Market Snapshot

Asia: Japan -1.6% to 17965 . Hong Kong +0.3% to 21562. China -2.7% to 3115. India +1.0% to 25862.
Europe: London +0.8%. Paris +0.2%. Frankfurt +0.2%.
Futures: Dow +0.1%. S&P +0.2%. Nasdaq +0.2%. Crude +0.02% to $44.64. Gold +0.3% to $1106.40.
Ten-year Treasury Yield 2.17%

Economic News

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Global stocks are mixed today as reports from China set a negative early tone off of disappointing economic reads. The Shanghai Composite Index fell 2.7% and the Nikkei lost 1.6%. Hong Kong’s Hang Seng was down 0.3%, while the broad market in Australia ended with a mild gain. There’s growing concern China will miss its economic growth target of 7% for the full year based off of new data. European stock markets are broadly higher in early trading. The focus will shift to the U.S. in the middle of the week when the Federal Reserve meets. A recent survey of economists indicated a majority of economists think the Fed will hold rates steady, although the decision is still considered a “toss-up” by many.

Oil prices retreated this morning in Asia after several banks issued a weak outlook for demand. Morgan Stanley warned oil fundamentals appear to be slipping again outside the U.S., while Macquarie pointed to pressure on global automobile sales as a potential drag. Jefferies lowered its 2015 forecast on Brent oil by 9% to $54 per barrel and by 10% for the 2016 forecast of $61/bbl. WTI and Brent crude futures have declined in 9 of the last 11 weeks. Crude futures in New York are flat at the moment. A key report on production from OPEC is due out later in the day.

Factory output in China rose 6.1% in August to miss the consensus estimate of analysts calling for a mark of 6.4%. The soft read increases the odds that economic growth in China will dip below 7% in Q3. The last time quarterly growth was below 7% in the region was during the global crisis. Fixed-asset investment in China decelerated to 10.9% during the first eight months of 2015, the slowest pace in 15 years. Analysts expected an 11.1% gain.

Eurozone industrial production rose 0.6% in July to top the consensus estimate from analysts of a 0.2% gain. Industrial output was up 1.9% on a year-over-year comparison as energy, capital goods, and durable consumer goods output all cycled higher.


Solera Holdings confirms it received an offer from Vista Equity at $55.85 per share. Vista has a group of heavyweight partners lined up for the acquisition, including Broad Street Principal Investments and a Koch Industries subsidiary. The new offer values Solera (SLH) at close to $6.5B inclusive of debt and is 13% higher than the closing price of Solera when the bell rang on Friday. The deal is expected to close by Q1 of 2016.

Google hired John Krafcik to lead its self-driving car initiative. Krafcik is the former CEO of Hyundai and highly-regarded in the industry. The car business is believed to be a prime candidate to be spun out from Google’s (GOOG, GOOGL) parent company, although it will stay on as part of Google X for now.

Airbus says a large A320/A321 factory in the U.S. will be the most efficient in the world as the company looks to challenge Boeing (BA). The Airbus (EADSF,EADSY) facility, which formally opens today, incorporates many of the best techniques for efficiency culled from existing Airbus plants. The company plans to decide later this year if it will aim to max out production at eight planes a month at the Alabama location from an initial planned level of four.

Negotiations between Detroit automakers and the UAW continued over the weekend as tonight’s expiration of labor contracts looms large. Auto workers have a great deal more leverage in the talks this year with profits at General Motors (GM), Ford (F), and Fiat Chrysler Automobile (FCAU) at a higher level than the last three negotiating rounds when concession were made. The UAW announced Fiat Chrysler Automobiles will be its lead target in contract talks. Fiat has a higher percentage of Tier 2 workers (entry-level) than Ford or GM. A major development to watch is if a pooled healthcare plan for all UAW workers can be hashed out.

U.S. gas prices fell sharply over the last three weeks, according to the latest read from Lundberg Survey. The average price for a gallon of regular declined 9.8% to $2.4419 for the period ended September 11. Fuel margins are a key earnings factor for a large number of retail chains – including CST Brands (CST), Murphy USA (MUSA), Costco (COST), Kroger (NYSE:KR), Wal-Mart (NYSE:WMT), and Casey’s General Stores (CASY).

A group of stocks profiled in Barron’s over the weekend could see some added traded volatility today. Big gains are forecast by grocery sector analysts for Supervalu (SVU) after the company spins off the Save-A-Lot Chain. Loews CIO Joe Rosenberg thinks energy stocks Shell (RDS.A, RDS.B), Chevron (CVX), and Exxon Mobile (XOM) are near a bottom as the beat-up oil names protect their dividends. The Barron’s cover story tears into Alibaba’s (BABA) user counts and average spending stats as it makes the case for another downturn in share price.

Swatch CEO Nick Hayek said the company is maintaining 15% sales growth to Chinese customers on a constant currency basis despite the recent economic downturn. His update could calm some fears over demand trends from Chinese tourists for Swatch (SWGAY) products. The confident exec also turned the tables on the theory that Apple Watch will cut into Swatch’s sales by noting Apple’s entry into the smartwatch category has driven up demand across the industry as consumers compare options.

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