Another downdraft in the Shanghai Composite is hammering risk assets today, with the CAC closing down 2.9% and the DAX down 2.7%. The S&P500 traded right down to 2000.5 but has bounced off this key level in the last few minutes. With market tensions building, the VIX volatility index rose to YTD highs around 23.90. The 10-year yield has come in just a bit, down 1.2 bps to trade around 2.054%, a four-month low. As of writing, the DJIA is down 1.74%, the S&P500 is off 1.67% and the Nasdaq is down 2.11%.

The dollar hit two-month lows against the euro during the European session, rising to 1.1290 before briefly pulling back in the US pre-market. EUR/USD has pushed higher again mid-morning, testing the 200-day moving average above 1.1350. WTI crude is creeping toward $40 however there is moderate resistance at this key psychological level. ...

Published in the New England Journal of Medicine on Wednesday, a group of scientists finally solved a big mystery on how the key gene tied to obesity, makes people fat. Researchers have known that a gene called FTO was related to obesity since 2007 but, didn't know how and could not tie the gene to appetite or other known factors.

Scientists from Massachusetts Institute of Technology (MIT) and Harvard University made the major discovery that could open the door to an entirely new approach to the obesity problem, beyond diet and exercise. ...

Yesterday's post-FOMC equity slide reverberated through global markets. The Shanghai Composite lost 3.4%, the Hang Seng entered a bear market, and the CAC and DAX are both about to close right at their lows, down 2% a piece. The S&P500 has gone negative on the year as decliners led gainers nearly 10 to one. The 10-year yield contracted four bps to 2.085% at its best level and other major sovereign yields came in even more. Gold has seen a +2% gain, while WTI crude is poised to break below $40. As of writing, the DJIA is down 1.22%, the S&P500 is off 1.0% and the Nasdaq is down 1.6%.

The emerging consensus on the Fed minutes is that they have somewhat confused market participants and revealed no clear sign in favor of a September rate hike. ...

Clinching a victory for a lobbying campaign that accused the U.S. Food and Drug Administration of gender bias for ignoring the sexual needs of women, the first prescription drug to enhance the female sexual drive won regulatory approval on Tuesday.

Move over Viagra and make way for the first medication approved by FDA to boost a womans libido - Addyi - from Sprout Pharmaceuticals. Addyi is thought to work by changing the balance of certain brain neurotransmitters like dopamine and serotonin. Dr. Janet Woodcock, a senior FDA official, said the agency was “committed to supporting the development of safe and effective treatments for female sexual dysfunction.” ...

European markets are closing at their lows this morning, with the CAC down 2%, the DAX and FTSE down 1.6% a piece, while US equities are only a few points off their lows. All sectors of the S&P500 are lower. Greece's bailout passed the German Bundestag earlier today, although the number of government MPs voting against the measure was larger than ever before. CPI was weaker than expected, while traders are headed for the hills in advance of this afternoon's FOMC minutes release. As of writing, the DJIA is down 1.27%, the S&P500 is down 1.0% and the Nasdaq is off 1.2%. ...

Nearly 114,000 U.S. taxpayers had their tax return information illegally accessed by cyber criminals during May 2015 as ...

The yuan may have stabilized for the moment but huge Chinese equity declines are back. The Shanghai Composite saw its biggest slide since late July, dropping 6.2%, and the PBoC responded by making very large liquidity injections. European equities were under pressure for most of the session and US stocks have struggled to stay out of the red. As of writing, the DJIA is flat, the S&P500 is down 0.06% and the Nasdaq is down 0.25%.

US housing starts rose to a total of 1.21M units in July, an eight-year high, up from the revised 1.20M unit figure for June. The 782K total for single family starts was the highest print since December 2007, while multifamily starts actually declined by double-digits from June. ...

According to the Mayo Clinic, while there is no cure for multiple sclerosis (MS), current treatments work to speed recovery from attacks, slow the disease’s progression and manage symptoms. Common treatments used to manage MS symptoms include physical therapy, muscle relaxants and medications to reduce fatigue, depression and pain. According to the National Multiple Sclerosis Society, more than 2.3 million people globally, are affected by MS.

The U.S. Food and Drug Administration (FDA) have yet to approve any cannabis products however, they did approve Marinol which contains dronabinol, a synthesized form of delta-9- tetrahydrocannabinol (THC) for anorexia, chemotherapy and AIDS patients. ...

China set a stronger yuan for the second consecutive session and declared its currency revaluation campaign over in the Asia session. European indices and US futures found their session lows as the Empire survey came out ahead of the US open, however stocks have moved back up to unchanged in mid-morning trading. Sovereign yields are still lower, with the UST 10-year yield down four basis points to 2.15%. The DJIA is up 0.17%, the S&P500 is flat and the Nasdaq is up 0.35%.

The August Empire Manufacturing survey published before the US open was very ugly. The index collapsed to its lowest level in six years, employment levels were flat and 34% of respondents said conditions had worsened while 19% said they had improved. The Empire report is the first regional Fed manufacturing report for August. The NAHB survey of housing market participants matched its highest level ever in the August reading. ...

Tech giants are working to boost employee diversity by hiring more women.

Recent past has shown diversity reports that have spurred a national debate over the lack of gender diversity at Silicon Valley's tech companies and how to improve gender and race ratios for employees.

In the past year, Apple Inc. (AAPL - Nasdaq) reportedly hired over 11,000 women globally - a 65% increase from previous year. As of September 2014, Apple had 92,600 full-time employees. ...

Weaker-than-expected preliminary second quarter GDP data out of France, Germany and Italy drove European markets into the red this morning. US equity markets made a brief run higher in the first 30 minutes of cash trading but have deteriorated mid-morning. As of writing, the DJIA is up 0.15%, the S&P500 is flat and the Nasdaq is down 0.18%.

After three straight days of depreciation, the PBoC strengthened the yuan 0.5% in its Friday fixing. EUR/USD saw a modest move higher in the US premarket as the pair tested toward the 1.1190 level but fell short and then rapidly dropped back to 1.1110. Crude made a run for $43 around the open of cash equity trading but then fell back to $42.30 mid morning. Brent remains well contained in the $49 handle. ...

According to Eric Hunsader, founder of Nanex LLC, U.S. financial markets consultancy firm, high-frequency traders (HFT) have a 500-microsecond advantage for Nasdaq OMX Group, Inc. (NDAQ - Nasdaq) quote data, over any firm that does not use a direct feed from the exchanges for quote prices.

New software changes implemented by the New York Stock Exchange (NYSE) made the analysis possible. The analysis measured the difference in speed between data transmitted by exchanges to direct feeds and data transmitted to the Security Information Processor (SIP) which links the U.S. equity markets by processing and consolidating all bid/ask quotes as well as trades from every trading venue into a single, easily consumed data feed. ...

The PBoC set the USD/CNY level lower for a third consecutive day, however the rate of decline eased to -1.1%. At the press conference held after the fixing, the PBoC said its yuan adjustments were almost complete and dismissed talk that it was looking for a 10% total devaluation (USD/CNY has been devalued by a total of 4.7% so far). Fed fund futures still see a 55% chance of a 0.25% rate hike in September. In Europe, the CAC and DAX are seeing a solid bounce higher after yesterday's slaughter, although the FTSE has given up earlier gains and is looking to close in the red. As of writing, the DJIA is flat, the S&P500 off 0.11% and the Nasdaq is up 0.11%. ...

The chart for the Dow Jones Industrial Average (^DJI) formed a rare “death cross” Tuesday, when it closed at 17,806.99, with a follow up to the downside on Wednesday, falling 1.4% during the early morning trading session. The move puts the Dow on track to suffer its ninth loss in the last 10 sessions and suggests the stock market may have already begun a new long term downtrend.

The Dow’s 200-day MA rose by less than two points on Wednesday, rose by nearly four points on Tuesday and rose by over five points on Monday. ...

Global equities have been stomped by the second consecutive day of devaluation in the Chinese Yuan, which was fixed another 1.6% lower during the Asian session. USD/CNY was set at 6.33, the softest level for the yuan since Oct 2012. In Europe, the DAX and CAC closed down 3.3% and 3.4%, respectively, while the FTSE closed down 1.9%. The 10-year UST yield is down more than five basis points to 2.089%, its lowest level since the beginning of May, slamming the stocks of banks, brokerages and asset managers; the XLF is down 1.9%, while utility names are rallying. The DJIA, S&P500 and the Nasdaq are down 1.2% each. ...

During a news conference Tuesday morning, top U.S. law-enforcement officials unveiled charges from the U.S. attorney’s offices in Brooklyn and New Jersey that detailed an alleged insider trading scheme dating back to 2010. According to court documents, the insider trading activity netted roughly $30 million in illicit profits. The Securities and Exchange Commission (SEC) unveiled related civil charges against 32 defendants and put the size of the alleged profits at nearly $100 million.

The alleged international plot unfolded in chat rooms in the dark side of the Internet, where U.S. traders teamed with hackers in Eastern Europe to conspire on a newfangled approach to insider trading. The case illustrates the increasingly bridged lines between cyber-theft and traditional financial crimes which are normally handled by the Federal Bureau of Investigation (FBI). ...

Commodities, equity indices and emerging market currencies are seeing losses this morning in the wake of China's currency devaluation. Last night, the PBoC cut its daily reference rate by 1.9%, triggering the yuan's biggest one-day drop since China ended a dual-currency system in January 1994. Sovereign yields are dropping across the board as investors seek safe havens, with the 10-year UST yield down nine basis points to 2.139%. As of writing, the DJIA is down 1.20%, the S&P500 is off 0.93% and the Nasdaq is down 0.96%.

The dollar momentarily strengthened after the Chinese devaluation but turned right around to continue the weakening trend seen since August 5th. EUR/USD dropped momentarily from 1.1025 to around 1.0970 before moving higher, topping out earlier this morning around 1.1090. ...

***Notes/Observations***
- China PBoC wakes up sleepy summer markets; announces one-off 2% CNY currency devaluation to boost the struggling exporters; New CNY fixing mechanism move seen to converge onshore and offshore pricing and appease IMF for Yuan to be part of SDR basket
- Greece and creditors said to reach an agreement on framework for a 3rd bailout package
- Mixed German ZEW Survey for Aug; Current Situation Survey registered its 2nd straight MoM improvement while Expectations Survey registered its fifth straight decline ...

Day traders and active traders hit the mother-load on Friday, and traded in awe Monday as shares of Aquinox Pharmaceuticals Inc. (AQXP - Nasdaq) fed the short term traders like it was 1999.

Canadian pharmaceutical company Aquinox shares hit an intraday high of $11.68 on Friday, after reporting positive secondary endpoints results from a Phase 2 leadership trial with AQX-1125 in patients with bladder pain syndrome/interstitial cystitis. ...

US futures surged into positive territory this morning and keep gaining ground in cash trading after Fed Vice Chair Fischer appeared to caution markets about the timing of rate hikes. The 10-year yield has gained nearly six basis points in risk-on trading. The DJIA, S&P500 and the Nasdaq gained over 1% each by the first hour of cash trading but have come off their highs.

In a television interview before the open this morning, Fischer said that the Fed is hesitant to move on rates before it sees inflation as well as employment returning to more normal levels. Fischer highlighted that rising employment in an environment where inflation remains very low presents a very tricky problem for the Fed. ...

According to the U.S. Labor Department, into the end of July, the price index for wholesale eggs surged a record 84.5% in June, following a 56% increase in May.

The surging price of eggs has made them more expensive on a protein-per-dollar basis than chicken breasts - for the first time ever on record.

According to the Bureau of Labor Statistics, during the first six months of 2015, into mid-June, the worst U.S. outbreak of the Avian Influenza killed more than 48 million fowl. While consumers were paying an average of $1.96 for a dozen of eggs in May, in June that price surged by 31% to a record $2.57 for a dozen large eggs. ...

The consensus heading into the US jobs data was that any figure above +200K would keep the Fed on track to tighten policy in September. Global equities are losing ground after the jobs report, with European indices looking to close at their lows and all three leading US indices seeing modest losses. The DJIA is down 0.31%, the S&P500 is off 0.37% and the Nasdaq is down 0.31%.

The US yield curve flattened in the wake of the jobs report as expectations for a September rate hike increased, with the 2/10 curve down five basis points to 1.46%. The Fed-funds futures now suggest the odds of a September hike have risen to 56% from 46% before the report. ...

***Notes/Observations***
- BOJ keeps policy steady (as expected) believing that weakness in growth and inflation during Q2 will be temporary
- July US Payroll data seen key in determining timing for the first Fed hike


*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
**Equities**
Indices [Stoxx50 -0.2%, FTSE 100 unchanged at 6,7465, DAX -0.2% at 11,560, CAC-40 -0.2% at 5,182, IBEX-35 -0.2% at 11,316, FTSE MIB -0.2% at 23,776, SMI -0.2% at 9,441, Athens Stock Exchange +2%, S&P 500 Futures flat 2,080] ...

According to a U.S. Department of Defense (DoD) Inspector General report dated July 17, 2015 and Kevin Dwyer, Defense Health Agency spokesman, the Theater Blood Application, a U.S. Defense Department system for tracking and helping speed blood supplies to combat field hospitals does not work. The faulty system is threatening to cause blood shortages for wounded soldiers.

The Application was meant to automate the tracking of blood inventory, beginning with individual donors through delivery and use in a combat zone medical facility. ...