US stocks have spent the day reeling from one piece of bad news after another. After trying to bounce back overnight from yesterday’s declines, US stocks turned lower after retail sales came in below expectations. Soft consumer spending was then confirmed by Wal-Mart who cut their sales guidance for this year to flat and indicated it expects EPS to fall 6-12% next fiscal year, sending its stock down 9.6% a big drop for a heavyweight. The third strike came in the afternoon with the release of the Fed’s Beige Book regional economic report that showed only 9 districts out of 12 reported modest to moderate expansion down from 11 previously with Chicago and Richmond slowing. Other comments showed a mixed business environment with manufacturing mixed, the oil crash still having an impact, labour market conditions tightening offset by no signs of inflation pressure Just as some FOMC members tried to downplay the soft unemployment report, Richmond Fed President Lacker, a hawk who dissented last meeting, tried to discount the soft retail sales report. Wal-Mart’s warnings plus anecdotal reports of 10-20% more empty containers leaving the US this year representing a slowdown in exports suggest that the Fed’s signalling toward raising interest rates over the last year may have already had a slowing effect on the economy by driving USD higher, such that it's unclear what impact the long awaited liftoff may actually have. If so, the central bank now appears to have painted itself into a corner which could make the next two meetings quite contentious and the market reaction volatile which could create opportunities for trading. On the interim, with two weeks to go to the next Fed decision, both stocks and USD have been taking it on the chin due to the data weakness, while Gold has been climbing along with most other paper majors led by GBP, NZD and CHF, with AUD dragging behind. Overall, this indicates that the market continues to view news that would be dovish for monetary policy as bad news, not as good news as had been the case for the last several years up until about a month ago. It’s important for traders to recognize that the game has changed in this area when planning how to react to upcoming news. It’s another big day for news which could spark significant market action and trading opportunities. Asia Pacific trading could see AUD and NZD particularly active on employment and PMI figures respectively. NZD has bounced back despite dovish talk from RBNZ Governor Wheeler earlier in the week. AUD, meanwhile has been under pressure on speculation the RBA may need to cut interest rates again. Depending on how the news shakes out we could see the spread between the two contract or widen significantly. Singapore markets, meanwhile, could be active around today’s retail sales report. It’s also a big day for US news with the street looking to three FOMC speakers for any sign of panic in the fact of recent weak data Regional economic reports may also influence trading while oil and natural gas inventory/storage reports could rekindle action in energy commodities. Corporate News Netflix is scheduled to report after the US close today. Economic News Significant announcements released overnight include: US retail sales 0.1% vs street 0.2% US retail ex auto (0.3%) vs street (0.1%) US retail ex auto and fuel 0.0% vs street 0.3% US producer prices (1.1%) vs street (0.8%) US Core PPI 0.8% vs street 1.2% UK jobless claims 4K vs street (2K) UK unemployment rate 5.4% vs street 5.5% UK average weekly earnings 3.0% vs street 3.1% Upcoming significant economic announcements include: 8:30 am AEDT NZ Business PMI previous 55.0 11:00 am AEDT NZ consumer confidence previous 110.8 11:00 am AEDT Australia consumer inflation exp previous 3.2% 11:30 am AEDT Australia employment change street 9K 11:30 am AEDT Australia full-time jobs previous 11K 11:30 am AEDT Australia part-time jobs previous 6K 11:30 am AEDT Australia unemployment rate street 6.2% 3:30 pm AEDT Japan industrial production previous 0.2% 4:00 pm AEDT Singapore retail sales street 1.6% 4:00 pm AEDT Singapore retail ex auto previous 0.8% TBA China new Yuan loans street 900.0B 8:30 am BST Sweden unemployment rate street 6.6% 9:00 pm BST Norway trade balance previous NOK 20.8B 1:00 pm BST Poland consumer prices previous (0.8%) 8:30 am EDT US jobless claims street 270K 8:30 am EDT US Empire manufacturing street (8.0) vs previous (14.6) 8:30 am EDT US consumer prices street (0.1%) 8:30 am EDT US core CPI street 1.8% 8:30 am EDT US real avg weekly earnings previous 2.3% 9:00 am EDT Canada existing home sales previous 0.3% 10:00 am EDT US Philadelphia Fed street (2.0) vs previous (6.0) 10:30 am EDT FOMC Bullard speaking 10:30 am EDT FOMC Dudley speaking 4:30 pm EDT FOMC Mester speaking 10:30 am EDT US natural gas street 91 BCF 11:00 am EDT US DOE crude oil inventories street 2.5 mmbbls 11:00 am EDT US DOE gasoline inventories street (1.2 mmbbls) 11:00 am EDT US DOE implied oil demand street 15,801 mmbbls CMC Markets is an execution only service provider. 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Gold soars as US retail sales, bleak Wal-Mart forecast and beige book crush stocks
22:00, 13 October 2015