Chicago PMI

China's Nauseating Volatility Continues, US Futures Flat Ahead Of Disastrous GDP Report

The most prominent market event overnight was once again the action in China's penny-index, which after tumbling at the open and briefly entering a 10% correction from the highs hit just two days ago, promptly saw the BTFDers rush in, whether retail, institutional or central bankers, and after rebounding strongly from the -3% lows, the SHCOMP closed practically unchanged following a 2% jump to complete yet another 5% intraday swing on absolutely no news, but merely concerns what the PBOC is doing with liquidity, reverse repos, margin debt, etc. Needless to say, this is one of the world's largest stock markets, not the Pink Sheets.

Futures In The Red On Europe Jitters Ahead Of Obligatory Low-Volume Levitation

While yesterday most markets were closed and unable to express their concerns at the very strong showing of "anti-austerity" parties in Spain's municipal election from Sunday, then today they have free reign to do just that, and as a result European stocks are broadly lower, alongside the EURUSD which dripped under 1.09 earlier today, with Spanish banks among the worst performers: Shares of Banco Sabadell, Bankia, Caixabank and Popular were down 1.8 to 2.3% earlier this morning, and while the stronger dollar was a gift to both the Nikkei and Europe in early trading, after opening in the green, Spain's IBEX has since slid into the red on concerns of what happens if the Greek anti-status quo contagion finally shifts to the Pyrenees.

With All Major Markets Closed For Holiday, Here Are The Major News

With US markets closed for the Memorial Day holiday, and some of the key European markets likewise shuttered for public holiday including the UK, Germany and Switzerland, it is difficult to find where one can observe or trade the weekend's newsflow, which is once again centered on developments in Europe, where on Sunday Spanish Prime Minister Mariano Rajoy’s People’s Party suffered its worst result in a municipal election in 24 years while Greece continues to threaten with default 5 some years after it should have officially pulled the plug.

Payrolls Preview - Hope Abounds Amid Better-Weather Boost

The last two months have been nothing if not a lesson in the disater that is the economic-forecasters of the world. With a 3-sigma beat followed by a 5-sigma miss, hope abounds that April will be the 'goldilocks' print - just cold enough to leave the Fed on hold and just hot enough to 'prove' growth remains. Goldman expects nonfarm payroll job growth of 230k in April, in line with consensus expectations. While labor market indicators were mixed in April, the employment components of service sector surveys were strong and better weather conditions should provide a boost. In addition, they see some upside risk to the forecast from a calendar effect, and expect the unemployment rate to decline by one-tenth to 5.4% and average hourly earnings to rise 0.2%.

Futures Flat As Global Markets Closed For May Day

Holidays in Europe and Asia left things quiet overnight after some traders used the last day of April to frontrun the old "sell in May and go away" market adage. Market closures also kept the Chinese day trading hordes from using a tiny beat on the official manufacturing PMI print as an excuse to pile more money into the country's equity mania, while Japanese shares ended mostly unchanged as investors fret over when the BoJ will deliver the next shot of monetary heroin. In the US we'll get a look at ISM manufacturing and the latest read on consumer confidence as we head into the weekend.

Chicago PMI Bounces

Following ISM Milwaukee's major miss this morning (and income and spending data weakness), and 2 months of significant misses, Chicago PMI printed 52.3 (handily beating expectations of a bounce to 50.0). Employment rose at a faster pace in April but Prices Paid tumbled at a faster pace.

The Committee To Destroy The World

Now we can see the real tragedy of negative interest rates: they not only have the perverse effect of reversing the flow of time, but they demonstrate that borrowers are not acting with the good faith incentives normally associated with someone who needs money. Rather than paying forward, borrowers are paying backwards because they are effectively trying to return something they don’t want. Such an arrangement renders it impossible for an economy to grow. By destroying the temporal and moral structure of money, negative interest rates destroy the economy. When tomorrow cannot be paid, the current regime must fail. The only question to be determined is the form that failure will assume. This may sound like philosophy but it is cold, hard reality.

Whiplash Session Sees Furious Buying Of Futures To Defend 50-DMA As New Quarter Begins

It has been another whiplash, rollercoaster, illiquid session which saw US equity futures tumble early overnight driven by a bout of USDJPY and Nikkei selling, only to regain all losses as European, and BIS, traders walked in, and promptly BTFD. In fact at last check, it was as if all the fireworks that took place just a few short hours ago and sent the ES as low as 2037, and below what has become the key support level, the 50-DMA never happened.

Chicago PMI Fails To Bounce Back, Hovers Near 6-Year Lows

Despite the hockey-stick-like expectations of all the clever economists, Chicago PMI failed to bounce back from its total carnage in February. Printing 46.3 against expectations of 51.4, the index remains at near six-year lows. Must be the weather... oh apart from the massive surge in Midwest pending home sales...?

Frontrunning: March 31

  • Iran, powers push for nuclear deal as clock ticks toward deadline (Reuters)
  • How DIY Bond Traders Displaced Wall Street’s Hot Shots (BBG)
  • MillerCoors Caught in a Downdraft (WSJ)
  • Saudi-led strikes again hit Yemen overnight (Reuters)
  • Even With Free Money, Merkel Still Reluctant to Spend (BBG)
  • Britain Uses Tax Breaks to Lure Digital-Game Developers (WSJ)
  • China to Insure Deposits in Move Toward Scrapping Rate Curbs (BBG)
  • As China Expands Its Navy, the U.S. Grows Wary (WSJ)

Futures, Oil Slide As Surging Dollar Now Takes Window Dressing Stage

Did stocks window dressing come one day early in this volatile, bipolar, stop-hunting, HFT-infested market? Looking at futures this morning, which are down about 12 points already on yet another surge in the USD which has sent the EURUSD just above 1.07, the lowest since March 20 , and the USDJPY back under 120 now that the "strong dollar is bad for stocks after all" algo seems to be back from vacation, all those hedge funds who chased risk higher yesterday because their peers did the same, may find they are all selling on the way down. It will be oddly ironic if all of yesterday's widely touted gains evaporate comparably in the first 10 minutes of trading today, and lead to an end in the longest streak of quarterly increases in two decades.

Futures Jump On Chinese Easinng Speculation, False Rumor Of PBOC Rate Cut

With the rest of the developed world's central banks waiting for the Fed to admit defeat for one more year and delay its proposed rate hike (or launch NIRP/QE4 outright) it was all about China (the same China which a month ago we said would launch QE sooner or later) and hope that its central bank would boost asset prices, when over the weekend the PBoC governor hinted that more easing is imminent to offset the accelerating drag after he admitted that the nation’s growth rate has tumbled "a bit" too much and that policy makers have scope to respond. How much scope it really has now that its bad debt is rising exponentially is a different question. It got so bad, Shanghai Securities News leaked a false rumor earlier forcing many to believe China would announce an unexpected rate cut as soon as today, in the process sending the Shanghai Composite soaring by 2.6%.