Nex Update July 7

QUICK OVERVIEW

• (FT) Markets often put a different slant on central bankers’ words than was intended, thus when Mr. Bernanke said ‘tapering’ the markets heard ‘tightening’

• The IMF on Friday urged the US to repeal sweeping federal budget cuts that will be a severe drag on economic growth this year. (Teabags not listening)

• U.S. producer prices up 0.5% in May and 1.7% YoY

• U.S. Industrial production was unchanged in May. The sector has seen little growth since the turn of the year, the Fed said

• The troubled city of Detroit will stop making payments on a portion of its unsecured municipal bond debt Friday, according to a report in the WSJ.

• China worried that tightening could trigger capital flight and set off debt crisis, says Ambrose Evans-Pritchard.

• The World Bank cut its global growth forecast for this year after emerging markets from China to Brazil slowed more than projected, while U.S budget cuts and slumping investor confidence in Europe’s are not helpful.

• Emerging markets risk an interest rate shock once the US Federal Reserve and other Western authorities start to withdraw global liquidity, the World Bank has warned.

• U.S. Banks repossessed 38,946 homes, an increase of 11% MoM. The number of homes hit with default notices for the first time grew by 4% (US housing might not be as strong as advertised)

• Fed's Beige Book business survey shows "modest to moderate growth" across U.S

• The Dow Transports, adjusted by the CPI, are in new high ground. Industrials, S&P etc are still lagging.

•  (FT) Gabon is planning to take assets back from three international oil companies including a subsidiary of China’s Sinopec in a sign of Africa’s growing assertiveness as competition intensifies for its natural resources.

• (Spiegel) There are more journalists in prison in Turkey than in any other country.

• Germany's high court made clear that it was skeptical of the ECB's program to buy unlimited quantities of sovereign bonds from struggling euro-zone member states. It could strike down the most successful tool in combating the crisis.

• The USDA trimmed corn production just 1%, to 14.005 billion bushels, well ahead of the market consensus. Traders had expected a drop of 2.2%. Ending stocks also surpassed market expectations. The USDA pegged 2013/14 corn ending stocks at 1.95 billion bushels, down from May but still the largest in eight years, and more than 8 % larger than the 1.8 billion traders expected.

• This year the world will eat 112m tonnes of pork. Around half will be munched in Chinese mouths, according to the Agricultural Outlook report from the FAO and the OECD, a rich country club. The Chinese have been the world's biggest meat-eaters for over two decades. Pork is their favourite: each person scoffs about 38kg a year, compared with 28kg swallowed by Americans.

• (FT) Sharp drop in availability of scrap copper has caught the attention of some hedge funds and traders, making them bullish about the red metal

Gangsta Government by WILLIAM O'CONNOR“I’ll let you have the $10,000 for three points. That’s only because I know you.” I’m listening to Tony yak, my Shylock. Yak, yak has earned the moniker. He never gives his mouth a rest. Yak’s giving me the loan at street price: $30 for every $1,000. That’s “juice.” Every week I’ll pay $300, but nothing comes off the top.

Elizabeth Warren’s QE for Students by ELLEN BROWN On July 1, interest rates will double for millions of students – from 3.4% to 6.8% – unless Congress acts

Next Update June 16

QUICK OVERVIEW

• YoY U.S. House prices rose 10.9% in March, the biggest increase since the height of the housing boom in 2006, according to the S&P/Case-Shiller index. MoM the Case-Shiller index rose 1.1 % in March. Phoenix and San Francisco led the YoY gains, up 22.5% and 22.2%, respectively.

• I am very recently retired from an Intel (INTC) position as chip design engineer with more than 30 years of varied experience in a wide swath of technologies and companies, and I have been a part of at least six startups. I have 27 US patents to my name..Without further ado, I can state with certainty that the new mobile oriented processors coming from Intel later this year will capture the processor space for the leading smartphones and tablets.

• Wolfgang Schäuble sounded almost like a new convert extolling the wonders of heaven as he raved about his latest conclusions on the subject of saving the euro. "We need more investment, and we need more programs," the German finance minister announced.

• The preliminary or "flash" version of the HSBC Purchasing Managers' Index for China fell to a seven-month low of 49.6, down from April's final reading of 50.4. A result below 50 signals contraction.

• Minutes from the U.S. central bank's latest policy-setting meeting showed that a "number" of Fed officials were willing to taper QE as soon as the next meeting in June.

• Forget environmental concerns: When it comes to fracking, Germans are worried about how it might affect beer quality. In a letter to several ministries in Berlin, brewers expressed concern that the exploitation of shale gas could contaminate water supplies and thus violate the beer purity law of 1516.

• (FT) An aggressive EU attempt to combat unfair competition from China was seriously undermined when Germany led a majority of the bloc’s members to oppose punitive duties on imported Chinese solar panels.

• Hong Kong-based Shuanghui International agreed to pay $7.1bn (a 31% premium to the closing price on Tuesday) for America's Smithfield Foods, in a deal aimed at US supplies for the growing demand of pork by China's increasingly wealthy consumers..

Next Update June 3

QUICK OVERVIEW

• (Bloomberg) Americans’ confidence in the economy climbed in May to the highest level in almost six years as rising real estate values and record stock prices boosted household wealth.
•  The Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose to 83.7, the highest since July 2007.
• U.S. housing starts were at a seasonally adjusted annual rate of 853,000 last month. The level was 16.5% below the revised March estimate, but was 13.1% higher than the level in April 2012.
• U.S. Leading indicators rose 0.6% last month after falling a revised 0.2% in March

• Japans GDP rose by 0.9% in the three months to March, or 3.5 % YoY (Bloomberg) --

• The U.S. budget deficit will shrink by the end of fiscal 2013 to $642 billion, the smallest shortfall in five years,
• U.S. Household debt, as a proportion of income, declined from 130% in 2007 to 105 % at the end of 2012.

• In the same period, Eurozone household debt has risen from 100% to almost 110%.

• French GDP shrank 0.2% in the three months through March, following a revised 0.2% contraction in the previous quarter.

• Yields on 10-year U.S. Treasury notes have backed up a bit of late, but at 1.9% they are still just over one -third the 5.4% earnings per share yield of the S&P 500.

• South Koreas Unemployment rate was 3.25 in April, down 0.3% point from a month earlier.

• YoY German CPI rose by 1.2% last month.
• The German economy, Europe’s largest, narrowly avoided recession expanding a measly 0.1% in Q1.

• France, the second-largest economy in the euro zone, is back in recession - contracting 0.2%.

• Greek unemployment hits new record high of 27% in February.

• Advanced Cell Technology (ACTC) confirmed that the vision of a patient enrolled in a clinical investigation of the company’s retinal pigment epithelial cells derived from human embryonic stem cells has improved from 20/400 to 20/40 following treatment.

Next Update May 19

Along the road of idiocy

QUICK OVERVIEW

• U.S. nonfarm payrolls rose by 165,000 last month and the jobless rate fell to a four-year low of 7.5 %.

• American International Group (AIG) investors hoping for a dividend and a buyback this year may be in luck, though the dividend seems more likely. CEO Robert Benmosche repeats on the company's first-quarter conference call that the dividend is something that could happen after AIG completes the sale of its plane-lease unit in coming weeks

• India cut  the benchmark lending rate by 0.25 points to 7.25%
• India's government reserves may soon be deposited with commercial banks to boost lending.

• The European Central Bank cut its main refinancing rate by a quarter of a percentage point to 0.5 per cent.

• YoY Japans household spending rose 5.2 % in March, in price-adjusted real terms a nine year high, as "Abenomics" gains momentum.

• At the end of 2012, U.S. household wealth rose to $66.1 trillion, close to the pre-recession peak of $67.4 trillion.

• Europe will enforce the world's first continent-wide ban on widely used insecticides (neonicotinoid pesticides) linked to serious harm in bees.

• U.K. avoids triple-dip recession as economy expands by 0.3% in Q1

• U.S. Pending Home Sales Index rose 1.5% to 105.7.
• Existing U.S. Home Sales fell 0.6 % to a 4.92 million annual rate.
• U.S. Feb. S&P/Case-Shiller home prices rose 9.3%

• YoY U.S. April consumer confidence index rose to 68.1 from 61.9

• The U.S. Labor Department said that the number of people who applied for new unemployment benefits last week fell by 16,000 to 339,000.

• As recession continues to sap the Eurozone and wider EU, the Eurostat data agency reported an extra 62,000 people joining unemployment queues in just four weeks in the 17-nation Eurozone as the jobless rate climbed for the 23rd consecutive month -- hitting 12.1% in March.

• Germany will grow by a meager 0.5% this year, the government said

• A bunch of weak manufacturing data from America, Europe and Asia has cast serious doubts on the strength of the global economy

• ARM Holdings ( ARMH) reported Q1 better-than-expected revenue, up 26% YoY

• (YUM) Yum Brands Inc., owner of Pizza Hut, Taco Bell and KFC, reported its first-quarter profit fell 27% to $337 million, or 72 cents a share. (China’s avian/chicken flue problem)

• ATT  (T) said that earnings rose 3% for Q1.

• Costco (COST) raised the quarterly dividend 12.7% to $0.31 from $0.275 per share

• Chevron (CVX) increased its quarterly dividend for the 26th year in a row, to $1 a share, up 11% from 90 cents, for a 3.4% yield.

• Akamai (AKAM) earned $0.51 a share on revenue of $386 million. That was better than the consensus estimates for $0.46

• Qualcomm (QCOM) said its second quarter earnings would be lower than analyst forecasts, as the company faces stiffer competition from smaller rivals, especially in Asia.

• UPS profit rose 7 % in the quarter.

• China Wireless Technologies said it will pass Samsung Electronics and Lenovo Group to become China's leading cell phone company.  

• Taiwan reported the first case of bird flu outside mainland China.

• Russia, Azerbaijan and Kazakhstan bought gold just before it plummeted.

• Brazil's unemployment rate rose to 5.7% in March

Next Update May 5

More  on Rogoff & Reinhart  from Harvard - Harvard I tell ya

..They have  done a great deal of damage to the world!

And thank you Mr. Herndon!

QUICK OVERVIEW

• The Group of 20 (G20) major economies on Friday pledged further actions to shore up growth while watching for monetary easing effects.

• Reports that Cyprus could sell a significant volume of gold may have triggered the sharp drop in prices, but we believe the fall represents a changing sentiment towards the metal," said Fitch

• Dutch unemployment increased to 8.1% in March from 7.7% in February. This is the highest number of unemployed people since the CBS started measuring unemployment in the 1980s.

• The IMF predicts the Spanish economy would shrink 1.6% in 2013, and the country's unemployment rate would peak at 27% this year before dropping to 26.5% in 2014 when its economy is predicted to grow 0.7%

• German car sales fell 17% in March.
• The indicator of economic sentiment for Germany fell by 12.2 points and stood at a level of 36.3 points.

• U.S. housing starts were at an annual rate of 1.04 million - 7.0% above the revised February estimate of 968,000, and up 46.7% YoY. This represented the highest level since June 2008.

• Fitch has downgraded the United Kingdom's Long-term foreign and local currency Issuer Default Ratings to 'AA+' from 'AAA'. The Outlook is Stable.

• Focusing on immediate economic concerns over future environmental ones, the European Parliament rejected a proposal to cut the number of pollution permits.

• Procter & Gamble Co. (PG) has raised its quarterly dividend 7%, marking the 57th consecutive year that the world's largest consumer-products company has boosted its payout.

• (Guardian) Frank Rijsberman, head of the world's 15 international CGIAR crop research centers, which study food insecurity, said: "Food production will have to rise 60% by 2050 just to keep pace with expected global population increase and changing demand.

• From the great State of Texas  Republican congressman Joe Barton comes this quote "I would point out that if you are a believer in the Bible, one would have to say the great flood was an example of climate change," Barton told a congressional hearing "That certainly wasn't because mankind had overdeveloped hydrocarbon energy."

• (Pritchard) Portugal's leading elder statesman has called on the country to copy Argentina and default (Telegraph)

• The Dutch government is to postpone some austerity measures, in a significant break away from EU policy that risks angering Germany.

• (FT) Haruhiko Kuroda has announced his arrival as governor of the Bank of Japan by introducing a “new phase of monetary easing”, doubling Japan’s monetary base through aggressive purchases of long-term government bonds and risk assets.

• (Science Daily) A genetic analysis of the avian flu virus responsible for at least nine human deaths in China portrays a virus evolving to adapt to human cells, raising concern about its potential to spark a new global flu pandemic…the new strain could be treated with another clinically relevant antiviral drug, oseltamivir

• (NZH) A 17-year-old girl has exposed Islamic sex tourism in India where Muslim men from the Middle East and Africa are buying one-month wives for sex.

Why America Forgot A Horrific Terrorist Attack On Wall Street In 1920 I set out to write that book because I came across a mention of the 1920 bombing, which killed 38 people and injured hundreds more people, many of them quite seriously. I was shocked that I had never heard of this. What's going on that allowed this big event to be lost to history?

Cyprus bail-out vote stirs fresh jitters as slump fears grow in Europe Europe’s policy elites are increasingly on the back foot after furious controversy this week over a Harvard paper widely cited as the intellectual justification for austerity. (See below)

The Excel Depression  ... what really matters isn’t what they meant to say, it’s how their work was read: Austerity enthusiasts trumpeted that supposed 90 percent tipping point as a proven fact and a reason to slash government spending even in the face of mass unemployment.

Next Update April 21

QUICK OVERVIEW

• The deaths of two men in Shanghai from a strain of bird flu have raised the specter of a new epidemic.

• The head of Cyprus' influential Orthodox Church has dealt a hammer blow to the island's economic leaders by becoming the first major figure to call for their resignations.

• Sergei Lavrov, Russia’s foreign minister has said about North Korea: “The situation could simply get out of control, it is slipping toward the spiral of a vicious cycle,”.

• U.S. consumer confidence unexpectedly rose in March. Sentiment edged up to a four- month high of 78.6 in March from 77.6 in the previous month.
• U.S. Existing home sales rose 0.8% to an annual rate of 4.98 million in February. The sales rate was the highest since November 2009
• U.S. economy rose 0.4% in Q4

• Japan's consumer prices fell 0.3% in February
• Japan's unemployment rate rose to 4. 3% in February from 4.2% the previous month
• Japan's retail sales accelerated their drop in February, falling 2.3% YoY after a 1.1% fall the previous month

• Portugal's public debt reaches 123.6 % of GDP

• Spain's economy to contract by 1.5 % in 2013

• Climate change denying Chris Stewart (R-Utah) to head subcommittee on Climate Change.

• (Telegraph) Japan has extracted natural "ice" gas from methane hydrates beneath the sea off its coasts in a technological coup, opening up a super-resource that could meet the country's gas needs for the next century and radically change the world's energy outlook.

• Russia and South Africa plan OPEC-style cartel for platinum and palladium.http://www.investmenttools.com/futures/metals/welcome_to_the_page_about_palladium.htm

• U.S. Insider selling has risen to 6.3 sells for every buy - eight year high.

• (Spiegel) As the euro crisis wears on, the tough austerity measures implemented in ailing member states are resulting in serious health issues, a study revealed. Mental illness, suicide rates and epidemics are on the rise, while access to care has dwindled.

• (Spiegel) Twelve years ago, Portugal eliminated criminal penalties for drug users. Since then, those caught with small amounts of marijuana, cocaine or heroin go unindicted and possession is a misdemeanor on par with illegal parking. Experts are pleased with the results.

• More than half of the rivers and streams in the United States are in poor biological health, unable to support healthy populations of aquatic insects and other creatures, according to a nationwide survey.

• The US Food and Drug Administration approved a first-of-its-kind diabetes drug from Johnson & Johnson that uses a new method to lower blood sugar flushing it out in patients' urine.

Next Update March 31