A recent court ruling giving cities and towns in New York State the authority to ban hydraulic fracturing (“fracking”) represents an enormous blow to the shale gas industry, which has been hoping to expand operations into the state for several years.
Global GDP growth expectations for 2014 have dropped 15% since the start of QE3 in Dec 2012... Global stocks are up 35% in that same period. At 2.67% GDP growth expectations are the lowest on record for 2014 and with MSCI World stocks at record highs the death cross has never been more crossed...
When the price of everything is rising, there's nothing more important that knowing the cheapest (and most expensive) places in the world to get a drink...
Having declared a caliphate, the terrorist group formerly known as ISIS (or ISIL) has decided a rebranding is in order. Since the group no longer recognizes the political distinction between Iraq and Syria, it has dropped the "Iraq" and "Levant" from its name, making it only the "Islamic State". The leader of the extremist group is looking to build his presence, as AP reports, Abu Bakr al-Baghdadi released a 19-minute tape demanding, "Muslims, rush to your state. Yes, it is your state."
“Economics is haunted by more fallacies than any other study known to man.” – Henry Hazlitt, Economics In One Lesson. The great Henry Hazlitt’s wise words came to mind while reading a recent New York Times post by George Mason economist Tyler Cowen who strangely observed that “The world just hasn’t had that much warfare lately, at least not by historical standards,” and “Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely.” As Forbes' John Tamny lambasts, "They’re ultimately only words, but Cowen’s about war theoretically boosting animal spirits are pretty disturbing ones..."
He may be "richer than you", but when it comes to cancer everyone is equal. Moments ago, Dow Jones and Bloomberg broke news that JPMorgan CEO Jamie Dimon has been diagnosed with throat cancer.
- J.P. Morgan JPM Chairman, CEO Jamie Dimon Tells Employees, Shareholders He Has Been Diagnosed With Throat Cancer, Condition Curable—J.P. Morgan
- Dimon Says Prognosis "Excellent," Cancer "Caught Quickly"—J.P. Morgan
- Dimon Says Cancer Confined, No Evidence Elsewhere—J.P. Morgan
- Dimon to start Radiation and Chemotherapy Treatment at Memorial Sloan Kettering, treatment to last 8 weeks
- Dimon advised able to continue to be actively involved in the business
And now the best healthcare that money can buy will be promptly put to use. We wish him a speedy recovery as it would be far more equitable for the JPM CEO to answer for his actions in full health before a jury of his peers, where guilt can not be "admitted or denied" away.
This shortened week is dominated by a veritable explosion of critical jobs market data on Thursday. As Citi's Steven Englander notes, there are five key US labor indicators - two of which will be initial asset market drivers: Citi expects disappointment; and three more that will give signals more relevant to the medium term evolution of asset markets and Citi think will give a more positive signal.
It appears the faithful are losing belief... Gallup reports that Democrats economic confidence has faded to its lowest since January (less than half the levels of confidence when President Obama unleashed his 2nd term). Despite exuberance conference board (government sponsored) surveys of confidence (and seasonally adjusted happiness in PMIs and ISMs), Gallup notes U.S. Economic Confidence Index remained flat in June having hovered at this lower level for most of the year (with no post-weather rebound). The outlook also remains dismal - hovering at its lowest since Dec 2013 with only 39% of Americans saying the economy is getting better and 56% saying it is getting worse.
While the new quarter has started with a bang for the capital markets and those 1% who actually benefit from one after another record high courtesy of the Fed's "fairy dust", July 1 is an important date for another group of Americans: students. However, instead of more wealth, America's aspiring intelligentsia has something far less pleasant to look forward to, namely more debt, because today is when higher interest rates for education loans kick in. Starting July 1 all new loans for the 2013/2014 student year will increase from 3.86% to 4.66%, a 20% increase.
The USD is unchanged; Commodities are unchanged; and Treasury yields are up only 2-3bps... but that didn;t stop July 1st from being a banner day for US equity markets (on the back of missed PMI and ISM data). The Dow, Russell 2000, and S&P closed at record highs but sadly the Dow missed out on 17,000 by a mere 1.5 points (despite the best VIX and AUDJPY manipulation $189 billion of repo liquidity free money can buy). Stocks got their start with yet another epic short squeeze at the open then ramped higher thanks to carry to record-er highs; stalling when it seemed Dow 17,000 was elusive. VIX traded with a 10-handle once again.
US auto makers just printed an annualized 16.98 million sales - dramatically beating expectations for the 2nd month in a row and the highest since July 2006. As we warned earlier, the reason is clear (massive extension of credit to the lowest credit quality sector of the market). With the government also taking major fleet sales and sponsoring the subprime purchasers, what more do you expect? We can only imagine the mal-investment boom that this unsustainable burst will create in the next few months - and right as the Fed's taper comes to an end.
As with any drug addiction, the first step is admitting you have a problem (or waking up naked in Glasgow train station). It seems HSBC - among a number of other sell-side strategists - are starting to wake up to their undying 'faith' and 'hope' that, based on the world's addiction to free money, there will be a return to the old normal status quo. As HSBC's Chief economist Steophen King notes, "there is an optimism bias, largely reflecting an attachment to pre-crisis growth trends which, post-crisis, have mostly remained out of reach," and they are finally facing up to the fact that "the world economy has succumbed to a lower structural rate of economic growth." But it is RBS that is waving the red flag as they warn of a "sense that this nervous stasis is dulling our perceptions about risk... it feels like 2007 all over again."
In yet another case of corporate malfeasance (which we are sure will see heavy jail sentences and sever punishments), the Federal Trade Commission is charging T-Mobile with making hundreds of millions of dollars by placing charges on mobile phone bills for purported "premium" SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers. Content such as flirting tips, horoscope information or celebrity gossip was charged to customers unknowingly and even when customers figured it out, T-Mobile failed to provide consumers with full refunds. Is it any wonder Telcos are doing so well?
One would think that with the economy, allegedly, growing at above-trend rates as Goldman has wagered for the second time in 4 years (the first time Hatzius was dead wrong), with jobs being added at what the BLS would have the market believe is a healthy 200K+ monthly clip, and of course with the S&P500 at record all time highs now on a daily basis, that the US business services sector would be humming along nicely, with little to no slack. One would be wrong: according to the WSJ even with all the alleged economic activity and all post-Lehman job losses having now been recovered, "employers have only reoccupied about 52% of the 142 million square feet that went vacant amid the economic downturn."