I’m on strike this week – Next update Sep.2

QUICK OVERVIEW

• Of the 100 highest-paid CEOs in America in 2011, 26 had CEO pay packages worth more than the companies paid in taxes.    

• Spanish Gov Bonds yield are back at 6.5% - a six-week low

• The VIX Index touched a 5-year low of 13.67.

• U.S. housing starts were at an annual rate of 746,000, 1.1% below the revised estimate of 754,000 in June, but up 21.5% YoY. The activity is still half the pace considered healthy by economists.

• U.S. wholesale prices rise 0.3% in July

• U.S. industrial production rises 0.6% in July.

• Brazil will invest $65.8 billion in construction and expansion of its aging highways and railways. Britain's unemployment rate drops to 85% in Q2.

• British inflation rate rose to 2.6% in July

• Though largely unnoticed in Britain, a political storm is brewing in Germany, says Christopher Booker

• Turkey's jobless rate fell to 8.2% in May -- an 11-year low.

• Germany posts 0.3% growth in Q2.

• Eurozone GDP shrank by 0.2% in Q2

• Moody’s warns anew about CA cities. The agency’s ratings review comes after three California cities filed for bankruptcy, raising concerns about the outlook for the $4tn municipal bond market

• Madonna is being sued for promoting homosexuality in Russia.

• Former British ambassador Craig Murray: 'We need whistleblowers now more than ever' - in support of WikiLeaks editor-in-chief Julian Assange.

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• Rate of arctic summer sea ice loss is 50% higher than predicted  

• Chris Mooney: Paul Ryan went all in on climate denial in 2009, accusing researchers of seeking to "intentionally mislead the public"

• Climate change: how theatre delivered a dramatic warning about the planet's future | Robin McKie

• Matt Taibbi‏ My take on Paul Ryan about a year ago

• GemShares, a Chicago-based financial firm, intends to create an index (ETF), in which diamonds are arranged in 10 layers of comparable quality.

• Arlan Suderman on Corn: USDA pegged the corn crop at 10.779 billion bushels on a yield of 123.4 bushels per acre. Harvested acres dropped by 1.5 million to 87.4 million acres. I wouldn't be surprised to see harvested acres drop by another 3 to 4 million in the months ahead. In essence, USDA cut the size of the crop by about 2.2 billion bushels. It increased old-crop carryout stocks by 118 million bushels, while also increasing imports by another 45 million. Ending stocks were put at bare minimum pipeline levels of 650 million bushels, necessitating that demand be cut by roughly 1.5 billion bushels to make everything balance. Young fund managers saw the demand cut and assumed that it had already slowed, which added to their incentive to take profits. Yet, the market will eventually have to do the job of rationing demand. New-crop global corn stocks fell to a 52.2-day supply, which is the tightest of the past 39 years. Just shy of 50% of those stocks are in China, where the credibility of the data is in serious question. Furthermore, USDA cut global corn feeding by more than a billion bushels, but only increased wheat feeding by a little more than 140 million bushels. There's a lot that doesn't add up in this sector.

• Arlan Suderman on Beans: USDA cut the crop to 2.692 billion bushels, essentially matching our estimate of 2.696 billion. The agency pegged the yield at 36.1 bushels per acre, down from 40.5 bushels last month. New-crop ending stocks were put at bare "pipeline levels" at 115 million bushels, necessitating a sharp slash in demand to make things balance. Exports were cut to 1.11 billion bushels; while soymeal exports were dropped by 1,100 thousand short tons. This kind of export rationing will be very difficult without a political embargo or much higher prices, and I don't expect the embargo to happen. First chart resistance for September soybeans is $17, but the fundamentals would argue for much higher prices; perhaps topping $20. USDA pegged 2013 Brazil soybean production at 2.975 billion bushels, up from 2.865 last month and up from 2.406 billion the previous year. That may happen, depending on the strength of El Nino in the month's to come. But I question whether Brazil has the infrastructure to export soybeans much beyond current levels, let alone with corn exports increasing as well.

• The U.S. federal government registered a budget deficit of about 69.6 billion U.S. dollars in July, bringing the total budget gap for the first 10 months of this fiscal year near the 1-trillion-dollar mark.

• China's exports fell from 11.3% to 1%, and imports fell from 6.3% to 4.7%. The July trade surplus printed at $25.1 billion, versus $35.5 billion a year ago.

QUICK OVERVIEW

• Arlan Suderman: ..In other words, the production estimates that we released today suggest that corn needs to spike above $10 and soybeans above $20 futures in order to sufficiently ration demand this year.
• The ongoing US drought has prompted agricultural disaster declarations by USDA across sections of 31 states--including 1,369 counties.
• Mexico bought 1.5 million tonnes of US corn Friday-- the biggest purchase in 2 decades.

• U.S. employers hired the most workers (163,000) in five months in July, but an increase in the jobless rate to 8.3% kept prospects of further monetary stimulus from the Federal Reserve on the table.
• 4 years of private sector job creation under Obama has exceeded private sector job creation under 8 years of Bush. The problem remains Fed/State/Muni layoffs and RE/construction.

• Spanish Prime Minister Mariano Rajoy inched closer on Friday to asking for an EU bailout for his country, but said he needed first to know what conditions would be attached and what form the rescue would take.
• 163 billion Euros - or around 16% of economic output - fled Spain between January and May.

• Bloomberg: The Pentagon has warned its missile defense staff to stop surfing porn on government computers.

• (Pritchard) China has ditched its reform strategy and prepared a vast stimulus package as the country's soft-landing turns uncomfortably hard, with recession warnings flashing across East Asia.
• China's capital and financial account swung into a deficit of $71.4 billion from a surplus of $56.1 billion in Q1 as domestic firms and residents increased their holdings of foreign currencies amid the global turbulence.

• As concerns rise about the state of America’s cities, the SEC says that the 3.7 trillion “illiquid and opaque” Municipal Bond market need reforms. Investors complained about being unable to get the information they needed. Ratings were often years out of date, and they are unable to find out how serious a given city’s problems are.

• The SP/Case Shiller composite index of 20 metropolitan areas gained 0.9% in May, topping economists' expectations for a 0.5% gain.

• WSJ: Home prices in the UK are now 13% below their 2007 peak.

• U.S. Consumer spending, which makes up about 70% of economic activity, fell 0.1% when adjusted for rising prices, the Commerce Department said.

• The July Chicago PMI rose a stronger-than-forecast 53.7%

• Deutsche Bank said it will slash 1,900 jobs in an effort to achieve cost savings of about 3 billion Euros.

• India's fiscal deficit during the April-June period rose to 1.9 trillion rupees (21.84 billion pounds), or 37.1% of fiscal 2012/13.

• Greece is fast running out of cash while it waits for its next installment of aid from international lenders.

• The Marcellus Shale is about to become the most productive natural gas field in the United States, according to new data from energy industry analysts and the federal government.