Month: July 2014

• France’s Sarkozy faces corruption probe in blow to comeback hopes (Reuters)
• Ukraine Says Military Offensive Against Rebels Yielding Results (WSJ)
• JPMorgan Investors Show Support for Dimon in Cancer Fight (BBG)
• World’s ATM Moves to Frankfurt as Yellen’s Fed Slows Cash (BBG)
• Argentina Seen Backtracking on Fernandez Vows as Legacy at Risk (BBG)
• Palestinian teen killed in possible revenge attack (Reuters)
• The Bill and Hillary Clinton Money Machine Taps Corporate Cash (WSJ)
• London House Prices Surge the Most Since 1987, Nationwide Says (BBG)
• Last Jew in Afghanistan faces ruin as kebabs fail to sell (Reuters)
• More than 500 arrested at Hong Kong pro-democracy sit-in (CBS)
• Erdogan Bids for Turkish History After Corruption Scandal (BBG)
• Fidelity Bans U.S. Investors Overseas From Buying Mutual Funds (WSJ)
• Apartment Rents Rise as Incomes Stagnate (WSJ)
• Facebook’s New Ad Effort Focuses on Emerging Markets (WSJ)
• Defiant Al Jazeera faces conservative backlash after Arab Spring (Reuters)

 

 

Overnight Media Digest

 

FT

Executives at France’s BNP Paribas breathed a collective sigh of relief following its record $9 billion fine for breaking U.S. sanctions, as clients, investors and the French government stood by the bank.

Unite, the biggest donor to opposition party Labour, has become the first trade union to back David Cameron’s plan to put Britain’s EU membership to a public vote.

The head of British drugmaker AstraZeneca has signalled his confidence in the company’s prospects buying 2 million pounds ($3.36 million) worth of its shares, just weeks it rejected a multibillion takeover bid from U.S. rival Pfizer .

U.S. authorities have fined Goldman Sachs $800,000 over pricing rule violations stemming from its “dark pool.”

Twitter has hired a former Goldman Sachs banker who helped take the micro-blogging site public as its new chief financial officer as it addresses investor concerns about slowing user growth.

Barclays has hired one of British Prime Minister David Cameron’s most senior business advisers to join the technology, media and telecommunication (TMT) team of its investment banking arm.

 

NYT

* A Canadian anti-spam law requiring proof that a recipient has consented to be sent emails has resulted in a torrent of messages from companies, non-profits and government agencies to everyone on their mailing lists. It is the unintended byproduct of a new Canadian law designed to declutter inboxes. (http://nyti.ms/1qj2ua7)

* Twitter’s Chief Executive Dick Costolo brought in Anthony Noto, the star Goldman Sachs banker who helped Twitter sell its initial stock offering last fall, as the Chief Financial Officer of the micro-blogging company. (http://nyti.ms/1jIb6kQ)

* Troubled automaker General Motors said that its sales in June rose by 1 percent over the same month a year earlier, to 267,461 vehicles, and keeping pace with an overall strong industry performance. (http://nyti.ms/1z6EACY)

* The Federal Trade Commission on Tuesday brought a legal action accusing T-Mobile of illegally earning hundreds of millions of dollars by placing bogus charges on customers’ cellphone bills for premium texting services that the consumers never ordered. Regulators said that T-Mobile had been allowing the third-party charges, and taking a hefty cut of the revenue, since 2009. (http://nyti.ms/1iWLTIl)

* Jamie Dimon, the chief executive of JPMorgan Chase , has throat cancer and will begin treatment shortly at Memorial Sloan Kettering Cancer Center, he said in a note to the bank’s employees and shareholders late on Tuesday. (http://nyti.ms/1qwHKNM)

* Puerto Rico’s electrical utility is running out of money and time to negotiate a deal with its lenders, part of a broad reckoning for an island that relies on Wall Street to finance some of its most basic functions. (http://nyti.ms/1qPpaOC)

* Whitney Wolfe, a former executive at the popular dating start-up Tinder, has filed a lawsuit against the company, along with its majority owner, IAC/InterActiveCorp, on sexual harassment and discrimination claims. (http://nyti.ms/1m7zSPm)

* Under pressure from the National Highway Traffic Safety Administration, Graco Children’s Products has agreed to recall about 1.9 million rear-facing infant seats with a faulty buckle that can make it difficult to free a child during an emergency. (http://nyti.ms/VaL6J2)

* President Obama called on congressional Republicans on Tuesday to take quick action to fund infrastructure projects throughout the country, arguing that failing to do so could mean huge layoffs for Americans this year. (http://nyti.ms/1mj6rM1)

* The United States Marshals Service announced on Tuesday that one bidder had won all of the nearly 30,000 Bitcoins auctioned on Friday. But the Marshals Service did not identify the winner or disclose the winning bid. (http://nyti.ms/1mIePPm)

* A judge on Tuesday dismissed two securities fraud counts against Rengan Rajaratnam, the younger brother of the Galleon Group founder Raj Rajaratnam, in a surprise development in an insider trading case. (http://nyti.ms/1pIslud)

* J. C. Penney appealed a New York state court ruling on Monday that found it had interfered with a contract between Macy’s and Martha Stewart Living Omnimedia by selling the celebrity’s home goods, according to a filing. (http://nyti.ms/TNPFYR)

 

Canada

THE GLOBE AND MAIL

** Unless Canada makes a lot more contributions to the International Space Station, it could be a while before another Canadian astronaut visits the giant orbiting space laboratory. For the moment, what’s clear is that no Canadians will be heading up to the space station before 2017. (http://bit.ly/1iXcBAK)

** An Amber Alert remained in effect across Alberta on Canada Day as police continued to search for leads in the perplexing disappearance of a five-year-old boy and his grandparents. Nathan O’Brien was reported missing Monday morning when his mother went to pick him up after a sleep-over at the grandparents’ southwest Calgary home and they weren’t there. (http://bit.ly/1jIT8i4)

Reports in the business section:

** Canadian retailers are bracing for a fashion fight this fall. Wal-Mart Canada Corp is stepping up its focus on styles of the season at lower price points in a bid to raise the profile of its key George line. At the same time, Target Corp is intent on repositioning its sweet spot of affordable trendy fashions. Canadian grocer Loblaw Cos Ltd is looking to expand its Joe Fresh styles beyond North America in its bid to woo price-conscious fashionistas. (http://bit.ly/1vvuOFG)

NATIONAL POST

** More than 150 acute care patients and long-term residents have been moved from a hospital in eastern Saskatchewan because of flooding. The full-scale evacuation at St. Peter’s Hospital in the city of Melville, about 145 kilometers northeast of Regina, took place because a creek behind the facility was rising on Tuesday. (http://bit.ly/1o1ilpo)

** A seven-year-old girl was airlifted to hospital with a “serious leg injury” after being struck by a boat in Lake Rosseau, Ontario Provincial Police said. (http://bit.ly/1xfNmg0)

FINANCIAL POST

** Having dumped the lowly penny, the Royal Canadian Mint is planning to create two high-value coins that won’t appear in any change handed out at the local Tim Hortons. A recent cabinet order authorizes the mint to produce two coins with face values of $1,000 and $1,250, destined for collectors rather than pockets or purses. (http://bit.ly/1lSoU0O)

** Toronto-based Globe and Mail newspaper’s reporters appear to be preparing to launch a competing online publication to add leverage in their standoff with management. Leaders of The Globe’s workers’ union, Unifor Local 87-M, have recommended the rejection of management’s latest contract offer, which is scheduled to go to a vote on Wednesday afternoon. (http://bit.ly/TOki0g)

 

China

CHINA SECURITIES JOURNAL

– At the start of July, a total of 637 Chinese companies had published preliminary IPO disclosures, according to data from the China Securities Regulatory Commission (CSRC). That included 40 companies which have already received approvals.

– A construction project in Shanghai, the Shanghai Yuehe International Plaza, was recently halted by local courts because the developer is facing cash flow problems and issues with its loans, the official newspaper reported.

SHANGHAI SECURITIES NEWS

– The volume of trade in China’s futures market fell around 10 percent in the first half of the year against the same period in 2013, according to figures from the China Futures Association. China is trying to increase the range of financial products available to investors.

CHINA DAILY

– A chemical company in China’s eastern Zhejiang province has been fined 20 million yuan ($3.25 million) for illegally discharging wastewater and polluting, local authorities said. China has been cracking down on polluters as it looks to clean up soaring levels of air, water and soil pollution.

– China’s capital, Beijing, will have healthy air by 2030, according to a senior official at the city’s Municipal Research Institute of Environmental Protection. In 2013 air pollution in Beijing was over double the level recommended by the World Health Organization.

SHANGHAI DAILY

– Five people have been detained in northeast China in connection with a huge oil pipeline fire on Monday evening near the city of Dalian, local officials said. The burst, which involved no casualties, was caused by nearby construction work.

– Alipay’s popular online investment fund Yu’e Bao said its assets hit 574.2 billion yuan ($93.33 billion) at the end of June, more than triple the amount at the start of the year.

PEOPLE’S DAILY

– Patriotic Hong Kong people should play a central role in administering the territory and upholding the principle of ‘one country, two system’, the newspaper, which acts as a government mouthpiece, said in a commentary. Hundreds of thousands of pro-democracy protesters marched in Hong Kong on Tuesday.

Britain

The Times

ECONOMY PICKS UP PACE ON BACK OF BOOMING MANUFACTURING

Britain’s recovery gathered speed in the second quarter on the back of the booming manufacturing industry, economists said after factory activity accelerated in June at its second fastest rate in more than three years.

TATA BLAMES BUSINESS RATES FOR 400 JOB CUTS

Tata Steel, one of Britain’s biggest private employers, blamed the cuts on ‘much higher’ business rates compared to other EU countries and ‘uncompetitive’ energy costs.

The Telegraph

SPORTS DIRECT HITS OUT AT ‘ANTI-COMPETITIVE’ ADIDAS

Mike Ashley’s sports retailer Sports Direct is understood to have reported adidas to competition authorities ahead of potentially stormy shareholder meeting.

The Guardian

MADELEINE MCCANN CASE: PORTUGUESE POLICE QUESTION FOUR SUSPECTS

Portuguese police have begun questioning four suspects identified by Scotland Yard detectives as being able to assist them in their investigation into the disappearance of Madeleine McCann seven years ago in Praia da Luz.

Sky News

SAINSBURY’S ENERGY HIT BY MIS-SELLING SCANDAL

British Gas is being forced to compensate thousands of customers for providing inaccurate savings estimates in the latest mis-selling episode to blight the utility sector.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ADP employment report for June at 8:15–consensus 213K
Factory orders for May at 10:00–consensus down 0.3%

ANALYST RESEARCH

Upgrades

AbbVie (ABBV) upgraded to Overweight from Equal Weight at Barclays
Alcatel-Lucent (ALU) upgraded to Overweight from Neutral at JPMorgan
Bank of America (BAC) upgraded to Buy from Hold at Deutsche Bank
Canadian Pacific (CP) upgraded to Outperformer from Sector Performer at CIBC
Eli Lilly (LLY) upgraded to Equal Weight from Underweight at Barclays
Energy Transfer Partners (ETP) upgraded to Outperform at Wells Fargo
Liberty Media (LMCA) upgraded to Overweight from Equal Weight at Morgan Stanley
Men’s Wearhouse (MW) upgraded to Buy from Hold at Stifel
Oracle (ORCL) upgraded to Overweight from Neutral at Atlantic Equities
WebMD (WBMD) upgraded to Buy from Hold at Stifel

Downgrades

Beazer Homes (BZH) downgraded to Neutral from Buy at Sterne Agee
Bristol-Myers (BMY) downgraded to Equal Weight from Overweight at Barclays
El Paso Pipeline (EPB) downgraded to Sell from Neutral at Goldman
Harley-Davidson (HOG) downgraded to Market Perform from Outperform at Raymond James
Hormel Foods (HRL) downgraded to Neutral from Outperform at Credit Suisse
Millennial Media (MM) downgraded to Equal Weight from Overweight at Evercore
Omega Healthcare (OHI) downgraded to Neutral from Buy at Goldman
Saneamento Basico (SBS) downgraded to Sector Perform from Outperform at Scotia
Targa Resources Partners (NGLS) downgraded to Equal Weight at Barclays
Targa Resources Partners (NGLS) downgraded to Market Perform at Wells Fargo
Trimble (TRMB) downgraded to Neutral from Buy at Janney Capital
U.S. Bancorp (USB) downgraded to Neutral from Outperform at RW Baird

Initiations

Advanced Energy (AEIS) initiated with a Hold at Canaccord
Atlas Energy (ATLS) initiated with an Outperform at RBC Capital
Atlas Pipeline Partners (APL) initiated with a Sector Perform at RBC Capital
Colfax (CFX) initiated with an Outperform at RBC Capital
Contango Oil & Gas (MCF) initiated with a Buy at Brean Capital
Intercept (ICPT) initiated with a Neutral at Goldman
JDSU (JDSU) initiated with a Neutral at JPMorgan
Owens-Illinois (OI) initiated with a Hold at Jefferies
Premier (PINC) initiated with a Buy at Jefferies
Southcross Energy Partners (SXE) initiated with a Sector Perform at RBC Capital
SunEdison (SUNE) initiated with a Buy at Canaccord
Vipshop (VIPS) initiated with a Buy at Jefferies
Yahoo Japan (YAHOY) initiated with a Buy at Jefferies

COMPANY NEWS

Destination Maternity (DEST) confirms interest in Mothercare plc
Exxon Mobil (XOM) announces $1B investment in Antwerp Refinery
Roche’s (RHHBY) Genentech acquires Seragon Pharmaceuticals for $725M
Google (GOOG) announces acquisition of Songza
HP (HPQ) awarded contract extension by Shell
Intuitive Surgical (ISRG) to begin direct sales of da Vinci surgical systems in Japan
JPMorgan (JPM) CEO Jamie Dimon diagnosed with throat cancer
Monsanto (MON) announces $6B accelerated share repurchase
Vectren (VVC) to sell coal mining subsidiary to Hallador subsidiary for $296M in cash
WellCare (WCG) announces Florida MMA rate decrease

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Greenbrier (GBX), A. Schulman (SHLM), CalAmp (CAMP)

Companies that matched consensus earnings expectations include:
Paychex (PAYX)

NEWSPAPERS/WEBSITES

AU Optronics (AUO) to see at least 10% increase in Q2 revenue, DigiTimes reports
American Airlines (AAL) nears $2.6B CFM engine order, Reuters says
Apple (AAPL) to open ten more stores in China, China Daily says
JetBlue (JBLU) expects new sleeper seating to boost profits, Reuters says
Lenovo CEO confident IBM deal to close by end of year, WSJ reports
Microsoft (MSFT) to join Internet of Things alliance, Re/code reports
Rackspace (RAX) looking to take itself private, TechCrunch reports
Time to take profits in MannKind (MNKD), Barron’s says

SYNDICATE

Benefitfocus (BNFT) files to sell $100M of common stock for holders
GlobeImmune (GBIM) 1.5M share IPO priced at $10.00
TECO Energy (TE) 15.5M share Secondary priced at $18.10

via Zero Hedge http://ift.tt/1qkGITz Tyler Durden

We could focus on whatever reports took place in the overnight session or the seasonally-adjusted economic data avalanche that will dominate US newsflow over the next two days (ADP, ISM New York, Factory Orders, Services ISM, Yellen Speaking, and of course Nonfarm payrolls tomorrow), or we could ignore all of that as it is still absolutely meaningless, and use a phrase from Standard Chartered in which the bank said that “the dollars Yellen is removing could be compensated for by cheap euros from the ECB; result may be enough cash sloshing around to underpin this year’s run-up in risk assets even if  the Fed begins mulling higher interest rates too.” In other words, the bubble will go on, as the Fed passes the baton to the ECB, if not so much the BOJ which is drowning in its own imported inflation.

Here is the snapshot: European shares rise, close to intraday highs, with the autos and retail sectors outperforming and telcos, chemicals underperforming. The Italian and Swedish markets are the best-performing larger bourses, French the worst. The euro is weaker against the dollar. Spanish 10yr bond yields rise; Irish yields increase. Commodities decline, with Brent crude, corn  underperforming and soybeans outperforming.

Taking a look at Asia today, markets are having a relatively buoyant 2nd day of Q3 helped by the record closes on Wall Street. Gains are being led by the Hang Seng (+0.95%) which is playing catch up after being closed for holidays yesterday, while gains are also being posted on the ASX200 (+1.1%) and the Nikkei (+0.3%). The AUD (-0.5%) has lost some ground against the greenback today following disappointing May trade data, though it’s still near eight-month highs. In Japan, the BoJ’s tankan inflation survey suggested that firms expect consumer price inflation of 1.5% in the year ahead, unchanged from last quarter’s survey. Inflation projections 3yrs and 5yrs from now are only 1.6% and 1.7% respectively, which is down to unchanged versus the last quarterly survey and still short of the BoJ’s goal.

As DB’s Jim Reid notes, in an otherwise quiet week for Fed policymakers, Yellen’s lecture at the IMF today (11am) will take much of the limelight. The exact topic of her speech is not yet known though as it is simply being billed as a Central Bank lecture, followed by a Q&A conversation with IMF Managing Director Christine Lagarde. If Yellen does discuss current monetary policy, we can probably expect more of the same overall tone that we saw from her post-FOMC press conference. Recall also that at that press conference, Yellen mentioned that “high yield bonds have certainly caught our attention”, so it will be interesting to see whether she elaborates on this topic given the IMF appears to have become more vocal about the issue of financial stability lately. DB’s Joe Lavorgna notes that Yellen will not have the employment data at the time of her talk. Traditionally, the Fed Chair does not get these figures until the early evening of the night before their release.

Turning to the day ahead, on the US docket we have US ISM New York, factory orders, mortgage applications, ADP employment change.

Bulletin headline summary from Bloomberg and RanSquawk

• Treasuries 7Y and longer gain, curve spreads flatten, as markets await ECB/Draghi and nonfarm payrolls tomorrow; Yellen due to speak at IMF 11am ET.
• Stocks in Europe traded broadly higher (Eurostoxx 50, +0.08%), benefiting from yet another record high close over on Wall Street yesterday, which saw the DJIA come within 2 points of 17,000.
• GBP/USD rose to its highest level since October 2008 following better than expected UK Construction PMI and Nationwide housing survey
• The dollars Yellen is removing could be compensated for by cheap euros from the ECB; result may be enough cash sloshing around to underpin this year’s run-up in risk assets even if  the Fed begins mulling higher interest rates too, according to Standard Chartered Plc in Dubai
• Foreign ministers from Ukraine, Russia, Germany and France meet in Berlin this afternoon for talks intended to “try and reduce the tensions,” according to a Russian Foreign Ministry spokeswoman, as Ukraine ended a cease-fire and vowed to retake territory from separatists in the violence-torn east
• A second batch of used Russian Sukhoi combat jets arrived in Baghdad to help Iraqi forces fight an al-Qaeda breakaway group threatening to fracture the country
• The State Department has told lawmakers informally that Obama wants to sell Iraq more than 4,000 additional Hellfire missiles for the government’s fight against Islamic insurgents, according to people familiar with the plan
• Belgium overcame a World Cup-record 16 saves by goalie Tim Howard and defeated the U.S. 2-1 in extra time to set up a quarterfinal soccer match against Argentina, which won 1-0 against Switzerland
• Stock investors have found a new hero in Japan’s JPY128.6t ($1.3t) retirement fund, SocGen said; the Topix rebounded 5% in 2Q as the GPIF moved closer to an asset  overhaul that’s expected to pour JPY3.6t into Japan’s equities
• Jamie Dimon said he’ll start treatment for throat cancer, raising new questions about succession plans at the biggest U.S. bank
• Sovereign yields mixed. EU peripheral spreads widen. Asian and European stocks, U.S. stock futures gain. WTI crude falls,  gold and copper little changed

US Event Calendar

• 7:00am: MBA Mortgage Applications, June 27 (prior -1.0%)
• 7:30am: Challenger Job Cuts y/y, June (prior 45.5%)
• 7:30am: RBC Consumer Outlook Index, July (prior 51)
• 8:15am: ADP Employment Change, June., est. 205k (prior 179k)
• 9:45am: ISM New York, June (prior 55.3)
• 10:00am: Factory Orders, May, est. -0.3% (prior 0.7%) Central Banks
• 11:00am: Fed’s Yellen speaks in Washington
• 2:00pm: Fed board discusses semiannual monetary policy report to Congress, board oversight and assessment of reserve bank
• 8:00pm: Reserve Bank of Australia’s Stevens speaks in Hobart
• No POMO today or the rest of this week

Market Wrap

• S&P 500 futures up 0% to 1966.7
• Stoxx 600 up 0.4% to 346.2
• US 10Yr yield down 1bps to 2.55%
• German 10Yr yield down 0bps to 1.24%
• MSCI Asia Pacific up 1% to 147.7
• Gold spot up 0.1% to $1327.1/oz
• 16 out of 19 Stoxx 600 sectors rise; 67% of Stoxx 600 members gain, 31.2% decline
• Eurostoxx 50 +0.1%, FTSE 100 +0.3%, CAC 40 -0%, DAX +0.2%, IBEX +0.1%, FTSEMIB +0.8%, SMI +0.3%
• Asian stocks rise  with the Hang Seng outperforming and the Nikkei underperforming.
• MSCI Asia Pacific up 1% to 147.7

EUROPE NEWS

There was little in terms of tier-1 macroeconomic releases in Europe this morning, but another round of better than expected macroeconomic data out of the UK (UK Construction PMI and Nationwide) resulted in further steepening of the Short-Sterling curve, while the Euribor curve was little changed.

Absorption of supply out of Germany (2019 auction), together with cash payment related flow (where as an estimated EUR 13bln of gross supply is outweighed by EUR 11.4bln of coupons and EUR 25bln of redemptions for Bunds) meant that in spite of stocks trading broadly higher, Bunds also remained bid.

EQUITIES

The positive sentiment stemming from yet another record high close over on Wall Street yesterday, which saw the DJIA come within 2 points of 17,000 yesterday, filtered over into the European session, with stocks in Europe (Eurostoxx 50, +0.08%) seen broadly higher this morning. However telecommunications sector underperformed since the get-go, with Orange shares down over 3% after the company scrapped plans for a potential M&A in France.

FX

GBP/USD touched on its highest level since October 2008 following the release of better than expected UK Construction PMI, which rose to its highest level since February. The pair was also supported by the latest UK Nationwide house price survey which showed that annual rise in house prices jumped from 11.1% to 11.8% in June and London seeing the sharpest rise, with prices up almost 26% in the three months to the end of June compared with the same period last year. Elsewhere, AUD/USD reversed much of yesterday’s RBA inspired gains, as Australia’s trade deficit ballooned to AUD 1.9bln, with exports falling 5%, led by a collapse in metal ore and mineral sales (-9%).

COMMODITIES

In terms of precious metals, spot gold traded sideways overnight and in Europe this morning, off its 3-month highs printed yesterday, even though SPDR gold holdings showed its biggest two day gain since 2011. Looking elsewhere, WTI and Brent crude futures traded lower, failing to benefit from a drawdown in API crude oil inventories and instead coming off on absence of geopolitical related news flow, as well as reports of the Libyan Es Sider port re-opening.

API Crude Oil Inventories (June 27) W/W -876k vs. Prev. 4000k
API Cushing Crude Oil Inventories (June 27) W/W -1300k vs. Prev. 424k
API Gasoline Inventories (June 27) W/W -407k vs. Prev. 2200k
API Distillate Inventories (June 27) W/W 4400K vs. Prev. -253k

We conclude with the overnight musings of DB’s Jim Reid

Following on from H1’s near universal asset price climb, the S&P 500 (+0.67%) hit fresh highs again yesterday. In spite of this fresh high and H1’s near universal rally I would have to say that this is a fairly miserable synchronised bull market. There’s not a lot of happiness and a lot of nervousness with markets at the moment. It’s tough to say whether this is mainly because bond yields have surprised the vast majority, or because the economic recovery still generally disappoints, or because trading liquidity is very low, or that regulation hurting certain markets, or fears that the Fed is soon to become more hawkish, or that liquidity not fundamentals are the main drivers of markets, valuations are becoming more stretched in many markets, or finally simply that there is little in the way of volatility. In truth all of these factors are preventing the champagne corks from popping at the moment. Maybe it’s better for markets to feel like this rather than be euphoric and complacent but it’s fair to say that we continue to live in fairly unique financial markets with a lot of uncertainty.

Tuesday’s US data docket was probably supportive of the theme that the economic recovery is a slow and steady one. Case in point was the US ISM which was basically unchanged at 55.3 for the month of June (vs 55.4 prior month). This was one of the higher readings of the last few years, but was below expectations of 55.9. The prices paid subcomponent printed at 58.0 which is broadly in the same range as it has been over the last six months. Consistent with the neither-hawkish-or-dovish feel of the ISM, construction spending growth of +0.1% was below expectations of +0.5% but this was offset by large upward revisions to April’s data. One of the stronger data points came from US vehicle sales for June which beat consensus across GM, Ford, Chrysler and Nissan. The total rate of sales increased to 16.98m (vs 16.70m previous and 16.38m expected) and this marked a post financial crisis high, despite a lower number of selling days this June compared to a year earlier. This prompted a sharp rally in GM stock yesterday (+3.35%). 10yr UST yields closed about 3.5bp higher at 2.565%, though most of that move occurred before the data flow.

In an otherwise quiet week for Fed policymakers, Yellen’s lecture at the IMF today (4pm London) will take much of the limelight. The exact topic of her speech is not yet known though as it is simply being billed as a Central Bank lecture, followed by a Q&A conversation with IMF Managing Director Christine Lagarde. If Yellen does discuss current monetary policy, we can probably expect more of the same overall tone that we saw from her post-FOMC press conference. Recall also that at that press conference, Yellen mentioned that “high yield bonds have certainly caught our attention”, so it will be interesting to see whether she elaborates on this topic given the IMF appears to have become more vocal about the issue of financial stability lately. DB’s Joe Lavorgna notes that Yellen will not have the employment data at the time of her talk. Traditionally, the Fed Chair does not get these figures until the early evening of the night before their release.

Taking a look at Asia today, markets are having a relatively buoyant 2nd day of Q3 helped by the record closes on Wall Street. Gains are being led by the Hang Seng (+0.95%) which is playing catch up after being closed for holidays yesterday, while gains are also being posted on the ASX200 (+1.1%) and the Nikkei (+0.5%). The AUD (-0.5%) has lost some ground against the greenback today following disappointing May trade data, though it’s still near eight-month highs. In Japan, the BoJ’s tankan inflation survey suggested that firms expect consumer price inflation of 1.5% in the year ahead, unchanged from last quarter’s survey. Inflation projections 3yrs and 5yrs from now are only 1.6% and 1.7% respectively, which is down to unchanged versus the last quarterly survey and still short of the BoJ’s goal.

Looking at other headlines, the FT reports that the ECB has yet to make any firm decisions or progress on how it intends to revive the loan-backed ABS market since last month’s ECB meeting where Draghi pledge to “intensify preparatory work” on a QE-like programme. Reportedly, one of the issues faced is the small size of the market with just EUR13.6bn of European securities issued in Q1 of 2014 and EUR181bn between 2012 and 2013. This is not surprising given the low amount of underlying SME loan origination volumes amongst European banks during this time. European banks themselves actually had a strong session yesterday led by Banco Espirito Santo (+13.8%) which recouped most of its losses from Monday after concerns over corporate governance issues arose. BNP (+3.6%) also rallied after the bank affirmed its long term dividend plans and said that it doesn’t plan to raise capital following the fine from the US authorities. European banks (+1.88%) were one of the key outperformers on the Stoxx 600 (+0.89%). It was also a strong performance in terms of European bank credit where both the senior and subordinated financials indices rallied sharply yesterday (-5bp and -8bp respectively).

Turning to the day ahead, the focus will again be on the US data with ADP employment (205k consensus) allowing markets to fine tune their estimates ahead of tomorrow’s payrolls. Aside from that there is the Challenger US job cuts release and factory orders. Yellen’s IMF lecture is scheduled for 11am Washington time (4pm London). In the UK, the June construction PMI will be released as well as Nationwide house prices. In EM, Brazil will report industrial production.

via Zero Hedge http://ift.tt/1lSAl8E Tyler Durden

via Zero Hedge http://ift.tt/1jJ4EKh Pivotfarm

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

I’ve spent pretty much all day reading as much as possible about the extremely controversial Facebook “emotional contagion” study in which the company intentionally altered its news feed algorithm to see if it could manipulate its users’ emotions. In case you weren’t aware, Facebook is always altering your news feed under the assumption that there’s no way they could fill your feed with all of your “friends’” pointless, self-absorbed, dull updates (there’s just too much garbage).

As such, Facebook filters your news feed all the time, something which advertisers must find particularly convenient. In any event, the particular alteration under question occurred during one week in January 2012, and the company filled some people’s feeds with positive posts, while others were fed more negative posts.

Once the data was compiled, academics from the University of California, San Francisco and Cornell University were brought in to analyze the results. Their findings were then published in the prestigious Proceedings of the National Academy of Sciences. They found that:

For people who had positive content reduced in their News Feed, a larger percentage of words in people’s status updates were negative and a smaller percentage were positive. When negativity was reduced, the opposite pattern occurred. These results suggest that the emotions expressed by friends, via online social networks, influence our own moods, constituting, to our knowledge, the first experimental evidence for massive-scale emotional contagion via social networks.

You probably know most of this already, but here is where it starts to get really strange. Initially, the press release from Cornell highlighting the study said at the bottom: “The study was funded in part by the James S. McDonnell Foundation and the Army Research Office.” Once people started asking questions about this, Cornell claimed it had made a mistake, and that there was no outside funding. Jay Rosen, Journalism Professor at NYU, seems to find this highly questionable. He wrote on his Facebook page that:

Strange little turn in the story of the Facebook “emotional contagion” study. Last month’s press release from Cornell highlighting the study had said at the bottom: “The study was funded in part by the James S. McDonnell Foundation and the Army Research Office.”

 

Why would the military be interested? I wanted to know. So I asked Adam D.I. Kramer, the Facebook researcher, that question on his Facebook page, where he has posted what he called a public explanation. (He didn’t reply to my or anyone else’s questions.) See:http://ift.tt/1mwqRuY

 

Now it turns out Cornell was wrong! Or it says it was wrong. The press release now reads: “Correction: An earlier version of this story reported that the study was funded in part by the James S. McDonnell Foundation and the Army Research Office. In fact, the study received no external funding.”

 

Why do I call this strange? Any time my work has been featured in an NYU press release, the PR officers involved show me drafts and coordinate closely with me, for the simple reason that they don’t want to mischaracterize scholarly work. So now we have to believe that Cornell’s Professor of Communication and Information Science, Jeffrey Hancock, wasn’t shown or didn’t read the press release in which he is quoted about the study’s results (weird) or he did read it but somehow failed to notice that it said his study was funded by the Army when it actually wasn’t (weirder).

 

I think I would notice if my university was falsely telling the world that my research was partially funded by the Pentagon… but, hey, maybe there’s an innocent and boring explanation that I am overlooking.

It gets even more interesting from here. The Professor of Communication and Information Science, Jeffrey Hancock, who Mr. Rosen mentions above, has a history of working with the U.S. military, specifically the Minerva Institute. In case you forgot what this is, the Guardian reported on it earlier this year. It explained:

A US Department of Defense (DoD) research program is funding universities to model the dynamics, risks and tipping points for large-scale civil unrest across the world, under the supervision of various US military agencies. The multi-million dollar program is designed to develop immediate and long-term “warfighter-relevant insights” for senior officials and decision makers in “the defense policy community,” and to inform policy implemented by “combatant commands.”

 

Launched in 2008 – the year of the global banking crisis – the DoD ‘Minerva Research Initiative’ partners with universities “to improve DoD’s basic understanding of the social, cultural, behavioral, and political forces that shape regions of the world of strategic importance to the US.”

SCG News has written one of the best articles I have seen yet on the links between the Facebook study and the Department of Defense. It notes:

In the official credits for the study conducted by Facebook you’ll find Jeffrey T. Hancock from Cornell University. If you go to the Minerva initiative website you’ll find that Jeffery Hancock received funding from the Department of Defense for a study called “Cornell: Modeling Discourse and Social Dynamics in Authoritarian Regimes”. If you go to the project site for that study you’ll find a visualization program that models the spread of beliefs and disease.

 

Cornell University is currently being funded for another DoD study right now called “Cornell: Tracking Critical-Mass Outbreaks in Social Contagions” (you’ll find the description for this project on the Minerva Initiative’s funding page).

So I went ahead and looked at the study mentioned above, and sure enough I found this:

There he is, Jeff Hancock, the same guy who analyzed the Facebook data for Cornell, which initially claimed funding from the Pentagon and then denied it.

I call bullshit. Stinking bullshit.

So it seems that Facebook and the U.S. military are likely working together to study civil unrest and work on ways to manipulate the masses into apathy or misguided feelings of contentment in the face of continued banker and oligarch theft. This is extremely disturbing, but this whole affair is highly troubling in spite of this.

For one thing, although governments and universities need to take certain precautions when conducting such “research,” private companies like Facebook apparently do not. Rather, all they have to do is get people to click “I accept” to a terms of service agreement they never read, which allows companies to do almost anything they want to you, your data and your emotions. What we basically need to do as a society is completely update our laws. For starters, if a private corporation is going to lets say totally violate your most basic civil liberties as defined under the Bill of Rights, a simple terms of service agreement should not be sufficient. For more invasive violations of such rights, perhaps a one page simple-to-read document explaining clearly which of your basic civil liberties you are giving away should be mandatory.

For example, had Facebook not partnered at the university level to analyze this data, we wouldn’t even know this happened at all. So what sort of invasive, mind-fucking behavior do you think all these large corporations with access to your personal data are up to. Every. Single. Day.

The Faculty Lounge blog put it perfectly when it stated:

Academic researchers’ status as academics already makes it more burdensome for them to engage in exactly the same kinds of studies that corporations like Facebook can engage in at will. If, on top of that, IRBs didn’t recognize our society’s shifting expectations of privacy (and manipulation) and incorporate those evolving expectations into their minimal risk analysis, that would make academic research still harder, and would only serve to help ensure that those who are most likely to study the effects of a manipulative practice and share those results with the rest of us have reduced incentives to do so. Would we have ever known the extent to which Facebook manipulates its News Feed algorithms had Facebook not collaborated with academics incentivized to publish their findings?

 

We can certainly have a conversation about the appropriateness of Facebook-like manipulations, data mining, and other 21st-century practices. But so long as we allow private entities freely to engage in these practices, we ought not unduly restrain academics trying to determine their effects. Recall those fear appeals I mentioned above. As one social psychology doctoral candidate noted on Twitter, IRBs make it impossible to study the effects of appeals that carry the same intensity of fear as real-world appeals to which people are exposed routinely, and on a mass scale, with unknown consequences. That doesn’t make a lot of sense. What corporations can do at will to serve their bottom line, and non-profits can do to serve their cause, we shouldn’t make (even) harder—or impossible—for those seeking to produce generalizable knowledge to do.

If you read Liberty Blitzkrieg, you know I strongly dislike Facebook as a company. However, this is much bigger than just one experiment by Facebook with what appears to be military ties. What this is really about is the frightening reality that these sorts of things are happening every single day, and we have no idea it’s happening. We need to draw the lines as far as to what extent we as a society wish to be data-mined and experimented on by corporations with access to all of our private data. Until we do this, we will continue to be violated and manipulated at will.

For some of my Facebook critical articles from earlier this year, read:

The Chief Operating Officer of Facebook Wants to Ban the Word “Bossy”

How UK Prime Minister David Cameron Paid Thousands of Dollars for Facebook “Likes”

How Facebook Exploits Underage Girls in its Quest for Ad Revenue

This Man’s $600,000 Facebook Disaster is a Warning For All Small Businesses

 

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Goldman’s June Final GLI came in at 3.1% year-over-year, down from the revised 3.3% year-over-year reading in May. Momentum came in at 0.15% month-over-month – flat from last month’s revised reading. Ever optimistic, Goldman views this results, as continuing to locate the global industrial cycle close to the ‘Expansion’ phase but has yet to signal positive acceleration… oh so close… The 3 big drivers of the deterioration were Japan’s Inventory/Sales ratio worsened, US Initial Jobless Claims were marginally higher, and as we have been vociferously noting, The Baltic Dry Index continued to come in softer as well.

US data, they argue, has been improving (though we note US Macro surprises at 2-month lows), but improvement has yet to show up in a more convincing way in the broader, global dataset.

Despite all this disappointment, Goldman remains resolute (just like they were on Q1 GDP til they folded… and Q2 GDP)…

Still, we continue to expect the GLI to move into ‘Expansion’, in line with our optimistic outlook for US growth, and we will be watching the GLI closely in the next few months for signs of a more broad-based turn in global activity data.

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Submitted by Nick Cunningham of OilPrice.com,

A recent court ruling giving cities and towns in New York State the authority to ban hydraulic fracturing (“fracking”) represents an enormous blow to the shale gas industry, which has been hoping to expand operations into the state for several years.

New York imposed a moratorium on fracking in 2008 so it could study the environmental impact, which industry opponents say includes adverse effects on groundwater supplies and public health. Fracking involves injecting a cocktail of water, sand, and chemicals deep underground at pressure high enough to fracture shale rock so the oil or gas within can be extracted.

Governor Andrew Cuomo has been under significant pressure from the industry to lift the moratorium, but has punted on the issue — some say to avoid making a politically controversial decision.

New York sits atop the vast Marcellus and Utica shale formations, which hold huge volumes of shale oil and gas. But due to the moratorium, the state has not seen the expansion of drilling that nearby states like Pennsylvania and Ohio have experienced.

In the past six years, towns and cities across New York have acted on their own, passing municipal bans. One, the upstate town of Dryden, was taken to court by an energy company after it prohibited fracking.

By a 5-2 vote, the New York Court of Appeals, the state’s highest court, ruled that the actions taken by local communities to restrict fracking amounted to a “reasonable exercise” of their zoning authority, particularly since high levels of drilling “would permanently alter and adversely affect the deliberately cultivated small-town character of their communities.”

The court decision could have a deflating effect on future drilling prospects in New York, even if the statewide moratorium is lifted. Although there are plenty of counties and cities that would support fracking, the patchwork of municipal bans could make drilling on a large scale difficult. Navigating the maze of municipal zoning laws could deter investment altogether.

“It’s going to have a real chilling effect on the investment in New York,” Thomas West, an attorney for Norse Energy, told Bloomberg News in an interview. “Most of the major companies are not going to see New York as open for business if they have to develop the resource around municipalities with bans.”

Brad Gill, executive director of the Independent Oil and Gas Association of New York, put in more bluntly, saying the decision is “one more nail in the coffin” for fracking in the Empire State.

A map put together by FracTracker.org shows why drillers would hesitate before pouring millions of dollars into leases and infrastructure. Over 75 towns have banned fracking, with many more considering provisions to restrict the drilling practice.

“The oil and gas industry tried to bully us into backing down, but we took our fight all the way to New York’s highest court.” Mary Ann Sumne, the Dryden, NY town supervisor, said in response to the ruling, “I hope our victory serves as an inspiration to people in Pennsylvania, Ohio, Texas, Colorado, New Mexico, Florida, North Carolina, California and elsewhere who are also trying to do what’s right for their own communities.”

Local control over fracking has cropped up as a major issue in several states across the country. The highest profile battleground is Colorado, where several cities have passed fracking bans, including Fort Collins, Longmont, and Lafayette. The oil and gas industry is fighting the bans in court, and trying to head off more bans in cities that have experienced an increase in drilling activity.

A movement to put the issue on a statewide ballot in November’s election is gaining steam. The industry has criticized the ballot push for being a stealth effort to enact an outright state ban on fracking while cloaking itself in the language of local sovereignty.

On June 30, the Colorado Supreme Court handed ballot organizers a victory with a ruling that says they can proceed with gathering signatures on petitions to put as many as six anti-fracking measures up for a vote. A deadline of August 4 has been set for the submission of signatures — 86,105 of which are needed for each measure organizers want to see the public decide.

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Global GDP growth expectations for 2014 have dropped 15% since the start of QE3 in Dec 2012… Global stocks are up 35% in that same period. At 2.67% GDP growth expectations are the lowest on record for 2014 and with MSCI World stocks at record highs the death cross has never been more crossed…

 

 

Source: Bloomberg

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Submitted by Michael Snyder of The Economic Collapse blog,

A lot of people that I talk to these days want to know "when things are going to start happening".  Well, there are certainly some perilous times on the horizon, but all you have to do is open up your eyes and look to see the global economic crisis unfolding.  As you will see below, even central bankers are issuing frightening warnings about "dangerous new asset bubbles" and even the World Bank is declaring that "now is the time to prepare" for the next crisis.  Most Americans tend to only care about what is happening in the United States, but the truth is that serious economic trouble is erupting in South America, all across Europe and in Asian powerhouses such as China and Japan.  And the endless conflicts in the Middle East could erupt into a major regional war at just about any time.  We live in a world that is becoming increasingly unstable, and people need to understand that the period of relative stability that we are enjoying right now is extremely vulnerable and will not last long.

The following are 18 signs that the global economic crisis is accelerating as we enter the last half of 2014…

#1 The Bank for International Settlements has issued a new report which warns that "dangerous new asset bubbles" are forming which could potentially lead to another major financial crisis.  Do the central bankers know something that we don't, or are they just trying to place the blame on someone else for the giant mess that they have created?

#2 Argentina has missed a $539 million debt payment and is on the verge of its second major debt default in 13 years.

#3 Bulgaria is desperately trying to calm down a massive run on the banks that threatens of spiral out of control.

#4 Last month, household loans in the eurozone declined at the fastest rate ever recorded.  Why are European banks holding on to their money so tightly right now?

#5 The number of unemployed jobseekers in France has just soared to another brand new record high.

#6 Economies all over Europe are either showing no growth or are shrinking.  Just check out what a recent Forbes article had to say about the matter…

Italy’s economy shrank by 0.1% in the first three months of 2014, matching the average of the three previous quarters. After expanding 0.6% in Q2 2013, France recorded zero growth. Portugal shrank 0.7%, following positive numbers in the preceding nine months. While figures weren’t available for Greece and Ireland in Q1, neither country is showing progress. Greek GDP dropped 2.5% in the final three months of last year, and Ireland limped ahead at 0.2%.

#7 A few days ago it was reported that consumer prices in Japan are rising at the fastest pace in 32 years.

#8 Household expenditures in Japan are down 8 percent compared to one year ago.

#9 U.S. companies are drowning in massive amounts of debt, but the corporate debt bubble in China is so bad that the amount of corporate debt in China has actually now surpassed the amount of corporate debt in the United States.

#10 One Chinese auditor is warning that up to 80 billion dollars worth of loans in China are backed by falsified gold transactions.  What will that do to the price of gold and the stability of Chinese financial markets as that mess unwinds?

#11 The unemployment rate in Greece is currently sitting at 26.7 percent and the youth unemployment rate is 56.8 percent.

#12 67.5 percent of the people that are unemployed in Greece have been unemployed for over a year.

#13 The unemployment rate in the eurozone as a whole is 11.8 percent – just a little bit shy of the all-time record of 12.0 percent.

#14 The European Central Bank is so desperate to get money moving through the system that it has actually introduced negative interest rates.

#15 The IMF is projecting that there is a 25 percent chance that the eurozone will slip into deflation by the end of next year.

#16 The World Bank is warning that "now is the time to prepare" for the next crisis.

#17 The economic conflict between the United States and Russia continues to deepen.  This has caused Russia to make a series of moves away from the U.S. dollar and toward other major currencies.  This will have serious ramifications for the global financial system as time rolls along.

#18 Of course the U.S. economy is struggling right now as well.  It shrank at a 2.9 percent annual rate during the first quarter of 2014, which was much worse than anyone had anticipated.

But if U.S. economic numbers look a bit better for the second quarter, that doesn't mean that we are out of the woods.

As I have stressed so many times, the long-term trends and the long-term balance sheet numbers are far, far more important than the short-term economic numbers.

For example, if you went to the mall today and spent a thousand dollars on candy and video games, your short-term "economic activity" would spike dramatically.  But your long-term financial health would take a significant turn for the worse.

Well, when we are talking about the health of the U.S. economy or the entire global financial system we need to keep the same kinds of considerations in mind.

As for the United States, whether the level of our debt-fueled short-term economic activity goes up a little bit or down a little bit is not what is truly important.

Rather, the fact that we are nearly 60 trillion dollars in debt as a society is what really matters.

The same thing applies for the globe as a whole.  Right now, the citizens of the planet are more than 223 trillion dollars in debt, and "too big to fail" banks around the world have at least 700 trillion dollars of exposure to derivatives.

So it doesn't really matter too much whether the short-term economic numbers go up a little bit or down a little bit right now.  The whole system is an inherently flawed Ponzi scheme that will inevitably collapse under its own weight.

Let us hope that this period of relative stability lasts for a while longer.  It is a good thing to have time to prepare.  But you would have to be absolutely insane to think that the biggest debt bubble in the history of the world is never going to burst.

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