Will The Oil Patch Bust Trigger Recession?

This seemingly inexhaustible credit line is now drying up, with severely negative consequences for oil producers with debt that's coming due. The row of dominoes swaying unsteadily in these stiff winds won't take much to topple.

Fool Me Once...

Once again, US equity markets are algorithmically surging as Treasury bonds are aggressively bid. It didn't end well yesterday, and we suspect won't today either...

Ongoing Greece Deposit Run Forces ECB To Boost Greek ELA Ceiling Yet Again

Despite the imploring of Greek bankers for Greeks to "take your money out of your chests and houses – which are not safe in any case – and deposit at banks," it appears the Greek bank deposit run continues. As The ECB just announced another €900 million increase in Emergency Liquidity Assistance, strongly suggesting that in the 2 days since the last increase, banks are once again insolvent facing a liquidity crunch as the "banks are trustworthy" propaganda falls on very deaf Greek ears.

WTI Back Below $50 After Inventory Build Takes Crude Stocks To Highest In 80 Years

Following yesterdsy's API data, DOE has confirmed a 2.5 million barrel build in crude inventory - the highest stocks of crude at this time of year in at least 80 years. This was accompanied by a very small drop in production and has squeezed WTI back below $50 (although there was an algo flash-smash up to $50.50 right after the data).

USDJPY Spike Sends S&P Surging Back Into The Green

Within 50 minutes of the US cash market open, the S&P 500 has been ridiculed all the way back to unchanged - erasing all the losses from tech titan turmoil overnight. The reason is simple! USDJPY was manhandled up to 124.00 just as we predicted... the question is - how much further will the BoJ push it?

Existing Home Prices Hit Record; Sales Soar To 8 Year High

Houses have become stocks... the higher the price, the more demand (especially as the government has your back with low down-payment loans and the re-emergence of IOs). With Existing Home Sales soaring to a SAAR of 5.49 million, the highest since early 2007, the fact that median home prices are at an all-time high appears to be any problem for the releveraging American (or Chinese) homebuyer.

Mind The Dow Divergence - Transports Are Signaling A Slump

The US economy is widely seen as the world’s best performing major economy at the moment. However, so far this year most economic data have actually been somewhere between very soft and lackluster. The steep fall in truck tonnage is definitely an alarm signal. It indicates that inventories are already too high relative to demand, something that seems to be confirmed by recent industrial production and retail sales data. Given that tonnage has continued to decline since the end of Q1, one can no longer blame the port strikes either. To be sure, the US economy is not yet signaling an imminent recession. At best though it is muddling through at a very subdued pace. It probably won’t take much to push it over the edge.

The Oldest Trick In The Accounting Book Is Back: How Coke Just "Beat" EPS Despite Sliding Revenues And Profit

If KO had applied the proper tax rate of 28.7% to its non-GAAP pre tax income of $3.6 billion, the EPS number it would get is not $0.63, but $0.58. Why is this key? Because Wall Street's consensus estimate for KO EPS was $0.60, or right in the middle. And that, ladies and gentlemen, is how both Intel and now Coca Kola used the oldest trick in the accounting book to "beat" EPS: by using an unrealistically low tax rate.

Tsipras Fights To Keep Greek Bailout Alive Amid Party Rebellion: Full Vote Preview

The Greek parliament will vote on a second batch of prior actions on Wednesday including EU rules on bank resolutions and civil justice reform amid protests from public sector union ADEDY which has pledged to "continue the battle so that the new barbaric bailout does not pass and is overturned," and so that Greece does fall under the "neocolonial control" of Brussels. Today's vote is a litmus test for Syriza. That is, the key issue is whether the party splinters further or if some of those who broke with Tsipras last week return to the fold on Wednesday.

Frontrunning: July 22

  • Stocks sour as Apple results leave bitter aftertaste (Reuters)
  • Awkward Alliance Running Germany Exposed by Greek Crisis (BBG)
  • Apple Faces Old Question of What’s Next After Record Profit (BBG)
  • Lawmakers, White House Explore Tax Revamp for U.S. Firms Overseas (WSJ)
  • Digital Misfits Link JPMorgan Hack to Pump-and-Dump Fraud (BBG)
  • More Debt Traders at Risk as European Banks Report Results (BBG)
  • Iran rejects sanctions extension beyond 10 years (Reuters)

Apple, Microsoft Plunge Drags Global Markets Lower, Oil Resumes Slide

While this week has been, and continues to be, devoid of macro updates, yesterday's flurry of mostly disappointing earnings releases both before and after the open, including some of the biggest DJIA companies as well as the current and previously biggest and most important companies in the world, AAPL and MSFT, both of which came crashing down following earnings and forecasts that were well short of market expectations, came as a jolt to a market that was artificially priced by central bank liquidity and HFT momo algos beyond perfection. Add to that yesterday's downward revision to historical industrial production which confirmed the US economy is a step away from recession, as well as last night's Crude API inventory build which is once again pressuring WTI lower and on the verge of a 49 handle, and perhaps the biggest question is why are futures not much lower.

Greek Prime Minister Asked Putin For $10 Billion To "Print Drachmas", Greek Media Reports

In what may be the biggest story of the year, if confirmed, Greek newspaper To Vima reports that Greek Prime Minister Alexis Tsipras has asked Russian President Vladimir Putin for 10 billion dollars in order to print drachmas. But the real shocker: on the night of the referendum, word came from Russia that Putin did not want to support Greece’s return to the drachma. After that, Tsipras had no choice left but to “surrender” to German Chancellor.

The American Nightmare: The Tyranny Of The Criminal Justice System

Justice in America is not all it’s cracked up to be. On paper, you may be innocent until proven guilty, but in actuality, you’ve already been tried, found guilty and convicted by police officers, prosecutors and judges long before you ever appear in a courtroom. Chronic injustice has turned the American dream into a nightmare.

Chinese Stocks Slide Into Red After Business Sentiment Crashes To 6-Year Lows

After a modesly positive open, Chinese stocks have pushed back into the red after Chinese business sentiment collapsed in July. The MNI China Business Indicator fell a straggering 8.8pts to 48.8 in July (below 50 signifying pessimism) - the lowest since January 2009. It appears the encouraging bounce after the massive creduit injections into June has been eviscerated and future expectations also dropped 6.4 to 54.1 in July (below the long-run average). While bad news is good news for much of the rest of the world, for China, as it continues to try to project a strong underlying economy to sustain its still extremely rich stock market, bad news is bad news.