Following disappoint PMIs from around the world, the US decoupling meme took another knock today as Markit PMI printed 53.0 (from 53.8) - its lowest in almost 2 years, led by a plunge in the employment subindex. Weakness was also evident in new factory orders. As Markit notes, "U.S. manufacturing sector continues to struggle under the weight of the strong dollar and heightened global economic uncertainty." On the heels of Milwaukee and Dallas Fed weakness, ISM Manufacturing printed a disastrous 51.1 (vs 52.5 expectations) - the lowest since May 2013. Employment tumbled, as did New Export ordedrs, but unadjusted New Orders plunged to its lowest since 2013, which is a problem given the massive inventory builds that have saved the world in the last few months.
According to Western diplomats, a Russian expeditionary force has already arrived in Syria and set up camp in an Assad-controlled airbase. The base is said to be in area surrounding Damascus, and will serve, for all intents and purposes, as a Russian forward operating base. In the coming weeks thousands of Russian military personnel are set to touch down in Syria, including advisors, instructors, logistics personnel, technical personnel, members of the aerial protection division, and the pilots who will operate the aircraft.
The Best And Worst Performing Assets In August: It Was A Good Month For Pet Rocks, Bad For "Hedge" FundsSubmitted by Tyler Durden on 09/01/2015 09:56 -0400
As Nanex's Eric Hunsader notes "there are numerous mini-flash-crashes in ETFs this morning," as market structure comes under significant pressure. Nowhere is that more obvious than in the VIX complex with VXX spiking above last Monday's highs and XIV collapsing...
Two state-owned Chinese oil trading companies (Chinaoil, which is the trading arm of state-run China National Petroleum Corp. and Unipec, which is owned by Sinopec) have been busy monopolizing the Dubai spot market, as a bout of suspicious trading activity between the two has served to distort prices and confuse other traders.
Modest USD weakness combined with significant risk-off across global equity markets (and a strange un-bid to bonds as China unwinds continue to weigh) has sparked heavy volume flows into precious metals this morning.
*NYSE AND NYSE MKT CASH EQUITIES MARKETS WILL INVOKE RULE 48
US equity futures markets have just pushed to fresh overnight lows, with the last leg down seemingly triggered by the CAD recession print. Let's hope Cramer and Cook have another email up their sleeves as weakness in AAPL is notable - down 2.75% in the pre-market. Lastly, we noted US equities are rapidly catching back down to the XIV-implied lows as the last few days bounce evaporates.
First the good news: of the 28 global regions that have reported PMIs so far (the US Markit PMI is due later today), 18 posted a print of over 50, or indicating manufacturing expansion.
Now the bad news: more than two-thirds of PMIs in August deteriorated compared to July suggesting that while the global economy is not in a recession yet, absent some dramatic improvement, a global economic contraction is just around the corner.
It rose out of the tropical Pacific in late 1997, bearing more energy than a million Hiroshima bombs.
It appears low oil prices are not awesome for everyone. For the second quarter in a row, Canadian GDP dropped (-0.5%) pushing America's northern neighbor back into recession. What is ironic is that this was better than the 1% drop that was expected and so CAD is strengthening.
Whatever the message is in these mega intra-week rebounds (if there is one), we're afraid it just hasn’t been the “out of the woods” bullish sign that many were hoping it was.
While the market's attention overnight was focused on China's crumbling manufacturing and service PMI, data which was already hinted in the flash PMI reports earlier in August, the real stunner came not from China but from South Korea, which last night reported an unprecedented 14.7% collapse in exports, far worse than the -5.9% consensus estimate, and more than 4 times worse than July's 3.4%. The number is critical because not only do exports account for about half of South Korea's GDP but because it also happens to be the first major exporting country to report monthly trade data. That makes it the perfect barometer of global trade flows, or as the case may be, the canary in the global trade coalmine. It also confirms what we reported just one week ago when we said that "Global Trade Is In Freefall."
Overnight, China decided to take steps to reduce "macro financial risks." And by that they mean "do something quick to help ease pressure on the yuan" and by extension, on the PBoC’s rapidly depleting FX reserves. To that end, starting October 15 banks will have to hold the equivalent of 20% of clients' FX forward positions with the PBoC, where the money will sit, frozen, for a year, at 0% interest.
- Charting the Market: New Month, Same China (BBG)
- China jitters send stocks tumbling (Reuters)
- Oil falls on weak China factory data (Reuters)
- Euro zone factory growth eases in August despite modest price rises (Reuters)
- Euro-Area Joblessness Falls to Lowest Level Since Early 2012 (BBG)
- Clinton friend advised on U.S. politics, foreign policy (Reuters)
- Korea exports slump as Asia's woes deepen (Reuters)
Gold rose 3.5% in August as stocks globally saw sharp falls on growing concerns about the Chinese and the global economy.