It’s been nearly three weeks since Michael Hastings was killed in a fiery car accident in West Los Angeles. The award-winning journalist earned his stripes as a wartime reporter and captured fame with his 2010 Rolling Stone story that forced General Stanley McChrystal to resign as commander of the US forces in Afghanistan. An eyewitness at the scene, Jose, employed at nearby business ALSCO Inc said, the car was travelling very fast and he heard a couple explosions shortly before the car crashed. In fact, the explosion was so intense that it took the LA County assistant corner, Ed Winter, two days to identify the burned-beyond recognition body of Hastings. Officials confirm that an autopsy has been performed, but the cause of death is pending. LAPD media spokesperson Lieutenant Andrew Neiman said, “it will take several weeks to get the toxicology results.” By stark contrast, in Italy, ‘Sopranos’ star James Gandolfini’s family received the toxicology report within a few days.
Ever wondered what is in your "favorite" McDonald's meal? Then today is your lucky day - the following table from BusinessWeek shows all McDonald’s burgers, sandwiches, and salads broken down into their nutritional components, as listed on the McDonald’s website. All sandwiches (except Southern Style Crispy Chicken), McWraps, and salads are designated by McDonald’s as "Premium." For obvious reasons, the calorie count has been omitted.
- China, the single biggest contributor to global growth over the past decade, slowing markedly.
- World trade now flirting with recession.
- OECD industrial production in negative territory YoY.
- Southern Europe showing renewed signs of political tensions as unemployment continues its relentless march higher and tax receipts continue to collapse.
- Short-term interest rates almost everywhere around the world that are unable to go any lower, even as real rates start to creep higher.
- Valuations on most equity markets that are nowhere near distressed (except perhaps for the BRICS?).
- A World MSCI that has now just dipped below its six month moving average.
- A diffusion index of global equity markets that is flashing dark amber.
- Margins in the US at record highs and likely to come under pressure, if only because of the rising dollar.
Nothing like good ole' Goldman to brighten up things with a wink and a smile just as the economy is sliding, earnings are retrenching (and declining excluding pension underfunding adjustments), cash flow is negative and revenues are poised to double dip.
Even if the last thing the tapering US "recovery" needed is a surge in energy costs, it may soon be getting them following yet another news flashback, this time to the 2010 GOM disaster. Just headlines for now from Bloomberg:
- U.S. IS RESPONDING TO A LOSS OF WELL CONTROL IN GULF OF MEXICO
- GULF OF MEXICO EVENT OCCURRED AT SHIP SHOAL BLACK 225 PLATFORM
- GULF SITE POSSIBLE SHEEN IS OVER 4 MILES WIDE BY 3/4 MILE LONG
- ENERGY RESOURCES TECHNOLOGY GULF OF MEXICO OWNS PLATFORM: U.S.
- U.S.: COMPANY ASSESSMENT SAYS GAS FLOWING FROM GULF WELL
WTI meanwhile up another $0.70 just shy of $105. Time to rid the world of evil speculators once and for all.
Anyone who followed today's trading action with a very distinct sense of summer of 2008 deja vu dread, where soaring crude led to just one thing, soaring stocks, they are forgiven, because this is precisely how one can summarize today's action. In a day devoid of any news (except for the JOLTS survey of course, which confirmed the gaming of NFP payroll numbers), in which bonds did absolutely nothing, with the 10 Year trading in a very tight range just shy of 2.65%, it was all about low-volume levitating equities and the energy complex.
Jeff Gundlach may not be present at today's DoubleLine live webcast titled ominously enough "The End of QE as We Know It", which will be led by the firm's Jeffrey Sherman, but the firm is sure to provide some guidance on how the recent bond rout has impacted bond funds, and what the future of risk duration is in a time when Bernanke seems hell bent on pushing everyone out of bonds and into stocks.
The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham – the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. After a four-year reflationary rally in just about everything, and now with an emerging interest rate shock, the second half of 2013 appears to have more downside risk than upside. Have global stock markets started to discount this possibility?
While we have already extensively deconstructed the quality components of jobs in the US, showing first that in June 240K full time jobs were lost, even as 360K part-time jobs were "gained", and second that so far in 2013 only 130K full time jobs have been added offset by 557K part-time jobs, we had sinking suspicions that there was something off with the quantity component as well: after all, at an average monthly gain of precisely 201.8K jobs in the past six months (or in 2013), this number seemed just a little too perfect considering the Fed's implicit target of generating just over 200K jobs in a half year period before it begins tapering, which in light of declining gross issuance and less monetizable instruments, has been the Fed's goal all along. Today, courtesy of the monthly JOLTS survey we got just the confirmation we needed that, indeed, the official non-farm payroll number as per the Establishment Survey has been substantially off to the tune of a whopping 40% above what is quantitatively happening in reality.
If you’ve wondered what the next recession might bring in the way of U.S. corporate earnings, you don’t have long to wait for an answer. Analysts expect the 30 companies of the Dow Jones Industrial Average to post a meager 0.7% top line growth for the upcoming Q2 2013 reporting season. If recent history – think all the way back to Q1 2013 – is any guide, that means we’ll actually see a decline in revenues for the just completed quarter once all the numbers are out. And with Q1 posting an average negative 0.6% top line comparison to last year, that will constitute a “Revenue recession” for these large and generally well-managed multinationals. If that makes you question why U.S. stocks are still up 15% on the year, look to both corporate profits (still at record highs) and the anticipation for a better second half. Hope may not be a strategy, as the old saying goes, but it certainly moves markets.
Just more meangingless drivel form a clueless, paid for rating agency (which recently disclosed it would plead "puffery" in its defense against the US lawsuit) now that the ECB is intent on actually lowering the EURUSD, because unlike last year, there is no (immediate) fear of redenomination risk as a result of a sliding EURUSD. Thank you Japanese carry trade.
We live in a money paradigm. All things are delivered for money (trade). All goods are compared to money (prices). Then we live and die by our trade and the money-signals that prices give us. Stop trade, wobble the prices around, and we starve by millions. We also swim in a consumer paradigm. We work to get people halfway around the world buy our stuff so that we can buy stuff back from them. Why? If you want an apple, which is easier: to work, trade that work for money through the online banking system, have money load that apple on a tractor in New Zealand, ship it to a warehouse, a cargo ship, a truck, a store, your car, then your mouth? Or is it easier just to go in the back yard and pick one? Worried about prices? All those middle men must be paid, from New Zealand to New Hampshire. Which do you think is cheaper? Which do you think is more reliable? Which do you think tastes better?
As reported yesterday when we showed the very special rate that the 3 Year was trading in repo (-1.45%, same as today), many were looking to today's 3 Year auction to relieve some of the collateral shortage issues that have developed across various asset classes. And sure enough, following last month's abysmal 3 Year auction, today's pricing of $32 billion in 3 Year paper was like night and day compared to a month ago.
As of last Friday, gold has now fallen as much 35.4% (based on London PM fix prices) over 96 weeks. But if you're like us, you still recognize that the core reasons for investing in gold haven't changed. People who sold their gold recently made a shortsighted decision. Before too long precious metals will rebound - and probably in a big way. But when? Does history have any clues about how long we'll have to wait for that rebound?
Russia to United States (et al): "you are lying."
- MOSCOW'S U.N. ENVOY SAYS RUSSIAN ANALYSIS INDICATES SYRIAN REBELS, NOT ARMY, CARRIED OUT ALEPPO CHEMICAL ATTACK ON MARCH 19
The ball is now in the free world's court.