Category: zerohedge

This is the 17th month in a row of contraction for Dallas Fed’s manufacturing survey as the headline print plunged to -20.8 from -13.9 (missing expectations of a hopeful bounce to -8.0 by 6 standard deviations). Despite the unequivocally good rebound in oil prices, sentiment in Dallas remains dismal with new orders crashing as even ‘hope’ has now given way to realism as the 6-month outlook tumbles back into negative territory.

 

 

This is a 6 standard deviation miss…

 

It appears higher oil prices are not helping…

 

As The Dallas Fed reports,

Texas factory activity declined in May after two months of increases, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 5.8 to -13.1, hitting its lowest reading in a year.

 

Other measures of current manufacturing activity also reflected contraction this month. The new orders index fell more than 20 points to -14.9 after pushing into positive territory last month. The growth rate of orders index has been negative since late 2014 and fell to -14.7 in May after climbing to near zero in April. The capacity utilization and shipments indexes returned to negative territory after two months of positive readings, coming in at yearlong lows of -11.0 and -11.5, respectively.

 

Perceptions of broader business conditions were more pessimistic this month. The general business activity index declined from -13.9 to -20.8, and the company outlook index fell 10 points to -16.1.

 

Latest readings on employment and workweek length indicated a fifth consecutive month of contraction in May. The employment index moved down three points to -6.7. Sixteen percent of firms noted net hiring, and 22 percent noted net layoffs in May. The hours worked index posted a double-digit decline from its April reading, coming in at -11.8.

Charts: Bloomberg

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In its ubiquitous manner, crude futures decided to try and run the stops at the US equity open but were unable to get to $50 (49.984 in July WTI) before fading back a little. Ths driver – according to the narrative-du-jour – is turmoil in Libya and ongoing Nigeria and France disruptions, which are both offsetting a surge in OPEC production to its highest level since 2008 in the minds of the machines. "The market is pretty much on hold until we get all this information," says Deutsche Bank's Jens Pedersen of the data dump and OPEC meetings this week. "We need to get that out of the way to see if there is a reason for oil to go higher."

OPEC production rose to 32.575m bbl/day – its highest since 2008…

 

And the result – a machine-driven meltup, which however failed to tag $50 stops for now…

 

As Bloomberg reporets, key stories shaping mkt today: Libya guards take control of town linked to 2 oil ports from Islamic State militants. French refinery strikes continue; potential for strike action seen in Norway, Brazil

Libya’s Petroleum Facilities Guard captures town of Bin Jawad after clashes w/ Islamic State: spokesman

• Bin Jawad is a crossing point to oil ports of Es Sider and Ras Lanuf, which have been closed since Dec. 2014
• Petroleum Guards seize Nofaliyeh town from IS

French Refinery Strike…

• Exxon’s Gravenchon, Fos Refineries in France operating normally: spokeswoman
• Total says 216 French gas stations completely out of stock, another 337 stations partially out of gasoline out of a total of 2,200
• La Mede refinery operating at 75% of capacity while 4 others are halted; Total operates 5 of France’s 8 refineries

Potential Strike Action…

• Norway oil industry faces risk of strikes after talks between oil cos., Industry Energy union broke down in less than a minute
• “The differences were so obvious so early on that it was just as well to make an appointment with the National Mediator right away rather than sit here for two days,” says union leader Leif Sande
• Brazil FUP oil union plans 1-day national strike on June 10 to protest against acting president Michel Temer
• Says workers will lose benefits under new administration, Petrobras could be privatized

Other Headlines…

• Russia said to export 28 cargoes of ESPO crude for July, up from 23 in June: 4 people w/ knowledge
• Japan crude imports rise 3.4% y/y to 16.54m kls in April: METI
• Oman crude official price for July set at $44.31, highest this yr; up from $39.40 in June: DME
   

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The Conference Board's consumer confidence measure has hovered around the 95 level for the last 6 months (as gas prices dipped and ripped, as stock prices dipped and ripped, and as political chaos reigned). This 'stability' is in stark contrast to other surveys of confidence such as Bloomberg's and Gallup's which are both at multi-month lows… until today. Consumer Confidence plunged to 92.6 (missing expectations of 96.1 by the most since November). May's dismal print (a 3 sigma miss) is below the lowest of 68 economist estimates as expectations slipped modestly but Present Situation tumbled with optimism on jobs sliding to 6-month lows.

Finally, government confidence data declines to other survey's realities…

Consumers’ assessment of current conditions weakened in May. The percentage stating business conditions are “good” improved from 24.2 percent to 25.9 percent. However, those saying business conditions are “bad” also increased, from 18.2 percent to 21.6 percent. Consumers’ appraisal of the labor market was less favorable. The proportion claiming jobs are “plentiful” was virtually unchanged at 24.3 percent, however those claiming jobs are “hard to get” increased from 22.8 percent to 24.4 percent.

Consumers were less optimistic about the short-term outlook than last month. Those expecting business conditions to improve over the next six months increased from 13.8 percent to 15.1 percent, but those expecting business conditions to worsen also rose, from 10.8 percent to 11.6 percent.

Consumers’ outlook for the labor market was less favorable. Those anticipating more jobs in the months ahead was virtually unchanged at 12.8 percent, but those anticipating fewer jobs increased from 16.7 percent to 18.1 percent.

“Consumer confidence declined slightly in May, primarily due to consumers rating current conditions less favorably than in April,” said Lynn Franco, Director of Economic Indicators at The Conference Board.

 

“Expectations declined further, as consumers remain cautious about the outlook for business and labor market conditions. Thus, they continue to expect little change in economic activity in the months ahead.”

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The Huffington Post has removed an article on its website Sunday, claiming that the FBI plans to indict Hillary Clinton on federal racketeering charges.

As Breitbart first reported, HuffPo freelance contributor Frank Huguenard, a scientist and public speaker, posted an article on the site’s blog entitled “Hillary Clinton to be Indicted on Federal Racketeering Charges.” Huguenard wrote:

The Racketeer Influenced and Corrupt Organizations Act (RICO) is a United States Federal Law passed in 1970 that was designed to provide a tool for law enforcement agencies to fight organized crime.  RICO allows prosecution and punishment for alleged racketeering activity that has been executed as part of an ongoing criminal enterprise.

 

Activity considered to be racketeering may include bribery, counterfeiting, money laundering, embezzlement, illegal gambling, kidnapping, murder, drug trafficking, slavery, and a host of other nefarious business practices.

 

James Comey and The FBI will present a recommendation to Loretta Lynch, Attorney General of the Department of Justice, that includes a cogent argument that the Clinton Foundation is an ongoing criminal enterprise engaged in money laundering and soliciting bribes in exchange for political, policy and legislative favors to individuals, corporations and even governments both foreign and domestic.

If accurate, this could be a terminal hit to Hillary’s presidential chances, and it is obvious why a left-leaning medium, and audience, would be disturbed by its content.

The piece was publicized on Twitter by conservatives including Clinton critic Jared Wyand:

???? BREAKING: Hillary Clinton to be indicted on Federal Racketeering Charges #RICO

FEDS threaten to go publichttps://t.co/mpM9XuT2zR

— Jared Wyand (@JaredWyand) May 29, 2016

It is unclear at this time whether the article was taken down due to editorial intervention happened to the article, or a technical glitch, although the article link now directs to a page that says “404” with a frownie face and the message “This is so embarrassing” after Huffington Post took the piece down Sunday.

A note at the bottom of the original article explains that “This post
is hosted on the Huffington Post’s Contributor platform. Contributors control their own work and post freely to our site. If you need to flag this entry as abusive, send us an email.”

It appears that many HuffPo readers found the article precisely that.

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Having wavered around the magical '50' level for much of the last year, bouncing off December plunge lows, Chicago PMI printed below expectations of 50.5 at a contractionary 49.3 – the 6th month of contraction in the last 12 months. With weakness in new orders (lowest since Dec 2015) and production (both back into contraction), MNI notes that on the heels of April's decline, the latest results show activity stumbling in the second quarter, following only moderate growth in Q1.

The 8th month of contraction in th elast 14..

As MNI reports, barring a solid revival in June, Q2 could be the weakest outturn since the fourth quarter of 2015 as the April-May Barometer average stood at just 49.9.

Stocks of finished goods fell deeper into contraction to the lowest since November 2009, and the seventh consecutive month in contraction. While a rebuilding over the coming months could support output, the underlying message appears to be that businesses are not confident about the outlook for growth, which makes some averse to stock building.

This lack of confidence was underlined by the answer to this month's special question which showed that 68.7% of panellists did not plan to increase business investment over the next six months.

The persistence of weak business conditions was blamed partly on efforts to keep businesses lean headed into the November US Presidential election. Others cited slowing in China and India and a reluctance to build inventories. Moreover, a mismatch between sales and operational planning was reported at some companies.

Charts: Bloomberg

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Carl Icahn appears to be a big fan of Brent Saunders. After Icahn was instrumental in placing his favorite CEO at the top of Forest Labs before it was acquired by Actavis several years ago – a deal which made then Forest Labs investor Carl Icahn hundreds of millions in profit – the billionaire investor is now doubling down on Saunders, and moments ago the billionaire investor announced that he has acquired a “large position” in Allergan, and confirms he is “very supportive of CEO Brent Saunders.”

Does this mean that Allergan, whose stock recently tumbled after the Pfizer deal was terminated due to Congressional intervention, is once again back in play?

From the release:

May 31, 2016

 

We have recently acquired a large position in Allergan and are very supportive of CEO Brent Saunders. We were instrumental in bringing Brent on board as the new CEO of Forest Labs a few years ago and worked cooperatively and constructively with him to help increase value for all Forest shareholders. Less than a year later Forest was acquired by Actavis (which subsequently merged with Allergan) resulting in massive gains for Forest shareholders. While we at that time disposed of our position in Forest, we still have always maintained great respect for Brent. We have every confidence in Brent’s ability to enhance value for all Allergan shareholders.

AGN stock is loving it.

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In what, if confirmed, would be a major move for Apple’s product development cycle, overnight Japan’s Nikkei reported that Apple is moving from its existing “innovation cycle” with a major iPhone refresh every two years to a three-year cycle. To wit:

Apple will likely take three years between full-model changes of its iPhone devices, a year longer than the current cycle. In a typical two-year term, fall 2016 was supposed to see a major upgrade. But the changes on the model to be launched this autumn will be minor, such as improved camera quality. 

According to Nikkei the move is prompted by two factors, and is “largely due to smartphone functions having little room left for major enhancements. A slowing market is another factor.“

In other words, Apple admits it may be nearing “peak technology” and more troubling, “peak demand.”

As it has done before, the Nikkei references the impact on the Japanese supply-chain. It also notes that the iPhone 7 “will look almost identical to the current iPhone 6 and offer relatively minor new features is consistent with other reports.”

The new version slated for this autumn will look almost identical to the current iPhone 6. Functions such as the camera, water resistance and battery capacity will likely be improved, and the headphone jack will be removed. Also, a high-end version of the model will give users better-quality photo capabilities via correction functions.

According to 9to5Mac, these include a KGI report last month stating that the design would be largely unchanged and that it would not have “many attractive selling points.”

As the Mac blog adds, “the claim will likely hurt AAPL stock, which has rebounded in recent weeks with help from a big investment from Warren Buffet’s Berkshire Hathaway.”

Bloomberg adds as much, noting that Dialog and AMS already fell on the report of an extended product cycle, and adds that in US trading, Apple and Apple suppliers may move on the report. AAPL was down 0.5% pre-market, Dialog Semiconductor down as much as 4.9% in European trading. Among the suppliers who may be impacted are Cirrus Logic, Qorvo, Skyworks, Broadcom, NXP Semiconductors, Knowles, Analog Devices

As for the new iPhone, 9to5 Mac adds that according to various claimed sketches, renders and photos seen, the iPhone 7 will be very similar in appearance to the iPhone 6 and 6s – right down to identical dimensions – followed by an all-glass phone for the iPhone 8.

Most troubling is the Nikkei suggestion that Apple is not expecting iPhone sales to return to growth until next year.

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Following February’s disappointing slowdown in home price appreciation, March’s S&P/Case-Shiller 20-City home price index stabilized, rising 5.43% YoY (beating 5.16% expectations by the most in 2 years). However, the national home price index slowed further from 5.32% YoY in Feb to 5.15% YoY in March with Seattle, San Francisco, and Denver seeing the greatest monthly increases.

 

Biggest beat in 2 years…

 

The March home-price gains follow a round of more timely data that showed purchases of existing and new homes and contract signings on previously owned houses all strengthened more than expected in April after the economy’s sluggish start to the year. Potential buyers still might be challenged by limited inventories, especially among lower-priced homes, while finding support from steady job gains and cheap borrowing costs.

“The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates,” David Blitzer, chairman of the S&P index committee, said in a statement. “Another factor behind rising home prices is the limited supply of homes on the market.”

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Submitted by Marc Faber via GloomBoomDoom.com,

WHEN A POLITICAL SYSTEM AUTHORIZES PLUNDER AND WHEN A MORAL CODE ENCOURAGES IT, MORAL DEGENERATION FOLLOWS SWIFTLY AFTER.

Montesquieu opined already in the 18th century that, “There is no greater tyranny than that which is perpetrated under the shield of the law and in the name of justice.”

The economist Jeffrey Sachs, recently penned an article entitled, The age of impunity. Sachs explains that, “Impunity means that the rich and powerful escape from punishment even when their malfeasance is in full view. Impunity is epidemic in America. The rich and powerful get away with their heists in broad daylight.”

Dubious practices, fraud and embezzlement are common during financial bubbles, which are usually created by central banks’ loose monetary policies and by a poor supervision of the financial sector.

Currently, there is a wide gap between GAAP earnings and “adjusted” earnings, which are usually reported to investors. In the first quarter of 2016, according to FactSet, the companies in the DJIA that "adjusted" their earnings inflated them on average by 28.9% over their earnings under GAAP…. According to Wolf Richter, “no one wants to see it. Instead, everyone wants to believe the sweet fairy tale spun by Wall Street and Corporate America.” Richter calls this phenomenon, “Consensual Hallucination.”

The Swiss psychotherapist Carl Jung opined that, “The wickedness of others becomes our own wickedness because it kindles something evil in our own hearts.”

The flood of money that central banks are creating pollutes the Western capitalistic system and free markets, as well as democracy. The consequences are anemic economic growth, deep social discontent, a culture of cheating, and moral degeneration. At the same time, “the bureaucracy is expanding to meet the needs of an expanding bureaucracy” (Oscar Wilde). Hardly a recipe for sustainable economic growth and rising standards of living.

via http://ift.tt/1P0Cw5a Tyler Durden

Traders gunned the market higher last week thanks to extremely low volume (most of Wall Street left early for the holiday weekend) and the usual performance (many funds have to record results at month end).

 

The S&P 500 has now slammed up against overhead resistance (red line). We are once again within spitting distance of the all-time highs.

 

 

Against this backdrop, earnings are in a free-fall. EPS are back at 2012 levels, while the S&P 500 is 70% higher than then:

 

 

This divergence is only getting worse. Of the 111 companies that have issued guidance for 2Q16, an incredible 80% are NEGATIVE.

 

More and more this environment feels like late 2007/ early 2008: when the economy was in collapse but stocks held up on hopes that the Fed could maintain the bubble.

 

The time to prepare for this bubble to burst is now. Imagine if you'd prepared for the 2008 Crash back in late 2007? We did, and our clients made triple digit returns when the markets imploded.

 

On that note, we are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

 

In it, we outline the coming crash will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

 

We are giving away just 1,000 copies of this report for FREE to the public.

 

To pick up yours, swing by:

http://ift.tt/1HW1LSz

 

Best Regards

 

Graham Summers

 

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