Equity Meltdown, No Catalyst Seen

Economic Data

- (TR) Turkey Central Bank left repurchase rate unchanged at 8.25%
- (CZ) Czech Central Bank left repurchase rate unchanged at 0.05%
- (BR) Brazil Aug Unemployment Rate: 5.0% v 4.9%e
- (US) Initial Jobless Claims: 293K v 296Ke; Continuing Claims: 2.44M v 2.44Me
- (US) Aug Durable Goods Orders: -18.2% v 18.0%e; Durables Ex Transportation: 0.7% v 0.6%e
- (US) Sept Preliminary Markit US Services PMI: 58.5 v 59.2e
- (US) Sept Kansas City Fed Manufacturing Activity: 6 v 3 prior

Participants are scrambling around to explain this morning's sharp sell-off, citing a range of the usual excuses such as September volatility, hedge funds blowing up, liquidation of big institutional positions, violation of key technical levels and various geopolitical developments. Some have even trotted out the old saw "sell on Rosh Hashanah, buy on Yom Kippur." As of writing, the DJIA is down 1.2%, the S&P500 is down 1.1% and the Nasdaq is off 1.7%. The 10-year yield has come in four points to 2.522%.

With risk assets in freefall, there is no bigger safe haven this morning than the US Dollar. Following a sharp move lower over the last 36 hours, EUR/USD has broken below its 2013 lows in the 1.2750 area to test 1.2700. This big move followed about ten days of consolidation, and the next target is the November 2012 low of 1.266. The move higher in USD/JPY has been more gradual, with resistance met around 109.3 over the most recent session. Note that reports that the government was in no hurry to complete the GPIF pension reform bill strengthened the JPY this morning, sending USD/JPY back below 108.7.

The headline August durables data was pretty weak, although the 18.2% decline merely reversed the 22.5% spike in the July data. The ex-transport figure was right in line, for a modest gain. The annualized growth rate for core shipments over the three months ended in August stands at 9.3%, somewhat higher than the 7.3% growth rate for all of Q2.

Shares of Apple are down nearly 3.0% this morning on reports that the new iPhone 6 phones are flimsy enough to bend if sat on or left in a user's pocket too long. Plenty of comparisons are being made to the "antenna-gate" issue with the new iPhone 4 model years ago. In addition, the company had a big snafu with iOS 8.0.1, its initial update to the newly released operating system.

Skechers commented on the 10%+ decline in its shares on yesterday's session. The company confirmed that the Buckingham Research Report was correct in when it claimed sales sank 3% for the week ending September 2, however the company said sales improved 19% for the trailing four weeks and 33% for the trailing 13 weeks. It asserted that its Q3 retail comps would show positive growth. SKX is up 5.5% today.

Lab Corp reached a deal to acquire LipoScience for $85.3 million, or $5.25/shr, in a bid to expand its offering of personalized diagnostic tests. LPDX surged 63% to meet the deal price while LH is down about 1% on the news. Separately, shares of Blackhawk Network Holdings are up more than 6% after the company acquired Parago, a "global incentive and engagement solutions" provider.

Looking Ahead

- 13:00 (US) Treasury to sell 7-Year Notes
- 19:30 (JP) Japan Aug National CPI Y/Y: No est v 3.4% prior; CPI Ex Fresh Food Y/Y: No est v 3.3% prior; CPI Ex Food, Energy Y/Y: No est v 2.3%
- 19:30 (JP) Japan Sept Tokyo CPI Y/Y: No est v 2.8% prior; CPI Ex Fresh Food Y/Y: No est v 2.7% prior; CPI Ex Food, Energy Y/Y: No est v 2.1%