Archive - Aug 13, 2015

Certain market realities were starkly exposed this week as a result of the China currency moves, Bloomberg’s Richard Breslow writes. As Keynes is supposed to have said, “When the facts change, I change my opinion. What do you do, Sir?” Yet markets have been lulled into relying on the belief that this is no longer the case, and even if it is, any change will be stage managed for the comfort of institutional money managers. Gone are the days when you had to guess at the Fed’s policy by interpreting weekly money-market operations. But that can’t be done in any practical sense.

Just as we warned earlier - and Goldman subsequently confirmed - the Q2 "stack'em-high" surge in inventories (which has juiced hype hope that America is back, baby!) has consequences. The Atlanta Fed just released its latest forecast for Q3 GDP growth, lowering it to just 0.7%, citing an inventory drag of -2.2 percentage points. The Fed estimate is now 75% below the street's consensus!!

With at least 50 dead and over 700 injured, it is no exaggeration to say that the massive explosion in the Chinese port of Tianjin is a total disaster. As the following stunning drone's eye views show heavily damaged homes, huge plumes of smoke, and completely burned-out cars cover this post-apocalyptic scene...

Honey, have you seen my trial balloons?

Some companies, particularly hedge funds looking for an edge, are having employees wear “biosensing wearable devices,” in order to collect detailed analytics about them and hopefully improve performance. “The idea that you can augment yourself with technologies will become absolutely commonplace and a natural progression.”

After years of moving lower, the past two quarters have seen a marked increase in Commercial & Industrial Nonperforming Loans.

Those who don’t think the US is heavily dependent on China as a market are delusional.

Total business inventories for June rose 0.8% MoM - the biggest rise since Jan 2013. Great news for Q2 GDP as we stacked 'em high, but as sales lagged dramatically, the inventory-to-sales ratio hit a new post-crisis high at 1.37, flashing a very recessionary level going forward (dampening hype hope for Q3 GDP). Once again it was autos that saw the biggest relative jump in inventories (+1.4% MoM) relative to sales (-1.5%).

Between a rather alarming three-day plunge and rampant accusations that Beijing entered the global currency wars solely to export China’s deflation and prop up its flagging economy, the PBoC had apparently seen enough. Cue an ad hoc, "forceful" press conference. Here is the full breakdown.

“Maybe this isn’t a great indication of the state of the economy.”

42 year low jobless claims and retail sales in line... sell sell sell. The Dow and S&P have given up all their overnight gains ahead of the open...

It appears efforts to form a coalition has failed as local nes report both the AKP and CHP will make separate statements from their party HQs.

Having missed expectations for 6 of the last 7 months, July retail sales printed a 0.6% rise, exactly in line with expectations of a 0.6% rise. The control group missed expectations, printing a 0.3% rise against expectations of a 0.5% rise. Year-over-year, retail sales growth hovers at weak levels strongly suggesting a recessionary environment, but the more watched MoM data leaves the door open for a September rate hike (i.e. not bad enough to warrant a delay) as it appears everyone is eating out with the biggest MoM and YoY rises seen in Food/beverage store sales.

Consider... Zero Interest Rate Policy and a 42-year low in the 4-week average initial jobless claims data... one of these things is not like the other... What Happens Next?