Archive - Jul 16, 2013

For those who don't eat or use energy: feel free to stop reading now - your inflation came in just as expected, at 0.2% up from May, and 1.6% higher compared to a year ago. However, those unlucky few who are forced to eat, use and A/C and/or commute, your inflation just saw its biggest monthly hedonically-adjusted jump (don't forget the deflationary impact of that 80 inch LCD TV you have zero intention of buying), or 0.5%, since February's 0.7% and well above the 0.3% expected. This was driven by a 6.3% surge in gasoline prices, and a nat gas price index soaring 11.7% leading to a 3.4% increase in Energy prices, even as the Food increase of 0.2%, tied for the highest since December 2012 was subdued. And while non-food and energy components did not see major spikes, June apparel prices jumped 0.9%, the highest since 2012, as did Medical Care Commodities and Services, rising 0.5% and 0.4% respectively, both posting the highest M/M jump since well into 2012.

Goldman is baaaaaack.... if only in soaring compensation.

While KO just reported EPS in line with guided down expectations of $0.63, it was the top line where the behemoth missed, printing $12.75bn on expectations of $12.97bn. The company promptly admitted that Q2 volumes were weak but just as has been the case with every other company, the biggest culprit promptly emerged: the weather even as it had to admit that not all was well in the world: "Our second quarter volume results came in below our expectations, reflecting an ongoing challenging global macroeconomic environment and unusually poor weather conditions in the quarter." To the surprise of nobody except the Fed Chairman, sellside analysts and the C-suite, the surging USD in the quarter did very little to help profitability:" Currency was a 2% headwind on comparable net revenues and a 3% headwind on comparable operating income in the quarter." Finally, wrapping it all up, when all else fail keep the hopium: "Despite the headwinds in the quarter, we are committed to improving upon our results, with current dynamics leading us to believe that our performance will be better in the second half of the year." That's ironic because that's what everyone else "believes" about everything else.

• India Joins Brazil to China in Efforts to Tighten Liquidity (BBG)
• Seven dead as police and protesters clash in Egypt (Reuters)
• U.S. senators fail to cut deal, head for showdown on filibuster (Reuters)
• Gasoline Tankers Beating Crude for First Time on Record (BBG)
• Smithfield's China bidders plan Hong Kong IPO after deal (Reuters)
• Bitcoin ETF plan struggles to find support (FT)
• Big Home Builders Gobble Up Rivals Starved for Cash (WSJ)
• Putin wants Snowden to go, but asylum not ruled out (Reuters)
• Zimmerman's lawyer calls prosecutors 'disgrace' to profession (Reuters)
• McDonald’s to bring Big Mac to Vietnam (FT)
• Korean Pilots Avoided Manual Flying, Former Trainers Say (BBG)

Fear not US: with a Q2 GDP of under 1% now all but assured, and with all economic data reporting now a global bizarro day farce, you will have a chance to take the torch from Europe in the ugliest girl category, and push the S&P to a new record intraday high today following what should be assured epic misses in the Industrial Production print (exp. +0.3%), Cap Utilization and the NAHB housing market index which is set to tumble now that any retail demand for housing was promptly killed following the recent spike in rates. In addition to a relatively lite economic docket, we get the all systematically important hedge fund, Goldman Sachs, reporting which is expected to announce a 21% q/q drop in revenues, led by lower gains in Investment Lending (i.e. prop), offset by 12% drop in operating expenses. Of course, nothing fundamental actually matters as markets continue to be on ultra low-volume, "drift higher" autopilot until tomorrow's Ben Bernanke semi-annual muppet show  in Congress, when he is expected to refill the hopium trough once more and finally send the S&P above 1700 on central planning.