Archive - Aug 14, 2013 - Story

Over the past several years, alongside the increasingly more "hedonically" doctored government inflation data, the Producer Price report has slowly but surely lost its significance. Today's report was no different: according to the BLS' seasonal adjustments, July PPI data was unchanged, dropping from the 0.8% increase in June and missing expectations of a 0.3% increase. This was driven by a -0.2% drop in energy finished good prices after a surge of 2.9% and 1.3% in energy prices in June and May, with food prices unchanged on the month. Core PPI excluding food and energy was also virtually unchanged at 0.1% on expectations of a 0.2% increase. And while the tapering in PPI inflation will likely be concerning to the Fed, the reality is that the unadjusted Y/Y increase was 2.1%, or in line with where it should be. Of course, we use the term "reality" loosely: anyone who thinks prices have increased only 2% over the past year, doesn't drive, eat or rent.

Once upon a time there was a Twitter-based, pump-and-dumping daytrading bucket shop posing as a "successful hedge fund manager" also known as Davian Letter/Davian Capital Advisors run by an Ohio gentleman known as Anthony Davian, which for reasons unknown even managed to run outside capital (somehow raking up to $1.5 million in idiot AUM), and which didn't like Zero Hedge much.  That's ok because the feeling was mutual - we had advised the SEC in late 2009 that the Davian operation was nothing but a ponzi scheme. A few years later, said outside capital is gone, and moments ago, following a four year delay since our notice, the SEC finally acted on our suggestion and charged Anthony Davian with fraud.

As we noted in the previous post discussing the inevitable pre-civil war crack down on pro-Mrusi protesters, the only thing that matters, at least to the "developed" West, is how the overnight events in Cairo impact risk, i.e., markets and stocks. Moments ago we got the first take, courtesy of Noah Capital Markets. The conclusion: Sell Egypt.

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• Software that hijacks visits to YouTube uncovered (FT)
• Chinese Billionaire Huang Readies Iceland Bid on Power Shift (BBG)
• China to launch fresh pharmaceutical bribery probe (Reuters)
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The amusing news overnight was that following slightly better than expected Q2 GDP data out of Germany (0.7% vs 0.6% expected and up from 0.0%) and France (0.5% vs 0.2% expected and up from -0.2%), driven by consumer spending and industrial output, although investment dropped again, which meant that the Eurozone which posted a 0.3% growth in the quarter has "emerged" from its double dip recession. The most amusing thing is that on an annualized basis both Germany and France grew faster than the US in Q2. And they didn't even need to add iTunes song sales and underfunded liabilities to their GDP calculation - truly a miracle! Or perhaps to grow faster the US just needs higher taxes after all? Of course, with the all important loan creation to the private sector still at a record low, and with the ECB not injecting unsterilized credit, the European depression continues and this is merely an exercise in optics and an attempt to boost consumer confidence.

As was reported over the weekend, it was only a matter of time before the Egyptian police began its violent crackdown on protesting pro-Mursi supporters across Egypt. But after the specified ETA came and went on Monday morning, most thought that this was yet another false alarm. It appears it was only delayed until Wednesday. Overnight, depending on the source one reads, Egyptian security forces killed anywhere between 43 and hundreds people when they cleared a camp of Cairo protesters who were demanding the reinstatement of the deposed Mohamed Mursi. There was no official confirmation of the deaths at Rabaa al-Adawiya, in northeast Cairo, where thousands of Mursi supporters awoke to police helicopters circling over the site. A second camp near Cairo University was swiftly cleared in the early morning. So is this the final step that will ultimately catalyze what has been an almost preordained civil war, with or without but most likely with America's blessing (after all the deficit spending surge so needed for the untaper won't happen on its own)?  The answer should be appearing promptly.