Economic Reports & Futures Levels 8.11.2015
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
1. Market Commentary
2. Futures Support and Resistance Levels – S&P, Nasdaq, Dow Jones, Russell 2000, Dollar Index
3. Commodities Support and Resistance Levels – Gold, Euro, Crude Oil, T-Bonds
4. Commodities Support and Resistance Levels – Corn, Wheat, Beans, Silver
5. Futures Economic Reports for Tuesday August 11, 2015
For 2015 I would like to wish all of you discipline and patience in your trading!
TradeTheNews.com Weekly Market Update: See You in September
Fri, 07 Aug 2015 16:27 PM EST
US equity indices saw modest losses this week and the 10-year yield pulled back to levels last seen in late May as investors continued to brood over the timing of Fed rate liftoff. The consensus heading into Friday’s July jobs report was that any non-farm payrolls figure above +200K would support expectations for the Fed to tighten policy in September, and the +215K figure on Friday did the job. In China, the government extended its campaign of heavy-handed interventions to keep the Shanghai Composite steady. Economic data continued to suggest the economy is slowing: the official China manufacturing PMI index stalled out in July, hitting 50.0 after four months of very slight expansion. Europe is finally seeing solid improvements in economic data, with most of the continent’s July manufacturing PMI data beating expectations and firmly in expansion territory (although France did slip back into contraction in the month). For the week, the DJIA lost -1.8%, the S&P dropped -1.2%, and the Nasdaq gave up -1.7%.
The non-farm payrolls total came in slightly below expectations, but overall the July jobs report still indicates some improvement in the US labor market. Employers added 215,000 jobs in July, 10 thousand less than expected, but this marked the 58th consecutive month of job gains, the longest stretch on record. Both the June and May figures were revised slightly higher. Unemployment didn’t budge from its post-crisis low of 5.3%, while average hourly earnings rose 0.2% sequentially and 2.1% on an annualized basis, on par with the pace of much of the expansion. The labor-force participation rate remained at a multi-decade low, suggesting there remains quite a bit of slack in the labor market. The consensus heading into the data was that any figure above +200K would keep the Fed on track for tightening policy in September, and based on Fed-funds futures, the odds of a September hike rose to 56% from 46% before the jobs report.
In other US economic data, personal spending and core PCE growth held steady at low levels in July, although the y/y figure was a hair higher. The July ISM manufacturing index fell to 52.7 from 53.5 the month before, however the new orders component rose slightly to 56.5 from 56.0 in June, marking the highest reading since December. The July ISM non-manufacturing index saw very strong growth, rising to 60.3 from 56 m/m, with a new orders component up at 63.8. Construction spending barely rose in June as private outlays posted their biggest drop in a year, but the May figures were revised up to +1.8% from +0.8% prior.
The BoE minutes out on ‘Super Thursday’ were not as hawkish as many had expected while the Quarterly Inflation Report maintained its two-year inflation outlook around 2.0%. The dovish tone weakened the pound, with GBP/USD falling from above 1.5600 to test 1.5470 in the aftermath of the release. The ensuing press conference did help offset some of the initial dovishness. Governor Carney reiterated that the likely timing of first hike was drawing closer but the decision would be fully data-dependent. Friday’s US payrolls further weakened the pound, with GBP/USD dropping below 1.5440.
Crude prices sank lower, with WTI holding below $45 and Brent below $50 in the latter half of the week. Both the API and DoE reports saw their second consecutive week of larger-than-expected inventory draw downs, although the numbers did very little to support prices. There were reports that Saudi Arabia was looking to raise up to $27B in USD bonds by the end of the year as lower oil prices strain the Kingdom’s finances. Analysts wrote that if the oil futures are correct, Saudi Arabia will start running into serious budget trouble in two years and enter an existential crisis by the end of the decade.
Greece is very close to reaching a deal with its creditors to secure a €86B line of credit that will keep it afloat for the next three years and keep it within the Eurozone. Greek PM Tsipras said negotiations were in the home stretch, and European Commission President Juncker said the talks would like be wrapped up by August 20th. The Athens stock exchange opened for trade on Monday after being closed for five weeks. Shares fell sharply through Thursday, with bank stocks giving up more than 60% a piece.
The political crisis in Brazil stemming from Petrobras corruption deepened and the Real currency hit 12-year lows against the dollar. President Dilma Rousseff is coming under severe pressure as her approval ratings have fallen below 10% to the worst levels on record. The leadership of the lower house of the Brazil National Congress is gathering support to impeach Rousseff, and one poll suggested that impeachment has 66% support in Brazil. Finance Minister Levy insisted that Rousseff would finish her term and protect Brazil’s investment-grade rating, which is currently only one notch above junk at S&P.
The US July auto sales reports were robust, with General Motors, Ford and Fiat-Chrysler each reporting 5-6% y/y sales growth that beat expectations, while Honda and Nissan saw around 8% y/y growth, crushing expectations. Toyota also topped consensus views, but only saw 0.6% growth. Analysts cited low fuel prices, big summer discounts and surging SUV demand for the excellent reports.
Activist investors were back on the radar this week. Carl Icahn disclosed an 8.2% stake in Cheniere Energy, sending shares up more than 5% on Friday. American Express got a similar boost from a report that ValueAct had built a $1B stake in the financial services firm. Mondelez shares moved out to fresh all-time highs after Pershing Square took a $5.5B stake, riding the coattails of activist investor Nelson Peltz (Trian) who got involved with Mondelez two years ago.
Shares of Apple lost nearly 6% on the week and fell below the 200-day moving average for the first time since September of 2013. Many tried to identify a direct catalyst for the move, citing one report that Apple Watch shipments declined in June (the report also said they would rise in Q3) and another that Apple moved to third place for China smartphone market share in Q2, with Xiaomi in first place and Huawei in second. Apple component suppliers Skyworks Solutions, Avago and Qorvo saw accelerating losses as AAPL shares sank lower.
Major media stocks and cable television names saw significant losses this week in the wake of Disney’s disappointing quarterly report. Disney’s headline numbers were fine, with profits up 11% y/y, however executives revised the firm’s outlook for its cable business slightly lower, blaming the trend of consumers moving away from traditional cable packages. Cablevision, Time Warner and Dish Network reported pretty strong second-quarter reports while Viacom missed top-line expectations, but Disney’s remarks about their contracting cable outlook weighed on all four stocks. The big winner was cable disrupter Netflix, after Disney’s CEO said there may be opportunities to expand the content relationship between the two companies. NFLX was up as much as 12% after the Disney comments, although shares followed broader markets lower on Friday.
In other notable earnings news, Tesla skidded 10% lower after CEO Musk lowered the firm’s full-year production target and results showed unrelenting cash burn, leading many to speculate a capital raise was a real possibility. Shares of AIG and Allstate sank after Allstate’s operating income fell 41% y/y in the firm’s second quarter thanks to a small underwriting loss. AIG’s quarter was not too shabby, but Allstate’s bad showing dragged down the name. Keurig Green Mountain plunged 30% after it were forced to slash its outlook on deteriorating fundamentals. Nvidia gained more than 10% after the firm crushed top- and bottom-line expectations in its second-quarter results and offered strong third-quarter guidance.
Shire disclosed that back in mid-July, it offered to acquire Baxter spin-off Baxalta in an all-stock deal that would value it around $30B. Baxalta, which only completed the spin-off from Baxter a month ago, declined to engage in substantive discussions regarding the proposal. At this valuation, the deal would be the fifth-largest of the year, just behind the Broadcom acquisition. PartnerRe agreed to be acquired by Italian firm Exor for $140.50/share in a deal valued at $6.9B. AXIS Capital had also been pursuing PartnerRe, and will receive a $225M termination fee for its troubles.
Two central bank policy updates in the Asia-Pacific region drew very different reactions. The Reserve Bank of Australia’s updated quarterly forecast was highlighted by a cut in the overall 2016 GDP outlook by 25 basis points to a 2.5-3.5% range. However, AUD/USD rose some 30pips toward $0.7380 on the release as RBA also raised its 2016 Core CPI target from 1.75-2.75% to 2-3% and also reiterated a more upbeat outlook for employment as it did earlier this week in its monetary decision. The prospects of the central bank standing pat Down Under in the face of falling commodities contributed to the headwinds for S&P/ASX index this week, sending it down by about 3.5%. Meanwhile, the Bank of Japan policy statement barely generated any market reaction, as the BOJ maintained its annual pace of ¥80T monetary base expansion, and reiterated that the economy continued to recover moderately.
Recent economic weakness in China has been blamed for sagging global equities and commodities markets, though the Shanghai Composite managed to rise 2% after taking a 10% shellacking last week. One analyst report suggested that government support for the equity market over the last two months amounted to as much as 900B yuan, or about 1.6% of the capitalization of the entire market. Investors await the release on trade and inflation data expected over the weekend, but also remain optimistic that policymakers will continue to find ways to boost liquidity. In a move eerily reminiscent of the US financial meltdown, some of the Chinese brokers were said to be attempting to securitize margin debt into ABS.
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|Contract Sept. 2015||SP500||Nasdaq100||Dow Jones||Mini Russell||Dollar Index|
|Contract||Dec. Gold||Sept. Silver||Sept. Crude Oil||Sept. Bonds||Sept. Euro|
|Resistance 3||1131.0||16.17||47.08||160 8/32||1.1188|
|Resistance 2||1119.7||15.77||46.04||159 15/32||1.1117|
|Resistance 1||1111.5||15.50||45.42||158 6/32||1.1071|
|Support 1||1092.0||14.83||43.76||156 4/32||1.0954|
|Support 2||1080.7||14.43||42.72||155 11/32||1.0883|
|Support 3||1072.5||14.16||42.10||154 2/32||1.0837|
|Contract||Dec. Corn||Sept. Wheat||Nov Beans||Dec. SoyMeal||Sept. Nat Gas|
|TueAug 11||2:00am||EUR||German WPI m/m||0.1%||0.2%||-0.2%|
|5:00am||EUR||German ZEW Economic Sentiment||25.0||31.7||29.7|
|EUR||ZEW Economic Sentiment||47.6||43.9||42.7|
|6:00am||USD||NFIB Small Business Index||95.4||95.4||94.1|
|8:30am||USD||Prelim Unit Labor Costs q/q||0.5%||0.0%||6.7%|
|USD||Prelim Nonfarm Productivity q/q||1.3%||1.6%||-3.1%|
|10:00am||USD||Wholesale Inventories m/m||0.9%||0.4%||0.6%|
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