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US Equity Futures Unable To Rally Despite Avalanche Of Bad Global News

Tyler Durden's picture




 

Any other Monday and futures would be scorching higher. After all it was a nearly perfect storm of bad news: from China's disastrous economic news, the worst since Lehman, to the Scottish vote where the latest poll tally had the Yes between 46% and 54%, to the dispatch of a second Russian humanitarian convoy into Ukraine, an event which a month ago sent the S&P 500 crashing, to ISIS openly defying the US by signing a non-agression pact with the "moderate" Syrian rebels to launching a new splinter group in Algeria and threatening to take over the Suez Canal, to the BIS once again warning about bubbles and complacency, and culminating with the Pope himself warning that World War III may have started, surely the S&P would be well over 2000 on any new normal day if not at new record highs.

Yet something appears to have changed not only because the USDJPY is not some 100 pips higher overnight on, well, nothing but because the S&P, which is treading water, has yet to spike on no volume reasons unknown. That something may be algos which are too confused to buy ahead of this week's Fed announcement which may or may not have some notable changes in language or the Scottish referendum on the 18th. Or it could simply be that algos are no longer allowed to openly manipulate and rig the market on the CME as of today now that "disruptive market practices" are banned (why weren't they before)?

In any case, keep a close eye on the market today: not all is at it has been for a while, unless of course it is still just a little early and the rigging algos (which haven't gotten the Rule 575 memo of course) haven't woken up just yet.

European equity markets trade little changed, with poor performance in Italian banks countered by a much stronger consumer staples sector, as consolidation hopes in food & beverage rose on reports that Heineken have rejected a big from SABMiller, who in turn were looking to shrug off an approach from AB InBev. Italian banks and those with high exposure to southern Europe (notably, Commerzbank) trade softer ahead of this Thursday’s ECB TLTRO allotment (the second of which comes in December).  7 out of 19 Stoxx 600 sectors rise; food & beverage, retail outperform, oil & gas, real estate underperform. 29% of Stoxx 600 members gain, 68.2% decline. Eurostoxx 50 -0.1%, FTSE 100 -0.2%, CAC 40 -0.2%, DAX +0.1%, IBEX -0.3%, FTSEMIB -0.8%, SMI -0.1%

Asian equity markets are generally softer overnight with the CSI 300, Hang Seng and ASX 200 down 0.5%, 0.8% and 0.7%, respectively. This seems to be a continuation of the softer session in US equities last Friday but in reality Chinese data over the weekend was also on the weak side. Chinese data over the weekend was overall on the weak side. Industrial Production came in at 6.9% yoy in August versus consensus of 8.8%. Retail sales rose 11.9% yoy in August, short of consensus of 12.1%. FAI investment came in at 16.5% YTD yoy, weaker than 16.9% expected. Growth commodities were also weaker overnight in Asian trading with Brent and Copper down -0.56% and -1.19%, respectively. The AUD has weakened to more than 5-month low at around 0.901 against the Dollar as we type. US Treasuries are closed overnight on the back of Japan’s holiday although the 10yr yield has risen by about 15bps over the past week to around 2.61% at the end of the US close on Friday.

Asian stocks fall with the Shanghai Composite outperforming and the ASX underperforming. MSCI Asia Pacific down 0.6% to 145. Nikkei 225 closed, Hang Seng down 1%, Kospi down 0.3%, Shanghai Composite up 0.3%, ASX down 1%, Sensex down 0.9%. None of 10 sectors rise with health care, consumer outperforming and energy, financials underperforming.

Market Wrap

The euro is weaker against the dollar. German 10yr bond yields fall;
Spanish yields decline. Commodities decline, with wheat, WTI crude
underperforming and natural gas outperforming. U.S. Empire manufacturing, industrial production due later.

  • S&P 500 futures down 0.2% to 1973.5
  • Stoxx 600 down 0.1% to 343.9
  • US 10Yr yield down 1bps to 2.6%
  • German 10Yr yield down 1bps to 1.07%
  • MSCI Asia Pacific down 0.6% to 145
  • Gold spot up 0.5% to $1235.3/oz

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European equity markets tread water ahead of key central bank releases from the Fed, BoE and ECB as well as political risk events (Scottish Independence) due to culminate later this week
  • AUD/USD slumped to fresh six-month lows as Chinese Industrial Production slowed to levels not seen since the global financial crisis
  • US Empire Manufacturing and Industrial Production
  • Treasuries steady, yields 5Y and longer higher by ~1bps-1.2bps as markets wait for FOMC rate decision on Sept. 17, Scottish independence vote Sept. 18.
  • Last week JPMorgan and BofAML changed forecasts for Fed’s first rate increase to June 2015; both previously expected 3Q 2015
  • U.K. Prime Minister David Cameron returns to Scotland today for the second time in a week to ask voters not to “rip” the nation from the rest of U.K. as campaigning ahead of the Sept. 18 referendum on independence reaches its climax
  • While Cameron pledged yesterday to take “whatever steps are necessary” to confront Islamic State after the beheading of a U.K. hostage, no decisions are likely until after Scotland’s independence referendum
  • China’s weakest industrial-output expansion since the global financial crisis, and moderating investment and retail sales growth shown in data released Sept. 13, underscore the risks of a deepening economic slowdown led by a slumping property market
  • U.S. Secretary of State John Kerry will meet Russian Foreign Minister Sergei Lavrov today after pro-Russian rebels continued to clash with Ukraine troops in several locations including the Donetsk airport
  • U.S. allies signaled readiness to step up the fight against Islamic State under a coalition formed by Obama as the beheading of a British aid worker sparked further outrage 
  • While no Arab states have publicly committed to military action, several have told the U.S. privately they are willing to join in airstrikes in Iraq and in Syria: U.S. State Department official
  • Sweden’s election threw the nation’s political establishment into turmoil as backing for the anti-immigration Sweden Democrats more than doubled, leaving the largest Nordic economy facing a hung parliament
  • North Korea sentenced an American detainee to six years of hard labor for what it termed “hostile” acts, putting pressure on the State Department to send an envoy to negotiate the release of three U.S. citizens
  • Sovereign yields mostly lower; yields in Asia (Singapore, Hong Kong, Australia) increase. Asian stocks mixed, European stocks, U.S. equity-index futures decline. WTI crude and copper lower, gold higher

US Event Calendar

  • 8:30am: Empire Manufacturing, Sept., est. 16.00 (prior 14.69)
  • 9:15am: Industrial Production m/m, Aug., est. 0.3% (prior 0.4%)
  • Capacity Utilization, Aug., est. 79.3% (prior 79.2%)
  • Manufacturing (SIC) Production, Aug., est. 0.2% (prior 1%)
  • 11:00am: POMO Fed to purchase $950m-$1.15b notes in 2036-2044 sector

FIXED INCOME

Bund futures trade flat, as markets get off to a quiet start to the week. Fixed income volumes are relatively light, with traders declining to commit to positions ahead of the slew of risk events beginning on Wednesday with the BoE minutes. French bonds underperform the broader European market, with domestic banks selling OATs ahead of France’s sovereign rating update on Friday, where France’s recent poor economic performance has raised the risk of a downgrade. Elsewhere, the IR/GE spread trades wider by as much as 3.5bps, after tightening significantly last week on reports that Dublin are to repay their IMF debt ahead of schedule.

EQUITIES

European equity markets trade little changed, with poor performance in Italian banks countered by a much stronger consumer staples sector, as consolidation hopes in food & beverage rose on reports that Heineken have rejected a big from SABMiller, who in turn were looking to shrug off an approach from AB InBev. Italian banks and those with high exposure to southern Europe (notably, Commerzbank) trade softer ahead of this Thursday’s ECB TLTRO allotment (the second of which comes in December).

FX

AUD was weighed on by disappointing Chinese data which showed industrial production (6.9% vs. Exp. 8.8% (Prev. 9.0%) expanding at the slowest pace since August 2008. AUD/USD broke below the 0.9000 handle for the first time since March 20th led by selling from Asia based banks while AUD/JPY printed a fresh month low near the 96.50 level. SEK fell sharply after the latest exit polls show the left-leaning Swedish opposition party gaining leading the current pro-market reform government after the vote last week.

GBP trades relatively flat as the slew of Scottish Independence opinion polls released over the weekend give no clear lead to either the ‘No’ or ‘Yes’ camp – keeping real money out of the market for the coming days.

COMMODITIES

WTI and Brent crude futures have extended last week’s fall as the poor Chinese numbers added further weight to the theory of slowing global growth. In the metals markets, gold trades slightly firmer as short-covering allows the metal to recover from the multimonth lows seen last week, however palladium outperforms, with further reports of violence surrounding Donetsk airport in Ukraine heightening fears that Russia’s large palladium production could be cut off from the global market. September Brent crude futures are set to expire at today’s pit close.

* * *

DB's Jim Reid concludes the overnight recap:

The four polls released over the weekend suggest that whilst the ‘No’ campaign is still mostly ahead it appears to be a close call still. Indeed only the ICM online poll for The Sunday Telegraph showed the ‘Yes’ vote ahead (54% vs 46%). This does though mark the second poll that puts the Yes campaign ahead after the YouGov poll last week. However the smaller sample size of this online ICM poll of (705 respondents) and the fact that it was conducted during the same period as a telephone poll by ICM for the Guardian, which showed a 2pt lead for the ‘No’ campaign, probably means we should read the online poll with extra caution. The other 3 polls were in favour of the ‘No’ campaign. The Survation poll, the Opinium poll for The Observer and the Panelbase survey for The Sunday Times showed the ‘No’ votes leading the ‘Yes’ votes by a margin of 8ppts, 6ppts, 2ppts, respectively. So all to play for still but as for the actual logistics of the vote, polling booths will open at 7am UKT on Thursday and continues to 10pm, with results declared on a district by district basis in early hours of the following morning. Our base case here at DB remains of a No vote however a high turnout, participation of 16-17 year olds in the referendum and the closeness of the current polls all inject an additional degree of uncertainty to the final outcome.

If that wasn't enough, the Scottish movement has increased market’s attention on the possibility of a similar referendum in Catalonia on 9th November. In an interview with El Mundo over the weekend, the leader of separatist party, Oriol Junqueras said that Catalan President Artur Mas must deliver a referendum despite its illegality. He also added that the time has come to break Spanish law in order to submit to a new Catalan rule of law. On this, DB’s Marco Stringa has published his thoughts and outlined several future scenarios. In sum although the Spanish Constitutional Court will reject Catalonia's request for a self-determination referendum, we see a non-negligible possibility that some sort of non-binding referendum will take place in November. In any case, a permanent solution does not look forthcoming. The Scottish result as well as the EU, business and market reactions could have relevant repercussions for Catalonia. 

In terms of the Fed, the two-day FOMC meeting concluding on Wednesday will be another key event for the week. In addition to the post-meeting statement (released at 2:00 pm NYT), the Fed update its economic and interest rate forecasts, which will include new information on the Committee’s 2017 estimates. As always Yellen’s press conference at 2.30pm will be a key focus. In terms of what to expect our US economists noted that in the meeting statement, the Fed is expected to taper asset purchases by another $10bn. However, there could be some tweaks to the forward guidance language, specifically with respect to the time frame in which interest rates will remain at the zero bound following the end of asset purchases (ie 'considerable time' phrase). Market participants will also likely focus on the 2017 forecasts, particularly with respect to the ‚dot plot?.

Back to the present day, Asian equity markets are generally softer overnight with the CSI 300, Hang Seng and ASX 200 down 0.5%, 0.8% and 0.7%, respectively. This seems to be a continuation of the softer session in US equities (S&P 500 -0.6%) last Friday but in reality Chinese data over the weekend was also on the weak side. Chinese data over the weekend was overall on the weak side. Industrial Production came in at 6.9% yoy in August versus consensus of 8.8%. Retail sales rose 11.9% yoy in August, short of consensus of 12.1%. FAI investment came in at 16.5% YTD yoy, weaker than 16.9% expected. Growth commodities were also weaker overnight in Asian trading with Brent and Copper down -0.56% and -1.19%, respectively. The AUD has weakened to more than 5-month low at around 0.901 against the Dollar as we type. US Treasuries are closed overnight on the back of Japan’s holiday although the 10yr yield has risen by about 15bps over the past week to around 2.61% at the end of the US close on Friday.

Looking at today, US Industrial Production and the NY Fed Empire State Manufacturing survey are the two main releases for the US. In Europe, the euro area trade balance will be the notable print. Beyond today, US PPI, German ZEW and UK CPI are the main economic reports tomorrow. Wednesday will see the release of BOE’s meeting minutes, the US CPI, and the Euro area inflation report. On Thursday, President Obama will host Poroshenko and on the data front we have Philly Fed, initial claims, and building permits to watch out for. German PPI will be the key release on what will otherwise be a relatively quiet Friday.

 

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Mon, 09/15/2014 - 07:13 | 5218144 Racer
Racer's picture

Disruptive practices were banned before, also so was all the other fraud that they got tiny feather light wrist slaps for, so what is different? Give it an hour or so and all will be back to the 'normal' thieving and robbing.

Mon, 09/15/2014 - 07:16 | 5218147 summerof71
summerof71's picture

you know, if they manage to close Suez, and the EBT system goes down for the week, we might actually get enough social unrest to spark a rally!

For now, metals and oil are weak in the knees at the site of the almighty dollar....

Mon, 09/15/2014 - 07:26 | 5218163 GetZeeGold
GetZeeGold's picture

 

 

Despite Avalanche Of Bad Global News

 

Dammit Jim.....I'm a doctor......not a miracle worker!

Mon, 09/15/2014 - 07:34 | 5218171 Xibalba
Xibalba's picture

CME rules apply to 'persons'.  SKYNET is not a person.  

Mon, 09/15/2014 - 08:00 | 5218193 mvsjcl
mvsjcl's picture

The Scots to vote on the 18th? Won't that hamper the Golfer-in-Chief's clubhouse putt?

Mon, 09/15/2014 - 08:14 | 5218206 max2205
max2205's picture

Wow a 26 point round trip....money at the margin

 

Bullish!

Mon, 09/15/2014 - 09:01 | 5218293 flacon
flacon's picture

...aaaaaand were GREEN. 

Mon, 09/15/2014 - 07:20 | 5218153 TideFighter
TideFighter's picture

rules, schmules....just wait for the fine and pay it. It's all "priced in" anyways. Rules don't do anything but drive up prices. 

Mon, 09/15/2014 - 07:15 | 5218145 Dungholio
Dungholio's picture

As if rules matter...  

Mon, 09/15/2014 - 07:21 | 5218155 Dungholio
Dungholio's picture

See. futures are now green!!!  That didn't take long...

Mon, 09/15/2014 - 07:29 | 5218166 GetZeeGold
GetZeeGold's picture

 

 

 

Helicopters are wonderful things.

 

We'll just put that on your grandkid's tab.

 

They're good for it.......right?

Mon, 09/15/2014 - 07:15 | 5218146 max2205
max2205's picture

Silly wabbit rules are made to be broken.

 

They are so 99% ers

Mon, 09/15/2014 - 07:18 | 5218150 Koolkoala
Koolkoala's picture

Meanwhile in Italy...

www.retelitfraud.com

Retelit is quoted on milan stock exchange: No CEO, No CFO, No brains and equity value destruction that continues to go ahead unnoticed

check it out, it's quite shocking:

http://www.retelitfraud.com/mystery-solved-just-value-destructive-value-...

http://www.retelitfraud.com/che-cazzo-stanno-facendo-adesso/

Mon, 09/15/2014 - 07:22 | 5218154 torak
torak's picture

Have you noticed that anyone that has a clue is dripping in cynicism?

Mon, 09/15/2014 - 07:31 | 5218169 GetZeeGold
GetZeeGold's picture

 

 

 

Don't look at me......I think everything is just going honky-dory.

Mon, 09/15/2014 - 07:32 | 5218162 buzzsaw99
buzzsaw99's picture

check time stamp on zh headline. done. :cue Kermit singing It's Not Easy Being Green: done.

Three days later everybody found out that you can't
No you can't keep a good algo down, no
No you can't keep a good algo down

Nah, nah, nah, nah, nah...

Mon, 09/15/2014 - 07:35 | 5218173 jubber
jubber's picture

So DAX up 100 points, Dow up 80 ZH kiss of death yet again

Mon, 09/15/2014 - 07:52 | 5218187 disabledvet
disabledvet's picture

Hard to call the huge move below one percent on the 10yr bund bearish. And indeed "bull market sell offs are notoriously violent." I think what just happened in Japan (negative 8 percent contraction, huge sell off in the yen) is probably about to spread to the rest of the industrialized world.

Mon, 09/15/2014 - 07:37 | 5218174 jubber
jubber's picture

Oh best of all Nikkei futures are now up 100 and fucking Japan is closed!!! today   CB's all over this shit yet again can't beleive that Gold is still up $6...guess that will be corrected shortly!

Mon, 09/15/2014 - 07:42 | 5218177 Dungholio
Dungholio's picture

It's a dirty job, but somebody has to do it.

Mon, 09/15/2014 - 07:44 | 5218181 GetZeeGold
GetZeeGold's picture

 

 

...guess that will be corrected shortly!

 

They gave the varsity squad the day off but the JV's are on it.....could be touch and go......just hold your breath.

 

Praying wouldn't hurt either.

Mon, 09/15/2014 - 08:14 | 5218208 gatorengineer
gatorengineer's picture

Meanwhile in Really important news we have the first Jewish Miss America. A chick that couldnt turn a head in Missoula Montana.....

 

Wonder who her father or Daddy is....

Mon, 09/15/2014 - 08:27 | 5218234 orangegeek
orangegeek's picture

we should see a bounce before the big roll

 

http://bullandbearmash.com/chart/sp500-daily-falls-breaking-support-proc...

 

once again, looks like yellen's speech is going to hold up the train

 

isn't her timing amazing?

Mon, 09/15/2014 - 08:36 | 5218245 spanish inquisition
spanish inquisition's picture

Can we get a Scottish poll that does not add up to 100%? Last I heard you don't ignore the "Don't know" portion of the vote. Why not eliminate the "No" portion and you can say 100% of Scots say "YES" to staying as part of the UK. No media manipulation here.

Regarding capital flight, 25 billionaires who support the 1 world government say "Lets pull some money out and spook the Scots".

To the Scots, you can deal with the UK in the future as "free men". You can also deal the same way with the EU. No need running off to find a new slave master.

And regarding the new Miss America, I guess we really missed Joan Rivers (rimshot).

Mon, 09/15/2014 - 08:42 | 5218255 financialrealist
financialrealist's picture

Have to keep up appearances

Mon, 09/15/2014 - 08:46 | 5218267 CheapBastard
CheapBastard's picture

We need worser news to be Bullish.

Mon, 09/15/2014 - 08:55 | 5218281 Racer
Racer's picture

3m

Obvious testing in (7:47) (8:08) and (8:45) this morning in violation of

 

Didn't take them long to ignore the law .... again! They are after all, too big to even fine very much at all

Mon, 09/15/2014 - 09:05 | 5218299 GrinandBearit
GrinandBearit's picture

Futures are green now.  Tyler, don't you realize what you are doing? 

 

You need to shut this site down... the market would tank.

Mon, 09/15/2014 - 14:44 | 5219438 jubber
jubber's picture

"US Equity Futures Unable To Rally"

 

DOW only up 130 points LOL!

Do NOT follow this link or you will be banned from the site!