(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers. )
CHINA HALTS DEVALUATION, WEAK EUROZONE GDP, AND HOTTER INFLATION
China has temporarily halted yuan devaluation. It set the reference rate slightly higher indicating that yuan can also appreciate. It appears that several banks were buying large quantities of yuan at 6.40, presumably on behest of PBOC. This means that at least for today PBOC does not want yuan to fall below 6.40.
Eurozone Q2 GDP came at 0.3% vs. 0.4% consensus. Eurozone CPI came at 0.2% in line with consensus.
In the U. S., Core PPI came at 0.3% vs. 0.1% consensus. This hotter inflation number may give the Fed cover to raise interest rates in September.
Oil is trying to rally after falling below $42.
Gold and silver ran up on the report that PBOC bought several tons of gold in July.
Interest rates are ticking higher in response to hotter Core PPI.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1116, silver futures are at $15.42, and oil futures are $42.16.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 33 points.
3RD DEVALUATION OF YUAN IN 3 DAYS, LOW PROBABILITY OF CURRENCY WARS AT THIS TIME, SURPRISE FROM GREECE
Overnight China devalued yuan for the third time in three days.
Contrary to self-servings proclamations of many, many gurus with specific agendas, the probability of a currency war at this time is low.
For months, the models at The Arora Report have been forecasting 5 to 7% devaluation of yuan. The total devaluation over three days is still less than 5%.
For a change, there is a pleasant surprise from Greece. Q2 GDP came at +0.8% vs. consensus of -0.5%. Understandably, many market participants are refusing to believe this number.
In the U. S., retail sales came roughly in line with expectations. Prior retail sales data was revised upwards. This data shows that the U. S. consumer is strong and should lead to better economy for the rest of this year.
Oil has broken major support at $43.
Overnight Smart Money aggressively sold gold around $1125 and silver around $15.50.
Interest rates are slightly ticking up as investors realize that fears over the yuan have been over done.
Our very, very short-term early stock market indicator is neutral.
Gold futures are at $1115, silver futures are at $15.33, and oil futures are $42.86.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 21 points.
IS CHINA LETTING LOOSE THE JUNK YARD DOGS BY DEVALUING YUAN FOR THE SECOND TIME IN TWO DAYS?
Overnight China devalued yuan for the second time in two days. In response, regional currencies experienced the biggest sell off since 1998. FTSE 350 Mining Index hit the low of 2009 great recession.
Is China letting loose the junk yard dogs by devaluing yuan for the second time in two days? The answer is a clear ‘no’. Recently we told you about ugly export numbers from China. China was left with no choice but to devalue to keep its economy together. However if China devalues again, that will be letting loose its junk yard dogs on the rest of the world.
It is important to understand that bear market rallies are sharp. With the exception of bear market rallies, commodities are likely to fall. Because of weaker yuan, China is likely to afford less. The same applies to gold and silver.
The momo crowd keeps on aggressively buying gold and silver without a deep understanding of what they are doing.
Smart Money is beginning to nibble large cap gold equities. This makes sense because large cap gold equities are likely to survive and will eventually offer significantly more leverage to the upside.
The oil market is waiting for the release of DOE inventory data.
Our very, very short-term early stock market indicator is negative.
Gold futures are at $1117, silver futures are at $15.41, and oil futures are $43.61.
S&P 500 resistance levels are 2038, 2017, and 2000; support levels are 2100, 2111, and 2132.
DJIA futures are down 149 points.
BAD NEWS FOR DOLLAR BEARS, BIGGEST ONE DAY FALL IN YUAN SINCE 1994
China has devalued yuan. Yuan fell by the biggest amount in one day since 1994. The move has serious implications for all asset classes across the world. Companies that sell to China are going to get hurt. Commodities are going to get hurt. Currencies of countries such as Australia and Canada are going to get hurt. Non-Chinese companies that compete with Chinese companies are going to get hurt.
Oil rallied over $45 but then gave up all its gains.
Gold rallied to $1120 but then gave up about half its gains.
Interest rates are falling as investors rush into security of U. S. Treasuries.
Our very, very short-term early stock market indicator is negative.
Gold futures are at $1108, silver futures are at $15.23, and oil futures are $44.13.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are down 106 points.
OPTIMISM OVER BAD NEWS FROM CHINA, GOOD NEWS FROM GREECE AND BUFFETT ACQUISITION
Over the weekend there was real bad news from China. Chinese exports fell 8.3%. Producer prices hit the lowest levels since 2009. Chinese stock market interpreted the real bad news as real good news based on the assumption that the Chinese government would be forced to print more money and went up about 5%.
Tsipras has won over skeptics, creditors are close to giving Greece about 86 billion euro package.
Buffett is buying PCP, a big manufacturer of aerospace components, for about $32 billion.
Based on the optimism from the foregoing, interest rates are ticking up.
Oil is desperately trying to hold the support in the $43 to $44 zone.
The momo crowd is aggressively buying gold and silver.
Our very, very short-term early stock market indicator positive.
Gold futures are at $1095, silver futures are at $14.90, and oil futures are $43.86.
S&P 500 resistance levels are 2100, 2111, and 2132; support levels are 2063, 2038, and 2017.
DJIA futures are up 121 points.
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