTIONS PRODUCTION LEVEL BY END OF SEPTEMBER -- SPOKESWOMAN
In bonds, the U.K.’s 10-year gilt yield declined one basis point to 0.52 percent, near a record low, before the Bank of England seeks to buy 1.17 billion pounds ($1.5 billion) of debt due in more than 15 years as part of its expanded quantitative-easing program. The central bank fell short of achieving a similar target at last week’s bond-buying auction, spurring gains in longer-dated gilts. The yield on U.S. Treasuries due in a decade fell three basis points to 1.53 percent. Rates on similar-maturity debt in Germany and Japan decreased by about one basis point to minus 0.08 percent and minus 0.10 percent, respectively.

On today's economic calendar, inflation, housing starts and industrial output data later in the day will provide more clues on the outlook for U.S. interest rates. The minutes from the Federal Reserve's July policy meeting, due on Wednesday, are also in focus. Although Fed officials have said a rate hike is possible by the end of year, investors are not convinced the Fed can raise rates this year given the fragile global economic outlook: U.S. December rate rise odds falls to 45% from 49% on Thursday.

Market Wrap
  • S&P 500 futures down less than 0.1% to 2185
  • Stoxx 600 down 0.2% to 345
  • FTSE 100 down less than 0.1% to 6936
  • DAX down 0.1% to 10725
  • German 10Yr yield down less than 1bp to -0.08%
  • Italian 10Yr yield up 1bp to 1.07%
  • Spanish 10Yr yield up less than 1bp to 0.94%
  • S&P GSCI Index up 0.5% to 361.3
  • MSCI Asia Pacific down 0.1% to 140
  • Nikkei 225 down 1.6% to 16597
  • Hang Seng down less than 0.1% to 22911
  • Shanghai Composite down 0.5% to 3110
  • S&P/ASX 200 down 0.1% to 5532
  • US 10-yr yield down 3bps to 1.53%
  • Dollar Index down 0.75% to 94.92
  • WTI Crude futures up 0.7% to $46.04
  • Brent Futures up 0.6% to $48.62
  • Gold spot up 0.7% to $1,349
  • Silver spot up 1% to $20.02
Top Global News
  • Dovish comments from Fed’s Williams point to signs the Fed is seriously contemplating a change in its current policy mix; Lockhart speaks today, while Bullard and Dudley are due later this week; Any similar comments from them may spur a meaningful repricing of Fed rate hike expectations, particularly further out the curve, before Yellen’s Aug. 26 Jackson Hole speech
  • Praxair, Linde Said to Be in Talks to Merge, WSJ Reports
  • Morgan Stanley Targeted by ValueAct as Core Activist Stake: Activist fund owns 2% of New York-based investment bank. Jeff Ubben’s fund disclosed stake in filing on Monday
  • Huntington’s FirstMerit Purchase Signals Faster Deals, CEO Says: Huntington closed on its biggest deal ever in 204 days. Steinour: Approval could spur more regional lenders to combine
  • Vivint Focusing on Sustainable Growth, Not Growth at All Costs: Blackstone-backed company canceled deal with SunEdison. Installer focused on being ‘best and the most disciplined’
  • Google Debuts New Chat App to Rival Skype, FaceTime: Introducing Duo. Google is trying to simplify a tangle of communication apps.
  • Cargill, Louis Dreyfus Halt Brazil Soy Plants as Margins Vanish: Too few soybeans to meet export commitments, needs of crushers. Profit also hurt as chicken producers buy less soy-based feed
Looking at regional markets, Asia failed to take the impetus from the latest US record close trifecta with the major regional indices in negative territory. Nikkei 225 (-1.3%) underperformed as a firmer JPY dampened investor sentiment, while ASX 200 (-0.1%) traded in a subdued fashion with participants cautious ahead of the expected release of the worst ever financial report from index heavyweight BHP Billiton after market. Chinese markets conformed to the lacklustre tone with choppy trade seen in the Hang Seng (-0.1%), while investors booked profits in the Shanghai Comp (-0.5%) after yesterday's stock connect-inspired outperformance. 10yr JGBs are higher as the lack of appetite for riskier assets spurred safe-haven flows into the paper, while today's JPY 400bIn enhanced liquidity auction was slightly disappointing with a lower than prior b/c. Chinese state council has approved the Shenzhen - Hong Kong stock connect. Note that this was widely in-fitting with weekend reports. RBA minutes from August 2nd meeting stated most recent data on prices and labour costs confirmed that domestic cost pressures had been subdued. The central bank reiterated that a rising AUD complicates an economic transition and sees inflation remaining around 1.5% over this year, before increasing to between 1.5%-2.0% by the end of its forecast period.

Top Asian News
  • Yen Rises Toward 100 as Dollar’s Funk Deepens on Fading Fed Bets: U.S. December rate rise odds falls to 45% from 49% on Thursday
  • Yuan’s Volatility Slides to 10-Month Low as Currency Steadies: Weekly ETF inflows to China, Hong Kong surge $605 million
  • China Plans Targeted Measures to Lift Hard-Hit Northeast Economy: NDRC plans 137 projects
  • RBA: On Balance, Prospects Would Be Improved by Aug. 2 Cut: There was room for stronger growth, which could be assisted by lower interest rates
  • BHP Reports Full-Year Profit Tumbles 81% on Prices Collapse: Biggest miner booked charges on shale unit, Brazil iron ore
  • Noble Group Gets Downgraded by Moody’s on Liquidity Outlook: Moody’s two-level cut contrasts with assessment from Fitch
  • Mizuho Said to Form Alliance With Maybank’s Kim Eng on Equities: Will provide research and execution for Southeast Asian stocks
In Europe, stocks have been subdued this morning, this comes German exporters are feeling the effects of a stronger EUR (+0.7%). The FTSE is currently the outperformer in terms of the European bourses, as mining names outperform with Antofagasta and BHP Billiton both reporting earnings. BHP Billiton posted a bigger than expected net loss but the underlying profit beat expectations and came in at USD 1.22bIn vs. Exp. USD 1.04bIn. The FTSE MIB underperforms after yesterday's break, but another reason for this may be due to PM Renzi asking Brussels asking for more time and more flexibility in regards to its banking reforms. In terms of fixed income markets Bunds are performing well up 24 ticks on session as fixed income is benefiting from risk off sentiment with no major supply from the Eurozone today.

Top European News
  • Offshore Wind Could Replace Hinkley Nuclear in U.K. at Same Cost: Britain would need 830 turbines to replace atomic plant. U.K. could install 5.7 gigawatts offshore for Hinkley costs
  • BHP Flags Price Freefall Over After Reporting Record Net Loss: BHP Billiton Ltd., the world’s biggest mining company, flagged it’s emerging from the worst commodities price collapse in a generation with renewed impetus after reporting a record full-year loss
In FX, the Bloomberg’s dollar index sank 0.8% while the yen strengthened 1.2 percent to 100.10 versus the greenback. The MSCI Emerging Markets Currency Index added 0.3 percent and has risen 1.9 percent this month. South Korea’s won led gains, appreciating 1 percent, its first increase in three trading sessions. Malaysia’s ringgit advanced 0.4 percent and South Africa’s rand strengthened 0.3 percent. The pound rose 0.9 percent to $1.2989, after a Monday close of $1.2880 that was the weakest since June 1985. Tuesday’s gain cut its loss this month to less than 2 percent.

In commodities, gold advanced 0.9 percent to $1,351.28 an ounce amid a decline in the dollar. Silver and platinum both added more than 1 percent. Oil gained, after erasing an earlier loss as the weakness in the dollar overtook speculation that the Organization of Petroleum Exporting Countries will struggle to agree any kind of limit on production next month. West Texas Intermediate crude advanced 0.7 percent to $46.04 a barrel and Brent gained 0.5 percent to $48.58. Nickel dropped 1.3 percent to $10,370 a metric ton after posting the biggest advance in more than two weeks on Monday. Copper advanced 1.2 percent.

There’s a fair bit of data to get through in the US this afternoon with the main event being the July CPI report. Market expectations there are for no change in the mom headline reading and a +0.2% mom pickup for the core. Also due out will be industrial and manufacturing production for July along with the latest capacity utilization reading, as well as last month’s housing starts and building permits data.

* * *

US Event Calendar
  • 8:30am: Housing Starts, July, est. 1.18m (prior 1.189m)
    • Housing Starts m/m, July, est. -0.8% (prior 4.8%)
    • Building Permits, July, est. 1.16m (prior 1.153m)
    • Building Permits m/m, July, est. 0.6% (prior 1.5%)
  • 8:30am: CPI m/m, July, est. 0.0% (prior 0.2%)
    • CPI Ex Food and Energy m/m, July, est. 0.2% (prior 0.2%)
    • CPI y/y, July, est. 0.9% (prior 1.0%)
    • CPI Ex Food and Energy y/y, July, est. 2.3% (prior 2.3%)
    • CPI Index NSA, July, est. 240.805 (prior 241.038)
    • CPI Core Index SA, July, est. 247.872 (prior 247.495)
    • Real Avg Weekly Earnings y/y, July, no est. (prior 1.2%)
  • 9:15am: Industrial Production m/m, July, est. 0.3% (prior 0.6%)
    • Capacity Utilization, July, est. 75.6% (prior 75.4%)
    • Manufacturing (SIC) Production, July, est. 0.3% (prior 0.4%)
Bulletin Headline Summary From RanSquawk and Bloomberg
  • European equities trade lower (albeit off worst levels) with a stronger EUR and downbeat session overnight weighing on price action
  • The USD-index remains soft today after breaking below 95.00 with GBP lent some support by slightly better than expected CPI data
  • Looking ahead, highlights include US CPI, US Industrial Production, API Crude Oil Inventory Report and NZ Employment Change
  • Treasuries higher in overnight trading while global equities selloff, WTI crude and gold rise; U.S. dollar index drops to lowest since June 23.
  • Central banks in developing economies are taking advantage of the biggest rally in their currencies since 2010, using stronger exchange rates to build up foreign reserves for the first time in two years
  • Japanese investors are paying the highest hedging costs since 2008 on foreign bond purchases, thwarting efforts by the central bank to spur overseas investment by boosting dollar supplies
  • The Bank of Japan, already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, is on course to become the No. 1 shareholder in 55 of those firms by the end of next year
  • A gauge of swings in China’s yuan fell to a 10-month low amid receding expectations of a central bank interest-rate cut, increased emerging-market inflows and bets policy makers will limit depreciation pressures
  • German investor confidence rebounded in August after the initial shock of Britain’s decision to leave the European Union
  • U.K. consumer-price growth picked up to 0.6% in July from 0.5% in June and there were signs of further price pressures with the weak pound leading to the biggest jump in import costs in more than four years
  • Big investment banks with their European headquarters in London will start the process of moving jobs from the U.K. within weeks of the government triggering Brexit, according to people briefed on the plans being drawn up by four of the biggest firms
  • Fed President John Williams argues that the level of interest rates that neither stimulates nor slows the economy has fallen. In the new low-natural rate environment, the Fed’s policy of targeting low inflation will no longer make sense
* * *

DB's Jim Reid concludes the overnight wrap

Yesterday was all about Oil really where more jawboning from OPEC members about potential output freezes helped to send WTI and Brent up +2.81% and +2.94% respectively. In fact that was the third consecutive daily gain of at least 2% for WTI and it means Oil is now up over 16% from the early August lows. After Saudi Arabia’s energy minister signalled that the country was open to measures to stabilize the market last week, yesterday Russia’s Energy Minister Alexander Novak said that Russia is also open to such talks with the WSJ also suggesting that the country is already consulting with Saudi Arabia and other countries. OPEC is scheduled to meet for an informal gathering late next month on the sidelines of an energy conference and at the moment the incentive appears to be there for producers to talk up some sort of potential action. Remember though that the market was left disappointed back in spring after similar jawboning.

A slightly softer US Dollar also helped Oil at the margin while gains for energy and financials stocks helped lead US equities to fresh all time highs again. Indeed the S&P 500 (+0.28%), Dow (+0.32%) and Nasdaq (+0.56%) all closed at record highs while markets in Europe finished little changed (Stoxx 600 -0.01%) with volumes a lot lower than usual given the public holiday impact. Credit markets were a touch stronger although the primary market in the US slowed down considerably following a strong past three weeks.

This morning in Asia bourses are generally struggling for any sort of traction, as Oil (-0.66%) pares some of yesterday’s and news flow continues to remain relatively light. Markets in Japan and China in particular are underperforming with the Nikkei and Shanghai Comp currently -1.15% and -0.52% respectively. The Hang Seng is little changed while the ASX is also -0.11%. Only the Kospi (+0.04%) is showing a gain this morning.

Moving on. Yesterday there was a bit of focus over at the Fed and specifically the San Francisco Fed President Williams. Seen as something of a centrist, he argued that central banks need to reassess prevailing policy frameworks and specifically those related to a low natural real rate of interest. Williams noted that ‘there is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low’. He went on to say that a higher inflation target ‘would imply a higher average level of interest rates and thereby give monetary policy more room to manoeuvre’. Williams also called for changes to fiscal policy saying that such would allow ‘predictable, systematic adjustments of fiscal policy that support the economy during recessions and recoveries’. A reminder that next week we’ve got the Jackson Hole policy symposium.

Staying on the central bank theme, yesterday we got the latest corporate bond holdings data out of the ECB. The bank disclosed that it held €16.23bn of corporate bonds as of August 12th which implies net purchases settled last week of €1.25bn. That means the average daily run rate last week was €250m which is lower than the €353m average daily run rate since the program started. It’s the lowest weekly run rate so far but that shouldn’t be all that unsurprising given the current quiet time of year.

There wasn’t too much to report datawise yesterday with the only economic reports coming out from the other side of the pond. The headline August Empire Manufacturing reading was disappointing after printing at -4.2 (vs. +2.0 expected). That represented a fall of nearly 5pts from July and is the first negative reading since May. That said we did see some improvement in key sub-indices including new orders and the number of employees. The only other data out yesterday was the NAHB housing market index for this month which rose 2pts to 60 as expected.

Looking at today’s calendar, as we noted at the top the significant data out this morning is from the UK with the July inflation docket, while the latest Gilt reverse auction will also attract attention. Also due out will be the be the Euro area trade balance reading for June and the Germany ZEW survey reading for this month where expectations are for a modest pickup in both the current situations and expectations readings. There’s a fair bit of data to get through in the US this afternoon with the main event being the July CPI report. Market expectations there are for no change in the mom headline reading and a +0.2% mom pickup for the core. Also due out will be industrial and manufacturing production for July along with the latest capacity utilization reading, as well as last month’s housing starts and building permits data.

http://www.zerohedge.com/news/2016-...nder-100-oil-over-46-gold-spikes-futures-flat
 

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#16
Frontrunning: August 16


by Tyler Durden
Aug 16, 2016 7:37 AM
  • World stocks edge away from one-year peak, dollar on defensive (Reuters)
  • Central Banks Could Be This Market’s Pets.com (WSJ)
  • Clinton announces transition leadership should she win in November (Reuters)
  • Oil Trades Near $46 a Barrel as Nigeria Sees OPEC Cuts Unlikely (BBG)
  • BHP Billiton Reports Worst-Ever Annual Loss (WSJ)
  • Trump nation-building view not in line with Bush (AP)
  • Air strike on MSF hospital in Yemen kills at least 11: aid group (Reuters)
  • Yuan’s Volatility Slides to 10-Month Low as Currency Steadies (BBG)
  • Retirees Need $130,000 Just to Cover Health Care, Study Finds (BBG)
  • Morgan Stanley Targeted by ValueAct as Core Activist Stake (BBG)
  • China says seeks closer military ties with Syria (Reuters)
  • Gas Glut Upends Global Trade Flows as Buyers Find Leverage (BBG)
  • Obama Administration to Fund Nontraditional Training for Students (WSJ)
  • Brexit Bulletin: Banks Already Plotting City Exodus (BBG)
  • Icahn Says He May Boost Trump with Attack on EPA (BBG)

Overnight Media Digest

WSJ

- U.S. prosecutors and Volkswagen AG are negotiating a settlement that could result in significant financial penalties after Justice Department officials found evidence of criminal wrongdoing in the car company's diesel-emissions cheating. http://on.wsj.com/2aOP46M

- Activist investor ValueAct Capital Management said it had taken a $1.1 billion stake in Morgan Stanley, signaling a potential rallying cry for bank investors after years of poor returns. http://on.wsj.com/2aZN1d6

- The U.S. transferred 15 Guantanamo Bay detainees to the United Arab Emirates, the largest such movement yet in President Obama's push to remove most prisoners from the prison before he leaves office in January. http://on.wsj.com/2bcW4GK

- Aetna Inc will withdraw from 11 of the 15 states where it currently offers plans through the Affordable Care Act exchanges. Aetna's move puts at least one county, Pinal in Arizona, at risk of having no insurers offering exchange plans in 2017. http://on.wsj.com/2aVZqNB

- Tesla has failed to meet more than 20 projections made by its chief executive in the past five years, an analysis by The Journal shows. Tesla missed 10 of the stated goals by an average of nearly a year, including targets for the debut of two of Tesla's past three models. http://on.wsj.com/2b6qv3S


FT

- Warren Buffett's Berkshire Hathaway increased its stake in Apple in the second quarter, from $1.1 billion at the end of March to $1.5 billion at the end of June. Berkshire has cut its stake in Walmart to 1.3 percent of the company.

- AIG has agreed to sell its mortgage insurance business to Arch Capital for $3.4 billion. Arch will pay $2.2 billion in cash and the remainder in preferred stock.

- ValueAct has disclosed a $1.1 billion investment in Morgan Stanley which is about 2 percent of the company and this comes Morgan Stanley's CEO James Gorman, cuts costs and lays off staff in the debt-trading business.

- Praxair is in talks to acquire German rival Linde in a deal which would create the world's largest supplier of industrial gas with a combined market capitalisation of over than $60 billion.

NYT

- Volkswagen owners in the United States will receive about $20,000 per car as compensation for the company's diesel deception. Volkswagen owners in Europe at most get a software update and a short length of plastic tubing. http://nyti.ms/2bupkKD

- Lyft, an American ride-hailing service, recently rebuffed takeover interest from General Motors, its 9 percent owner. There are reasons for Lyft to steer clear of Detroit, despite a shared vision for autonomous cars. http://nyti.ms/2bupHEV

- Google released its latest mobile app Duo, a video-calling app that is a direct alternative to Apple's FaceTime. The app lets you place video calls between Android and iPhone users, and increases the universe of people with whom you can hold a video conversation. http://nyti.ms/2buqfuE

Britain

The Times

The closure of the final BHS stores that are still trading has been delayed by a week as the administrator faces allegations of holding staff "to ransom". http://bit.ly/2b9UxTA

Britain's blue-chip companies handed their shareholders five times more cash than they paid into their own pension schemes last year despite the fund deficits ballooning on the back of falling interest rates. http://bit.ly/2b9VPho

The Guardian

Damage to the economy caused by Brexit will more than offset the modest wage gains for British-born workers in low-paid jobs caused by cutting net migration to the tens of thousands a year, according to a report by the Resolution Foundation think tank. http://bit.ly/2b9V4oH

Workers for the takeaway delivery firm Deliveroo have staged a sixth day of protests over a new pay deal, saying concessions only apply to those who are willing to work in new areas. http://bit.ly/2b9VaN5

The Telegraph

A controversial proposal to water down final salary pensions could save large British firms 30 billion pounds ($38.64 billion) from their retirement bills, according to new research. http://bit.ly/2b9VlYK

British Sugar Plc, a subsidiary of Primark owner Associated British Foods Plc, has joined forces with a host of business groups to fight the mooted sugar tax on soft drinks, amid growing fears the controversial levy will lead to job losses. http://bit.ly/2b9WgIB

Sky News

UK's inflation rate for July is expected to remain unchanged at 0.5 percent when official figures are released by the Office for National Statistics later this morning. http://bit.ly/2b9VBXG

Banco Santander SA has announced it will be reducing the amount of interest its customers can earn from its hugely popular 123 current account. The rate will be cut in half, reducing the amount savers can earn to 1.5 percent from 3 percent. http://bit.ly/2b9V2x9

The Independent

Thousands of workers at British retailing group Sports Direct International Plc's warehouse are set to receive back pay totalling an estimated 1 million pounds for non-payment of the minimum wage, Britain's largest union Unite has confirmed. http://ind.pn/2b9UXJM

http://www.zerohedge.com/news/2016-08-16/frontrunning-august-16
 

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#19
Gold and Silver Market Morning: Aug-16-2016 -- Gold and silver prices trying to break higher on a weaker dollar!
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch
Shanghai was higher than London’s opening and much higher than New York’s close. London opened at $1,350 whereas as you can see, the p.m. Fix in Shanghai was at nearly $1,354. Shanghai’s physical demand is greater than New York’s paper demand today. U.S. physical demand via the gold ETFs was absent yesterday.
 

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#20
Mornings With "V" (08/16/2016)
ROGUE MONEY


Streamed live 30 minutes ago
The News Summarized Guerrilla Style.
 

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#21
Shipping & Energy 08/16:

Peak Oil Review - Aug 15 2016
http://www.resilience.org/stories/2016-08-15/peak-oil-review-aug-15-2016

Opium Rules: Afghan Oil Will Never Get Out Of The Ground
http://oilprice.com/Energy/Energy-G...han-Oil-Will-Never-Get-Out-Of-The-Ground.html

Forecast FLNG Spend of Over $41 Billion
http://www.maritime-executive.com/editorials/forecast-flng-spend-of-over-41-billion

Dry Bulk: 2017 could mark the start of lower ship deliveries helping tonnage supply issues in the market, says shipowner
http://www.hellenicshippingnews.com...e-supply-issues-in-the-market-says-shipowner/

Coal ship owners ‘vanished’ while unpaid crew left without supplies
http://www.hellenicshippingnews.com...shed-while-unpaid-crew-left-without-supplies/

Northern Iraq crude oil exports dive on pipeline outages, oil field attacks: sources
http://www.hellenicshippingnews.com...n-pipeline-outages-oil-field-attacks-sources/

Live International Companies’ Shipping Stocks
http://www.hellenicshippingnews.com/live-international-shipping-stocks/
 

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#25
Gold Seeker Closing Report: Gold Gains While Silver Slips With Stocks
By: Chris Mullen, Gold-Seeker.com
Gold gained $15.57 to $1354.97 in London before it fell back to almost unchanged at $1341.93 at about 10AM EST, but it then chopped back higher in the next few hours of trade and ended with a gain of 0.5%. Silver climbed up to $20.097 before it dropped back to $19.729 and then also bounced back higher, but it still ended with a loss of 0.05%.
 

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#26
Nothing to see in this one. It's approx. 1 hour long and your best bet if interested is to listen in one window, play around on GIM or surf the web in a different window.

Racketeering Is Ruining Us | James Howard Kunstler
FinanceAndLiberty.com


Published on Aug 16, 2016
If you don't understand what's causing a particular problem, then it's pretty difficult to come up with an effective solution.

Author, commentator and longtime friend-of-the-site James Howard Kunstler returns to our podcast this week to discuss the importance of accurate diagnosis -- in this case, of the scourge he sees as accelerating America's downslide into economic and social decline: Racketeering.

More associated with the organized crime bosses of a century ago, it's not a word used often these days. But that doesn't diminish in any way its relevance to and impact on our lives today.

This video was posted with permission from http://PeakProsperity.com

FINANCE AND LIBERTY:
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DISCLAIMER: The financial and political opinions expressed in this video are not necessarily of "Finance and Liberty" or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.
 

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#27
European Stocks Drop, Futures Flat As Rising Dollar Pressures Oil, EMs: All Eyes On The Fed Minutes


by Tyler Durden
Aug 17, 2016 6:41 AM


European stocks are down led by tech, chemicals, alongside EM stocks which retreated from near a one-year high and oil fell for the first time in a week after hawkish comments from Federal Reserve officials revived bets on U.S. interest rate rises this year, and pushed the dollar higher from 7 week lows ahead of today's Fed Minutes. S&P 500 futures were little changed following yesterday's drop from record highs.

The Stoxx Europe 600 Index fell for a fourth day, while MSCI’s gauge of developing-nation shares also declined, having halted an eight-day winning streak on Tuesday.



Crude pulled back from a five-week high as the Bloomberg Dollar Spot Index rebounded from near a three-month low after two regional Fed chiefs indicated interest rates could be increased at least once this year. South Korea’s won tumbled by the most since Britain voted to leave the European Union and gold declined. After sliding as low as 99.50 yesterday, a rebound in the USDJPY to 101 overnight pushed the Nikkei higher by 0.9%, closing at 16,746.

The rebound in the dollar was catalyzed by comments from Fed President William Dudley and Dennis Lockhart who jolted markets yesterday by indicating a rate hike in 2016 remained possible despite uneven growth in the world’s largest economy. Their comments helped push the probability of a Fed move above 50 percent in the futures market for the first time since the June 23 Brexit vote. Before their comments, global equities had climbed to a one-year high and the dollar index sank to levels last seen in May amid conflicting signals over the U.S. labor market and growth.

“A pull-back is following through in European stocks today after the Fed raised the possibility of a September rate hike,” said William Hobbs of Barclays in London. “It seems like expectations had become too muted.”

Today it will be all abaout the Fed again: Group head of multi-asset portfolios at GAM, Larry Hatheway, said attention was firmly on the Fed minutes and particularly why the bank's last meeting ended with a notably cautious statement. "It wasn't really about Brexit. It is not even about the world economy which isn't in great shape but is somewhat improved from the first quarter fears and its surely not about the cost of capital," Hatheway said. "So one presumes the caution reflects a thought process about a much lower equilibrium real interest rate ...or possibly the fact that inflation is just not accelerating, which was corroborated to a degree by CPI data yesterday."

But before the Fed we will get another dovish blast as St. Louis Fed chief James Bullard - the Fed's latest uberdove - is due to speak Wednesday at 1pm, one hour ahead of the Minutes release which are scheduled for release at 2 p.m. in Washington.

In Asia overnight, the MSCI' Asia-Pacific index ex-Japan dipped 0.3% while Japan's Nikkei closed 0.9 percent higher, paring some of Tuesday's sharp losses thanks to a weaker yen as it dropped back below the 100 yen per dollar level. China's CSI 300 index and the Shanghai Composite both erased earlier losses to end the day flat after authorities approved the launch of a long-awaited scheme to allow stock trading between Shenzhen and Hong Kong.

European yields nudged 2-4 basis point lower with Spanish bonds boosted ahead of a meeting later that could pave the way for a new government in Madrid after eight months of limbo. Interim prime minister Mariano Rajoy is to hold a meeting of his Conservative People's Party (PP) to consider a reforms-for-support offer from centrist rivals Ciudadanos. "I still have doubts about political progress in Spain and negotiations could still go on for weeks," said DZ Bank strategist Christian Lenk. "But markets do seem to like what's coming out of Madrid.

It has been a quiet session in European equities where the Stoxx 600 slipped 0.3% for a fourth day without gains. The volume of Stoxx 600 shares traded was 27% lower than the 30-day average. S&P 500 Index futures were little changed, after U.S. equities fell on Tuesday. ASML Holding NV dragged technology shares to the biggest decline on the equity benchmark, dropping 5 percent after Intel surprised the market when it said it won’t use the semiconductor-equipment maker’s lithography technology to make some of its chips. Carlsberg A/S slid 4.6% after the Danish brewer reported first-half profit that missed analysts’ estimates as the weakness of Russia’s ruble eroded earnings.

The MSCI Emerging Markets Index was down 0.9 percent, trimming this quarter’s advance to less than 9 percent. In Hong Kong, small-cap shares were the brightest part of China’s stock markets after an exchange trading link between the city and Shenzhen was unveiled. The Hang Seng Composite Small Cap Index climbed 0.5 percent to four-month high.

Tyco International Plc and Johnson Controls Inc. have shareholder meetings lined up to vote on their proposed $16 billion merger, while Target Corp. and Cisco Systems Inc. are among U.S. companies reporting results.

Market Snapshot
  • S&P 500 futures down less than 0.1% to 2176
  • Stoxx 600 down 0.3% to 342
  • FTSE 100 down 0.1% to 6887
  • DAX down 0.8% to 10592
  • German 10Yr yield down less than 1bp to -0.04%
  • Italian 10Yr yield up 2bps to 1.13%
  • Spanish 10Yr yield up 2bps to 1%
  • S&P GSCI Index down 0.6% to 360.9
  • MSCI Asia Pacific down less than 0.1% to 139
  • Nikkei 225 up 0.9% to 16746
  • Hang Seng down 0.5% to 22800
  • Shanghai Composite down less than 0.1% to 3110
  • S&P/ASX 200 up less than 0.1% to 5535
  • US 10-yr yield up less than 1bp to 1.58%
  • Dollar Index up 0.19% to 94.97
  • WTI Crude futures down 0.9% to $46.14
  • Brent Futures down 1% to $48.75
  • Gold spot down 0.2% to $1,343
  • Silver spot down 0.9% to $19.61
Top Global News
  • Och-Ziff Bribery Settlement Said to Spare Firm as Unit Convicted: Hedge fund is in talks to resolve probe of dealings in Africa. Gabonese ‘fixer’ with links to firm arrested on Tuesday
  • Cisco Plans to Cut Up to 14,000 Jobs Within Weeks, CRN Says: CEO Robbins is shifting to emphasize software as growth slows. Cuts could account for up to 20 percent of 73,000 employees
  • JPMorgan Hires Sakagami as Chief Japan Equity Strategist: Fills position left vacant since Jesper Koll left last year. Top-ranked Japan equity strategist according to Nikkei Veritas
  • Deutsche Bank Must Consider Scrapping Bonuses, Sewing Tells Bild: Lender scrapped 2015 management bonuses following annual loss. No dividend means bonuses should be up for debate, Sewing says
  • BOJ Firepower Falls Short as Yen Climb to 100 Dares Japan to Act: Bank of Tokyo-Mitsubishi, Morgan Stanley see further gains
  • Hong Kong Exchange Sees Second Link Cementing China Gateway Role: Shenzhen link expands Chinese investor access to Hong Kong
  • Barnes & Noble Ousts Its CEO After Less Than a Year on the Job
  • FOMC releases minutes from July 26-27 meeting; follow TOPLive for blog coverage at 2pm
  • Hyundai Motor Says It’s Discussing Partnerships With Google
  • Citadel to KCG Tell SEC New Treasuries Rules Don’t Go Far Enough
  • Univision Said to Buy Gawker Media for $135m: Recode
  • U.S. Senator Seeks Multiple Reviews for Major Chem Mergers: FuW
  • Madison Square Garden Said to Take 12% Stake in Townsquare: WSJ
* * *

Looking at regional markets, Asia equity markets slightly shrugged off the weak lead from US markets where hawkish Fed comments weighed on risk-appetite, with Asia mixed and Japan leading as JPY pared some of its recent considerable gains. Energy names were among the outperformers in Nikkei 225 (+0.9%) on the continued advances in oil prices, with the materials sector also reflecting the strength seen across its global counterparts. Conversely, ASX 200 (flat) was initially weighed by some lacklustre earnings reports before paring loses to close flat. Chinese markets were mixed with the Shanghai Comp (flat) indecisive and Hang Seng (-0.4%) pared gains after initially being bolstered after China approved the Shenzhen¬HK stock connect which would provide wider investment options and allow foreign investors access to the world's 7th largest stock exchange via Hong Kong. 10yr JGBs traded marginally lower amid increased demand for riskier assets in Japan, while today's BoJ market operations were for a relatively reserved JPY 750b1n in government debt. PBoC set CNY mid-point at 6.6056 (Prey. 6.6305); strongest fix by the PBoC since June 24th. PBoC injected CNY 100bIn via 7-day reverse repos.

Top Asia News
  • BOJ Firepower Falls Short as Yen Climb to 100 Dares Japan to Act: Bank of Tokyo-Mitsubishi, Morgan Stanley see further gains
  • Hong Kong Exchange Sees Second Link Cementing China Gateway Role: Shenzhen link expands Chinese investor access to Hong Kong
  • Hong Kong Small Caps Rise, Brokerages Fall on Shenzhen Link News: There’s profit-taking in main beneficiaries, CMB analyst says
  • Aussie Rides Out RBA Cuts as World-Beating Yields Lure Funds: Options traders become least bearish on currency since 2014
  • Cathay Shares Drop as Profit Slumps 82% on Fuel Hedge Losses: Co.’s yields under pressure as Chinese carriers expand
  • Modi Sends Warning Shot to China, Pakistan on Territory Spat: Comments come after weeks of violence and tension in Kashmir
European equities extend on yesterday's losses following hawkish comments from Fed's Dudley and Lockhart while newsflow has been relatively light as participants await the FOMC minutes release. In terms of a sector breakdown, financial and IT names have been the notable drags, with chip maker ASML (-4.8%) one of the laggards following a negative broker move. However, equities saw a minor bounce after the UK Jobs report, in particular the Jobless Claims which showed little signs of Brexit jitters. Elsewhere, in credit markets, Portuguese bonds yet again decline amid the recent commentary from the DBRS stating that they may consider downgrading the countries rating, which could have serious implications as the ECB uses the DBRS to decides if countries are eligible for QE.

Top European News
  • Carlsberg 1H Organic Rev. Beats Ests., Keeps 2016 Outlook
  • Admiral Group Biggest SXXP Decliner As Solvency Ratio Drops
  • ABN Amro Says 2Q Net Profit Impacted by Derivatives Provision
  • Deutsche Bank Must Consider Scrapping Bonuses, Sewing Tells Bild: Lender scrapped 2015 management bonuses following annual loss. No dividend means bonuses should be up for debate, Sewing says
  • U.K. Dividends at Risk as BOE Action Swells Pension Hole: Rate cut lowers yields, piling pressure on retirement plans. Some investors dump shares as dividend reductions loom
  • Credit Suisse Joins War for Quants, Hiring Rothman to Build Team: He’ll assemble equity researchers to hone strategies, products. Banks and fund managers are snapping up quants to sift data
In FX, the Bloomberg Dollar Spot Index rose 0.4 percent, after sliding 1 percent over the past three days. “While Dudley was at least able to stem the bleeding for the dollar index, price action is not encouraging for the dollar near term,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Still, so long as a rate hike seems more likely than not as the Fed’s next move, we wouldn’t get super bearish on the dollar.” The yen was down 0.5 percent at 100.76 per dollar, after strengthening beyond 100 on Tuesday for only the second time this year. The currency is still up 19 percent for the year and Japanese Vice Finance Minister Masatsugu Asakawa said policy makers are prepared to intervene if exchange-rate moves are extreme. South Korea’s won slumped 1.5 percent, its steepest slide since June 24. The currency climbed to its strongest level in more than a year last week and its 14-day relative strength index ended the last session below 30, a sign to some investors that a retreat was likely. The MSCI Emerging Markets Currency Index lost 0.6 percent, headed for the biggest drop in seven weeks on a closing basis.

In commodities, oil halted its advance after the biggest four-day gain since April as weekly industry data showed U.S. gasoline stockpiles expanded, keeping supplies at the highest seasonal level in more than two decades. West Texas Intermediate crude slipped 0.9 percent to $46.15 a barrel, ending a 12 percent rally over the preceding four days after Saudi Arabia said it is prepared to act to stabilize markets. U.S. inventories of motor fuel increased by 2.18 million barrels last week while crude stockpiles dropped by 1 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show a drop in gasoline supplies and an increase for crude. Gold’s two-day gain stalled on the Fed rates speculation. Bullion for immediate delivery slipped 0.3 percent to $1,342.63 an ounce. Silver lost 1 percent. U.S. natural gas futures rose 1.1 percent to $2.645 per million British thermal units, a fourth day of gains and the longest rally since the start of June. Temperatures may be above average in the East and Northwest, boosting demand for electricity for cooling.

It’s quiet on the US calendar today where the focus will be on the FOMC minutes tonight, while the DOE will release the official weekly inventory data at 10:30am ET.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg
  • European equities enter the North American crossover lower amid yesterday's hawkish Fed rhetoric with newsflow otherwise light
  • GBP/USD was lent some support by the latest jobs report, although gains have now been pared with the data not providing too much insight into the post-Brexit fallout
  • Looking ahead, highlights include FOMC Meeting Minutes, DoE crude oil inventories and comments from Fed's Bullard
  • Treasuries lower in overnight trading with global equities, oil and gold; FOMC minutes at 2pm ET may “reflect greater confidence in labor mkt and domestic economic growth than in June.”
  • The U.K. labor market showed signs of continued resilience after the country’s referendum on EU membership, as jobless claims unexpectedly fell 8,600 in July after increasing 900 in June
  • Norway’s $890 billion sovereign wealth fund, the world’s biggest, took the step of independently cutting the value of its massive U.K. real estate portfolio by 5% after Britain voted to leave the European Union
  • Russia is delaying what would have been its biggest asset sale in a decade after renewed weakness in global oil markets and tensions among potential buyers upended plans to offer a stake in Bashneft PJSC
  • ABN Amro jumped the most in almost six months after second- quarter profit beat estimates and Chief Executive Officer Gerrit Zalm announced plans to cut costs by about 200 million euros ($225 million)
  • Chinese authorities said 450 suspects have been arrested this year in a crackdown on using offshore companies and “underground banks” to transfer money illegally
  • Cisco Systems, the largest maker of networking equipment, will cut as many as 14,000 employees worldwide, or 20% of its workforce, CRN reported, citing people close to the company
US Event Calendar
  • 7am: MBA Mortgage Applications, Aug. 12 (prior 7.1%)
  • 10:30am: DOE Energy Inventories
  • 1pm: Fed’s Bullard speaks in St. Louis
  • 2pm: FOMC Minutes
DB's Jim Reid concludes the overnight wrap

The FOMC minutes (from the July 26-27 meeting) will be a little more interesting than previously thought after the influential and usually relatively dovish NY Fed President Dudley’s unscheduled comments yesterday. He suggested that a September hike was "possible" and that "we're edging closer towards the point in time where it will be appropriate to raise rates further." He added that 10y Treasuries were "pretty low given the circumstances" and that the Fed funds futures market was underpricing rate hikes. We've heard this sort of thing a lot in recent years from FOMC members without much eventual action so we shouldn't over interpret but it was inevitable that it would impact rates pricing yesterday.

Indeed while 10y Treasury yields only ended up climbing 1.7bps yesterday to close at 1.575% they were up some 6bps from the intraday lows just prior to Dudley’s comments. The same can be said for 2y yields which were at 0.681% prior to the comments and 0.746% by the end of the session (+2.0bps on the day and +6.4bps from the session low). September rate hike expectations edged up to 22% from 18% the day prior while December expectations rose from 45% to 51%. European government bond markets also followed the lead. 10y Bund yields ended up climbing 4.4bps to -0.031% which is the highest yield since August 4th, while the peripherals were up anywhere from 5bps to 15bps in yield. We’ve seen a similar move in Asia this morning where 10y JGB’s are +3.0bps and similar benchmark bonds in the Australian, NZ and China are 2-4bps higher.

Staying with bonds, yesterday we saw the latest long-dated reverse Gilt auction which was hotly anticipated after last week's failure from the BoE to buy the desired amount. With a week of press and publicity it was expected that they would have more success this week and indeed they did. However the £3.12bn tendered vs. the £1.17bn desired (2.67 covered) was still less than for any of the other non long-end auctions so far (3.54 times being the lowest cover). We also have a 2055 Gilt auction today which may have encouraged more sellers than last week. 30 year gilts sold off 5.6bps yesterday but this was in line with international equivalents. Given the BoE will be buying these bonds every week this story will continue to be a big theme for many months and we'd expect the supply/demand dynamics at the long end to continue to be tough for the Bank.

Meanwhile, there was little evidence that the big post-referendum decline for Sterling has fed through to headline consumer prices yet as the July headline CPI reading came in as expected at -0.1% mom. The YoY rate did however nudge up one-tenth to +0.6% while the core reading was down one-tenth to +1.3%. That said the more interesting read-through was in producer prices where PPI input rose a significant and more than expected +3.3% in July (vs. +1.0% expected). That was most since 2011 while the YoY rate is now up to +4.3% from -0.5% and so ends 32 consecutive months of deflation in input costs.

Risk assets ended up spluttering yesterday following Dudley’s comments with US equity markets in particular retreating from Monday’s record high marks. The S&P 500 (-0.55%), Dow (-0.45%) and Nasdaq (-0.66%) all closed lower while in Europe the Stoxx 600 (-0.79%) also ended up weakening as automakers in particular came under pressure. The rally for emerging markets also finally came to a halt with the MSCI emerging markets index (-0.03%) just about closing in the red following eight consecutive daily gains which had seen it surge over 5%. Notably the weaker performance for equity markets also came despite another +1.84% rally for WTI where some pre-Dudley weakness for the USD (-0.88%) supported gains.

This morning in Asia it’s been another relatively mixed start. Currently in the red is the Shanghai Comp (-0.52%), Kospi (-0.66%) and ASX (-0.08%), however the Nikkei (+0.50%) and Hang Seng (+0.21%) are both up in early trading. The Shenzhen is also a touch higher after Beijing yesterday approved the long awaited Shenzhen and Hong Kong trading link. Meanwhile gains for Japanese equities this morning have come about following a slightly weaker morning for the Yen which has been a big focus in the last couple of days. After breaking below 100 yesterday, the Yen is -0.32% weaker this morning at 100.62. Japan’s Vice Financial Minister said earlier that he is watching with ‘a strong sense of concern’ about moves in the currency and would look to act if needed.

Moving on. Despite playing second fiddle to Dudley yesterday, the Atlanta Fed’s Lockhart also attracted a bit of attention when he said that ‘I’m not locked in to any policy position at this stage, but if my confidence in the economy proves to be justified, I think at least one increase of the policy rate could be appropriate later this year’.

The hawkish Fedspeak largely overshadowed what was a mixed batch of economic data in the US yesterday. Of most focus was the July CPI report where headline inflation printed at 0.0% mom as expected although the YoY rate rounded down to a slightly lower than expected +0.8% from +1.0% in June. The core (+0.1% mom vs. +0.2% expected) also rose less than the market had forecasted resulting in the YoY rate dipping one-tenth to +2.2%, driven primarily by an unusual plunge in airfares.

There was better news in the latest activity indicators however where industrial production rose a bumper +0.7% mom last month (vs. +0.3% expected). Capacity utilization was up half a percent to 75.9% (vs. 75.6% expected) while manufacturing production also rose a robust +0.5% mom (vs. +0.3% expected). Finally the latest housing starts data covering July revealed starts rose +2.1% mom in July (vs. -0.8% expected) leaving the annualised level of starts at the highest since February. Building permits (-0.1% mom vs. +0.6% expected) were a bit weaker than expected however. The only other data to note came in Germany where the August ZEW current situations index bounced back from its post-Brexit decline to rise nearly 8pts to 57.6 (vs. 50.2 expected). That actually left the index at the highest level since January while the expectations component rose over 7pts to +0.5.

Looking at the day ahead, this morning in the UK we’ll get the next slug of data with the latest employment numbers. We’ll get the claimant count and jobless claims change data for July (i.e. post referendum) along with the ILO unemployment rate and average weekly earnings data in the three months to June. It’s quiet in the US this afternoon where the focus will be on the FOMC minutes tonight. Away from the data we’ll also hear from the Fed’s Bullard again this evening at 6pm BST where he’s due to speak on the US economy and monetary policy

http://www.zerohedge.com/news/2016-...-dollar-pressures-oil-ems-all-eyes-fed-minute
 

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#28
Frontrunning: August 17


by Tyler Durden
Aug 17, 2016 7:44 AM
  • Futures flat ahead of Fed minutes (Reuters)
  • Trump shakes up campaign staff (Reuters)
  • Univision Wins Bankruptcy Auction for Gawker Media for $135 Million (WSJ)
  • Congress receives FBI material on Hillary Clinton emails (CBS)
  • Traders Brace for More Turmoil in World’s Worst Stock Market (BBG)
  • Withdrawals Plague Once-Mighty Hedge-Fund Firms Brevan Howard and Tudor (WSJ)
  • New York man in court charged with murdering Muslim cleric, assistant (Reuters)
  • NSA website recovers from outage amid intrigue (Politico)
  • The Soft Pinch of Austerity in Saudi Arabia Could Backfire (BBG)
  • Walmart’s Out-of-Control Crime Problem Is Driving Police Crazy (BBG)
  • Iran official: No permanent Russia base for Syria strikes (AP)
  • Deutsche Bank Must Weigh Scrapping Bonus for 2016, Sewing Says (BBG)
  • U.S. Charges Gabonese Fixer Tied to Hedge Fund Och-Ziff With Bribery (WSJ)
  • Modi Sends Warning Shot to China, Pakistan on Territory Spat (BBG)
  • Israel to pay Turkey $20 million in compensation after six-year rift (Reuters)
  • Fund managers to ditch UK holdings over Brexit (Times)
  • North Korea deputy ambassador in UK defects to South (Reuters)
  • Target cuts profit forecast as same-store sales decline (Reuters)

Overnight Media Digest

WSJ

- A growing exodus from hedge funds extended to two of the biggest names in the industry Tuesday, Tudor Investment and Brevan Howard, as disenchanted investors increasingly shun what was once the hottest place to put money. Hedge funds and actively managed mutual funds have been underperforming since financial markets began their rebound in early 2009. http://on.wsj.com/2bboNON

- Pennsylvania Attorney General Kathleen Kane announced her resignation Tuesday, a day after she was convicted of perjury and obstruction in a case stemming from her leak of grand jury materials. http://on.wsj.com/2aZxCIo

- Ford Motor plans to release a fully driverless car without a steering wheel or pedals in the next five years, the latest salvo in a technological arms race engulfing the global auto industry. http://on.wsj.com/2aYyKfo

- Univision Communications won a court-administered auction for Gawker Media Group, outbidding Ziff Davis for control of the digital media pioneer that was forced into bankruptcy by a costly legal battle with former professional wrestler Hulk Hogan. http://on.wsj.com/2baMnLJ


FT

- Univision is buying Gawker Media for $135 million and offer from Univision represents a 50 percent premium to the initial $90 million bid by Ziff Davis, its main competition in the auction.

- Ford says it would build a fully self-driving car by the year 2021. The car will have no steering wheel or pedals and will be used in the driverless taxi services.

- Barnes & Noble has fired its CEO, Ron Boire, after the bookseller said the board determined that Boire "was not a good fit for the organization"

- BT CEO Gavin Patterson wrote to rival broadband providers Sky, Vodafone and TalkTalk to say that their 'Fix Britain's Internet' campaign is misleading consumers and "talking down" Britain.

NYT

- Gawker Media was sold to Univision at auction on Tuesday. Univision bid $135 million to beat out digital media publisher Ziff Davis. http://nyti.ms/2bxbEi9

- Ford Motor's Chief Executive Mark Fields said the company planned to mass produce driverless cars and have them in commercial operation in a ride-hailing service by 2021. http://nyti.ms/2bxaOSD

- The Obama administration on Tuesday issued aggressive new emissions standards for heavy-duty trucks. The rules are expected to achieve better fuel efficiency and a bigger cut in pollution than the version that was first proposed last year. http://nyti.ms/2bxbVS2

- African officials say the arrest of a Gabonese man on bribery charges may help pull back the curtain on a long-running foreign corruption scandal. United States authorities on Tuesday arrested Samuel Mebiame, a consultant who worked for a joint venture involving Och-Ziff Capital Management Group. http://nyti.ms/2bxcbk9


Canada

THE GLOBE AND MAIL

** Ottawa is monitoring the surge of unregulated mortgages in Canada as non-bank lenders see their market share grow amidst frothy housing conditions in Toronto and Vancouver. (http://bit.ly/2bdmNEU)

** Energy infrastructure company Kinder Morgan's pipeline expansion is caught amidst a "challenging" time of transition, according to a federal ministerial panel appointed to conduct additional work despite the pipeline getting approved by the National Energy Board. (http://bit.ly/2bdp5Uw)

** A month after rules to legalize UberX were to come into effect, Toronto said that it had issued a new sort of licence to the disruptive ride-for-hire service and will begin screening its drivers with criminal background checks. (http://bit.ly/2bdoFh1)

NATIONAL POST

** BHP Billiton Ltd, the world's biggest mining company, may end up "mothballing" its Canadian potash project by the end of the decade after completing two shafts at a cost of about US$2.6 billion. After the shafts are completed by 2018 or 2019, the company will decide on whether to build the mine or not. (http://bit.ly/2bmKGLO)

** Ontario's largest credit union Meridian is launching a nationally available online and mobile bank. The aim is to compete with the country's Big Five banks by accepting deposits and giving loans. (http://bit.ly/2bmR05D)

** Virgin Mobile Canada has introduced two new home Internet service plans for eligible Ontario residents. Customers in the province have the option of signing up for a 300 GB plan for $50 per month or an unlimited plan for $65 per month. (http://bit.ly/2bmM299)


Britain

The Times

More than half of Europe's largest fund managers plan to cut their holdings in UK companies amid fears about the impact of Britain leaving the European Union. http://bit.ly/2bcnUom

A 3.4 billion pounds ($4.43 billion) bid for William Hill Plc hung by a thread last night amid indications that Rank Group Plc and 888 Holdings Plc may be ready to throw in their cards. http://bit.ly/2bcp8jp

The Guardian

The financial pressure on older people and their families when trying to pay for social care is growing, with the average cost of a room in a care home now more than 30,000 pounds a year. The cost of a care home room has risen by 5.2 percent in the last year, more than 10 times the average increase in pensioners income, according to a report by Prestige Nursing and Care. http://bit.ly/2bcpree

Britain's Intellectual Property Office has approved Specsavers' application to trademark the terms "should've" and "shouldve" to protect its well-known catchphrase. The high street opticians made the application in July in a bid to safeguard its slogan "should've gone to Specsavers". http://bit.ly/2bcpzKQ

The Telegraph

Prime Minister Theresa May has written to Chinese President Xi Jinping insisting she wants stronger trade and cooperation between Britain and China, amid a row over her decision to delay the Hinkley Point nuclear deal. http://bit.ly/2bcr6Aw

City firms that help businesses run tax avoidance schemes could face huge financial penalties under fresh Government proposals. Under new HMRC plans, firms that help clients exploit tax rules, including the use of offshore tax havens, could pay a fine of up to 100 percent of the money lost to the taxpayer. http://bit.ly/2bcqE5f

Sky News

Direct Line Insurance Group Plc, one of Britain's biggest insurance companies, has abandoned plans to offload a chunk of its pension liabilities as deficits soar in the wake of this month's Bank of England interest rate cut, Sky News has learnt. http://bit.ly/2bcrvTg

Three 24-hour strikes by Virgin Trains East Coast staff have been called off pending further talks, the company has said. Members of the Rail, Maritime and Transport union had been planning to walk out later this month in a row over jobs, working conditions and safety. http://bit.ly/2bcpSVX

The Independent

Banco Santander SA has warned that Britain's vote to leave the European Union marked the end of an era of stability for the UK banking sector as banks face the prospect of record low interest rates and wider economic volatility. http://ind.pn/2bcqURV

http://www.zerohedge.com/news/2016-08-17/frontrunning-august-17
 

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Asian Metals Market Update: August 17-2016
By: Chintan Karnani, Insignia Consultants
Gold’s next big move seems to be the distance between the lip and the kiss. A $30 rise will result in sell stop losses getting triggered and another wave of rise to $1434+ very quickly. On the contrary, inability to get a sustained rise over $30 ($1380+) can result in prices falling first to $1309 and below and then rising. Long term investors need to worry. Short term traders and jobbers have some serious mind games in trading.

45th Anniversary Of Nixon Ending The Gold Standard
By: GoldCore
This was one of the most important events in modern financial, economic and monetary history and is a seminal moment in the creation of the global debt crisis which has confronted the U.S., Europe and the world in recent years and continues to this day. Nixon ushered in an era of floating fiat currencies not backed by gold or silver but rather deriving value through government “fiat,” diktat or order of the government.

Gold and Silver Market Morning: Aug-17-2016 -- Gold and silver prices steady in the euro weak in the dollar!
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch
Again Shanghai was higher than New York’s closing but London decided to walk its own road at the opening, opening lower at $1,341. The reason London pulled gold prices down before the opening in London was the continuing ‘strength of the euro/weakness of the dollar, as you can see in the euro gold prices below.
 

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#32
Ellen Brown-Cascade of Derivative Defaults Would Bring Everything Down
Greg Hunter


Published on Aug 16, 2016
Countries are up to their necks in debt that cannot not be paid. The derivatives propping the debt up are hundreds of trillions of dollars. Public banking expert Ellen Brown contends, “The concern is this $500 trillion of derivatives just on sovereign debt. There is $100 trillion in sovereign debt globally, which is a huge bill, and then you have all these derivatives betting against it with credit default swaps that would pay off in the event of a default. So, they can’t let any of these governments go bankrupt. They can’t write down the debt, and they can’t write off the debt as they should. These are impossible debts in Europe, particularly like in Greece. They are impossible debts to pay, but the central banks, for example in the EU, will not let any of these countries go bankrupt because the fear is it would trigger a cascade of defaults among the derivatives players, which would bring everything down.”

Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Ellen Brown, creator of the Web-of-Debt Blog at EllenBrown.com.

All links can be found on USAWatchdog.com: http://usawatchdog.com/financial-cras...
 

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#35
S&P Futures Unchanged As Europe Rises; Dollar Slide Sends Oil Above $47


by Tyler Durden
Aug 18, 2016 6:45 AM

In the latest quiet trading session, European shares rose while Asian stocks fell and S&P futures were little changed. Minutes of the Fed’s last meeting damped prospects for a U.S. interest-rate hike, sending the Bloomberg Dollar Spot Index doen 0.3%, approaching a three-month low. Dollar weakness continues to buoy commodities, with the Bloomberg Commodity Index set for the most enduring rally in more than two months, as WTI flirted with $47 and Brent briefly rising above $50.

Dollar weakness also pushed the MSCI emerging market index to a fresh one year high. The latest leg lower in the dollar was the result of yesterday's Fed minutes, which showed officials saw little risk of a sharp uptick in inflation and pushed odds of a rate increase this year back below 50 percent. “The message appears to be that as much as a September hike is a possibility, the Fed is unlikely to move until there is a consensus on the outlook for growth, hiring and inflation,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “Recent data would therefore suggest a hike is not imminent.”



Here is Jim Reid's take on yesterday's FOMC minutes:

The reaction in markets suggested that the minutes were on the dovish side, certainly relative to what we’d heard from Dudley although it still felt like investors were left fairly confused. The question is probably what is the more up to date view and should we place higher value on Dudley’s comments as a barometer of the overall leaning at the Fed? Dudley is due to speak again this afternoon on regional economic conditions at a press briefing however Q&A is expected after so that will be interesting to watch. A reminder than next week on Friday we’ll also hear from Fed Chair Yellen at Jackson Hole.

In terms of the minutes the most notable takeaway was the mention that ‘members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labour market and economic activity’. This was followed with ‘a couple of members preferred also to wait for more evidence that inflation would rise to 2% on a sustained basis’ and also that ‘some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation’.

The text also revealed that ‘several suggested that the committee would have ample time to react if inflation rose more quickly’ while others were of the view that ‘labour market conditions were at or close to those consistent with maximum employment and expected that the recent progress in reaching the Committee’s inflation objective would continue, even with further steps to gradually remove monetary policy accommodation’. The minutes also suggested that the committee was encouraged by the post-Brexit reaction in markets. The text showed that ‘participants generally agreed that the prompt recovery of financial markets following the Brexit vote and the pickup in job gains in June had alleviated two key uncertainties about the outlook’.

Speculation that central banks in the world’s biggest economies will remain accommodative propelled global equities to a one-year high this month. “Today is a breather after yesterday’s declines,” said Benno Galliker, a trader at Switzerland’s Luzerner Kantonalbank AG. “I am optimistic about the market overall - there is no other option but equities at the moment, as rates are going down and down and down. Central banks are going to remain quite accommodating, now politics have to come in to improve the mood.”

The Fed minutes struck a more dovish tone when compared with comments this week from New York Fed chief William Dudley, who flagged the prospect of a rate hike as soon as next month. Dudley will hold a press briefing on Thursday in New York and his San Francisco counterpart, John Williams, is also due to speak.

Britain’s pound was the biggest winner against its U.S. counterpart, surging after a report showed U.K. retail sales jumped more than economists forecast in the month after Britain voted to quit the European Union. Following last night's devastating Japan trade data, which showed imports and exports crashing the most since the crisis...






... economic data out of the UK showed retail sales unexpectedly surged in the month after Britain voted to quit the European Union, as hot weather bolstered sales of clothing and footwear and a drop in the pound encouraged tourists to snap up watches and jewelry.




The volume of goods sold in stores and online jumped 1.4 percent, after dropping 0.9 percent in June, figures from the Office for National Statistics showed on Thursday, exceeding a prediction of 0.1 percent in a Bloomberg survey. Sales excluding auto fuel advanced 1.5 percent. As a result, sterling strengthened 0.9 percent to $1.3160.

In Japan, the Nikkei 225 tumbled -1.6%, pressured by a sliding USD/JPY which fell below 100.00 early in the session, as well as July trade figures which showed both exports and imports declined by the most since 2009, while ASX 200 (-0.5%) was weighed ON by disappointing earnings. Chinese markets are positive with the Hang Seng (+1.0%) underpinned by strong results from the likes of Tencent and Lenovo, while the Shanghai Comp (-0.2%) saw indecisive trade after firm Chinese Property Prices which could spur outflows from stocks into the rampant sector.

In Europe, the Stoxx 600 added 0.5% with all industry groups rising. Nestle SA, which has the highest weighting in the Stoxx 600, advanced 1.2 percent as Chief Executive Officer Paul Bulcke forecast pricing will rebound in the coming months, after the world’s biggest food company reported the slowest first-half sales growth since 2009.

The MSCI Emerging Markets Index rose 0.7 percent, led by technology stocks. Tencent Holdings Ltd. jumped to an all-time high after a 47 percent surge in profit beat analysts’ estimates. Samsung Electronics Co. also climbed to a record. The two stocks have the biggest weightings in the MSCI equity benchmark.

S&P 500 futures were little changed, after shares eked out gains on Wednesday following the release of the Fed minutes. Cisco Systems Inc. fell 1.6 percent in German trading after the biggest maker of equipment that runs the Internet announced plans to cut about 7 percent of its workforce.

In addition to the weekly jobless claims data, investors will focus on earnings from retail giant Wal-Mart for indications of the state of the U.S. economy. Fewer than 30 of the S&P 500’s companies have yet to report.

Market Snapshot
  • S&P 500 futures up less than 0.1% to 2180
  • Stoxx 600 up 0.5% to 342
  • FTSE 100 up 0.2% to 6876
  • DAX up 0.6% to 10597
  • German 10Yr yield down 1bp to -0.06%
  • Italian 10Yr yield down 2bps to 1.1%
  • Spanish 10Yr yield down 2bps to 0.95%
  • S&P GSCI Index up 0.1% to 365.5
  • MSCI Asia Pacific down 0.4% to 139
  • Nikkei 225 down 1.6% to 16486
  • Hang Seng up 1% to 23023
  • Shanghai Composite down 0.2% to 3104
  • S&P/ASX 200 down 0.5% to 5508
  • US 10-yr yield up less than 1bp to 1.56%
  • Dollar Index down 0.23% to 94.5
  • WTI Crude futures up 0.3% to $46.94
  • Brent Futures down 0.4% to $49.63
  • Gold spot down 0.1% to $1,347
  • Silver spot up less than 0.1% to $19.70
Top Global News
  • Cisco Cuts Workforce by 7% to Speed Transition to Software: CEO Robbins moving company away from traditional hardware. Any savings from job reductions to go toward growth areas
  • Nestle Revenue Grows at Weakest Pace Since 2009 on Deflation: KitKat maker increasing prices in U.K., Brazil, Russia. Sales growth needs to accelerate to reach full-year target
  • Blackstone Said Nearing $620 Million New York Apartment Purchase: Kips Bay Court on east side of Manhattan has 894 rental units. Deal would follow $5.3 billion Stuyvesant Town purchase
  • American Apparel Said to Hire Bank to Explore Sale: Hires Houlihan Lokey to explore sale, Reuters reports, citing unidentified people familiar.
  • Redstone Granddaughter Said Pursuing Trial Even If Others Settle: Case in Massachusetts is scheduled to go to trial on Sept. 19. Suit claims media mogul is unduly influenced by daughter Shari
  • Retrophin Said to Consider Bid for Raptor Pharmaceutical: Raptor has also attracted interest from other drugmakers. No agreement has been reached, firms could decide against deal
  • Widening Fed Consensus on Inflation Overshadows Rate-Hike Debate
  • Caesars Suing Apollo to Stop Creditors From Suing Apollo
  • Bosch’s VW Diesel Cheating Role Called Key by Car Owners
  • American Apparel Said to Hire Bank to Explore Sale: Reuters
  • Tronc Said to Respond to Gannett’s Bid by End of the Week: WSJ
  • Clinton Foundation Said to Hire FireEye on Suspected Hack: Reuters
  • Gawker CEO Denton to Exit After Univision Sale Closes: Politico
  • Mondelez to Invest >$100m in China Over 3 Yrs: China Daily
Looking at regional markets, we start as usual in Asia where equities traded mixed following the mild gains seen in the US after dovish FOMC minutes, although Japanese sentiment was dampened on JPY strength and poor trade data. Nikkei 225 (-1.6%) was pressured after USD/JPY fell below 100.00 and July trade figures showed both exports and imports declined by the most since 2009, while ASX 200 (-0.5%) was weighed ON by disappointing earnings. Chinese markets are positive with the Hang Seng (+1.0%) underpinned by strong results from the likes of Tencent and Lenovo, while the Shanghai Comp (-0.2%) saw indecisive trade after firm Chinese Property Prices which could spur outflows from stocks into the rampant sector. 10yr JGBs traded higher amid the lack of risk appetite seen in Japanese equities, whilst today's 5yr JGB auction was also supportive with the bid/cover increasing from prior.

Top Asia News
  • China Bailout Fund Said to Sell Bank Stocks as Rally Extends: Selling seen after benchmark index climbs to 7-mo. high
  • Hong Kong Stocks Rally to Nine-Month High on Earnings Optimism: Tencent, Lenovo jump after profit beats analyst estimates
  • BOJ Cornered as Japanese Banks Running Out of Bonds to Sell: Banks cut almost half of holdings since Kuroda began easing
  • China July New Home Prices Rise M/m in Fewer Cities: New home prices, excluding subsidized housing, rises m/m in in 51 out of 70 cities tracked by China’s statistics bureau, vs 55 in June
  • Swire Properties Says 2H H.K. Office Demand Likely Subdued: 1H underlying profit HK$3.56b vs HK$3.94b y/y
  • Arsenal of Smartphone Apps Seeking Reliable Power Grows in India: Tarang phone app to track electricity transmission projects
In Europe, the upside in oil has seen energy names lead the way higher in terms of European equities, with major indices all trading in modest positive territory (Euro Stoxx: +0.5%). Elsewhere, basic material names are the laggard of the session so far, while on a stock specific basis, earnings continue to dictate play as we come to the back end of earning season, with Vestas Wind Systems and NN Group the top performers after their update, while Boskalis are the worst performer. Fixed income markets have seen a continuation of the post FOMC minutes fallout, with Bunds playing catch up to trade higher this morning amid dissipating expectations of a near term rate hike form the Fed, while the German curve has flattened this morning, also in line with its US counterpart.

Top European News
  • Bosch’s VW Diesel Cheating Role Called Key by Car Owners: Supplier accused of participating in ‘decade-long conspiracy’. Car owners’ lawyers expand on allegations in U.S. court filing
  • Casino Quietly Buying Back its own Shares: Casino has begun to buy back its own shares, bought back 0.7% of total equity or 1.4% of the free float for EU35m so far, Bernstein says in note
  • U.K. Retail Sales Surge as Sunshine Overpowers Brexit Concern: Volumes increased 1.4% on month in July, 5.9% on year. Slide in sterling after Brexit prompted watch, jewelry spree
  • Brexit-Bashed Banks Can’t Escape From London’s Canary Wharf: U.K. commercial property market fell into recession in July. Canary Wharf pivots to residential and retail construction
  • Argos to Buy U.S. Plants From HeidelbergCement for $660 Million: German company says disposal proceeds ahead of target. Argos to add one plant and eight related terminals in U.S.
In FX, the Bloomberg Dollar Spot Index fell 0.3 percent, approaching a three-month low. It posted a 0.2 percent gain on Wednesday, having been up as much as 0.5 percent ahead of the Fed minutes’ publication. Britain’s pound was the biggest winner against its U.S. counterpart, climbing after a report showed U.K. retail sales jumped more than economists forecast in the month after Britain voted to quit the European Union. Sterling strengthened 0.9 percent to $1.3160. The Aussie climbed 0.4 percent after a report showed Australia’s unemployment rate unexpectedly fell to 5.7 percent in July. The MSCI Emerging Markets Currency Index added 0.2 percent, after falling 0.5 percent on Wednesday. South Africa’s rand was among the biggest gainers, rising 0.4 percent, while Mexico’s peso and Malaysia’s ringgit both appreciated a similar amount.

In commodities, the Bloomberg Commodity Index was set for the most enduring rally in more than two months as the dollar weakened. West Texas Intermediate crude rose for a sixth day, the longest advance in more than a year, as U.S. crude and gasoline stockpiles dropped from the highest seasonal level in at least two decades. Oil added 0.4 percent to $46.96 a barrel after gaining more than 12 percent over the previous five sessions. Brent added as much as 0.4 percent to trade above $50 for the first time in more than a month. Industrial metals also rose, with copper gaining 1.4 percent to $4,839 a metric ton and nickel adding 1.5 percent.

In terms of the day ahead, we’ll get the latest initial jobless claims reading, Philly Fed survey for August and also the Conference Board’s leading index for July. Away from the data and as noted at the top we’re due to hear from the Fed’s Dudley this afternoon (at 3pm BST) and also Williams (at 9pm BST) later this evening. Amazon's bricks and mortar nemesis, Wal-Mart, will release earnings.

* * *

Bulletin Headline Summary From RanSquawk and Bloomberg
  • European equities trade modestly higher with energy names leading the way in what has once again been a relatively quiet session
  • GBP/USD has been dealt further support by another batch of positive post-referendum data with retail sales exceeding market consensus
  • Looking ahead, highlights include ECB Minutes, Philadelphia Fed Manufacturing Index and earnings from Wal-Mart
  • Treasuries mostly steady in overnight trading, global equities mixed and commodities rise as USD drops for fifth day in a row.
  • For all of their differences, one thing most Federal Reserve officials seem to agree on is that there’s not much risk of inflation running away from them anytime soon, regardless of what they do with interest rates
  • U.K. retail sales unexpectedly surged in the month after Britain voted to quit the European Union, as hot weather bolstered sales of clothing and footwear and a drop in the pound encouraged tourists to snap up watches and jewelry
  • France’s unemployment rate dropped to 9.9% in the second quarter from 10.2% in the first quarter, its lowest level in almost four years, helping President Francois Hollande fulfill a promise to cut joblessness before the next election
  • Japan’s biggest banks are running out of room to sell their government bond holdings, pushing the central bank closer to the limits of its record monetary easing; Etsuro Honda, an adviser to Japanese Prime Minister Abe, tells WSJ in interview he sees “more than a 50% possibility” of the Bank of Japan taking “bold” easing measures next month
  • Chinese state-backed funds sale of bank shares may signal confidence among Chinese policy makers that the $6.5 trillion market is growing strong enough to stand on its own
  • Steve Eisman made his name and fortune by foreseeing the collapse of subprime mortgage securities. Now he’s betting against a different kind of Wall Street money machine. He thinks hedge fund fees are going to tumble
  • JPMorgan Chase, Citigroup and Morgan Stanley are among 16 banks being sued by funds in the U.S. for allegedly manipulating a key Australian interest rate benchmark to generate hundreds of millions of dollars in illicit profits
  • Fannie Mae and its cousin, Freddie Mac, are once again headed for trouble. On Jan. 1, 2018, the two government- sponsored enterprises will officially run out of capital under the current terms of their bailout. After that, any losses would be shouldered by taxpayers
US Event Calendar
  • 8:30am: Initial Jobless Claims, Aug. 13, est. 265k (prior 266k)
  • 8:30am: Philadelphia Fed Business Outlook, Aug., est. 2.0 (prior -2.9)
  • 9:45am: Bloomberg Economic Expectations, Aug. (prior 44.5)
  • 10am: Leading Economic Indicators, July, est. 0.3% (prior 0.3%)
  • 10am: Freddie Mac mortgage rates
  • 10am: Fed’s Dudley speaks in New York
  • 10:30am: EIA natural-gas storage change
  • 4pm: Fed’s Williams speaks in Anchorage
DB's Jim Reid concludes the overnight wrap

Markets have spent the last 48 hours up and down like a BMX rider as they try to come to terms with the Fed's latest thinking after a relatively hawkish set of comments from the NY Fed’s Dudley on Tuesday was then followed up yesterday by FOMC minutes which suggested a much more divided committee. The reaction in markets suggested that the minutes were on the dovish side, certainly relative to what we’d heard from Dudley although it still felt like investors were left fairly confused. The question is probably what is the more up to date view and should we place higher value on Dudley’s comments as a barometer of the overall leaning at the Fed? Dudley is due to speak again this afternoon on regional economic conditions at a press briefing however Q&A is expected after so that will be interesting to watch. A reminder than next week on Friday we’ll also hear from Fed Chair Yellen at Jackson Hole.

In terms of the minutes the most notable takeaway was the mention that ‘members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labour market and economic activity’. This was followed with ‘a couple of members preferred also to wait for more evidence that inflation would rise to 2% on a sustained basis’ and also that ‘some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation’.

The text also revealed that ‘several suggested that the committee would have ample time to react if inflation rose more quickly’ while others were of the view that ‘labour market conditions were at or close to those consistent with maximum employment and expected that the recent progress in reaching the Committee’s inflation objective would continue, even with further steps to gradually remove monetary policy accommodation’. The minutes also suggested that the committee was encouraged by the post-Brexit reaction in markets. The text showed that ‘participants generally agreed that the prompt recovery of financial markets following the Brexit vote and the pickup in job gains in June had alleviated two key uncertainties about the outlook’.

Treasuries were bid up following the minutes. 10y yields ended the day 2.5bps lower at 1.550% although remain a couple of basis points above where they were immediately prior to the Dudley comments. 2y yields have gone from 0.694% pre-Dudley to a high of 0.767% and are now back down 0.726%. The USD was pretty choppy following the minutes but finished little changed. US equities had traded in the red for much of the session (quarterly results from Target and Lowes in the retail sector weighing) before firming slightly following the minutes. Indeed having been down as much -0.45% intraday the S&P 500 closed +0.12% although is still a shade below pre-Dudley levels. Meanwhile September rate hike expectations are unchanged at 22% (18% pre-Dudley) while December expectations continue to be a coin flip (49% from 51% on Tuesday and 45% on Monday)

This morning in Asia has seen another relatively mixed start in markets. The Hang Seng (+1.60%) has rallied on the back of a number of earnings reports, while the Shanghai Comp (+0.41%) and Kospi (+0.48%) are up more modestly. The Nikkei (-0.89%) is in the red with the Yen breaking through 100 again early this morning (its hovering around that level as we go to print). The ASX (-0.57%) is also lower.
There’s also been a bit of data released overnight. In Japan exports weakened to -14.0% yoy (vs. -13.7% expected) in July from -7.4% the month prior, while imports (-24.7% yoy vs. -20.0% expected; -18.8% previously) were also lower despite the strengthening Yen. The decline in exports is now the most since October 2009. Meanwhile in China the latest property prices data for July showed that prices increased in 51 cities last month (excluding government-subsidized housing) from 55 in June. This is out of 70 cities signalling a slight cooling off in property prices gains. Lastly a decline in the unemployment rate in Australia following the latest data this morning has seen the Aussie Dollar rise half a percent.

Away from the Fed yesterday, the only real economic data to note came again from the UK where the latest employment numbers were released, some of which covered the post-Brexit period. In the three months to June 172k jobs were added which was a bit more than expected (150k expected). The ILO unemployment rate held steady in the same period at 4.9% as expected while average weekly earnings including bonuses (+2.4% yoy) and excluding bonuses (+2.3% yoy) both rose one-tenth which was in-line. Meanwhile, in terms of the July data jobless claims actually declined unexpectedly (-8.6k vs. +9.0k expected) – this was also the first monthly decline in claims since February although it’s worth noting that the data tends to be a bit volatile.

Sterling was little changed by the end of play and Gilt yields were lower (10y Gilts -2.2bps) which was in line with the wider market generally. The FTSE 100 was -0.50% although this outperformed most other European bourses which were down 1-1.5% generally, seemingly still reacting to Dudley’s more hawkish comments the day prior.

Meanwhile, Portugal has been focus for sovereign bond markets over the past couple of days. Indeed 10y Portugal yields had been up as much as 31bps from Tuesday’s intraday lows at one stage over concerns that Portugal may lose its BBB rating from rating agency DBRS – the only rating agency to still rate Portugal investment grade and so making Portugal still eligible for ECB bond purchases. Yesterday late afternoon however the Chief Economist at DBRS said that the agency is ‘comfortable’ with its rating for Portugal which helped to alleviate some concerns for now. Portugal’s bonds rallied 8bps or into the close following those comments.

In terms of the day ahead, shortly after we go to print this morning we’ll get the Q2 employment numbers out of France. It’s all eyes on the UK after that where the July retail sales data is set to be released and should be another important post-Brexit indicator. Current market consensus is for +0.3% mom excluding fuel and +0.1% mom including fuel. Also out this morning will be the final revisions to July CPI for the Euro area along with the minutes from the last ECB Council Meeting. Across the pond this afternoon we’ll get the latest initial jobless claims reading, Philly Fed survey for August and also the Conference Board’s leading index for July. Away from the data and as noted at the top we’re due to hear from the Fed’s Dudley this afternoon (at 3pm BST) and also Williams (at 9pm BST) later this evening.

http://www.zerohedge.com/news/2016-...-europe-rises-dollar-slide-sends-oil-above-47
 

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#36
Frontrunning: August 18


by Tyler Durden
Aug 18, 2016 7:55 AM
  • World stocks rise, dollar weakens on divided Fed (Reuters)
  • U.S. Held Cash Until Iran Freed Prisoners (WSJ)
  • Brazil police pull U.S. swimmers from flight amid robbery probe (Reuters)
  • Rio’s Latest Headache: Loads of Empty Seats (WSJ)
  • Clinton Foundation hired cyber firm after suspected hacking (Reuters)
  • How Lending Club’s Biggest Fanboy Uncovered Shady Loans (BBG)
  • Spain PM seeks small party support to try to snap deadlock (AP)
  • Lawsuit Alleges Banks Manipulated Australian Rate (WSJ)
  • Brexit Means Little to British Consumers When the Sun Is Shining (BBG)
  • Welcome to the ‘Meat Casino’! The Cattle Futures Market Descends Into Chaos (WSJ)
  • Cathay Says Premium Travel Slumping, Prompting Discounts (BBG)
  • Turkey 'to seize assets of 187 Gulen-linked businessmen (AFP)
  • How Bernie Sanders Avoided Disclosing His Personal Finances (NBC)
  • Samsung Climbs to Record, Defying Sluggish Smartphone Market (BBG)
  • Merkel says refugees didn't bring Islamist terrorism to Germany (Reuters)
  • Germany Sees Tailor-Made Brexit Deal as U.K. Tests Patience (BBG)
  • Serbia intercepts over 3,000 illegal migrants in a month (Reuters)

Overnight Media Digest

WSJ

- An Iranian cargo plane left Geneva with $400 million in cash after a flight with Americans aboard took off from Tehran in January. http://on.wsj.com/2byZtS3

- Some Republicans welcomed Donald Trump's overhaul of his campaign staff, while others worried that Trump couldn't recover lost ground by choosing a provocative media entrepreneur who has never run a campaign to lead his team. http://on.wsj.com/2bBNJ3a

- The Consumer Financial Protection Bureau sent undercover investigators to BancorpSouth Inc as part of an investigation into alleged mortgage discrimination, the latest example of the agency testing boundaries with its enforcement tactics. http://on.wsj.com/2b2Nn0U

- Federal Reserve officials, playing a waiting game on the economy, sought to keep their options open at a July policy meeting as they tried to reconcile differences over whether it was time to raise short-term interest rates again. http://on.wsj.com/2b1Byew


FT

- Cisco will cut 7 percent of its global workforce or up to 5,500 jobs as it restructures in what it called a "challenging macro environment".

- City of London Police said they detained a female employee of Sage Group at the airport on suspicion of conspiracy to defraud. The woman may have been detained in relation to the data breach that hit Sage Group.

- Cobham has appointed a new CEO after reporting losses two weeks ago in the first half of the year. David Lockwood, who is currently chief executive of Laird, will replace Bob Murphy before the end of the year.

- The number of people in Britain claiming jobless benefits fell in July and the unemployment rate also held steady at an 11-year low of 4.9 percent in a sign of the labour market's resilience.

NYT

- Hillary Clinton leaned into her plans to raise taxes on the wealthiest Americans on Wednesday, denouncing Donald Trump's tax proposals as a boondoggle for billionaires. http://nyti.ms/2bkdfpX

- Pinterest has started selling video advertising. Video ads from brands like Kate Spade and bareMinerals will start appearing in the virtual scrapbook-like Pinterest feed on Wednesday and into the coming weeks. http://nyti.ms/2bkdsZX

- Facing high-profile withdrawals from online insurance exchanges and surging premiums, the Obama administration is preparing a major push to enroll new participants into public marketplaces under the Affordable Care Act. http://nyti.ms/2bkdRMg


Canada

THE GLOBE AND MAIL

** Ontario said it would start licensing home inspectors in the province as part of legislation that could be passed as early as this fall. The province plans to introduce laws that would establish minimum standards for home inspections. (http://bit.ly/2bpA1Qg)

** The federal government expressed its willingness to settle lawsuits over the mass adoption of indigenous children into non-indigenous families, even as its lawyers file disclosures related to an Ontario class-action lawsuit scheduled to be heard in court next week. (http://bit.ly/2bpBia6)

** Canadian auto startup EVEN Electric is launching an innovative web-based sales platform and showroom that will move transactions online and away from the traditional car lot. (http://bit.ly/2bpBQfZ)

NATIONAL POST

** A fraud investigation in the UK and a Senate impasse in the U.S. have virtually eliminated export financing for two of Bombardier Inc's biggest competitors, Boeing Co and Airbus Group SE, giving the Canadian company a leg up as it vies to win new orders for its CSeries commercial jet. (http://bit.ly/2bpzga1)

** Meridian, Ontario's largest credit union, will be able to tap a much broader pool of deposits to fund its business, if it is successful in a bid for a national banking license. But analysts say the firm will need to gain sufficient scale and efficiency to take on the country's biggest banks. (http://bit.ly/2bpyM3y)

** Victims of the hepatitis C tainted blood scandal of the 1990s will receive compensation from a surplus of more than C$200 million ($156.09 million), after an Ontario court rejected Canada's efforts to claw it back. (http://bit.ly/2bpA7r1)


Britain

The Times

Norges Bank Investment Management, the world's largest sovereign wealth fund, has cut the valuation of its UK property portfolio, which includes Regent Street in London, by 5 percent after the Brexit vote. http://bit.ly/2boygmo

Economic and consumer uncertainty surrounding the vote to leave the European Union will take away any growth in UK car sales this year, one of Britain's leading motor retailer Lookers group has admitted. http://bit.ly/2boyGta

The Guardian

Government proposals to impose heavy fines on banks, accountants and lawyers who market tax avoidance schemes will fail without more resources for HM Revenue & Customs to pursue offenders, campaigners have said. http://bit.ly/2bozhuH

More than a million workers from eastern Europe are working in Britain following a rise in the number of foreign nationals entering the labour market before the Brexit vote. The total number of EU workers employed in the UK increased by almost 90,000 in the three months to the end of June, pushing the overall employment rate to another record high in statistics, which were published on Wednesday. http://bit.ly/2boz5LX

The Telegraph

The City of London police arrested a Sage Group employee at Heathrow airport on Wednesday on suspicion of conspiracy to defraud, just two days after the FTSE 100 company revealed a data breach. http://bit.ly/2boC0EA

The London Stock Exchange Group Plc's merger with its German counterpart is now in the hands of the world's regulators after Deutsche Boerse AG's shareholders belatedly gave their blessing to the pairing. http://bit.ly/2boDiPY

Sky News

Uber Technologies Inc has launched legal action against Transport for London over new rules for private hire companies which are designed to improve passenger safety. http://bit.ly/2boCri3

The Independent

Certain London airport bureaux de change are now returning less than 1 euro ($1.13) for each pound offered, underlining how the slide in the value of the sterling since the 23 June Brexit referendum vote is already hitting holidaymakers in the pocket. http://ind.pn/2boCr1J

http://www.zerohedge.com/news/2016-08-18/frontrunning-august-18
 

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Global Stocks Drop, US Futures Down As Dollar Rebound Halts Longest Oil Rally In Years


by Tyler Durden
Aug 19, 2016 6:49 AM

European, Asian stocks and S&P futures all fell in another quiet, low-volume early session. With oil entering a bull market yesterday (after sliding into a bear market just weeks ago), and set for its longest run of gains in 4 years after, overnight crude stumbled, and reversed early gains, falling for the first time in seven days driven by rebound in the dollar which gained versus all G-10 currencies with commodity currencies underperforming.

“I think it’s the case that we’ve run up pretty hard in the past six weeks or so and that slightly caught investors unawares,” James Buckley at Baring Investment told Bloomberg. “That’s probably going to mean that to push on further from here we would need some further affirmative data. I wouldn’t be surprised to see a pause around these levels, I don’t necessarily think it will be up or down, but certainly a pause, perhaps with a downward drift.”

The Bloomberg Dollar Spot Index was +0.5% at 1,167.08, set for the biggest one-day gain since July 19 and trimming this week’s loss to 1 percent. While the U.S. central bank’s minutes showed Wednesday that officials were split in July on the need for an interest-rate hike, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an increase. “The Fed’s apparent lack of urgency to raise rates is encouraging expectations of further dollar declines,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Today is probably just a blip in the dollar’s lousy August so far.”

Financial markets were confused this week by more hawkish comments from regional Federal Reserve chiefs including New York’s William Dudley, while minutes of the last policy meeting struck a dovish tone seeing little prospect of a sharp increase in price pressure. The events set the stage for Fed Chair Janet Yellen, who speaks at a meeting of global policy makers in Jackson Hole, Wyoming, next week. December rate hike odds stand at 47%, fed fund futures show. That compares with 36% at the start of the month.




“The Fed, at least in speeches this week, has been trying to get markets more in line with what they expect from monetary tightening this year,” said Richard Falkenhall, a strategist at SEB AB in Stockholm. “But the market is still not convinced.”

Europe’s Stoxx 600 Index is heading for a 1.4% weekly decline, the largest weekly drop since mid-June. Trading volumes were about a third lower than the 30-day average. Italy’s FTSE MIB, the worst performing index in the world this year, tumbled 1.9 percent.

Intesa Sanpaolo SpA weighed heaviest on the index with a 3.1 percent drop. Italy’s shares led declines on Friday and its government bonds yielded the most relative to Spain’s in more than 18 months as concern over the health of the country’s banking industry and political risks weighed on the nation’s assets. Equities in emerging markets erased a sixth week of gains. Gold lost ground for the first time this week as Bloomberg’s dollar index rose from a three-month low. Oil was headed for its biggest weekly jump since March amid speculation major producers will act to freeze output. Insurers were the biggest decliners on Friday, while BMW AG led automakers lower. BHP Billiton Ltd. and Glencore Plc dragged a gauge of miners down as commodity prices slipped. Royal Vopak NV tumbled 6.9 percent after the storage-tank operator reported lower revenue and cashflow.

S&P 500 Index futures were down 0.3% in premarket trading. Applied Materials Inc. advanced 6.5 percent in European trading after the biggest maker of machinery used to manufacture semiconductors predicted revenue and profit that may surpass estimates.

The MSCI Emerging Markets Index slid 0.8 percent, leaving it down 0.1 percent in the week. The measure is up 15 percent this year compared with a 4.4 percent increase in the MSCI World Index of developed-nation stocks.

10Y Treasuries yielded 1.54%, little changed on the day and up three basis points for the week. The two-year note yield, among the maturities most sensitive to the outlook for Fed policy, was little changed this week at 0.71 percent.

Market Snapshot
  • S&P 500 futures down 0.3% to 2177
  • Stoxx 600 down 0.6% to 341
  • FTSE 100 down 0.1% to 6860
  • DAX down 0.8% to 10517
  • German 10Yr yield down less than 1bp to -0.09%
  • Italian 10Yr yield up 3bps to 1.11%
  • Spanish 10Yr yield up 3bps to 0.94%
  • S&P GSCI Index down 0.6% to 368.7
  • MSCI Asia Pacific down 0.3% to 139
  • Nikkei 225 up 0.4% to 16546
  • Hang Seng down 0.4% to 22937
  • Shanghai Composite up 0.1% to 3108
  • S&P/ASX 200 up 0.3% to 5527
  • US 10-yr yield up less than 1bp to 1.54%
  • Dollar Index up 0.4% to 94.53
  • WTI Crude futures down 0.5% to $47.98
  • Brent Futures down 0.8% to $50.46
  • Gold spot down 0.4% to $1,347
  • Silver spot down 0.9% to $19.57
Global Headline News
  • Viacom Board Said to OK Settlement; Dauman Steps Down as CEO: COO Tom Dooley to take over as interim chief executive officer. Settlement marks near-total victory for Sumner, Shari Redstone
  • Exxon, Chevron, Hess Said to Be in Joint Bid for Mexican Oil: Mexico to auction rights to 10 deepwater oil fields on Dec. 5. Companies have until Nov. 18 to report bid groups to regulator
  • China Sovereign Fund Said to Seek $9 Billion Vale Streaming Deal: Miner also talking to other Asian cos. on stake sale
  • Chipotle Is Still in a Funk and Wall Street’s Getting Impatient: Sales haven’t recovered as marketing spending gets a boost; “they’re going to have to find a different way to operate.”
  • Monte Paschi Says It Acted Properly as CEO Viola Investigated: Bank says operations were carried out by previous management. Reuters reported that Viola, Profumo being investigated
  • Katsuyama Shakes Up Industry Even Before His IEX Exchange Opens: Nasdaq, NYSE want new kinds of orders in response to upstart. IEX begins trading as 13th U.S. stock exchange on Friday
  • NBC’s $12b Olympics Bet Stumbles, Thanks to Millennials: Prime-time broadcast viewership has been down ~17% compared to the London games four years ago
  • Singapore Defaults Boost Calls for Aid as Oil Firms Falter: More bonds may default without further bank help, UBS analysts say
  • VW’s German Production at Risk as Supplier Spat Sparks Slowdown:
    Shortened work hours at Emden plant may widen to more sites. Cutbacks
    compound woes as VW seeks to resolve diesel scandal
* * *
Looking at regional markets, we find that Asia failed to sustain the early widespread energy-inspired gains in which oil rallied 3% and officially entered bull market territory, with the regional stock markets mixed. Nikkei 225 (+0.4%) initially outperformed on JPY weakness but then pared some gains as China bourses entered the fray and dragged sentiment lower. ASX 200 (+0.3%) also saw choppy trade amid weakness in financials after Moody's downgraded its outlook on the big 4 banks and Australia's banking system to negative. Chinese markets were initially lower with the Hang Seng (-0.4%) and Shanghai Comp (+0.1%) weighed on following reports of possible curbs on the financial and property sectors, while the PBoC also reduced its net weekly liquidity injection. However, the Shanghai Comp managed to pare losses heading in to the close. 10yr JGBs traded flat amid indecisiveness seen across riskier Japanese assets, while the BoJ were present in the market to acquire JPY 1.25tr1 in government debt.

Top Asia News
  • China Sovereign Fund Said to Seek $9 Billion Vale Streaming Deal: Miner also talking to other Asian cos. on stake sale
  • Singapore Defaults Boost Calls for Aid as Oil Firms Falter: More bonds may default without further bank help, UBS analysts say
  • Idle Credit Cards in Asians’ Wallets Prompt Citi, HSBC Overhaul: Banks are eyeing rapid growth of payment transactions in Asia
  • The Gold Medal for Buying Up Brazilian Assets Goes to China Inc.:China surpasses U.S., U.K. as top buyer of Brazilian assets
  • Citic Unit Plans Japan Private Equity Fund as China Buying Jumps: 30b yen fund has invested in Akakura, Mark Styler
  • Bank of East Asia Profit Drops 38% as China Drags on Lending: Weaker China economy causes loan impairments to surge 60%
European equities are softer this morning (Euro Stoma -0.9%) with notable weakness in telecom and health care names, allied with the moves lower in oil prices which have seen a pull-back as Brent crude futures fall below USD 51. Additionally, downside in equities has been somewhat exacerbated by the thin market conditions with newsflow relatively light as has been the case over the past week. In credit markets, Bunds are relatively flat despite the downside in equities, while there has been some notable outperformance in the long end of the curve. In terms of peripheral bonds, Portuguese yields are firmer this morning ahead of Fitch's sovereign announcement with risks concerning over the potential moves to their outlook.

Top European News
  • Monte Paschi Says It Acted Properly as CEO Viola Investigated: Bank says operations were carried out by previous management. Reuters reported that Viola, Profumo being investigated
  • U.K. Posts Surplus as Bank Surcharge Boosts Corp. Taxes: U.K. posted surplus in July as govt’s tax take was boosted by first payments under a surcharge on banks introduced last year.
  • VW’s German Production at Risk as Supplier Spat Sparks Slowdown: Shortened work hours at Emden plant may widen to more sites. Cutbacks compound woes as VW seeks to resolve diesel scandal
  • Brunel Drops; 2Q Numbers Beat, But FY Guidance Weak, Kepler Says: Brunel International falls as much as 7.6% in early trading, vol. 85% of 3-mo. daily avg. at 9:09am CET; 2Q figures beat ests, but FY Ebit guidance of EU30m-EU35m is “clearly” lower than consensus, Kepler Cheuvreux says in note.
  • Deutsche Bank Whistle-Blower Spurns $8 Million SEC Reward: Eric Ben-Artzi complains that top executives went unpunished. Former Deutsche Bank risk officer writes opinion piece in FT
In FX, the Bloomberg Dollar Spot Index rose 0.4 percent, trimming this week’s loss to 1 percent. While the U.S. central bank’s minutes showed Wednesday that officials were split in July on the need for an interest-rate hike, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an increase. “The Fed’s apparent lack of urgency to raise rates is encouraging expectations of further dollar declines,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Today is probably just a blip in the dollar’s lousy August so far.” The yen weakened 0.2 percent to 100.13 per dollar, paring its weekly gain to 1.2 percent. The currency has strengthened 20 percent this year and Japan’s Vice Finance Minister Masatsugu Asakawa said on Thursday that policy makers are prepared to take action if speculative trading is evident. The MSCI Emerging Markets Currency Index declined 0.5%, set for its first weekly loss in four weeks. Mexico’s peso and South Africa’s rand led losses on Friday, both sliding more than 1 percent.

In commodities, oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output at the same time U.S. crude and fuel stockpiles decline. West Texas Intermediate crude fell 0.4 percent to $48.01 a barrel, paring its weekly gain to 7.9 percent. Brent lost 0.8 percent to $50.48. Prices have risen steadily since Saudi Arabian Energy Minister Khalid Al-Falih said Aug. 11 that informal talks in September may lead to action to stabilize the market. Most metals declined as a rebounding dollar made commodities more expensive to investors in other currencies. Gold dropped 0.4 percent to $1,346.85 an ounce, snapping a four-day advance as the dollar rebounded. Zinc dropped 0.8 percent, paring a weekly gain and retreating from the highest level in 15 months. Copper fell 0.4 percent.

Looking at today's calendar, it is set to be a fairly quiet day ahead and finish to the week. This morning in Europe we got the latest Germany PPI data which dipped 2%, less than the expected -2.1% decline, and better than the -2.2% drop in June. There’s nothing due out in the US this afternoon and just 3 corporate earnings reports from the S&P 500 are due out from the retail sector.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg
  • European equities trade lower as markets take an opportunity to pare some of the week's gains
  • This has also been triggered by softness in commodities with analysts cynical about the potential efficacy of an oil production freeze
  • Looking ahead, highlights include Canadian CPI
  • Treasuries mostly steady in overnight trading, global equities higher in Asia, drop in Europe; WTI crude has closed over $45/barrel each day this week, now trading at just over $48.
  • Even if OPEC strikes a deal with Russia next month to freeze oil production, success will mean a lot less than when they tried and failed four months ago. Oil has rallied more than 10% since OPEC said that it will hold an informal meeting
  • Federal Reserve officials have gone out of their way this week to stress the market is underestimating the odds of an interest-rate increase this year -- and yet the probability of such a move has fallen back below 50%
  • U.S. regulators looking to avoid bailouts of too-big-to-fail banks have passed so many rules that regional and local lenders are combining to stomach the costs. Mergers and acquisitions by U.S. banks surged last year to about $18 billion, the highest level since 2009
  • Billionaire Paul Tudor Jones, who’s facing his worst performance since the global financial crisis, wants to show investors he hasn’t lost his mojo. He’s also demanding that all his managers take more risk in their bets
  • Will the Socialists dare to steal Christmas? That’s the question that Spaniards are asking after caretaker Prime Minister Mariano Rajoy agreed to face a confidence vote in parliament at the end of this month
  • Ukraine’s president Petro Poroshenko warned of a possible invasion by Russia and said the military may consider imposing a draft if hostilities worsen
US Event Calendar
  • No major reports scheduled
  • 1pm: Baker Hughes rig count
DB's Jim Reid concludes the overnight event wrap

Markets don’t appear to be in much of a race to get anywhere at the moment with the last 24 hours or so consolidating further the post-FOMC minutes price action reversal of NY Fed President Dudley’s more hawkish comments from earlier in the week. We did actually hear from Dudley again yesterday when he spoke to a press briefing. Much of his commentary pointed towards the recent strength in the labour market which has ‘helped allay concerns that arose earlier this year that job growth was beginning to stall and reinforced my view that labour market conditions continue to improve’. Dudley also said that he expects growth in the second half of this year to be ‘quite a bit stronger’ than in the first half but that the labour market data will get greater weight given that the labour market is part of the Fed’s dual mandate and that the Fed is not targeting GDP growth.

The San Francisco Fed President John Williams (seen as relatively centrist) also spoke shortly after although he didn’t offer much in the way of new views. Williams said that ‘I think every one of our meetings should be in play in principle’ including September and that this ‘makes sense given where the economy is’. Williams also said that ‘I don’t think I’m in a hurry to raise rates’ but ‘I don’t think that it would be helpful to allow this economy to overheat’.

Treasuries continued to firm up again yesterday with 2y and 10y yields down 2.4bps and 1.4bps respectively to 0.703% and 1.536%. The latter is now within half a basis point of doing a full circle from the pre-Dudley levels on Tuesday. Meanwhile the US Dollar came under renewed pressure again yesterday, with the Dollar index closing -0.59%. Risk assets eked out modest gains with the S&P 500 and Dow closing +0.22% and +0.13% respectively. The odds of a September rate rise have held steady at 20% (versus 22% on Tuesday) while December odds are down to 47% from 49% on Wednesday and 51% on Tuesday.

Elsewhere European equity markets also finally snapped out of a four-day slump (Stoxx 600 closed +0.72%) with the better tone for risk yesterday also given a boost by another sharp leg higher for Oil. WTI rallied +3.06% yesterday to a close a shade above $48/bbl, while Brent climbed +2.09% to finish above $50/bbl for the first time since July 4th. In fact that’s the sixth successive daily gain for Brent and it has now risen over 22% from the intraday lows on August 2nd and so taking it back into a bull market. Yesterday’s gains came despite there being little new news, instead just seemingly an extension of the positive momentum we’ve seen this month as hopes have risen around a potential OPEC production freeze next month.

Oil is little changed this morning but despite the move yesterday, most major bourses in Asia this morning are trading in the red, albeit modestly. The Hang Seng (-0.50%), Shanghai Comp (-0.36%) and Kospi (-0.22%) are all currently lower although the Nikkei (+0.39%) has bounced back this morning with the Yen (-0.48%) having a rare weaker day after trading back up above 100. In fact it looks set to end five prior consecutive days of gains.

The main economic data of note yesterday was again focused on the UK where the July retail sales data came in much better than expected, adding to the reasonably solid post Brexit data that we’ve seen this week. Excluding fuel, sales rose a bumper +1.5% mom last month (vs. +0.3% expected) which helped to lift the YoY rate to +5.4% from +3.9%. Including fuel, sales were also up an impressive +1.4% mom (vs. +0.1% expected). The YoY rate including fuel is now +5.9% (from +4.3%) which is the highest since September last year. Much of the commentary suggested that the warm weather was a big contributor and it’ll be interesting to see what the August numbers look like. Sterling rallied +0.97% yesterday post the data and is now back above $1.31.

Elsewhere, in the US the main data of note was a pickup in the headline Philadelphia Fed manufacturing index of 4.9pts to +2.0, which was in line with the market. It was some weakness in the details which caught our attention though. The new orders index tumbled to -7.2 from +11.8 in the prior month, while the number of employees weakened further to -20.0 from -1.6. The average workweek was also lower although we did see a pickup in the six-month ahead business conditions reading to the best level since January 2015. Elsewhere, initial jobless claims declined 4k last week to 262k and the Conference Board’s leading index (+0.4% mom vs. +0.3% expected) was up a little more than expected.

The only other data yesterday came in Europe where the July CPI reading for the Euro area came in a smidgen lower than expected (-0.6% mom vs. -0.5% expected) and the unemployment rate in France ticked down three-tenths to 9.9% in Q2.

It looks set to be a fairly quiet day ahead and finish to the week. This morning in Europe we’ll get the latest Germany PPI data (covering July) along with more data out of the UK, this time in the form of public sector net borrowing data for July. There’s nothing due out in the US this afternoon and just 3 corporate earnings reports from the S&P 500 are due out from the retail sector.

http://www.zerohedge.com/news/2016-...-dollar-rebound-halts-longest-oil-rally-years
 

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Frontrunning: August 19


by Tyler Durden
Aug 19, 2016 7:44 AM

  • European shares, oil ease as markets return to Fed-watching (Reuters)
  • Brent crude slides, but on track for third week of gains (Reuters)
  • Rio 2016: Lochte’s Teammates, USOC Join With Police in Discrediting Robbery Story (WSJ)
  • OPEC Freeze Wouldn’t Be So Potent as Gulf Rivals Pump More (BBG)
  • Hackers targeted Trump campaign, Republican Party groups (Reuters)
  • Key Figure in 1MDB Probe Is Arrested in Abu Dhabi (WSJ)
  • VW’s German Production Grinding to Halt Over Spat With Supplier (BBG)
  • NBC’s $12 Billion Olympics Bet Stumbles, Thanks to Millennials (BBG)
  • Ukrainian MP offers more details on alleged payments to Trump campaign chief (Reuters)
  • Viacom, Sumner Redstone Near Settlement Ousting CEO Philippe Dauman (WSJ)
  • Merkel sees no end to EU sanctions against Russia (Reuters)
  • Gap Faces a World That Doesn’t Want to Be Normal Anymore (BBG)
  • Dividends Eat Up Bigger Slice of Company Profits (WSJ)
  • Chicago Schools Step Back From Brink Ahead of Bond-Market Return (BBG)
  • Monte dei Paschi CEO, former chairman under investigation (Reuters)
  • Bank Mergers Heading for Seven-Year High, Pushed by Costly Rules (BBG)
  • Everybody Has a Plan for Fannie and Freddie But Nothing Gets Done (BBG)

Overnight Media Digest

WSJ

- The Obama administration said for the first time on Thursday that its $400 million cash payment to Iran in January was used as "leverage" to gain the release of American prisoners, fueling criticism that the exchange amounted to the U.S. paying ransom. http://on.wsj.com/2bgV1bC

- Viacom Inc Chief Executive Philippe Dauman would relinquish his position as part of a settlement the company is completing with Redstone's National Amusements Inc, a deal that would end a leadership crisis that has engulfed the media giant. http://on.wsj.com/2b331Jt

- Big companies are handing more of their profits to shareholders than at any time since the financial crisis. In the second quarter, 44 S&P 500 companies paid an annual dividend that exceeded their latest 12 months of net income, according to data from FactSet. http://on.wsj.com/2b7NAlr

- Former U.S. President Bill Clinton and his daughter, Chelsea, plan to stop raising money for the Clinton Foundation and turn over operations to independent parties if Democratic candidate Hillary Clinton is elected president. http://on.wsj.com/2b4HAuW

- Uber Technologies Inc will begin using self-driving taxis to ferry customers around Pittsburgh as soon as this month, a first for the industry in a race among automobile and technology companies to make driverless cars commercially available. http://on.wsj.com/2b3BcnJ

- "Warcraft," the big-budget summer-movie flop that partially offset dismal receipts in the U.S. by becoming a hit with Chinese audiences, secured a streaming-rights deal in China that some in Hollywood think could signal the start of a new revenue opportunity. http://on.wsj.com/2bwrMiG

- U.S. star swimmer Ryan Lochte's account of being robbed at gunpoint unraveled on Thursday night as Rio police, his teammates and the U.S. Olympic Committee broke from his narrative. Rio police said Lochte's account had been disproved by witnesses and surveillance-camera footage. http://on.wsj.com/2bEMsbG

- Abu Dhabi authorities have arrested Khadem Al Qubaisi, who authorities say is a key figure in an alleged multibillion-dollar fraud related to a Malaysian sovereign-wealth fund. The arrest last week was made in relation to an Abu Dhabi investigation into fraud and corruption, which includes Qubaisi's alleged role in the 1Malaysia Development Bhd affair. http://on.wsj.com/2b5x5Vg

- Wal Mart Stores, previously the poster child of staid retailers, reported strong second-quarter results on Thursday, with sales at established stores up for the eighth consecutive quarter and more shoppers visiting for the seventh period in a row. http://on.wsj.com/2b1wNOR

- T-Mobile US Inc and Sprint Corp have brought unlimited data plans back from extinction. T-Mobile said it would stop selling monthly data packages, while Sprint dropped prices for its unlimited service. http://on.wsj.com/2b3Lm7F

FT

- The U.S. CFTC charged Deutsche Bank with a number of swap-reporting abuses, repeated failures of supervision and a violation of a previous order. CFTC, in a complaint filed to the U.S. District Court in Manhattan, said the bank was not able to report any swap data for multiple asset classes for five days after an April systems outage.

- VTech and LeapFrog are set to come under investigation after Competition and Markets Authority said the proposed $72 million merger could lead to a "substantial lessening of competition".

- Monte dei Paschi di Siena's CEO Fabrizio Viola and former chairman Alessandro Profumo have come under investigation for alleged market manipulation and false accounting.

- Enterprise Products Partners' attempt to buy rival Williams Companies was rejected, but Enterprise is still interested and could make another offer to Williams. The nature of the offer made by Enterprise Products is unknown.


NYT

- German auto supplier Robert Bosch GmbH played a key role in developing the software that let Volkswagen AG cheat on clean air rules, according to new allegations filed in a San Francisco court on behalf of car owners. http://nyti.ms/2b5DqjB

- A truce has been reached in the vicious corporate battle that pitted Sumner Redstone, who controls Viacom Inc and CBS Corp, and his daughter, Shari Redstone, against his longtime confidants and directors at Viacom, according to two people briefed on the agreement. http://nyti.ms/2b5DlMC

- Gawker Media, under financial pressure from a $140 million legal judgment in an invasion-of-privacy lawsuit brought by Hulk Hogan, the former professional wrestler, will shut down next week. http://nyti.ms/2b5DdfZ


Canada

THE GLOBE AND MAIL

** Canada Mortgage and Housing Corp launched a bond sale on Tuesday with a goal of raising at least C$3 billion ($2.34 billion) for the Crown Corp, and ended up raising C$5.25 billion ($4.10 billion) on Wednesday from a financing that caught the attention of yield-hungry investors. (http://bit.ly/2bscXAA)

** The Royal Bank of Canada has revamped its investment banking team, promoting its long-time mining chief, Gordon Bell, to vice chairman of capital markets and laying off the mining group's managing director. (http://bit.ly/2bsdhzd)

** A new venture capital fund, Impression Ventures Fund II, focused solely on financial technology companies, has raised C$20 million ($15.61 million) from a handful of big-name Canadian investors, including FairVentures Ltd, the innovation unit of Fairfax Financial Holdings Ltd. (http://bit.ly/2bsexlU)

NATIONAL POST

** EQ Bank, Equitable Bank's online deposit-taking venture, that offered an industry-topping 3 percent interest rate on savings accounts earlier this year, is lowering its rate for the second time. In April, the rate was lowered to 2.25 percent, and will drop to 2 percent as of Aug 25. (http://bit.ly/2bsbWsi)

** Wal-Mart Canada's share of the grocery market grew in the second quarter, but at a significantly slowed rate, as key competitors including Loblaw Cos Ltd and Sobeys Inc fought back with price competition. (http://bit.ly/2bsbiLq)


Britain

The Times

Britain's largest brickmaker is to cap the liabilities of its pension fund and block present members from making fresh contributions. Ibstock Plc launched a two-month consultation after announcing proposals to scale back the cost of its final-salary pension scheme, which entitles retiring members to pensions linked to their earnings at the point of retiring. http://bit.ly/2bBj4kx

Sports Direct International Plc has confirmed that it will publish a long-awaited report next month into its working practices after the retailer brought in lawyers to look into allegations of mistreatment of its staff. http://bit.ly/2bBj5ou

The Guardian

The Institute of Directors has backed Prime Minister Theresa May's decision to review the 18.5 billion pounds ($24.32 billion) Hinkley nuclear scheme but launched a savage attack on successive government policies for failing to deliver energy security. http://bit.ly/2bBitit

Hundreds of jobs are at risk at one of Britain's biggest high street retailers, Monsoon Accessorize, after it decided to close its largest shops. http://bit.ly/2bBixyU

The Telegraph

National Grid Plc has slashed its forecasts for the number of big new power plants expected to be built in coming years, while admitting its estimates for the growth of solar farms and other small-scale generators were almost 50 times too low. http://bit.ly/2bBkrzm

Sky News

Jack Wills, the preppy British fashion brand, will gain a new shareholder in the coming days in a deal that will prompt the departure of the former Government minister who chairs the company. http://bit.ly/2bBj6Jf

BP Plc is sounding out top investors on a new boardroom pay policy after a humiliating revolt this year saw a majority of shareholders vote against a 14 million pounds package for its chief executive. http://bit.ly/2bBj4Ru

The Independent

The staggering cost of UK's uncompetitive energy market has been revealed today, as new research shows consumers have handed an extra 18.7 billion pounds to gas and electricity suppliers than if they had regularly switched to the best deals.

http://www.zerohedge.com/news/2016-08-19/frontrunning-august-19