Why are so many plagues hitting the United States all of a sudden? Yes, one can always point out bad stuff that is happening somewhere in the country, but right now we are facing a nightmarish combination of crippling drought, devastating wildfires, disastrous viruses, dying crops and superbugs that scientists don’t know how to kill.
While Iraqi crude represents about 4.4% of world production, or around 3.4 mmbd (5th largest in the world); enabling investors to shrug at any fears that ISIS will spread to the South and interrupt this supply (since it will be 'contained'); what many do not comprehend is that in such a tight oil market as we currently have, Goldman warns that as much as 60% of OPEC’s expected capacity growth over the next five years to come from Iraq. Production losses so far have been fairly small, and have only been felt domestically. However, the larger impact of the conflict potentially lies in the medium to long term.
Ten dark suited men entered the premises of FBME bank in Cyprus on Friday afternoon and took it hostage. The men were from the Central Bank of Cyprus (CBC). And they commandeered FBME because an obscure agency within the US government recently issued a report accusing the bank of laundering money. It just so happens that FBME... and Cyprus in general... is where a lot of wealthy Russians hold their vast fortunes. Bear in mind, there has been no proof that any crime was committed.
Silver is down almost 3% today - its biggest drop since the end of January as precious metals both tumble back towards pre-June-FOMC levels. News on China demand appears to be the main catalyst according to desk chatter (as well as a break through the key 50-day and 100-day moving-averages) with gold testing down to its 200-day moving average at $1286.
Readers are familiar with our quarterly summary of the IMF's laughable forecasts, which we compile after every quarterly release of the fund's World Economic Outlook. Moments ago, the IMF released its latest update for world growth and trade for 2014 and 2015. Since we have said it all already, we will cut straight to the charts.
There are consequences to speaking publicly about the real state of the economy. After 8 years of service, Walmart CEO Bill Simon has been replaced by Greg Foran as President and CEO of the behemoth retailer. This comes just 2 week after Simon questioned the validity of the government's "rosy jobs numbers" on CNBC and several quarters of weak performance at the company (due to a weak economy). Walmart's press release explains that the new CEO has "a passion for fresh food" and is "one of the most talented retailers ever met." We are sure these are crucial factors to overcome the stagnating incomes of America for the largest retailer...
- EU to weigh extensive sanctions on Russia (FT)
- U.S. lifts flight ban to Israel (Reuters)
- Russia says will cooperate with MH17 probe led by Netherlands (Reuters)
- Norway faces ‘concrete and credible’ terrorist threat (FT)
- Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
- But... but... PMI: Unilever Sales Growth Misses Estimates on Asian Slowdown (BBG)
- World’s Biggest Wealth Fund Reviews $8 Billion Russian Stake (BBG)
- Qualcomm latest US tech company to reverse in China (FT)
- Hamptons Home Sales Rise as Buyers Find More Inventory (BBG)
Update: According to AP, the missing Algerian plane went down in central Mali, citing a U.N. representative, contradicting earlier reports that it crashed in Niger.
Not a day seems to pass in the past week without some airplane catastrophe: first over Ukriane, next over the South China Sea, now in western Africa over Mali where moments ago Air Algerie reported said that it had lost contact with one of its passenger aircraft carrying 116 people on board, nearly an hour after takeoff from Burkina Faso bound for Algiers. And what is most stunning is that just like in the MH17 case, the flight lost radio transmission shortly after it was ordered to change its course due to "poor weather." According to an Air Algerie source "the plane was not far from the Algerian frontier when the crew was asked to make a detour because of poor visibility and to prevent the risk of collision with another aircraft on the Algiers-Bamako route. Contact was lost after the change of course."
Ever since going public, it appears that Markit's giddyness about life has spilled over into its manufacturing surveys: after a surge in recent Markit mfg exuberance in recent months in the US, it was first China's turn overnight to hit an 18 month high, slamming expectations and fixing the bitter taste in the mouth left by another month of atrocious Japan trade data (where even Goldman has thrown in the towel on Abenomics now) following which the euphoria spilled over to Europe just as the triple-dip recession warnings had started to grow ever louder and most economists have been making a strong case for ECB QE. Instead, German July mfg PMI printed at 52.9, above the 52.0 in June and above the 51.9 expected while the Composite blasted higher to 55.9, from 54.0, and above the 53.8 expected thanks to the strongest Service PMI in 37 months! End result: a blended Eurozone manufacturing PMI rising from 51.8 to 51.9, despite expectations of a modest decline while the Composite rose from 52.8 to 54.0, on expectations of an unchanged print. Curiously the soft survey data took place as Retail Sales declined both in Italy (-0.7%, Exp. +0.2%), and the UK (-0.1%, Exp. 0.3%), which incidentally was blamed on "hot weather." Perhaps Markit, now that it has IPOed successfully, can step off the gas or at least lobby to have surveys become part of GDP.
Having shown 11 awkward-to-explain charts of the Chinese economy, exposed the liquidity crisis that still lingers just under the surface, and exposed the "discrepancies that abound" in China's data, it was only right and proper in this new topsy-turvy normal that HSBC China Manufacturing PMI - after 8 months of missed expectations (but a very recent surge to the highest levels in 2014) - should smash expectations and surge to 52.0, its highest sicne Jan 2012 (and 2nd highest since the recovery began). Despite this exuberant data, employment fell for the 9th straight month.
Tragically, the "out of control" epidemic has taken a major turn for the worse when the head doctor fighting the Ebola epidemic in Sierra Leone has himself caught the disease, the government said. According to Reuters, the 39-year-old Sheik Umar Khan, hailed as a "national hero" by the health ministry, was leading the fight to control an outbreak that has killed 206 people in the West African country. Ebola kills up to 90 percent of those infected and there is no cure or vaccine. Khan told Reuters in late June that he was worried about contracting Ebola. "I am afraid for my life, I must say, because I cherish my life," he said in an interview, showing no signs of ill health at the time.
With Colorado suffering from pneumonic plague, and the dreadfully sad report of Sierra Leone's chief Ebola doctor contracting the virus, it appears China is taking no chances. As Yahoo reports, Chinese officials have blocked off parts of Yumen, a city in northwest China, preventing about 30,000 of the city's people from leaving after one resident died from bubonic plague. About 150 people who had contact with the plague victim have been placed under quarantine but US experts are perplexed at the response, "there's something here that we don't know, because this seems a very expansive response to just one case."
Two-Thirds Of Chinese Consumers No Longer Trust Western Fast-Food As "Meat Scandal" Spreads Across AsiaSubmitted by Tyler Durden on 07/23/2014 10:12 -0500
As if the Chinese meat scandal was not a big enough concern for Western fast-food firms, The WSJ reports that the crisis is spreading across Asia as Yum Brands and McDonalds sever links with US-owned Shanghai Husi Food Company, which is accused of selling expired beef and chicken, pulling supplies of chicken from restaurants in Japan. Perhaps even more worrisome for American fast-food companies who have expanded aggressively and over-hyped the growth opportunities in China, a second Sina survey started yesterday, featuring 25,000 respondents, found 77% believed the restaurant brands affected had been aware of Husi’s faulty practices, while 69% said they would no longer dine at the restaurants run by the Western companies.
A TransAsia Airways flight from Kaohsiung to Penghu made an forced landing in Taiwan, according to TVBS, leaving 51 dead and 7 injured. The crash occurred on Makung, one of Taiwan's offshore islands.
*TRANSASIA PLANE MADE EMERGNCY LANDING IN MAKUNG, TVBS SAYS
*51 DEAD, 7 INJURED IN TRANSASIA CRASH IN TAIWAN: TVBS
On the positive side, at least it wasn't Malaysian Airlines but it does make us wonder as a Taiwanese flight crashes over South China sea... how long until Taiwan accuses China of shooting it down?
Those keeping track and hoping the second default would finally hit have to hold their breath again after yet another last minute bailout has now made a complete mockery of China's "deliberate" intentions to clear up the rot plaguing its bond market. As Reuters reports, Huatong avoided a "landmark bond default at the last minute on Wednesday, raising enough funds to pay off both principal and interest on a 400 million yuan ($64.51 million) bond." Who bailed it out? Why the same government which continues to say one thing and do something totally different.