“Obviously the thing to do was to be bullish in a bull market and bearish in a bear market… I came to learn that even when one is properly bearish at the very beginning of a bear market it is not well to begin selling in bulk until there is no danger of the engine back-firing.” – Jesse Livermore

1. Chinese Trade Continues to Slump — Chinese imports fell for the tenth month in a row, tumbling a greater than expected 13.8% in August vs consensus of -8.2% and a drop of 8.1% in July. Exports dived 5.5% vs -8.3% previously. The fall in imports reflects lower global commodity prices and sluggish internal demand.
2. Chinese Government Plans Further Stimulus — China’s finance ministry has unveiled yet more stimulus as it again bids to re-spark the country’s slowing economy, which was exemplified by poor trade figures yesterday. The government intends to cut taxes for small businesses and allocate further funds for infrastructure projects, with two railway projects worth almost 70B yuan ($11B) being approved.
3. Standard & Poor Cuts Brazil Credit Rating to Junk With a Negative Outlook — Standard & Poor downgraded Brazil to BB+, the highest speculative grade, highlights the failure of President Dilma Rousseff’s administration to shore up the government’s budget amid forecasts for the longest recession since the 1930s, inflation at a 12-year high and a collapse in prices for Brazil’s commodity exports. S&P’s negative outlook means it may reduce the grade further, even as Fitch Ratings and Moody’s Investors Service keep the country at investment grade for now.
4. Consumer Sentiment in U.S. Slumps to Lowest Level in a Year — Bloomberg, the University of Michigan’s preliminary index dropped to 85.7 from an August reading of 91.9, the largest one-month decline since the end of 2012. Households were less upbeat about future growth in employment and wages than a few months earlier, while 73 percent of respondents reported hearing news of negative economic developments. Attitudes in September toward purchases of automobiles and other big-ticket items remained strong, especially among higher-income households, the report showed.

The week ahead — Economic data from Econoday.com: