Empire State Manufacturing
With newsflow out of Iraq having slowed down as has the ISIS offensive, which appears to have been halted north of Baghdad, the market now shifts its attention to the Fed's two-day meeting which begins today and continues through tomorrow afternoon, when it will be leaked by media outlets to ultra-wealthy speculators and robots, breaching the embargo (in exchange for a hefty payoff) some 10 minutes before 2 pm.
- Iraq Army Tries to Roll Back Sunni Militants’ Advance (BBG)
- Starbucks to Subsidize Workers' Online Degrees (WSJ)
- ‘Bitcoin Jesus’ Calls Rich to Tax-Free Tropical Paradise (BBG)
- Medtronic Is Biggest Firm Yet to Renounce U.S. Tax Status (BBG), Medtronic to buy Covidien for $42.9 billion, rebase in Ireland (Reuters)
- Oil Topping $116 Seen Possible as Iraq Conflict Widens (BBG)
- Putin Seeks Paris Landmark as Hollande’s Russia Ties Defy Obama (BBG)
- GM Says It Has a Shield From Some Liability (WSJ)
- BOJ’s Bond Paralysis Seen Spreading Across Markets (BBG)
It's one of those days: despite the Iraq conflict spilling out of control and about to involve US drones and warplanes, despite China's naval conflict with Vietnam over an oil rig in disputed territory set to go "kinetic" at any moment, despite the Ukraine civil war having its deadliest day yet this weekend and adding insult to injury Russia halting gas supplies to Ukraine (letting Kiev and Berlin fight for the scraps), despite crude prices rising ever higher and about to unleash a "discretionary income" shockwave on America's summertime motorists, despite yet another massive tax inversion M&A deal in which the buyer has made abundantly clear its stock is overvalued and will be used as the purchasing currency, stocks are inexplicably not at all time highs this morning.
The interesting part is how the Econ Data and Central Bank events for the next three weeks all directly affect the next event, and how the market digests all these events as a whole.
The labor market is really starting to tighten and Thursday`s initial jobless claims coming in at 297,000 for the May 10 week is the lowest reading since May 2007.
- More than 20 dead, doctor says, as anti-China riots spread in Vietnam (Reuters)
- Russia's Gazprom plans Singapore stock exchange listing (Reuters)
- Inside Europe’s Plan Z (FT)
- Ukraine slides deeper toward war as Russia warns to vote (BBG)
- Fast-Food Protests Spread Overseas (NYT)
- BOJ Beat, Officials Could Upgrade Outlook for Capex (WSJ)
- Euro-Zone Economy Shows Weaker-Than -Expected Expansion (WSJ)
- Yahoo to YouTube Ads Spreading Viruses Rile Lawmakers (BBG)
- New York Times Ousts Jill Abramson as Executive Editor, Names Dean Baquet (BBG)
- NYT Publisher Said to Always Have Clashed With Abramson (BBG)
- Google gets take-down requests after European court ruling - source (Reuters)
We summarized yesterday's both better and worse than expected Chinese GDP data as follows: "a substantial deterioration of the economy, one which was to be expected yet one which can be spun as either bullish thanks to the GDP "beat", and negatively if the purpose is to make a case for more PBOC stimulus." Sure enough here are the headlines that "explain" the latest overnight futures surge which has once again brought the S&P into the green on the year - a 40 point Spoo move in hours since yesterday's bottom when the Nikkei "leaked" Japan's economy is on the ropes :
- Stocks Rise on China Stimulus Speculation
Here one should of course add the comment that launched yesterday's rebound, namely the Japanese warning that its economy is about to contract, adding to calls for more BOJ stimulus, and finally this other Bloomberg headline:
- The Strengthening Case for ECB Easing
And there you have it - goodbye "fundamental" case; welcome back "central banks will once again bail everyone out" case. Hopefully today's news are absolutely abysmal to add "US economic contraction fear renew calls for untapering" to the list of headlines that should send the S&P to all time highs by the end of today.
For the 8th month of the last 9, the Empire Manufacturing missed expectations. Tumbling to its lowest since December (despite the apparent let-up in weather freakishness), this is the biggest miss since Jan 2013. The average workweek slowed significantly, but the overall index was modestly saved by a push higher in 'hope' as the six-months-forward index jumped back to Feb highs. Perhaps most concerning, given the supposed pent-up demand that we have been told to expect when the weather picked up, was the tumble in new orders to their lowest since November.
- Ukraine forces move against separatists (FT)
- China GDP Gauge Seen Showing Deeper Slowdown (BBG)
- China Is Losing Its Taste for Gold (WSJ)
- Regulators Weigh Curbs on Trading Fees (WSJ)
- Obama, Putin Talk as Unrest Roils Eastern Ukraine (WSJ)
- Japan PM talks with BOJ chief, does not push for easing (Reuters)
- BRICS countries to set up their own IMF (RBTH)
- IMF Members Weigh Options to Sidestep U.S. Congress on Overhaul (WSJ)
- Zebra to Buy Motorola Solutions Unit for $3.45 Billion (BBG)
- Chinese Thunder God Herb Works as Well as Pain Therapy (BBG)
Putin Is No Mad Man to Russians as Power Play Trumps Economy (BBG)
Alibaba picks U.S. for IPO; in talks with six banks for lead roles (Reuters)
Russia hearts selling German energy: Billionaire Fridman’s L1 Buys RWE Unit for $7.1 Billion (Bloomberg)
Malaysia plane search straddles continent as police focus on crew (Reuters)
Saudi Crown Prince’s visit to China set to bolster investment (Al-Awsat)
Bugatti-Driving 26-Year-Old Tied to Penny-Stock Website (BBG)
Vodafone agrees $10 billion deal to buy Spain's Ono (Reuters)
The Hidden Rot in the Jobs Numbers (WSJ)
SocGen Ex-Trader Kerviel Walks to Forget Loss as Judgment Looms (BBG)
U.S. Banks’ $75 Billion Payout at Stake in Fed Tests (BBG)
- Carl Icahn wins again: Actavis to Buy Forest Labs for $25 Billion (WSJ)
- ECB governing council member attacks German court ruling on OMT (FT)
- China Tackles $1 Trillion Data Gap as Xi Changes Metrics (BBG)
- FX Traders Facing Extinction as Computers Replace Humans (BBG)
- BOJ Boost to Loan Programs Signals Room for More Easing (BBG) - actually no it doesn't as it was "factored in"
- Four killed in Thai clashes; PM to face charges over rice scheme (Reuters)
- Goodbye unsterilized SMP: Bundesbank Backs Measure to Boost Funds in Banking System (WSJ)
- Iranian Hacking to Test NSA Nominee Michael Rogers (WSJ)
- Ukraine Clashes Leave Dozens Wounded as Putin Resumes Bailout (BBG)
The overnight global scramble to buy stocks, any stocks, anywhere, continued, with the Nikkei soaring higher by 2% as the USDJPY rose firmly over 100, to levels not seen since May as the previously reported speculation that more QE from the BOJ is just around the corner takes a firm hold. Sentiment that the liquidity bonanza would accelerate around the world (with possibly more QE from the ECB) was undented by news of a surge in Chinese short-term money market rates or the Moody's one-notch downgrade of four TBTF banks on Federal support review. The release of more market-friendly promises from China only added fuel to the fire and as a result S&P futures are now just shy of 1800, a level which will almost certainly be taken out today as the multiple expansion ramp continues unabated. At this point absolutely nobody is even remotely considering standing in front of the centrally-planned liquidity juggernaut that has made "market" down days a thing of the past.
Big picture and dispassionate discussion.
Trifecta Of CPI, Initial Claims And Empire Manufacturing All In Line, And All Pushing The Market LowerSubmitted by Tyler Durden on 08/15/2013 08:46 -0400
If there was one thing the bulls did not want this morning, it was a goldilocks report in the trifecta of economic data, which included CPI, Initial Claims and the Empire Fed. Sadly, Goldilocks is precisely what they got with CPI printing just as expected, up 0.2% from June, and up 2.0% from a year ago (ex food and energy also in line at 0.2%), claims coming modestly better than expected at 320K vs Expectations of 335K, and finally the Empire Fed offsetting the sligh claims beat by printing at 8.24 on expectations of 10.00, down from 9.46 in July. As a reminder, only a big economic shock could have derailed the Fed's September taper intentions. So far it is not coming, which means only the August NFP report is left.
Fed chairman Ben Bernanke’s testimony to Congress will be important in setting the tone for the markets (particularly the dollar, equities and US treasuries), as traders hunt for clues on when the Fed is likely to ease its rate of asset purchases.