Archive - Aug 6, 2015 - Story

While we await for the BLS to report another seasonally adjusted Initial Claims report which will be near multi-decade lows, a far more disturbing report was released moments ago by outplacement consultancy Challenger Gray, which has done a far better job of compiling true layoff data, and which reported that in July there was a whopping 105,696, up 136% from the 44,842 job cuts in June, and the highest in nearly four years, or since September 2011, which the last time there were more than more than 100,000 layoffs.

According to a transcript of an internal meeting of the China Banking Regulatory Commission, bad loans jumped CNY322.2 billion in H1 to CNY1.8 trillion, a 36% increase. Meanwhile, The PBoC will include loans made to CSF, China’s plunge protection vehicle, in its monthly loan data, meaning Beijing will pretend that the state-directed effort to artificially shore up the country’s stock market represents real, organic demand for credit.

Reading through the August inflation report two things seem to stand out:

1. The MPC is more optimistic on (domestic demand-driven) GDP growth – supported by growing wages, cheaper bank funding and growing house prices.  Indeed, they revised their growth projections slightly to the upside compared to May.
2.  The MPC has turned more cautious on inflation because of persistent commodity price weakness and, indeed, FX appreciation. This is reflected in their lower inflation projections.

• Trump at center stage as Republicans square off in first debate (Reuters)
• Cleveland Debate Offers GOP Hopefuls a Chance to Break Away from the Pack (WSJ)
• Bank of England Keeps Key Interest Rate at 0.5% in 8-1 Vote (BBG)
• Emerging stocks submerged, UK gears up for 'Super Thursday' (Reuters)
• No IMF decision on Greek bailout until autumn, Swedish rep tells paper (Reuters)
• Japan Heads Toward Nuclear Unknown With Post-Fukushima Restarts (BBG)
• Activist Ackman Takes $5.5 Billion Stake in Snacks Giant Mondelez (WSJ)

Today the Bank of England releases its rate decision, minutes and quarterly inflation report (QIR) all at 1200BST with the QIR press conference to be held by Governor Carney at 1245BST. Given the volume of information on offer, the release is likely to be met with volatility.

It has been more of the same in the latest quiet overnight session where many await tomorrow's NFP data for much needed guidance, and where Chinese markets opened weaker, rose during the day, then went through a mini rollercoaster, then sold off in the afternoon.  The Shanghai Composite and HS China Enterprises indices finished down .9% and .3%, respectively. Trading volume continued to be very subdued, running at half the thirty day average as some 20 million "investors" have pulled out of the market to be replaced with HFTs such as Virtu.  But while stock action has been muted, the story of the night so far is oil and the energy complex broke out of a tight overnight range early in the European session to continue yesterday's downward trend, seeing WTI Sep'15 futures fall below the USD 45.00 handle after yesterday's DoE crude oil inventories saw US crude output rise by 0.552%. As of this moment oil was trading at $44.72, just pennies above the low print of 2015.