Stock markets in Japan, Europe and the US are all trading lower to start the week along with commodities
like crude oil and copper. There hasn’t been one big major development, rather, pessimism appears to be due to the combination of a number of smaller things including:
Increased political uncertainty in Europe after separatist parties came out on top in Spain’s Catalan regional elections, highlighting unhappiness among voters heading into federal elections in Spain and Portugal later this year.
Follow-through increases in political uncertainty in the US with the risk of a government shutdown growing as House Speaker Boehner plans to retire at the end of October with key budget, debt limit and other business related votes due through the transition.
Press reports suggest analysts have been cutting their Q3 earnings estimates for S&P 500 companies.
Press reports suggest Saudi Arabia sovereign wealth funds have been taking funds back from overseas wealth management accounts to the turn of $50-70 billion over the last six months to fund government operations so the country can wage its price war against the US.
Press reports suggest the IMF could be preparing to cut its global GDP growth forecast again next month.
Stock market reaction has continued the recent trend of declining on weak news, seeing it as a sign of weakness rather than as a sign more liquidity could be on the way.
US indices have stabilized a bit after New York Fed President Dudley indicated this morning he still expects the Fed to raise interest rates this year and that October is a live meeting, although he kept the usual data dependent escape hatch open. While close to the party line, Dudley had been leaning more dovishly in recent months, so the street could take this news as another hawkish swing. Later today uber-dove Chicago Fed President Evans speaks, along with San Francisco Fed President Williams, all voters this year.
In currency markets
today USD is climbing again on anticipation of a Fed hike, while JPY and GBP also remain near the top of the league with the UK also trending toward and increase and speculation of more stimulus out of Japan fading. Resource currencies dominate the lower half of the standings with NZD, SEK NOK and AUD weakening.
CAD has been outperforming its resource currency peers by a wide margin, benefitting from its close association with the US and the unlikelihood the Bank of Canada will cut interest rates before December at least due to the Canadian election campaign and rebalancing economy.
Apple sold a record 13 million plus new iPhone 6 models over the weekend, the bad news is the results are to be split over the next two quarterly reports depending on whether sales were made Fri and Sat, or Sunday onwards
Volkswagen press reports suggest it had been warned about emissions test cheating years ago, also the safety of the company’s bonds has come into question.
Glencore stock down 29% in speculation weal commodity prices could force a restructuring, press rumours grains division could be put up for sale
Alcoa to split itself up into two companies
Whole Foods to lay off 1,500 workers about 1.6% of its workforce, raises questions about consumer spending
Significant announcements released overnight include:
US personal income 0.3% vs street 0.4%
US personal spending 0.4% vs street 0.3%
US core PCE inflation 1.3% as expected vs previous 1.2%
China industrial profits (8.8%) vs previous (2.9%)
Japan leading index 105.0 vs previous 104.9
Sweden retail sales 1.0% vs street 3.7%
Italy consumer confidence 112.7 vs street 108.7
Italy business confidence 104.2 vs street 102.7
Upcoming significant announcements include:
10:00 am EDT US pending home sales street 8.1%
1:30 pm EDT FOMC Evans speaking
5:00 pm EDT FOMC Williams speaking
7:00 pm EDT Canada election debate
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