Archive - Oct 2015 - Story

Germany's DAX has given back all of yesterday's exuberant month-end gains and more to suffer the worst start to Q4 since 2009 (and actually worse than 2007 and 2008)...

"He deliberately tries to do things to throw opponents off balance and he’s always trying to get some sort of element of surprise and tactical advantage over people, that’s sort of what keeps him going is this constant springing surprises and flipping events in his favor."

It’s no coincidence that consumer sentiment stumbled at the same time that the stock market plunged. Coming back from Summer vacations, households saw:

• The deepest drop in 401K wealth in years
• The most prolonged drop in years

It has been a shock because investors have been conditioned to ignore the dips; or better still, to buy the foolish dips (BTFD) because time-after-time the dips reverse within a few weeks and the market plows onward and upward. In July last year, the market tumbled 3% and then fully recovered within four weeks.

Bill Richardson could teach Donald Trump something about the art of the deal. He has done a lot of them. At present Richardson sees one of his deals in jeopardy, and he was in Washington last week to raise the alarm, meeting privately with former colleagues and appearing at a press conference at the National Press Club. The deal in jeopardy involves a commitment he made, when he was secretary of Energy in the Clinton administration, with the Russians to dispose of weapons-grade plutonium, the long-lived ingredient in nuclear weapons.

Following Manufacturing PMI's weakness and ADP's Manufacturing employment weakness (and six regional Fed surveys' weakness), ISM printed 50.2 (the 3rd miss in a row and lowest since May 2013). Under the surface was a disaster with New Orders collapsing (unadjusted are weakest since before 2013) with just 22% saying New Orders are better (the lowest since August 2012).

Given the fact that for the first time since the recession, manufacturing has added zero jobs this year, that ADP just saw a drop in manufacturing jobs, Markit reports September US Manufacturing PMI has stagnated for the last 2 months at 2 year lows (printing 53.1 final vs 53.0 prelim). Worst still, and confirming even further the demise of the US manufacturing "renaissance", the Employment sub-index dropped to 50.8 - the lowest since June 2013. As Markit sums up,  "The Fed is therefore likely to keep an open mind as to whether tighter policy is appropriate given current economic conditions and await a clearer idea of the health of the economy in the fourth quarter."

Each and every day, we are witnessing the ongoing global selloff inflict more and more damage to the post-2009 cyclical bull market. And while that bull may not be declared dead for some time, it is now being wounded enough daily to warrant very seriously considering that possibility.

"... the fact that our International Index has rallied 2% from its lows and now has rallied for two days in a row has our interest and does give us  reason to pause in our bearish perspective."

It has not been a good year for retail currency broker FXCM which in January faced massive losses in the aftermath of the shocking Swiss Franc revaluation. In fact, only a $300 million bailout from Jefferies/Leucadia allowed the currency trader to meet regulatory requirements and continue operations.  Then, this morning, FXCM clients woke up with even more headaches when the currency broker admitted it had been hacked, leading to a "small number" of unauthorized wire transfers from customers’ accounts.

Does not compute. That may be the best way to summarize the discrepancy between the statistically-massaged, seasonally-adjusted initial claims data reported by the DOL, and what Challenger reported just an hour earlier when it said that U.S.-based employers announced plans to shed 58,877 in September, a 43 percent increase from the previous month. Worse, for 2015 YTD, employers have announced 493,431 planned layoffs, 36 percent more than the 363,408 cuts tracked from January through September a year ago. Someone is lying.

BOJ IS SAID TO SEE LITTLE IMMEDIATE NEED FOR ADDING STIMULUS
BOJ OFFICIALS ARE SAID TO WANT CHANCE TO SEE MORE DATA

• After Rough Quarter, Investors Buckle Up (WSJ)
• From heroes to bystanders? Central banks' growth challenge (Reuters)
• Russian Airstrike in Syria Targeted CIA-Backed Rebels, U.S. Officials Say (WSJ)
• Kremlin says Syria air strikes target list of groups, not just Islamic State (Reuters)
• That’s information warfare? Russia accused of killing civilians in Syria (RT)
• Euro zone factory growth eases in August despite modest price rises (Reuters)
• How Glencore's Crazy Month Makes Greek Banks Look Tame (BBG)