Archive - Jul 1, 2013 - Story

While last night's Tankan manufacturing reports met lowered expectations, it seems the reality of the domestic Japanese economy remains as bleak as ever. As Nikkei reports, Japan's domestic sales of new cars, trucks, and buses declined 15.8% for a year earlier in June for the second consecutive month. Even if one argues that Abenomics goal is not just boosting the domestic economy, total Japanese car sales were down almost 11% YoY as Honda saw its sales drop a stunning 40.7%. The latest figures continue this year's downward trend and while some blame the particularly sharp drop on fewer selling days in June, the auto dealer's association also said reflects the "ongoing severe" situation in the domestic market.

There is no European Banking Union. This is a good place to start. It does not exist which is why all of the ballyhoo and discussion in the Press is of such little importance. This grand scheme is nothing more than theory at this point and not a very good theory at that.

With over a million people crowded into the streets of Cairo (and 16 reported dead and 781 injured according to The Jerusalem Post), the situation in Egypt is becoming more unstable. Amid cheers of "the people demand the fall of the regime," protesters set fire to and ransacked the Muslim Brotherhood's main offices all over Egypt. Many saw this as another victory towards their goal of Egypt not being ruled under Islamic law noting, that they "feel victorious, but we'll only have truly won once Morsi leaves." It seems the pressure is building as five Egyptian ministers have just resigned amid the growing chaos.

Back in April 2012 we first suggested - to loud jeers by the "pundits" who were convinced there is no chance in hell of it happening - that Goldman's take over of the world's central bank triumvirate: the NY Fed (Bill Dudley), the ECB (Mario Draghi) and the Bank of England, would soon be completed with Mark Carney taking over the world's oldest central bank located on Threadneedle street. Today, this process has concluded and we have photographic evidence. Behold Goldman's Mark Carney attending his first Monetary Policy briefing (observe Michael Cross, Head of Foreign Exchange, and Executive Director for Markets, of Fleecebook fame sitting on the lower left).

First it was Research In Motion, then in an act of desperation (remember, it's not GMAC, it's Ally Bank although it can't IPO no matter what) it changed its name to Blackberry. And while we doubt it will happen, perhaps today's plunge of the stock price back to single digits should result in the final and correct name of the company that may have run out of kitchen sinks: RedBerry.

Think gold and silver were the worst performing financial asset in June? Think again: that dubious distinction falls to the Bovespa, the Shanghai Composite and the Greek stock market index, all of which tumbled more than the precious metal complex did in the past month. Yet what an odd month for hard assets - on one hand WTI, Corn and Brent were the best performing assets, while gold, silver, copper and wheat tumbled.

• Pretty much as expected from George W. Bush: Edward Snowden ‘damaged’ security (Politico)
• Gotta love the Keynesian-Monetarist religion: True 'Bullievers' Are Still Sweet on Japan (WSJ)
• Canadian Takes Reins at Bank of England (WSJ)
• Egypt streets quiet, political standoff goes on (Reuters)
• Private Banks Leave Switzerland as End of Secrecy Hurts (BBG)
• How Next Debt-Ceiling Fight Could Play Out (WSJ)
• Easy Money Is Still Central (WSJ)
• Lew Says China Needs Market Policies and Stop Spying (BBG) - China replies with the same
• Ireland Preparing Plan to Tap Euro-Area Rescue Fund, Noonan Says (BBG)
• Poll shows strong shift to Australian PM Rudd, new ministry named (Reuters)

#BREAKING France's Hollande tells US to 'immediately stop' spying

— Agence France-Presse (@AFP) July 1, 2013

A busy week, with a bevy of significant data releases, starting with the already reported PMIs out of China and Europe (as well as unemployment and inflation numbers from the Old World), the US Manufacturing and Services PMI, another Bill Dudley speech on Tuesday, US factory orders, statements by the ECB and BOE, where Goldman's new head Mark Carney will preside over his first meeting, and much more in a holiday shortened US week.

Following the Friday plunge in the ISM-advance reading Chicago PMI, it was a night of more global manufacturing data, which started off modestly better than expected with Japanese Tankan data, offset by a continuing decline in Chinese PMIs (which in a good old tradition expanded and contracted at the same time depending on whom one asked). Then off to Europe where we got the final print of the June PMI which continued the trend recent from both the flash and recent historical readings of improvement in the periphery, and deterioration in the core. At the individual level, Italy PMI rose to 49.1, on expectations of 47.8, up from 47.3; while Spain hit 50 for the first time in years, up from 48.1, with both highest since July and April 2011 respectively. In the core French PMI rose to a 16-month high of 48.4 from 48.3, however German PMI continued to disappoint slowing from 48.7, where it was expected to print, to 48.6. To the market all of the above spelled one thing: Risk On... at least until some Fed governor opens their mouth, or some US data comes in better than expected, thus making the taper probability higher.