Market News

As London/European traders had for the exits, the major European indices are closing higher. The gains were led by the France's CAC which rose by 0.98%. That runs in contrast to that indices price action this week. Ironically, that index closed down -0.98% for the week. So the decline was halved in trading here today. A snapshot of the daily indices shows:

• German DAX: +0.81%
• France’s CAC 40: +0.98%
• UK’s FTSE 100: +0.29%
• Spain’s Ibex: +0.81%
• Italy’s FTSE MIB: +0.67%
• Euro Stoxx 50: +0.77%

For the trading week, the major indices finished mixed:

• German DAX: +1.66%
• France’s CAC 40: -0.98%
• UK’s FTSE 100: +0.07%
• Spain’s Ibex: +0.40%
• Italy’s FTSE MIB: -0.10%

In the European debt market, benchmark 10-year yields moved higher across the…

Marvell Technology reported better-than-expected fiscal second-quarter results after Thursday’s close, but the stock moved sharply lower as investors focused on the timing of future revenue from the company’s recently announced Google AI-chip agreement.

• Adjusted EPS: $0.94 versus $0.92 expected
• Revenue: $2.739 billion versus $2.71 billion expected, up 37% year over year and 13% from the prior quarter
• Data-center revenue: $2.172 billion, up 46% year over year and 18% quarter over quarter
• Adjusted gross margin: 58.9%
• Operating cash flow: $605.5 million
• Q3 revenue guidance: $3.15 billion, plus or minus 5%
• Q3 adjusted EPS guidance: $1.10, plus or minus $0.05
• Q3 adjusted gross-margin guidance: 57.5% to 58.5%

Marvell also raised its longer-term…

• Preliminary estimate 51.0
• Consumer sentiment 51.7 vs 51.0 estimate. Prior 55.2
• Current conditions 51.9 versus 51.8 estimate. Preliminary 51.8. Prior 54.8.
• Expectations 51.5 versus 50.6 preliminary. Prior month 55.4.
• 1 year inflation expectations 4.0% versus 4.3 preliminary. Prior month 4.2%.
• 5 year inflation expectations 3.3% versus 3.3% preliminary. Prior month 3.3%

Comments from Joanne Hsu:Consumer sentiment confirmed its early month reading, falling about 6% from last month and landing about 11% below a year ago amid continued worries that inflation will remain elevated for the foreseeable future. Sentiment declines in August were seen for all political groups and were particularly acute among Republicans. Moreover, groups who are…

Kevin Warsh cultivated a sense that he wasn't going to offer much on rates or the economic outlook and that created a backlash that he would be opaque. Instead, we got a guy who repeatedly hammered the idea that the economy was hot and that underlying inflation is still too hot. He didn't go as far to say the Fed was going to hike soon but he said -- strongly -- that the Fed would meet its inflation target.

It's taken some time for the market to figure out how hawkish he was and pricing for a hike in September is up to 57% from 33% prior to his speech. That's translated into dollar strength across the board.

The euro is quickly down to 1.1605 from 1.1643.

It's the same across the board with the US dollar notably higher, though not exactly…

The US dollar has moved higher as Fed chair Warsh is more hawkish in his remarks. He remains reluctant to give forward guidance, but the market is pricing and around a 46% chance of a September hike which is up from the low 30s, but not near higher levels near 60 a month or so ago.

In the video above, I take a look at the technicals of the major currency pairs versus the US dollar and also a quick look at the major US stock indices. Included is:

• EURUSD
• USDJPY
• GBPUSD
• USDCHF
• USDCAD
• AUDUSD 
• NZDUSD 

Along with a look at the S&P and the Nasdaq composite indices. 

The breakdown of his longer than expected speech (close to 30 minutes) 

This article was written by Greg Michalowski at investinglive.com.

Highlights of the Federal Reserve speech from 

• Must be confident underlying inflation is moving to objective or, we have work to do
• I would be hard pressed to describe broad financial conditions as restrictive.
• While this summer's PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved.
• Overall economy appears to have strengthened
• Credit and loan markets showing few signs of policy restraint
• Inflation expectations tend to look durable until they don't, must be closely mined
• Business investment rising rapidly
• Important to gauge effects of high growth expectations for capex, corporate earnings
• Market prices show confidence that we will deliver price stability
• One indicator of strength is…

Most of the major currency pairs have positioned the price near technical levels ahead of Fed Chair Warsh's speech at Jackson Hole. The market is saying "We don't really know what to expect, so we will let the Fed chair influence the next shove".

In the kickstart video, I took a look a the technicals for the EURUSD, USDJPY and GBPUSD. In the video above, I extend the technical discussion to the USDCHF, USDCAD, NZDUSD and AUDUSD.  What is the bias, the risks the targets. Where does the next shove take the price.  

Much will depend on the Fed Chair's tone, his lean (toward Trump or away), and how convincing he is to the market.  

A snapshot of other markets ahead of the speech has stocks mixed with the Dow up (+90 points), S&P up 7.50 points…

Hammack spoke yesterday so this is a repeat. Warsh speaks at 11:45 am ET.

• Inflation will end year around 3%
• Does not see restrictive financial conditions
• Communicating Fed issues to public is part of the job
• Fed credibility depends on delivering the dual mandate

This article was written by Adam Button at investinglive.com.

• Prior Q1 +0.3%
• Canada GDP Q2 annualized 3.3% vs 3.4% estimate
• Implicit price QoQ 2.5% vs 1.2% last quarter
• GDP MoM for June 0.3% vs 0.2% estimate. Prior month 0.3%.
• Preliminary July estimate 0.0%

This article was written by Greg Michalowski at investinglive.com.

The US dollar is modestly higher as North American traders arrive for the final trading day of the week, but the changes are limited. The USD is higher against the EUR, JPY, GBP, CHF, CAD and NZD, while it is marginally lower against the AUD.

The low-to-high trading ranges are also narrow:

• EURUSD: 15 pips
• USDJPY: 39 pips
• GBPUSD: 17 pips
• USDCHF: 20 pips
• USDCAD: 14 pips
• AUDUSD: 14 pips
• NZDUSD: 17 pips

The narrow ranges reflect a market waiting for the next catalyst. That opens the door for range extensions as North American traders enter and the key events begin to unfold. Of course, there IS a key event ahead. More in a bit.

Before that, the US Treasury yields are modestly higher, with the curve steepening as the largest increases are…

Headlines:

• No guidance from Jackson Hole?
• USD/JPY extends gains as focus turns to Fed Chair Warsh's speech
• Gold stays locked in ahead of Warsh's Jackson Hole speech
• How have interest rate expectations changed after this week's events?
• France Q2 final GDP +0.0% vs +0.2% q/q prelim
• France August preliminary CPI +2.4% vs +2.4% y/y expected
• Spain August preliminary CPI +4.3% vs +4.2% y/y expected
• German unemployment rises a little less than expected in August
• Month-end fixing to be mildly supportive of the dollar - BofA
• Some slight dollar selling likely to be the case for this month-end - Credit Agricole

Markets:

• USD little changed
• Gold flat at $4,599
• European equities higher; S&P 500 futures flat
• WTI crude oil up 0.4% to $83.22
• US 10-year yields up 1.2 bps…