Financial Markets and Economy
JPMorgan: Something Has Gone Wrong With the Global Consumer (Bloomberg)
"It would be difficult to overstate the recent downside surprise in global consumer spending," writes JPMorgan Senior Global Economist Joseph Lupton.
Though retail sales in the U.S. have missed expectations for five consecutive months, disappointing consumer spending is far from just a made-in-the-USA story, he observes.
Japan Still Beating China on One Score: World’s Top Creditor (Bloomberg)
Japan’s foreign investments and assets climbed to a record in 2014, keeping it in front of China and Germany as the world’s top creditor nation.
The reading stretches Japan’s lead as No.1 creditor country to 24 years, with 71 percent more in net assets than China, even after its Asian neighbor surpassed it to become the world’s second-largest economy in 2010.
Altice seeks financing for Time Warner Cable bid: sources (Reuters)
French telecommunications group Altice SA is talking to several banks about raising debt for a potential bid for Time Warner Cable Inc, the second-largest U.S. cable operator, according to people familiar with the matter.
The talks are an important step for Altice in putting together a bid for Time Warner Cable, which is also being courted by Charter Communications Inc after Comcast Corp abandoned its $45.2 billion offer for Time Warner Cable last month over U.S. antitrust concerns.
QE Great for Europe Stock Markets, Not So Much for Pension Funds (Bloomberg)
Deutsche Lufthansa AG scrapped its dividend this year partly because of charges tied to its pension fund. Investors have been shunning the shares — and those of peers that are likely to follow suit.
An unintended consequence of Mario Draghi’s bond-buying campaign has been an increase in the estimated cost of providing for retired workers. According to an index designed by Citigroup Inc., companies with the biggest pension deficits that have been forced to reduce profit forecasts are trailing the rest of the market by the most since 2013.
What happens to your bank accounts if you retire abroad? (Market Watch)
I spent many years as an expat, am currently working in the U.S., but plan to retire in Latin America. I have and hope to keep retirement accounts — taxable account, an IRA and a Roth IRA–at Merrill Lynch, Charles Schwab and Vanguard.
Oil’s Whodunit Moment Coming With Millions of Barrels to Vanish (Bloomberg)
Millions of barrels of untapped oil that U.S. shale drillers discovered during the boom years are about to disappear from their inventories.
Six years ago, the industry pushed the Securities and Exchange Commission to make it easier for companies to claim proved reserves for wells that wouldn’t be drilled for years. Some prospects considered sure-things when crude was $95 a barrel are money losers at today’s $60. When crude crashed in 2008, 44 U.S. companies wiped 630 million barrels from their books.
German Investment Picks Up in Sign of Confidence (Bloomberg)
German investment and consumption rose last quarter in a sign of confidence in Europe’s largest economy.
Capital spending increased 1.5 percent and private consumption advanced 0.6 percent, while net trade was a drag on growth, the Federal Statistics Office in Wiesbaden said on Friday. Gross domestic product rose 0.3 percent in the first three months of the year after expanding 0.7 percent in the previous quarter, it said, confirming a May 13 estimate.
A Pivotal Year For ASEAN? (Value Walk)
The role of Asian markets in the global economy has grown significantly in recent years, and we expect this trend to continue in the future. Many of these countries have also made fundamental improvements to their economies, and we think these changes are here to stay.
Puerto Rico’s House Passes Bill Raising Sales Tax to 11.5% (Bloomberg)
Puerto Rico’s House of Representatives passed a bill that would raise the junk-rated island’s sales tax, a move that may help it sell debt and ease a cash crunch.
House members voted 26 to 24 to boost the levy to 11.5 percent from 7 percent through March, after which it will transition to a value-added tax. Lawmakers expect the measure will increase revenue and balance a proposed $9.8 billion budget for fiscal 2016, which begins July 1. The bill now heads to the Senate, which has a session scheduled for Friday.
Greece Submerges as Crisis Fallout Worse Than Emerging Markets (Bloomberg)
The Greek economy risks being more a submerging market than an emerging market.
As another round of aid talks between the Mediterranean nation and its creditors ends without a deal, its economy is faring even worse than a string of developing countries which suffered traumas in the last two decades. That leaves Commerzbank AG declaring the country is in little position to pare its debt and that default or a restructuring may loom.
Analyst: This Is the Chart That Keeps Me Up at Night (Bloomberg)
Reduced federal spending on research and development poses “the risk of a widening innovation deficit in America relative to the rest of the world,” according to Joseph Quinlan, chief market strategist at U.S. Trust, Bank of America Private Wealth Management.
As the attached chart illustrates, R&D outlays peaked in fiscal 2011 at $140.9 billion, according to data compiled by the American Association for the Advancement of Science. This year’s projected spending of $131 billion represents 3.4 percent of the federal budget, which would be the fifth straight annual drop in percentage terms.
Grand Central: Is the Fed’s 2% Inflation Target Too Low? (Wall Street Journal)
Central bankers around the developed world have agreed for much of the past two decades that 2% is a good objective for inflation. They want inflation to be low and stable, but they don’t want it too low. Interest rates move in line with inflation, and they don’t want inflation so low that interest rates are near zero. Then they would have no room to cut rates in a downturn to stimulate economic growth. Thus they have gravitated to 2%, a number born out of pragmatism more than any econometric model or proof.
BOJ Refrains From Boosting Stimulus After Growth Picks Up (Bloomberg)
The Bank of Japan refrained from increasing monetary stimulus, as Governor Haruhiko Kuroda bets on stronger growth fueling inflation that is 1/10 the BOJ’s target.
The central bank will continue to boost the monetary base at an annual pace of 80 trillion yen ($662 billion), it said in a statement. All of 36 economists in a Bloomberg survey forecast the outcome.
50 stocks that ‘matter most’ to hedge-fund Masters of the Universe (Market Watch)
Analysts continue to sort, sift and break down the latest round of quarterly filings from some of the market’s most prominent investors that were due last week.
On Thursday, Goldman Sachs weighed with a note looking at the 50 stocks that they say “matter most” to hedge funds.
These are the stocks that fundamentally driven hedge funds have big positions. Specifically, Goldman’s criteria are the stocks that appear most frequently among the top 10 holdings of those funds.
There's only one thing keeping 5 of the world's biggest Wall Street banks in business (Business Insider)
On Wednesday, a handful of Wall Street banks pleaded guilty to criminal charges and agreed to pay a combined $5.8 billion in fines for their roles in the LIBOR interest rate and currency-rigging scandal.
The market barely reacted.
Jobless Claims Haven't Been Lower Since the Arab Oil Embargo (Bloomberg)
The premise of the 1979 movie "Mad Max" was a global oil shortage that created a street war for fuel. There was a reason the movie had a cult following: It had a hook. The Arab oil embargo that began in October 1973 pushed the U.S. into recession, the first indicator of which was a jump in firings and jobless claims.
The film's latest rendition, "Mad Max: Fury Road," is a reminder of how far the U.S. has come.
Stocks and Trading
Chinese Stock Bubble Frenzy Returns; US Futures Flat Ahead Of Today's Pre-Holiday Zero Volume Melt Up (Zero Hedge)
The highlight of the overnight newsflow may have been the BOJ's preannounced statement that it is keeping its QE unchanged (which comes as no surprise after a few weeks ago the BOJ adimirted it would be unable to keep inflation "stable" at the 2% in the required timeframe), but the highlight of overnight markets was certainly China, where the Banzai Buyers have reemerged, leading to another whopping +2.8% session for the Shanghai Composite which has now risen to a fresh 7 years high.
China stocks rally past seven-year high (Market Watch)
Shanghai stocks extended gains Friday morning, one day after hitting its best close since 2008, while Hong Kong markets also posted a solid rebound, bolstered by the mainland Chinese shares. The Shanghai Composite Index SHCOMP, +1.51% headed toward a fourth consecutive day of gains, up 1.7% toward a fresh seven-year high.
Everyone in China is on the same side of the market (Business Insider)
In recent months all the rage has been talk about the Chinese stock market and how aggressively it has rallied, but probably more concerning is how many “retail trading accounts” have been opened. Which to me, is probably the scariest part of the analysis that you will see below.
Energy stocks’ key metric spikes this month (Market Watch)
A key metric for measuring the performance of publicly traded energy companies has spiked in recent days, racing ahead of the rest of the stock market just as a rebound in the price of oil is fizzling.
The trailing price-to-earnings ratio of energy stocks in the S&P 500 — major companies that include mammoths such as Exxon Mobil Corp. XOM, top refiners and shale-oil and gas producers — jumped in recent days to above 16.
Politics
Rand Paul Blocks Extension Of Patriot Act, Future Of Illegal NSA Spying On Americans In Limbo (Zero Hedge)
While an extension of the Patriot Act, that landmark bill which ushered in the America's Big Brother, "turnkey totalitarian state" (previewed here long before Edward Snowden's shocking revelations), is just a matter of time, supporters of the Fourth Amendment scored a brief victory last night when following yet another marathon 10 hour filibuster…
Defending ISIS Policy, Obama Acknowledges Flaws in Effort So Far (Bloomberg)
President Obama denied that the United States and its allies were losing the fight against Islamic State forces in the Middle East, but he acknowledged in an interview posted online on Thursday that more should be done to help Iraqis recapture lost territory.
While repeating his refusal to commit large-scale American forces to the region, the president said Sunni fighters in Iraq needed more commitment and training to take on fellow Sunnis aligned with the Islamic State. But he offered no regrets about his handling of the war and said in the end, it would be up to the Iraqis to increase their efforts.
The Slow-Mo Scandal That Could Crush Scott Walker's Presidential Hopes (Mother Jones)
In 2010, Scott Walker was the young, hyperambitious executive of Milwaukee County and one of three candidates angling for the Wisconsin Republican gubernatorial nomination. Part of his official duties included overseeing Operation Freedom, a charity event that raised money for veterans and their families. When Walker's chief of staff caught wind that $11,000 of the nonprofit's money had gone missing, Walker had his office ask the local district attorney to investigate. Now that he's seeking the Republican presidential nomination, he probably wishes it hadn't.
Obama Set to Strengthen Federal Role in Clean Water Regulation (NY Times)
The Obama administration is expected in the coming days to announce a major clean water regulation that would restore the federal government’s authority to limit pollution in the nation’s rivers, lakes, streams and wetlands.
Environmentalists have praised the new rule, calling it an important step that would lead to significantly cleaner natural bodies of water and healthier drinking water.
Senator Says Republican Plan If Obamacare Struck Down Is ¯\_(?)_/¯ (Time)
A Democratic Senator used a popular Internet symbol on Thursday to describe what he says is the Republican plan should the Supreme Court strike down the Affordable Care Act.
Connecticut Senator Chris Murphy presented a poster with an enlarged image of the “shruggie”, or ¯\_(?)_/¯, during his speech. Murphy said the image was a “pretty good summary of what the Republicans plan is to respond to King v. Burwell.”
US Retaliates At China Escalation, Warns Sea "Sandcastles" May "Lead To Conflict" (Zero Hedge)
On Wednesday we showed what happens when US spy planes carrying CNN reporters get too close to China’s land reclamation project in the South China Sea. In short, the Chinese Navy not-so-politely advises them to “Go now!”
China is working diligently to construct man-made islands atop reefs in the Spratly archipelago where Beijing shares disputed waters with the Philippines, Vietnam, Malaysia, Brunei and Taiwan. For its part, Washington is none too pleased with the effort and in a fantastic example of ironic rhetoric and American hypocrisy, The White House is shouting about violations of territorial sovereignty and Chinese “bullying”.
Obama Says Tunisia to Be Non-NATO Ally of U.S. (TIME)
President Barack Obama on Thursday elevated Tunisia to new allied status, promising financial and security assistance to ensure the North African country’s transition to democracy remains a success in a fragile region.
Obama announced in an Oval Office meeting with newly elected Tunisian President Beji Caid Essebsi that he intends to designate his country as a major non-NATO ally of the United States, a special status only a few countries have been granted. “The United States believes in Tunisia, is invested in its success and will work as a steady partner for years to come,” Obama said.
Technology
What’s in This Picture? AI Becomes as Smart as a Toddler (Bloomberg)
Artificial intelligence has graduated past the infancy stage of figuring out what's in an image. Computers have previously been capable of little more than a simple game of I Spy: Name a specific object or person, and they'll show you an image containing it. But thanks to new developments in AI research, machines can now answer more complex questions, like, “What is there on the grass, except the person?” (For the answer to that awkwardly worded enigma, take a look at the last image.)
The Worst Thing About the iPhone Is About to Be Fixed (TIME)
Your iPhone is about to get way more useful for navigating around big cities.
Apple’s upcoming iOS 9 update will add public transportation data to the default Maps app, according to 9to5Mac. The company will reportedly unveil bus, subway and train directions within the app at the Worldwide Developers Conference in June.
Firefox For iOS Begins Its Beta Testing Program (Tech Crunch)
Mozilla’s Firefox browser for iOS is nearing public release, as the organization is now actively recruiting beta testers willing to try the app ahead of its App Store debut. A recent survey sent to potential testers is asking for details about which devices they own, and instructs them that the beta will require a version of iOS 8 or higher in order to work. It also reminds testers that the beta build will “have some bugs and break at times,” which is why Mozilla needs testing and feedback.
Health and Life Sciences
Neuron transplants could keep your brain young (Business Insider)
Researchers from the University of California, Irvine have developed a neuron transplant method they say can renew brain plasticity in adults.
Brain plasticity allows the brain to create new neural connections that help the organ develop. We have the most brain plasticity when we're younger, but as we grow, it diminishes.
4 out of 9 e-cigarettes sold in japan produce carcinogen in vapor (Japan Times)
A health ministry research group found Thursday that 4 of the 9 electronic cigarettes sold in Japan produce vapor with high levels of formaldehyde, a known carcinogen.
A panel of experts at the Health, Labor and Welfare Ministry who received a report on the findings said “negative health effects” cannot be ruled out from the use of e-cigarettes.
Bacteria cooperate to repair damaged siblings (Science Daily)
Daniel Wall, a UW associate professor in the Department of Molecular Biology, and others were able to show that damaged sustained by the outer membrane (OM) of a myxobacteria cell population was repaired by a healthy population using the process of OME. The research revealed that these social organisms benefit from group behavior that endows favorable fitness consequences among kin cells.
Life on the Home Planet
Antarctic Peninsula in 'dramatic' ice loss (BBC)
Satellites have seen a sudden dramatic change in the behaviour of glaciers on the Antarctica Peninsula, according to a Bristol University-led study.
The ice streams were broadly stable up until 2009, since when they have been losing on the order of 56 billion tonnes of ice a year to the ocean.
Warm waters from the deep sea may be driving the changes, the UK-based team says.
Oil Again Fouling California Coast Near Site of Historic Spill (NY Times)
Refugio State Beach is one of the treasures of the California coast, a little-known curve of beach in the hills that on weekends like this one — Memorial Day — would be sprinkled with people who made their way up from Santa Barbara, about 20 miles down the Pacific Coast.
But not on Thursday. Refugio was filled not with vacationers, but with teams of workers in white coveralls and masks, scooping up sand fouled with oil that had washed in after a pipeline broke earlier this week. The smell of oil, not surf, was in the air as Coast Guard riggers off shore, using yellow buoys, tried to corral and clean up the oil before it reached the shore.
California Wants To Stop Crisis Pregnancy Centers From Lying To Women (Think Progress)
Elected officials in California — including the attorney general — are urging the passage of a statewide measure that will help patients make fully informed decisionsabout their reproductive health care. The proposed legislation would specifically crack down on unlicensed “crisis pregnancy centers” (CPCs) that present misleading health information designed to dissuade women from choosing abortion.
Former North Korean operative reveals secret spy tactics (CNN)
Looking at the poison pens and torch guns, you would be forgiven for thinking you were on a James Bond set. But these weapons are real and are still part of the arsenal of North Korean spies.
Agents from the most isolated country on Earth are not a thing of the past, said one man who claims his job once was to infiltrate South Korea on missions for the Kim regime.
Home-brewed heroin may soon be in the works (Economist)
SHORTENING an industry’s supply chain is bound to affect the activities of its suppliers. That is as true of the recreational-drugs business as it is of any other. Some street pharmaceuticals, such as methamphetamine and cannabis, are already produced near their main consumer markets—whether cooked up in laboratories or grown under cover. But others, particularly cocaine and heroin, still have to be imported from far-flung places where the plants which produce them flourish in the open (think of poppies in Afghanistan).
