Via Dave Lutz of JonesTrading, here’s a quick overview of what traders are talking about amid a wild morning in global markets.
Nothing good about this Morning, unless you are levered up short. The S&P Futures are marked down 2.2% this AM, and Nasdaq over 3% as AAPL and other tech names are whacked due to their China Exposure – Shanghai dove 8.5% overnight, leaving it 60% below June peaks and red for 2015 as China’s official state news agency declares ‘Black Monday’ – Nearly 2,200 stocks slid by the daily limit of 10 per cent, while only 15 out of all Shanghai- and Shenzhen-listed companies rose on Monday as the PBoC defied hopes of policy action over the weekend, stopping short of cutting interest rates or injecting liquidity. This hit the Hang Seng for 5.2 per cent, wiping out its gains for the calendar year — while Nikkei lost 4.6% on the rallying Yen, and Aussie dropped 4.1% as resource stocks crumbled. Emerging Asia Markets were hit hard, with Thailand, Singapore, India and others off 4%+. While the S&P is weaker, it continues to mean-revert and outperform European exchanges – Every constituent in the Eurofirst 300 in the red and basic resource stocks are leading the losses in Europe. FTSE 350 mining index down almost 5%, and the DAX has lose over 3% as it smashed under that “psychologically important” 10,000 level.
No Surprise, but there is a huge rush into the Safety of Treasuries — with the US 10YY under 2% (1st since April) — but kinda stunning German 10YY higher on the day. Hawkish Fed bets continue to recede, as the Fed Funds now calculating only a 30% chance of a September Liftoff, down from nearly 50% last week. The “Policy Sensitive” 2YY has dropped to 6week lows. The massive covering in the euro and Japanese yen continues, as the HFs unwind “Carry Trades” — and we have heavy damage being done in resource currencies, with Rouble on an all-time low, and Canadian and Aussie dollars taking out August lows against the Greenback. With the Euro testing 1.15 and the $US/Yen at 120 — we have a heavy headwind for commodities. Industrials are taking it particularly hard — with Copper and aluminium prices trading at new six-year lows – WTI and Brent off nearly 4%, Copper and Silver off 3%, and even Gold is breaking a 5day winning streak. Every one of the “Softs” is firmly in the red as well.
We have a quiet day of catalysts amidst all these market headlines — with the Chicago Fed Nat Activity Index at 8:30 and Aug Treasury Allotments at 3. Fed’s Lockhart (2015 Voter) Speaks to Public Pension Funding Forum at 3:55 tonight. President Obama travels to Las Vegas to deliver remarks on National Clean Energy Summit, while the Senate, House remain on summer break. This week’s main event (aside from PBoC headers) should be the Jackson Hole Fed symposium — kicking off Thursday. While Janet is not speaking, Fed VC Fischer speaks on Friday.
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