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Thursday, September 10, 2015
Nervous markets await FOMC meeting next week
Dow rose 76 (well off the highs), advancers slightly ahead of decliners & NAZ gained 39. The MLP index was off fractionally to 345 (still down more than 200 from last year's record highs) & the REIT index added a fraction in the 392s. There was buying in junk bond funds & Treasuries retreated. Oil had a strong day (see below) & gold rebounded from recent selling.
China appeared to expand efforts to bolster its currency in
an attempt to align its exchange rates at home &
abroad. The yuan rose a record 1.2% in the offshore market
amid speculation the People’s Bank of China was again acting to contain
the months-long turmoil in Chinese financial markets. The move came on the same day the country opened its domestic foreign-exchange market to overseas central banks. Traders
said the intervention combined with the change in its domestic policy
will further China’s long-time goal of making the yuan more of an
intl currency. The yuan strengthened to 6.3936
per dollar, the biggest one-day advance
since offshore trading began 5 years ago. The
gov has launched a series of measures in recent months to shore
up growth & boost equity valuations, ranging from devaluing the
currency to cutting interest rates & cracking down on stock market
manipulation to stem a rout that has wiped out $5T in
shareholder value.
Since
devaluing its currency a month ago & shifting to a more
market-oriented exchange rate, China has been intervening to limit
depreciation, a policy that led to an unprecedented $94B drop
in its foreign-currency reserves in Aug. The yuan will be kept stable
at a reasonable level, Premier Li Keqiang said today, while announcing that foreign central
banks would be allowed to trade in China’s domestic currency market.
Oil prices rallied as
indications of strong US demand for gasoline overshadowed news of
increased US inventories of crude. A weaker dollar also made dollar-denominated crude more affordable to
holders of the €, while higher equity prices enhanced
bullish sentiment in oil markets. US Energy Information Administration data showed demand
for gasoline over the latest 4-week period was up almost 4% from a
year ago, bullish for late-summer consumption of the motor fuel.
Gasoline inventories, meanwhile, rose just about ½ of expected levels
last week. Encouragement about gasoline demand outweighed concern over data
showing US crude oil stockpiles rose nearly 2.6M barrels last
week, more than double the build of the 933K barrels forecast. Concern about the rise in crude inventories was also mitigated by a
drawdown in crude stockpiles at the Cushing, Oklahoma delivery point for
US crude. Keeping pressure on prices, producer group OPEC has kept the spigots
open to protect market share. Leakers said today Saudi Arabia was disinclined to hold a summit of oil producing countries
if the discussions would fail to produce concrete action towards
defending oil prices.
Google will roll out Android Pay, a one-touch payment
app on Android devices, in more than 1M locations in the US on today. The payment service can be used thru Android devices with
near-field communication (NFC) technology & Google's KitKat 4.4+
operating system. Android Pay will compete with Apple Pay in the mobile
payments market, which research firm IDC estimates at $1T in
2017. Existing users of Google Wallet app can access Android Pay thru an
update, while new users can download it from Google Play store in the
next few days. Android Pay will be made available in more locations over the next
few days & more features will be added to it in the coming months. Android Pay will support credit & debit cards on payment networks
of popular credit cards cards issued by major banks. As part of security, the service is supported by the industry standard "tokenization" card-security service. Tokenization service substitutes random numbers for a user's credit
card details when a merchant transmits transaction data, reducing the
risk of online theft. The app will come preinstalled on new NFC-enabled phones from
major wireless carriers. High priced GOOG stock went up 8+. If you would like to learn more about GOOG, click on this link: club.ino.com/trend/analysis/stock/GOOG?a_aid=CD3289&a_bid=6ae5b6f7
Market volatility as shot up in the last month. The VIX, volatility index, was wallowing around 12 for months & months. But last month it soared to 53 & today is around 25, where it has spent much of the time in the last month. Timid investors are being reminded about what fluctuations in the stock market are about. All kinds of thoughts about the FOMC meeting next week & how changes in oil prices can move stocks prices wildly, even during the day. Little can be made from these gyrations, but the stock market is much different from the way it has behaved during the 6 year recovery. High volatility on whims about this & that are a strong negative for stocks.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.8563060669756278)
...1.73 
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