Archive - Jul 21, 2015

The company which was carrying the fate of not only the Dow Jones and the S&P 500 on its shoulders had taken the stairs up, and just took the elevator down.

"I held in my hand the Holy Grail for the Chicago Mercantile Exchange. The most influential economic mind of the twentieth century provided the CME with the intellectual foundation upon which to build its financial superstructure."

Unleash the talking head spin...

"The only thing we have to fear is the lack of fear itself..."

The one line item everyone looks for in every Greek forecast is what its debt will be now that reality is finally allowed to creep in. We have dutifully highlighted it on the chart below: it is now expected to hit 238% by 2018. But it was another number that caught our attention: Citi's estimate for Greek HICP (inflation) in 2017. 22.5%  In other words, Citi predicts that by 2017 Greece will have hyperinflation even if it remains in the Eurozone.

Surprise! Just days after the 'deal' to bring world peace a little closer amid much crowing by the Obama administration (ahead of Congress' 60-day decision process), Iranian Supreme Leader Ali Khamenei on Saturday vowed to defy American policies in a speech punctuated by chants of "Death to America" and "Death to Israel". As Reuters reports, US Secretary of State John Kerry said the speech was "if it is the policy, it's very disturbing, it's very troubling," seemingly surprised at the rhetoric.

You don’t hear it much, but the S&P 500 has been a bit of a “One trick pony” in 2015. No, it isn’t the 4% weighting in Apple that makes it such; it is the combination of a 15% weighting in Health Care AND that sector’s 12.9% return year to date.  When you compare the S&P 500’s price return year to date of 3.37%, you can see that the Health Care sector’s contribution is essentially just over half the market’s price return for 2015 (12.9 times 15% is 1.90 of that 3.37). Layer on the fact that 5 of the 10 industry sectors in the S&P 500 are still down on the year: Materials (-2.7%), Industrials (-2.9%), Telecomm (-0.7%), Utilities (-8.6%) and Energy (-9.7%). 

In the latest example of what happens when circular funding schemes begin to trip over each other, National Bank of Greece has refused to participate in an auction for paper issued by the bailout fund which is set to recapitalize the Greek banking sector. 

President of Greek Banks Association Louka Katseli appealed at the citizens to return their money to the banks. “Banks are absolutely trustworthy,” Katseli told Mega TV, “Let’s all help our economy... If you take your money out of your chests and houses – which are not safe in any case – and deposit at banks, this will enhance liquidity.” Katseli’s appeal triggered laughter among Greeks with one exclaiming “Ah sure! Banks will never see my money again, I prefer to buy tonnes of peanuts with it.”

If the Fed is concerned that a rate hike cycle might exacerbate the supposed drag on the economy exerted by the strengthening dollar and that tightening when the rest of the world is immersed in competitive devaluation could create FX headwinds for US exports, then why not nominate a currency strategist to the Fed board to weigh in on the subject? Well, as it turns out, that’s precisely what the Obama administration did on Monday.

Over the last 5 years, rent costs in the city of Oakland have doubled. At $2,807 per month it more expensive to live in Oakland now than it was in SanFrancisco in 2012, so one would expect the city to have 'cleaned up', and 'be safer'? However, as SFGate reports, the city laid off 80 officers today to help eliminate a $30.5 million budget deficit, prompting the department to announce that officers would no longer be dispatched to take reports for most nonviolent crimes. "With current levels of staffing, we are unable to respond to many lower-priority calls," said Officer Jeff Thomason, a police spokesman.

California's gasoline price premium to the rest of the nation is the highest on record, according to Bloomberg data. This, as OilPrice's Andy Tully notes, is in large part because an Exxon Mobil Corp. refinery in Torrance has been out of commission since an explosion there in February, and the state’s environmental regulations are hampering the company’s efforts to quickly get it back to full production. This situation is not expected to improve by year-end.

The Euro is up 1.3% - the biggest jump in 6 weeks - as the US Dollar is weakening against all the majors (except cable). The USD Index is down almost 1%, its biggest drop in 7 weeks...