By Carlos Guillen
Equity futures are making a slight move into winning territory in pre-market activity this morning as some encouraging data from Asia, coupled with some positive comments from Syria are serving to relieve some pent up tensions and fears that have been keeping many investors in the sidelines.
For starters, bringing a major sigh of relief not only to investors but to economies around the world was news that Syria and Russia have worked together to avert U.S. military actions in response to the recent chemical weapon attacks in Syria. As it stands, Syria has agreed with a Russian proposal to put its chemical weapons under international control. This was a very surprising move, particularly from Russia as it had previously threatened to aid Syria if the U.S. did indeed attack Syria. So this move is really a gift to the current administration as it can now find an exit door to this entire situation without looking weak. U.S. President Barack Obama will be speaking later today, and we are expecting him to accept the Syrian proposal.
Also enthusing investors this morning was data from China that showed the world's second largest economy's industrial output grew at the fastest pace in 17 months in August; in addition, the broadest measure of new credit almost doubled from July, demonstrating that China's economy is gaining some momentum once again. According to China's central bank, factory production rose 10.4 percent from the year-ago period, landing above economists' forecasts of 9.9 percent. Moreover, aggregate financing was 1.57 trillion yuan, well above forecasts calling for 0.95 trillion. The news is certainly encouraging as it is apparent that the credit slowdown in China is now over. Of course, there is a slight downside to this, and that is much less stimulus, which may not assist stocks this time around.
Over in Japan, the central bank will prepare a stimulus package this month to counter the blow to the world's third biggest economy from a planned sales-tax increase. While the tax is needed to help Japan deal with its large debt burden, it can cause the economy to sink into a contraction, and this of course affects everyone to some degree, so this stimulus should help attenuate any adverse effects.
One last interesting item this morning is that Bank of America BAC, Alcoa AA and Hewlett-Packard HPQ will be dropped from the Dow Jones Industrial Average and replaced by Nike NKE, Visa V and Goldman Sachs GS. Apparently the change will take place on September 20 and will be the most significant change in the last 10 years.
An Accidental Solution in Syria?
By David Urani
And so a quick, unexpected solution has popped up for the Syria situation and it has the market a little more optimistic this morning once again. Funny enough, it seemed to start with an offhand comment from John Kerry when he made a rhetorical comment about Syria turning over their chemical weapons if they wanted to avoid a US strike. It seemed casual enough, but say what you will about the Russians, it appears they were opportunistic enough to jump on those comments and try to broker a peaceful deal between the US and Syria.
Syria seems to be receptive, and now all of a sudden we may have a solution brewing. You can be all for or against a US intervention but maybe one thing we all underestimated was Syria's desire not to be at the mercy of our Air Force; our Air Force tends to win its battles.
This morning there's a report making the rounds from Syrian Foreign Minister Walid al-Moualem who was quoted as having accepted Russia's deal. And on our end the President is apparently willing to go along with this, with the one hang up being how much we can actually trust that Syria (and Russia for that matter) would turn over all of the chemical weapons.
That quote was out this morning, and subsequently oil made a quick drop: