LIVE MARKETS-It pays to pay well


* Major U.S. indexes claw their way into positive territory

* Energy leads S&P 500 sector gainers; cons disc weakest group

* Euro STOXX 600 index down ~0.4%

* Dollar, gold down; crude, bitcoin up

* U.S. 10-Year Treasury yield ~1.30%

Sept 15 - Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at


With workers in short supply and inflation on everybody's mind, Barclays head of investment sciences Ryan Preclaw finds that companies that rely on paying low wages have underperformed higher-paying counterparts.

So the firm recommends selling stock in the companies most exposed to the low-wage factor as the biggest wage gains are occurring in the lowest-paying industries.

In the past four months they observe that the lowest-paying companies have underperformed with a "statistically significant relationship between the share of a company’s employees being paid well below the median wage and stock performance since the end of April 2021," citing data from Revelio.

Companies lagging include those with more than 80% of workers making less than $87,000. Barclays also cautions against

hope that the end of federal unemployment insurance supplement in August would lead to an influx of workers, saying that "the evidence suggests otherwise."

Barclays suggests tilting away from low-paying companies or pairing "shorts in names more exposed to low wages with longs in similar names that pay at the higher end of the scale."

It says to sell a basket of the 150 low-paying names, which has lagged the S&P 1500 by about 3% since the end of April and is expected to keep underperforming as wage pressures intensify.

For example, it suggests selling Cracker Barrel Old Country store and buying Starbucks Corp , selling Addus Homecare and buying Mednax , selling Heartland Express and buying Union Pacific selling Illinois Tool Works and buying Rockwell Automation

and says to sell MGM Resorts International and buy Host Hotels & Resorts .

(Sinéad Carew)



The latest bout of weakness in U.S. stocks is following a pattern that has become all too familiar to options market watchers.

While stocks have traded higher for months now, scaling one record after another, it has not been without the occasional wobble, most of which have occurred around options expiration weeks.

Once a month, on the third Friday of every month, millions of options contracts on stocks, ETFs and indexes expire, leading to a change in options dealers' trading behavior.

Options dealers are considered long or short gamma depending on whether they have bought or sold options. To manage their risk they may continuously hedge by buying and selling stocks, futures and options.

When dealers are long S&P 500 index gamma, rising stocks lead them to sell equities or futures, while a falling index would lead them to buy stocks or futures. This tends to dampen volatility.

With expiring options changing dealers' gamma profile, volatility can potentially rise.

People are more understanding of options' impact on the market and are just trying to "front-run it," Kris Sidial co-chief investment officer at volatility arbitrage firm Ambrus Group, said.

While increased volatility around options expiration is nothing new, growth in options trading volume and increased awareness of this dynamic has led to a more noticeable uptick in stock gyrations during options expiration weeks this year.

Of the 13 weeks this year that the S&P 500 logged a weekly loss, 7 have been options expiration weeks. All but the April expiration saw stocks head lower.

The SPX is now down around 0.4% for the week.

(Saqib Ahmed)



China's summer slowdown is having a sizeable impact on today's session in Europe with luxury goods makers well in the red and France's LVMH and Kering taking the most points off of the STOXX 600.

Mikael Jacoby, head of continental European sales trading at Oddo notes that Beijing's policy shift to close the wealth gap in the country had prompted fears among investors of "hunt the rich" policies would obviously hit European luxury giants.

Moreover, with China providing the bulk of the growth for these groups, the latest macro data and Covid-19 infections were a clear worry.

More cracks appeared indeed in China's growth story after today's batch of disappointing retail sales while supply bottlenecks and raw material shortage dent factory output and social restrictions weigh on service.

Meanwhile, debt-laden China Evergrande's liquidity crisis and the country's recent regulatory crackdown add to the unease.

What could brighten the picture, some economists believe, is some good old monetary stimulus.

"Today's weak data and the cumulative impact of policies mean the economy needs more liquidity to lessen the impact of rising credit premiums," analysts at ING said in a note.

They called for a 50 basis point cut to the reserve requirement ratio by the country's central bank in October as did Standard Chartered.

Both banks also said they would downgrade China's annual growth projections if the situation did not improve.

(Anushka Trivedi with Julien Ponthus)



The Nasdaq Composite relative to the Refinitiv/CoreCommodity CRB index appears to be at an important juncture on the charts:

The Nasdaq/CRB ratio, on a weekly basis, hit a record high of 80.54 in early November last year. Since then, however, the tech-laden Nasdaq has underperformed the index of materials and things. In fact, the ratio hit a 14-month low at 65.69 in early June.

Although it has since clawed its way back up some and is now at 67.88, the ratio has been flirting with what appears to be significant support in the form of a log-scale trend line from its 2011 trough, now around 67.85, as well as the 100-week moving average $(WMA.AU)$, now around 67.30.

The ratio did fiddle with the support line in late 2018. However, with the market's December bottom that year, it quickly reversed to the upside without breaking the 100-WMA. The trendline then contained weakness in 2019, and again in early 2020.

Of note, the ratio has been on a record run versus its 100-WMA. In fact, it is on pace for its 512th-straight weekly close above this long-term moving average. This current run above the 100-WMA absolutely dwarfs the ratio's 155-week streak that lasted into the Y2K "tech-bubble" top.

However, the ratio is now only 0.8% above the 100-WMA, which is the tightest disparity since it crossed back above it in early December 2011.

Thus, it may now be time for tech , and FANGs

for that matter, to once again step up in order to underpin a renewed Nasdaq advance relative to commodities.

A ratio weekly close below support can add credence to the view that a sea change in trend is underway. A deeper decline to threaten the March 2000 high at 28.9 could see the ratio lose more than half its value from current levels.

(Terence Gabriel)



<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ IXICTRCCRB09152021B That sinking feeling again


(Terence Gabriel is a Reuters market analyst. The views expressed are his own)

Disclaimer: The views expressed in this article represent the personal views of the author and do not constitute investment advice from this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, nor does it assume responsibility for any losses arising from the use of or reliance on the information in the article.
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