Market Talk- July 7th, 2017

Following on from the weak US session, Asia tended to drift in sympathy. Ahead of the US NFP’s it was always going to be light volume but with G20 also just stated numbers were even lighter. The Shanghai has managed a positive close (+0.17%), but not so for the Hang Seng which closed down -0.5%. After trading hours China released Foreign Reserves which were mildly better than expected at $3.057 trillion for June a rise of just $3bn. In Japan the BOJ was rumoured to be in action supporting 5 – 10yr JGB’s as we have seen bond markets fall globally this week. This programme failed to support todays Nikkei action which closed down -0.3% and also watched as the JPY traded close to 114 through US Dollar strength. This move was accelerated after the NFP report but we’ll discuss that further down. Australia is feeling the pinch as commodities, geopolitics and slowing trade unnerves trade flow which impacts confidence. The ASX closed almost 1% lower and saw the A$ trade back in the 0.75 handle.

This post was published at Armstrong Economics on Jul 7, 2017.

US Trade Stalls, Too

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
US imports rose year-over-year for the seventh straight month, but like factory orders and other economic statistics there is a growing sense that the rebound will not go further. The total import of goods was up 9.3% in May 2017 as compared to May 2016, but growth rates have over the past five months remained constrained to around that same level. It continues to be about half the rate we should expect given the preceding contraction.
Though price effects are tailing off, there was again a large base effect distortion from crude oil. US imports were up significantly again in May, by 41.8%, meaning that imports ex petroleum rose by just 4.8%. For the five months of 2017 so far, non-crude imports have grown by just 5% over the same period in 2016. That’s far too much like 2013 and 2014.

This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ July 6, 2017.

Is This Wealthy San Fran Suburb Really On The Brink Of Bankruptcy Or Is It A Scam To Raise Taxes

When you think about municipal bankruptcies, your mind likely conjures images of a decrepit Detroit littered with abandoned auto plants and burned down houses or the rapidly deteriorating city of Chicago with it’s gang wars and neighborhoods that look and feel more like an Iraqi battlefield than a U. S. suburb.
What you likely don’t think about is an ultra-posh suburb of San Francisco where the median home will run you over $1 million. But according to Bloomberg, the wealthy Northern California city of Moraga could be the next Cali domino to fall.
‘We just don’t have enough revenue to take us through the future for many more years before we would really be in some of the situations other cities are, where they’re laying off mass numbers of employees or declaring bankruptcy,’ town manager Robert Priebe said in an interview. In Moraga, where the council discussed establishing a poet laureate position before approving the fiscal distress declaration, lowering headcount isn’t the first priority. The town’s $8.5 million budget this year authorizes about 36 full-time workers. Members instead opted to reduce services such as park maintenance in the community about 20 miles east of San Francisco.
‘We’re not willing to hurt the public first,” Priebe said. “We’re not going to lay off half of our employees and have the quality of life of all of our citizens really be impacted.’
Moraga, where the median family income is $169,000 a year, illustrates an irony for some at the center of Silicon Valley’s latest economic boom. While real estate prices have surged due to the latest tech bubble, the local tax collections haven’t necessarily followed the same trajectory because of Proposition 13, the 1978 ballot measure that keeps homeowners’ tax bills from rising by more than inflation or 2% a year.

This post was published at Zero Hedge on Jul 7, 2017.

Upton Sinclair: The Brass Check – Brazen Times in Donnie-dom

I will probably update the charts and other information over the weekend.

Considering that today was a Non-Farm Payrolls report, the action in the markets is not particularly surprising. The talking heads were calling this an almost perfect ‘risk-on’ jobs report. Right. Plenty of crappy jobs at wage levels for an unsustainable recovery.

Not one thing has change in my mind for the intermediate to longer term. Its just that the antics of the major corporate/financial players is becoming more brazen in Donnie-dom.
These quotes are from The Brass Check which was written by Upton Sinclair in 1919. A brass check was a token purchased by a customer in a brothel and given to the woman of his choice. Sinclair saw the moneyed interests of his day holding brass checks with which to purchase politicians, journalists and their editors, and other thought leaders of the day. In modern times we call them ‘speaking fees’ and ‘consulting contracts’ and lobbyist positions’ and ‘book deals.’ For twenty years I have been a voice crying in the wilderness of industrial America; pleading for kindness to our laboring-classes, pleading for common honesty and truth-telling, so that we might choose our path wisely, and move by peaceful steps into the new industrial order. I have seen my pleas ignored and my influence destroyed, and now I see the stubborn pride and insane avarice of our money-masters driving us straight to the precipice of revolution.

This post was published at Jesses Crossroads Cafe on 07 JULY 2017.

Tales from the FOMC Underground

A Great Big Dud
Many of today’s economic troubles are due to a fantastic guess. That the wealth effect of inflated asset prices would stimulate demand in the economy.
The premise, as we understand it, was that as stock portfolios bubbled up investors would feel better about their lot in life. Some of them would feel so doggone good they’d go out and buy 72-inch flat screen televisions and brand-new electric cars with computerized dashboards on credit.
Before you know it, gross domestic product would go up – along with wages – and unemployment would go down. A self-sustaining economic boom would follow.
This fantastic guess, however, has proven to be a critical error in judgment. Asset prices bubbled up, flat screen televisions and new cars were bought in record numbers, and the unemployment rate – according to the government’s statistics – went down.
On the flip side, real GDP growth only marginally lurched upward, never eclipsing 3 percent during a calendar year, and the great big economic boom that was supposed to save the economy from itself turned out to be a great big dud.
At the same time, the general aura of the Federal Reserve Chair, once held up on high by Bob Woodward, has slipped into irreparable decline. No public relations exploit or press briefing can correct the damage. No policy adjustment or balance sheet modification can return the Fed to its former glory.

This post was published at Acting-Man on July 8, 2017.

One Trader Explains Why The Bond Market Needs A PR Firm: “It’s All A Bunch Of Tripe”

“The bond market needs to hire a new public relations firm,” says former fund manager Richard Breslow, reflecting on the panacea of negativity surrounding the weakness in global bond markets. His suggestion is simple – “get over it” – bond yields are going higher and you better get used to it, it’s just needs to be seen for the ‘positive’ that it is…
Via Bloomberg,
Globally rising sovereign yields has been the story of the week. One central bank after another, here, there and everywhere, have brought the market up short (or long in this case) by overtly shifting to a more hawkish stance. But the way it’s being portrayed is all wrong.

This post was published at Zero Hedge on Jul 7, 2017.

G-20 Meeting Shines a Spotlight on Global Divisions

Leaders of the world’s most powerful economies are converging on Hamburg, Germany, for the annual Group of 20 meeting. The summit, as usual, will provide a venue to discuss issues of critical international importance. But setting this year’s agenda apart are the divisions that lately have grabbed the world’s attention thanks largely to US President Donald Trump’s “America First” policies on trade, climate, and security. Competing forces are trying to rebalance the global order, pitting nationalists and globalists against each other. The fight to change, or preserve, the status quo will pervade the G-20 meeting, both during the main event July 7-8 and as world leaders meet one-on-one on the summit’s sidelines.
Trade Atop the Bill
Despite its recent shift toward retrenchment, the United States still occupies a position of power on the world stage and will guide the course of conversation at the G-20. Trade will be a central topic of discussion. As health care and tax reform proposals face congressional and judicial roadblocks, Trump sees trade as a strong fallback option to advance his agenda. The president, after all, has more authority to change US policy over the matter through executive action relative to other domestic issues. A country-by-country review of the United States’ bilateral trade deficits reached Trump’s desk during the week of June 26, and he may soon start planning to try to reduce the imbalances. Washington’s actions to that end will target primarily the other members of the G-20. In 2016, the United States had a combined trade deficit of $667 billion – or 84 percent of its total trade deficit – with its 18 fellow countries in the G-20 (the European Union being the group’s 20th member).

This post was published at FinancialSense on 07/07/2017.

Japanese Equity Market Outflows Spike To 8 Year High

With The Fed is full ‘taper’ mode and The ECB hinting, the world is left to rely on Kuroda to single-handedly buy-the-dip in stocks and maintain bond yields at the mandated level. With Japanese stocks fading in the last two weeks (as bond yields spike), it appears the ubiquitous ‘hand of god’ has disappeared…
And judging by the biggest Japanese equity fund outflows in 8 years, the fear is spreading…

This post was published at Zero Hedge on Jul 7, 2017.

US Oil Rig Count Rises But “Must Drop 150 For Oil Markets To Balance”

After falling for the first time this year last week, Baker Hughes reports US oil rig count rose once again (as perhaps Cindy impacted drilling last week) for the 23rd week in the last 24.
*U. S. TOTAL RIG COUNT UP 12 TO 952 , BAKER HUGHES SAYS :BHI US *U. S. OIL RIG COUNT UP 7 TO 763 , BAKER HUGHES SAYS :BHI US *U. S. GAS RIG COUNT UP 5 TO 189 , BAKER HUGHES SAYS :BHI US This week saw a resurgence in US crude production (as Cindy’s effects wear off)…This is the highest Lower 48 production since Aug 2015…

This post was published at Zero Hedge on Jul 7, 2017.

JULY 7/RAID!!

GOLD: $1210.40 DOWN $13.40
Silver: $15.43 DOWN 53 cent(s)
Closing access prices:
Gold $1213.00
silver: $15.62
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1231.29 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1219.65
PREMIUM FIRST FIX: $11.64

This post was published at Harvey Organ Blog on July 7, 2017.

Is ‘Oil God’ Andy Hall The Latest Victim Of “Fake News”?

Raymond James’ J. Marshall Adkins invoked one of President Trump’s favorite phrases to explain oil’s plunge, and to excuse his bullish bias (that crude can rise to as much as $65 a barrel).
As Bloomberg notes, conventional wisdom holds that resilient U. S. shale drilling, underwhelming progress towards OPEC’s goal in slimming global oil inventories, and output recoveries from nations exempt from the deal to curb production helped push crude down more than 20 percent from recent peaks. But according to Adkins – a noted oil bull – the bad times for oil can be chalked up to ‘fake news’ that amplified the downside.
‘The recent collapse in oil prices was triggered by a breakdown in the technical charts but fueled by the ‘negative feedback loop’ of bearish headlines that usually follow price declines,’ the analysts wrote in a July 3 note to investors. ‘Some oil price headlines have been misleading, or outright wrong, and they have distracted investors from what we believe is fundamentally a bullish overall picture.’
Concerns have been overblown, the Raymond James analysts argued, saying trends pertaining to U. S. inventories, production and gasoline demand have been misinterpreted. They put out a list of ‘myths’ that explain the downturn and set out to debunk them in arguing that crude can rise about 45 percent from current levels.

This post was published at Zero Hedge on Jul 7, 2017.

BofA: “Massive Market Inflection Point Coming This Summer: Will Lead To Fall Crash”

One week after BofA’s Michael Hartnett became the latest strategist to admit the truth, when in his Flow Show report from last week he said that “central banks have exacerbated inequality via Wall St inflation & Main St deflation” and now that they are hoping to quickly and painlessly undo their error, there are “two ways to cure inequality…you can make the poor richer…or you can make the rich poorer…” concluding that the “Fed/ECB are now tightening to make Wall St poorer” because it is “no longer politically acceptable to stoke Wall St bubble”, he has followed up with a note in which he looks at the vast change in the market landscape over the past year.
As he says, one year ago, July 11th, 2016, 30-year Treasury yield hit all-time low (2.14%), and Swiss government could have issued a 50-year bond at a negative yield (Chart 2 shows 10- year Swiss yield back to 1900).

This post was published at Zero Hedge on Jul 7, 2017.

Bullion Banks line up in London to support LME’s Gold Futures

The London Metal Exchange (LME) and World Gold Council have just confirmed that their new suite of London-based exchange-traded gold and silver futures contracts will begin trading on Monday 10 July. These futures contracts are collectively known as LMEprecious.
The launch of trading comes exactly 11 months after this LMEprecious initiative was first official announced by the LME and World Gold Council on 9 August 2016. Anyone interested in the background to these LMEprecious contracts can read previous BullionStar articles ‘The Charade Continues – London Gold and Silver Markets set for even more paper trading’ and ‘Lukewarm start for new London Gold Futures Contracts’.
This 10 July 2017 launch is itself over a month behind schedule given that LMEprecious was supposed to be launched on 5 June but was delayed by the LME.

This post was published at Bullion Star on 7 Jul 2017.