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Scoxit Becomes Less of a Worry for Investors


Today's financial recap and tomorrow's financial outlook.

Risk assets were buoyed in the early afternoon following the release of two new surveys showing that the sentiment towards voting for Scottish independence next week had not gained as much traction as it was shown earlier this week. Two news surveys showed that the "no" vote for independence had grown to five points more than "yes." The referendum vote is scheduled for Sep 18. The GBPUSD FX cross rose 100 pips in today's session after falling by more than 200 pips on Monday morning.

Separately, the Swiss National Bank acknowledged that they are prepared to move interest rates into the negative to  help defend their currency barrier. The central bank has placed that barrier at EURCHF 1.20. The EURCHF FX cross posted the largest gain across all assets today - risk-adjusted - moving up 40 pips.

The S&P 500 (SPX) opened lower this morning by as much as 10 points before finding a bid after the opening 30 minutes. The news that the Scottish secession - or "Scoxit" - was not as likely as had been expected cause the benchmark index to tack on another six points of gains. Apple, (AAPL) following yesterday's product announcement, rose 3% and was a major driver behind US equities today. It's equipment suppliers also posted strong gains. Tech stocks were the top performing sector today with the Nasdaq-100 (NDX) finishing up 0.81%.

Caterpillar (CAT) was downgraded early today by Bank of America Merrill Lynch analysts to Neutral from Buy, citing the strength in the US dollar. It was the first major international company to receive such a downgrade. The third quarter earnings season will begin in earnest in four weeks.

Dollar General (DG) announced a hostile tender offer for Family Dollar (FDO) after two of its prior bids were rebuffed due to antitrust reasons. The offer was $9.1 billion or $85 per share in al cash.

Tomorrow's Financial Outlook

Tomorrow will again be light on the domestic economic front. Weekly jobless claims will be reported in the morning with economists expecting 300K claims. The average since mid-March is 309K and last week's count came in at 302K. The August US Treasury budget will be released in the afternoon. Also in the afternoon, the Treasury will re-open $13 billion in 30-year bonds.

Overnight, the Reserve Bank of New Zealand will release its rate decision. Following still weak milk auctions over the last few weeks it is very likely that the central bank will continue to keep a dovish tone. Also overnight is Japan's third quarter manufacturing surveys. Yen weakness has  been a big contributor to strength in the US dollar recently due to the perception that the invisible hand of the Japanese government has been very active on the offer side. Lastly, China will report its August consumer and producer price indices.

Ulta Salon (ULTA) and Kroger (KR) are scheduled to report earnings tomorrow in the US.

Twitter: @Minyanville

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No positions in stocks mentioned.

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