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Commodity Clobbering Continues As Amazon Lifts Futures
After yesterday's latest drop in stocks driven by "old economy" companies such as CAT, which sent the Dow Jones back to red for the year and the S&P fractionally unchanged, today has been a glaring example of the "new" vs "old" economy contrast, with futures propped up thanks to strong tech company earnings after the close, chief among which Amazon, which gained $40 billion in after hours trading and has now surpassed Walmart as the largest US retailer.

Ironically, AMZN's beat was not due to its retail results but thanks to its ongoing AWS/cloud rollout which will continue as long as the second tech bubble rages on because while AMZN's market cap may be bigger than WMT, whatever you do, don't compare PE multiples.
Away from techs it has been a very different story, with the previously noted flash smash in gold, a near carbon copy of Sunday's (un)precedented plunge, coupled with the tumble in copper as well as ongoing oil price drop this time catalyzed by the worst Chinese Caixin (now that Markit is out) manufacturing PMI in 15 months, together with European PMI misses across the board, most notably those out of Germany and France.
As a result Brent crude is little changed near 2-wk low after disappointing Chinese manufacturing data fueled demand concerns, adding to bearish sentiment in an oversupplied mkt. WTI up ~26c, trimming losses after yday falling to lowest since March 31 to close in bear mkt. Both Brent and WTI are set for 4th consecutive week of declines; this is the longest losing streak for Brent since Jan., for WTI since March.
Crude “made a move a little bit higher, but it’s not surprising to be turning around again following disappointing PMI data,” ABN Amro energy economist Hans van Cleef said. “Combined with the oversupply situation, this adds to the bearish sentiment."
It wasn't just crude: the entire commodity complex continues to get clobbered:
- S&P GSCI Index down 0.3% to 389.8
- Brent Futures down 0.4% to $55.1/bbl, WTI Futures up 0.3% to $48.6/bbl
- LME 3m Copper down 0.3% to $5258/MT
- LME 3m Nickel down 1.6% to $11250/MT
- Wheat futures down 0.6% to 518.5 USd/bu
And while we covered China's latest PMI disappointment last night, one which even managed to send the SHCOMP to a red close, it was Europe which confirmed that away from the "tech economy" things are once again relapsing and the global economy is poised for what appears to be another contraction.
The highlights:
- EU Manufacturing PMI: 52.2, Exp. 52.5, Last 52.5
- EU Services PMI: 53.8, Exp. 54.2, Last 54.4
- EU Composite PMI: 53.7, Exp. 54.0, Last 54.2
Driven by Germany:
- German Manufacturing PMI: 51.5, Exp. 51.9, Last 51.9
- German Services PMI: 53.7, Exp. 54.0, Last 53.8
- German Composite PMI: 53.4, Exp. 53.9, Last 53.7
And France:
- French Manufacturing PMI: 49.6, Exp. 50.8, Last 50.8
- French Services PMI: 52.0 Exp. 53.8, Last 54.1
- French Composite PMI: 51.5 Exp. 53.5, Last 53.3
Visually:
A closer look at markets shows Asian equities which traded mostly lower following the weak close on Wall Street amid a bout of discouraging earnings, while a strong result from Amazon after-market, led to a recovery in NASDAQ futures . Sentiment in the Asia-Pac region was also dampened by Chinese manufacturing PMI printing a 15 month low which weighed on all indices, despite some suggestions the poor data supports calls for further measures from Chinese authorities. JGBs traded with minor gains supported by weakness across riskier assets, but came off its best levels after a poorly received enhanced liquidity auction where the b/c was the worst in 2 months. Caixin Chinese Manufacturing PMI (Jul P) M/M 48.2 vs. Exp. 49.7 (Prey. 49.4); 15-month lows.
In Europe, markets trade in positive territory heading into the North American crossover , (Euro Stoxx: %) as indices look to pare back some of the recent losses seen throughout the rest of the week. This comes as equities shrug off the worse than expected PMIs and fairly mixed high profile earnings, including Vodafone (+3.4%), Anglo American (+1.4%) and BASF (-3.2%).
Aftermarket yesterday saw Amazon.com Inc report Q2 EPS USD 0.19 vs. Exp. Loss/Shr 0.14 and Q2 sales USD 23.18bIn vs. Exp. USD 22.4b1n, with the Co. forecasting Q3 net sales at USD 23.3bIn-25.5bIn vs. Exp. USD 23.9bIn to trade higher by 18.5% premarket. Elsewhere, Visa, who make up 2.7% of the Dow, reported Q3 Adj. EPS USD 0.74 vs. Exp. USD 0.58 and Q3 revenue USD 3.52b1n vs. Exp. USD 3.36b1n to trade higher by 4.6% premarket. Today's notable US earnings include AbbVie and Biogen.
USTs underperform German paper in early trade as they pare back some of yesterday's gains and the stronger USD lifts rates across the US curve; with positive US data continuing to lift stocks compared to bonds . Bunds spending the session in positive territory on the back of the aforementioned weak Eurozone data, while volumes were particularly light and Gilts have outperformed during the European session with the yield curve on the short end flattening, as expectations for a BoE rate lift off were potentially dented after yesterday's weak UK retail sales.
Today's Manufacturing PMIs have largely disappointed , with the Chinese Caixin Manufacturing PMI printing a 15 month low to weigh on AUD, while European Manufacturing and Services PMIs have all printed lower than expected to weigh on EUR. AUD is also weighed on by comments from S&P after they affirmed Australia's ratings at AAA with a stable outlook, but said the country could be downgraded if the budget does not improve as expected. Elsewhere, NZD weakened in sympathy with AUD, coupled with trade figures printing an unexpected deficit.
USD (+0.3%) has benefited from the weakness in its counterparts to pare back much of yesterday's losses, with participants today looking out for US Manufacturing PMI preliminary reading and New Home Sales.
The main story remains commodities where recent weakness in commodity markets continues today with gold printing fresh five year lows and on track for its worst week since Octobe r, while WTI and Brent crude futures have ticked lower heading into the North American crossover with nothing particularly fundamental at play, as WTI remains below USD 49.00/bbl and Brent crude falls below USD 55.00/bbl for the first time since April.
In summary: European shares rise, though are off intraday highs, with the real estate and telco sectors outperforming and media, banks underperforming. Euro-area July composite PMI falls more than estimated. Chinese prelim. July manufacturing unexpectedly weakens; gold and copper fall to multi-year lows. The Italian and French markets are the best-performing larger bourses, Spanish the worst. The euro is weaker against the dollar. Irish 10yr bond yields fall; French yields decline. Commodities decline, with nickel, natural gas underperforming and WTI crude outperforming. U.S. Markit manufacturing PMI, new home sales due later.
Market Wrap
- S&P 500 futures up 0.2% to 2102.5
- Stoxx 600 up 0.2% to 399
- US 10Yr yield little changed at 2.27%
- German 10Yr yield down 3bps to 0.71%
- MSCI Asia Pacific down 0.9% to 142.4
- Gold spot down 0.8% to $1081.6/oz
- 13 out of 19 Stoxx 600 sectors rise; real estate, telco outperform, media, banks underperform
- Asian stocks fall with the ASX outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific down 0.9% to 142.4
- Nikkei 225 down 0.7%, Hang Seng down 1.1%, Kospi down 0.9%, Shanghai Composite down 1.3%, ASX down 0.4%, Sensex down 0.9%
- Anthem to Buy Cigna for $48.4b After Year of Talks
- Japan’s Meiji Yasuda to Buy U.S. Insurer StanCorp for $5b
- Euskaltel Agrees to Buy Spain’s R Cable in $1.3b Deal
- Ladbrokes to Acquire Coral to Form U.K. Betting-Shop Giant
FX/BONDS
- Euro down 0.36% to $1.0945
- Dollar Index up 0.35% to 97.46
- Italian 10Yr yield down 3bps to 1.87%
- Spanish 10Yr yield down 4bps to 1.91%
- French 10Yr yield down 4bps to 0.99%
COMMODITIES
- S&P GSCI Index down 0.3% to 389.8
- Brent Futures down 0.4% to $55.1/bbl, WTI Futures up 0.3% to $48.6/bbl
- LME 3m Copper down 0.3% to $5258/MT
- LME 3m Nickel down 1.6% to $11250/MT
- Wheat futures down 0.6% to 518.5 USd/bu
Bulletin Headline summary from RanSquawk and Bloomberg
- Treasury yields little changed overnight after declining yesterday; 30Y closed below 3% for first time since July 8 as WTI crude traded below $49/barrel.
- A private gauge of Chinese manufacturing unexpectedly fell to the lowest in 15 months, reinforcing the need for further policy support in an economy that had seen signs of stabilization recently. Regional stocks fell
- Greece’s three main official creditors are back in Athens and their arrival draws a line under the antagonism the Syriza government displayed in the afterglow of its election victory as PM Tsipras accepts the pain
- The euro-area economy maintained a steady pace of growth at the start of the third quarter, weathering strains on confidence from the debt crisis in Greece
- Ukrainian bonds rose for a fifth week as the government made an interest payment on time, showing negotiations toward a $19 billion debt restructuring are making progress
- Japan’s debt is unsustainable and could climb to almost three times the size of its economy by 2030 unless the government does more to cut its budget, the IMF said
- The good news for investors in the $3.6 trillion municipal market: only one bond issuer rated by Moody’s Investors Service defaulted during the past two years, the first time that’s happened since the late 1990s
- Sovereign 10Y bond yields mostly lower, Greece rises ~10bps. European stocks higher, Asia lower; U.S.equity- index futures rise. Crude oil higher, copper and gold drop
US Event Calendar
- 9:45am: Markit US Manufacturing PMI, July preliminary, est. 53.6 (prior 53.6)
- 10:00am: New Home Sales, June, est. 548k (prior 546k)
- New Home Sales m/m, June, est. 0.3% (prior 2.2%)
DB's Jim Reid completes the overnight event summary
Maybe we are not alone after all. Yesterday NASA announced the discovery of a planet in a far off solar system that is the most similar to ours that they have yet discovered. It has the glamorous name of Kepler-452b. If it is able to support life I hope they've had a more exciting week in markets than we have had here on Earth. Having said that, despite holiday season taking over a few themes are emerging after Greece and China continue to quieten down with the commodity slump and US result season being the main focus.
Oil yesterday entered into bear market territory for the second time in 2015 with WTI falling to $48.45/bbl and 22% off its recent highs on June 10th. Commodities elsewhere have also continued to fall. Gold closed 0.32% lower yesterday to a new five-year low of $1091/oz – the eighth daily decline in the last nine days – while there were fresh cycle lows for Copper, which tumbled 1.65% to a six-year low, Aluminum (-1.39%), Silver (-0.95%) and Platinum (-0.15%).
Combined with some disappointing top tier earnings releases yesterday, equity markets struggled across the board with the S&P 500 (-0.57%), Dow (-0.67%) and NASDAQ (-0.49%) all lower for the third consecutive session in the US while closer to home the Stoxx 600 fell 0.54% as peripheral bourses led the declines.
It was Caterpillar and Freeport-McMoran which stole much of the headlines in yesterday’s US earnings releases with their share prices tumbling 3.6% and 9.4% respectively. Despite Caterpillar’s Q2 earnings printing in line, investors latched onto the bleak outlook posted by the company which also saw full year sales forecast slashed. Caterpillar’s CEO noted in a statement that ‘while economic conditions in the US are modestly positive, the global economy remains relatively stagnant’ and that ‘many of the key industries we serve remain weak and we haven’t seen sustained signs of improvement’. It was a similar story for Freeport-McMoran meanwhile who posted a better than expected Q2 report (with a beat at the profit and revenue level) but warned of a struggling outlook for commodity prices and suggested the company may have to look at scaling back operations as a result.
Dow Chemical added to a weak day for commodity names following its earnings release with shares tumbling 4.6%, although it wasn’t all bad news with General Motors up nearly 4% on a slightly more positive outlook for sales in China and Amazon shares surging as much as 17% higher in after-market trading (pushing the company’s market cap beyond that of Wal-Mart) after an unexpectedly strong earnings beat.
Refreshing our beat/miss ratio for earnings season so far after yesterday’s bumper day for releases, we now have 171 S&P 500 companies having reported with the EPS beat level remaining at 77% (the same as earlier in the week) but with the sales beat edging a touch lower to 54%. Looking at a similar analysis for European companies and specifically the Stoxx 600, out of 92 companies to have reported, 64% have reported a beat at the EPS level but contrary to what we’ve seen in the US, 66% have actually reported a beat at the sales line.
Moving onto Asian, there’s broad weakness across most bourses this morning, following the lead from the US yesterday. The Nikkei (-0.64%), Hang Seng (-0.94%), Kospi (-0.82%) and ASX (-0.50%) have all fallen while it’s been a fairly volatile start for Chinese equities with bourses swinging between gains and losses. As we go to print the CSI 300 (+0.88%), Shanghai Comp (+1.07%) and Shenzhen (+1.46%) are back in positive territory however – the latter two bourses for the seventh consecutive session. Data in China this morning hasn’t been supportive however following the latest July flash manufacturing PMI which saw the indicator drop 1.2pts to 48.2 and below expectations of 49.7, the fifth straight monthly contraction and the lowest level since April 2014. There was better news in Japan however where the same indicator saw a 1.3pt rise to 51.4 (vs. 50.5 expected). Gold has slumped another 0.60% this morning, dragging other precious metals along with it although there’s been a modest rebound for WTI (+0.64%). S&P 500 futures are unchanged despite the positive surge in Amazon after the closing bell while Treasuries are also unchanged. Credit markets across Asia, Japan and Australia are 1-2bps wider.
Back to yesterday, it was a slightly busier day for data in the US headlined by a 26k drop in initial jobless claims last week to 255k (vs. 278k expected). The reading was in fact the lowest since November 1973 although a lot of the reasoning is being pointed towards an unwind of the early July surge as a result of auto retooling. The more normalized four-week average of 279k was down 4k from the last reading. The Chicago Fed’s National Activity index for June rose to 0.08 (vs. -0.05 expected) while the Conference Board’s leading index for the same month was also above market (+0.6% mom vs. +0.3% expected). There was some slight disappointment in the July Kansas City Fed manufacturing activity index which remained weak at -7 (vs. -5 expected). With US credit also weaker yesterday (CDX IG +1bps), along with a softer day for equities, 10y Treasury yields continued to grind lower, closing -5.6bps at 2.269%. Sovereign bond yields in Europe followed suit with 10y Bunds half a basis point lower at 0.740% and the periphery 4bps tighter. Meanwhile in the UK, despite more hawkish comments out of the BoE with MPC member McCafferty highlighting that wage growth including bonuses is slightly ahead of where BoE officials expected in the May inflation report, weak June retail sales (-0.2% mom vs. +0.4% expected) helped send the Pound down 0.63% and 1.12% versus the Dollar and Euro respectively.
On the subject of currencies, it’s worth pointing out that our FX strategists have put out an update on their bearish EUR/USD view. This view has been based on the belief of large-scale European capital outflows (what they call Euroglut) and the eventual prospect of Fed exit from ultra-accommodative policy. They think the European outflow story remains fully on track and as for the Fed they think the Fed's re-investment policy on QE assets is a bigger deal than the timing of rate hikes. Nearly half a trillion dollars of their balance sheet matures in 2016, almost equivalent to a full QE program in reverse. This potential 'QT' is important to their view over time. Nearer term they continue to target parity by year-end. f
Before we run over today’s calendar, with the second parliamentary vote in Greece now behind us and news that the Creditors have returned to Athens ahead of talks of a third bailout package, Syriza-related headlines have certainly lessened of late and should be less of a factor in the near term. Some of this attention moved on yesterday to Italy and specifically the leader of Italy’s populist Five Star Movement Beppe Grillo. With polls for his party rising steadily since March and currently sitting at around 25% (according to the FT), Grillo yesterday said that Italy should abandon the Euro, calling it an ‘anti-democratic straitjacket’ and that Italy should ‘take back our monetary sovereign’. Speaking with regards to Greek PM Tsipras, Grillo said that the PM’s’ ‘refusal to exit the euro was his death sentence’ and that it ‘would be difficult to defend the interests of the Greek people worse than Tsipras did’. For now Italy is currently growing and Renzi's popularity and effectiveness seems to be decent, so there is no real immediate issue. However extreme politics in Europe are still a huge threat over 2-5 years and we have to monitor any trends.
Looking at today’s calendar now, it’s set to be a slightly busier morning for European data with the flash July manufacturing, services and composite PMI’s for the Euro area and also regionally in Germany and France. We’ll also get the flash manufacturing reading for the US this afternoon while new home sales for June are also scheduled to be released. On the earnings front American Airlines is the notable release today.
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Commodity Clobbering Continues
Must....kill.....anything real.
All markets matter....except the real ones.
Baby seals get better treatment
top 10 NDX stocks = 47% of NDX weight
NDX moves SPX. SPX moves DJI.
And this is how cunt yellen does it. Magic? No. Fraud? Yep!!!
AMZN up 20% overnight - if AMZN is succeeding, the entire retail sector is failing. How's WMT? : )
AMZN is eating the other retailors.
There can only be one.
amzn don't sell food with snap cards yet , ha...
Can't wait until amzn has those awesome drones delivering their packages. I'm sure the government wouldn't abuse it's power to tap into that system.
deflation of stuff we can live without, inflation of rent and food, squeeze to poverty, thanks zirp..
lies damn lies and statistics..that is finance news, watch cnbc and trade on cramers must have stocks like mlp's in oil and gas you can't lose....cause they can't go lower. when jeff of the amazon is shot dead just think how much amzn will climb. there is no there there in a co with no profits that just keeps growing by selling more at a loss while killing brick and mortar mom and pop co's..stupid idiots shopping on amzn and killing the comunity businesses they no longer buy from...the reptiles want amzn just like they want free money from the fed, the west is led by non human blood sucking leaches, but i guess it is still ok to buy on amzn the razor you cut your neck with. your enemy is the mega international corp, is all you need to know.
/rant off
Awesome....got anymore?
Agreed but it was companies like WMT, TGT, and HD that killed off the mom and pops long before AMZN could.
Commodities? We don't need no stinking commodities
https://www.youtube.com/watch?v=VqomZQMZQCQ
Aw gee, der be words too many in here um artikul. Too daym diffikult to read.
Let me jus fit in round here parts and say fuk obomba he ruining ma precious south...
Yee haw where is me gun, keep stackin ya gold n lead fit when dem yankees come for em...
O'reilly 2016 o'reilly 2016....
I perceive you to be a market savvy pornstar.
Could just be a MSM reporter....same damn thing really.
Me is just a humble averidge joe..dont be using all dem yanky words you learnid in your fancy edumakayshn yankee school when you dum yakkin with me.
I din know wat perceve is but it sure sound like you be bein discrimatory. We humble suvvern white folk just want to be um left well alone. No gays or blacks neither..no siree
Me aint no savvy pornstar, dat would be me yungist annie,,,she a right ho. but we daym love her none the less...
masis oh so you are homosexual, kinda fits. do you lick the dick after anal sex..we all wanna know?
sorry overthe top..even for ZH..but do you?
in fight club there are no rules. punk
The jew mafia paves the way for amzn to succeed. The jew mafia paves the way for fb to succeed. The jew mafia paves the way for lvs to beat its competitors. The jew mafia paves the way for gs to crush its competitors(leh, bsc). The jew mafia paves the way for their own to rise in power and wealth as they destroy the goyim to pieces as the goyim has no clue what's going on and actually roots for the jew because of the holocaust and everything he heard on tv how the jew is always the poor little victim. School Ties was a movie where a jew went to college with these white prep football players and they hated him when they found out he was a jew. The jew fought back and stood up for himself and was the victim. Now when the FUCK has this ever happened in real life? The jew has mindfucked everyone in this country so bad that even if you tell them the truth the goyim will attack you and think you're an antisemetic.
America is about to go over the cliff... read the Obama prophecies....
http://revelation12.ca
what really sucks is the reptiles are smart enough to hire smarter people to run the program..no hard money economy is one piece of the puzzle..try buying stuff on amzn with cash, anybody? oh you say you can't well think about it, one more piece in the tyranny plan for us all..mega corps mega cbanks mega .gov mega tyranny, can't have one without the others..the reptile perfer to be the one holding the whip.
if you do not like modern western living, take a pill. to change it has gone far beyond guns and diebold voting - free your mind, just say no to the plan to make a one world one culture one race = slave planet.
Bitcoin now. Something else quickly in the event of currency collapse. There's no way to pass though such a thing totally unscathed.
Aw yee...dis her de da truf... Obomba profesies..shure mes be true...i did see too um suns too...
masis, U be nigger?? U be jew?? U be numbnuts? we all wanna know?
she be a little brainwashed, anti white, liberal who was mindfucked by the jew. Oh, and she's white too and hates her people. The jew taught her to hate her people but to love the jew and the nigger. Even though the nigger kills THOUSANDS of white people each year and rapes them repeatedly. She still hates her white people but loves the nigger. Dem dirty filthy fucking jews.
The cloud guys go oh yeah we can spin up all these machines when every wants to watch a movie on Netflix on Friday night. In reality I still get jerky video on Friday night when I try to watch a movie with my 50mbps connection!!!
To me, at 700+ PE and NO yield, the price has discounted earnings as far as the eye can see, making growth forcasts mostly irrelevent as far as I'm concerned. Along with Netflix and other stocks, they all have dot com written all over them. History repeating itself with the Fed and other central banks around the world monetizing their stock and bond markets. This whole scene doesn't pass the smell test. At this point, I'm content to watch and wait.
Goddamn.
Silver at $14.54 right now.
It's almost free.
Hi,
Good to know that Australia got the AAA rating. Well done. I was looking for baby products like muslin wraps, swaddle, swaddle wrap and baby blankets for my baby on Amazon. Aden and Anais is a good brand of Australia for baby products with free shipping. Happy to got this.