Financial Markets and Economy
Trade Deficit increased in May to $41.9 Billion (Calculated Risk)
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $41.9 billion in May, up $1.2 billion from $40.7 billion in April, revised. May exports were $188.6 billion, $1.5 billion less than April exports. May imports were $230.5 billion, $0.3 billion less than April imports.
'The Great Fall of China' is hitting other markets (Business Insider)
China's tanking stock markets were largely overshadowed due to turmoil in Greece over recent weeks, but the impact of tumbling share prices is getting harder to ignore.
China's leading Shanghai Composite index has fallen by over 30% over the last 3 weeks. The collapse has largely been contained within China so far, but there are signs that it's starting to impact other markets.
Oil prices dropped 7.8% overnight to as low as $52.48 (£33.85) a barrel — the biggest intraday move for crude oil since February and the lowest price for WTI crude since early April.
China’s market rout is so bad, one in four companies have stopped trading (Quartz)
After a brief respite on Monday, the Shanghai Composite Index headed steeply south again today (July 7), and despite a late trading rally ended down 1.26% for the day. Shenzhen’s composite index fared much worse, falling 5.36%.
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Rolls-Royce shares are still cratering (Business Insider)
Rolls-Royce's stock tumbled another 3% within the first hour of trading, after already cratering 9% the previous day, following its third profit warning in just over a year.
Juncker: 'We will not reach a deal with Greece today' (Business Insider)
European Commission President Jean-Claude Juncker unleashed a number of home truths to Greece and its Prime Minister Alexis Tsipras on Tuesday, after the country overwhelmingly voted "No" – or "OXI" – in the country's bailout referendum Sunday.
He said that there will be no deal reached today and that all parties must discuss "what 'respecting Greek vote' means."
"The Greek Prime Minister knows that the question asked in the Greek vote was no longer valid. I'm against a Grexit but we must discuss what 'respecting the Greek vote' means," said Juncker in a speech Tuesday morning.
Samsung Electronics profit guidance suggests costly S6 miss (Reuters)
South Korean tech giant Samsung Electronics Co Ltd (005930.KS) on Tuesday guided for weaker-than-expected second-quarter earnings, as a supply shortage plagued its latest smartphone launch and tepid demand from key markets likely undercut sales.
The guidance suggests that Samsung, while on a gradual recovery path, will struggle to replicate the explosive growth it recorded at the turn of the decade as smartphone competition intensifies and demand softens in China and Europe.
ISM Non-Manufacturing Index increased to 56.0% in June (Calculated Risk)
The June ISM Non-manufacturing index was at 56.0%, up from 55.7% in May. The employment index decreased in June to 52.7%, down from 55.3% in May. Note: Above 50 indicates expansion, below 50 contraction.
China's companies found a solution to stop the massive market crash — suspend 651 stocks (Business Insider)
Chinese stock markets are in serious trouble, with the country's benchmark Shanghai Composite plunging 30% in just three weeks — now the markets may have found the solution.
Market Snapshot: U.S. stocks set for upbeat day with Greece, trade data in focus (Market Watch)
After a choppy start to the week, U.S. investors were more upbeat on Tuesday, as stock futures pointed higher ahead of fresh trade data and key meetings on Greece’s future.
Futures for the Dow Jones Industrial Average YMU5, +0.30% gained 73 points, or 0.4%, to 17,700, while those for the S&P 500 index ESU5, +0.38% picked up 10.90 points, or 0.5%, to 2,075.25. Futures for the Nasdaq 100 index NQU5, +0.27% climbed 19.75 points, or 0.5%, to 4,442.59.
Britain depends increasingly on services sector to drive growth – BCC (Reuters)
Britain was more heavily dependent on services companies to drive its economy during the second quarter as manufacturing growth ebbed, according to a business survey that said greater efforts are needed to boost investment and exports.
The British Chambers of Commerce's (BCC) quarterly economic survey – the largest of private-sector study of its kind in Britain – suggested the economy would continue to expand at a moderate pace over the next year.
To save its stock markets, China is putting its whole financial system at risk (Quartz)
“We must deepen economic system reform by centering on the decisive role of the market in allocating resources….” — President Xi Jinping, “The Decision” of the Third Plenum, Nov. 2013
That was the plan, anyway. Not anymore.
In recent days, the Chinese government unfurled a series of measures to stop its stock markets’ free-fall the scale of which has never before been seen. It is essentially giving investors a “Xi Jinping put,” as Joyce Poon of Gavekal Dragonomics calls it (referring to Mario Draghi’s European Central Bank put) in a note today—meaning, the government is assuring investors it will do what it has to to keep the market aloft.
3 Stocks to Watch in the Steel Industry (Fool)
Steel is a building block of the modern world. It gets used in everything from roads to buildings to home appliances. Which is why steel producers around the world ramped up production to meet demand coming out of rapidly industrializing China. Only the expected demand hasn't materialized now that China's growth is starting to slow.
China stocks tumble again despite support measures (Business Insider)
Chinese stocks opened down on Tuesday, taking no comfort from a slew of support measures unleashed by Beijing in recent days, and unnerved by Chinese Premier Li Keqiang's failure to mention the market chaos in a statement on the economy.
Before the market opened, Li said in comments on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30 percent off Chinese shares since mid-June.
In China, Hairdresser Bull Call Goes Horribly Wrong, Broker IPO Crashes 31% (Zero Hedge)
Around two weeks ago, Wang Weidong, who WSJ describes as “one of China’s top fund managers,” drew a crowd so large at the Grand Hyatt in Lujiazui that the building’s air conditioning unit was, much like the SHCOMP’s volume tracking software in April, overwhelmed by the sheer number of aspiring Chinese day traders in attendance.
Angela Merkel has a red and a yellow button. One ends the crisis. Which does she push? (The Guardian)
Bankruptocracy is as much a European predicament as it is an American “invention.” The difference between the experience of the two continents is that at least Americans did not have to labour under the enormous design faults of the eurozone. Imagine their chagrin if the citizens of hard-hit states (eg Nevada or Ohio) had to worry about a death embrace between the debt of their state and the losses of the banks who happened to operate within the state.
Additionally, Americans were spared the need to contend with a central bank utterly shackled by inner divisions and the German central bank’s penchant for treating the worst-hit parts of the union (the eurozone, that is) as alien lands that had to be fiscally waterboarded until they ceased to obey the laws of macroeconomics.
There Is No Tech Bubble. Still, Be Worried. (Bloomberg)
Andreessen Horowitz, the most innovative and outspoken of Silicon Valley’s big venture capital firms, recently came out with a presentation intended to kill the idea that there’s a new tech bubble under way. The 53-slide presentation, by Morgan Bender, Benedict Evans and Scott Kupor, takes on the idea that too much money is flowing into private technology companies, especially in the highly valued startups called “unicorns.”
First, a little background. Bubbles, by definition, pop, and if tech crashed it would hurt a lot of investors. People making the case for a bubble often focus on unicorn startups (those with a valuation of greater than $1 billion) such as Uber, which is now valued at $40 billion without having gone public. They claim that large private financing by late-stage venture capital, backed up by large asset managers like Fidelity or Tiger Global Management, have replaced initial public offerings as the driver of overvaluation. This is known as the “private IPO.” The pro-bubble case is that these private financing rounds have inflated the value of the unicorns without spilling over into the public markets.
Pacific Trade Deal Negotiators See a Wrap in Late July (NY Times)
With a final accord in sight, the 12 nations negotiating a trans-Pacific trade agreement linking 40 percent of the global economy have set a last round of talks for late July on the remaining issues on the most ambitious trade deal in a generation.
Outstanding controversies include access to Canada’s agriculture market, Australian concerns over American pharmaceutical patent rules, Peru’s rain forest management, Chinese components in Vietnamese textile exports and labor organizing rights in Vietnam and Mexico. The dispute over access to Canada’s protected dairy and poultry markets is so fierce that some participants say they believe Canada could drop out of the talks.
Foreigners can't ignore China's crazy stock market (CNN)
This is a very scary time to own Chinese stocks. The market has plunged over 25% and stomach-churning volatility has become routine.
But if you take the long view, analysts say, China's markets are too important for international investors to ignore.
Can China Keep Miami's Condo Bubble From Bursting? (Zero Hedge)
After Xi Jinping’s anti-corruption campaign emptied the VIP baccarat tables in Macau causing gaming revenue to plunge 40% month after painful month, China’s stock market miracle might well have functioned as a convenient outlet for the gambling propensities of the country’s ultra rich.
That all came to a rather unceremonious end three weeks ago when the unwind of as much as CNY1 trillion in backdoor margin lending triggered a terrifying 30% collapse in Chinese equities.
Charting the Rise and Fall of China's Equity Market (Bloomberg)
It’s been a wild ride on China’s equity market, with the Shanghai Composite Index rising from just above 2,400 in November 2014 to a high close of 5,200 in June, before plunging back toward 3,700 in early July. Along the way there have been four rate cuts, three reserve requirement cuts and, most recently, a raft of measures from the government aimed at stabilizing the market. This chart maps out the recent history of policy and market moves.
Trading
4 Oil Service Stocks to Buy With at Least 40% Upside Potential (24/7 Wall St)
If you are going to invest capital in a sector that has, and likely will continue to struggle for the next year or so, it makes sense to direct that capital to companies with the biggest upside potential. Deutsche Bank met recently with more than 20 oil service companies in Houston and came away with data and opinions that investors can benefit from going forward.
Nearly 25% of Chinese stocks have stopped trading (CNN)
The turmoil in China's stock market is so bad that some companies are calling it quits.
Over 700 Chinese companies have halted trading to "self preserve," according to the state media. That means about a a quarter of the companies listed on China's two big exchanges — the Shanghai and Shenzhen — are no longer trading.
Politics
Clinton: Rice Backed Obama Over Israel on Settlements (Bloomberg)
One of President Obama's first breaks with Israel was when he disregarded what its foreign ministry considered an informal U.S. agreement to accept limited expansion of Jerusalem suburbs built on land Israel won in the 1967 Six-Day War.
It turns out this decision — a flash point for Jerusalem — was quietly supported by Bush's second secretary of state and first foreign policy tutor: Condoleezza Rice, according to an e-mail made public by the State Department last week as part of the disclosure of Hillary Clinton's personal e-mails stored on a private server.
Can Republicans Block an Iran Deal? (Atlantic)
As Congress awaits word from Vienna about a nuclear agreement with Iran that may—or may not—come this week, the Obama administration has all but given up on winning Republican support for the deal. The question now is whether GOP leaders can muster enough votes to block it.
Whether the U.S. and five other global powers can even finalize an accord with Iran after two years of painstaking talks is anyone’s guess. The original June 30 deadline has already been been extended, and the latest indications are that negotiators could blow past Tuesday’s due date as well. As of Monday, “very difficult decisions” had yet to be made, administration spokesmen said, and Secretary of State John Kerry warned that he would walk away from the deal—crutches and all—in the face of “absolute intransigence” by the Iranians. “At this point, this negotiation could go either way,” Kerry said Sunday.
Not Another Bush and Clinton? Many Companies Don’t Feel That Way (Bloomberg)
More than two dozen companies, trade associations and other groups ignored the political gridlock and opened their wallets in recent years to bring in both a Bush and a Clinton for paid speaking gigs. At least two—the World Affairs Council and the National Multifamily Housing Council—have heard from both former Presidents George W. Bush and Bill Clinton, and each of their relatives running for the White House this year.
Technology
Soon you'll be able to buy a real Star Trek Communicator for your smartphone (The Verge)
This might just be the ultimate Star Trek accessory: a faithful replica of the sci-fi show's iconic Communicator device that works as both a Bluetooth handset for your phone and as a portable speaker. Built by The Wand Company and making its debut appearance at San Diego Comic-Con this week, the Communicator is constructed from die cast aluminum and comes with a magnetic stand for wireless charging. As well as its Bluetooth functionality, the device is also filled with authentic Star Trek sounds and conversation fragments. This is presumably useful for when your friends refuse to talk to you because they just know you're using that damn prop again.
Health and Life Sciences
A New Frontier For Statins (Popular Science)
Up until recently, anyone suffering from high cholesterol had a fairly easy option to improve health. All they needed was a prescription for a group of chemicals known as statins. For decades, this was the go-to drug to cost-effectively keep low density lipoprotein (LDL) levels in check and prevent the onset of cardiovascular disease. Although this view has changed somewhat with the FDA providing advice on the potential risks associated with their use, the number of people taking these drugs continues to be high.
While the majority of research on statins appears to be focused solely on cholesterol, researchers have examined other potential benefits. Some include the formation of new blood vessels and an improvement in immune, bone and central nervous systems . But one of the most studied has been the antimicrobial effects of these drugs. For some reason, their inclusion seems to help the chances of infection prevention and control.
How tricky Lyme bacteria fool immune systems (Futurity)
The bacteria that cause Lyme disease are able to trick the immune system into not launching a full-blown immune response or developing lasting immunity to the disease, a new study with mice shows.
The discovery may explain why some people remain vulnerable to repeat infections by the same strain of bacteria, especially in regions where Lyme disease is prevalent.
Life on the Home Planet
Mystery of the Lizards That Know the Way Home (NY Times)
Call it the case of the homing lizards.
It’s a small mystery. No one of any species is murdered. But the central question is one that has prompted plenty of scientific research:
How do animals find their way home?
The lizards in this case are anoles — abundant, mostly small reptiles that thrive in the Caribbean…
Why Can’t We Stop Cholera in Haiti? (Gizmodo)
An outbreak of cholera in Haiti that began in 2010 is still killing people. Why have attempts to get it under control failed?
In early February, when Jenniflore Abelard* arrived at her parents’ house high in the hills of Port-au-Prince, her father Johnson* was home. He was lying in the yard, under a tree, vomiting. When Jenniflore spoke to him, his responses, between retches, sounded strange: “nasal, like his voice was coming out of his nose”. He talked “like a zombie”. This is a powerful image to use in Haiti, where voodoo is practised and where the supernatural doesn’t seem as far-fetched as it might elsewhere. Her father’s eyes were sunk back into his head. She was shocked, but she knew what this was, because she has lived through the past five years in Haiti. She has lived through the time of kolera.
Rubber expansion threatens biodiversity and livelihoods (Phys)
Increasing amounts of environmentally valuable and protected land are being cleared for rubber plantations that are economically unsustainable, new research suggests. More widespread monitoring is vital to design policy that protects livelihoods and environments.
How Brazil Designed Its Shapeshifting Olympic Torch (Wired)
IN 1936, A succession of nearly 4,000 runners carried the first torch of the modern Olympic games from Olympia, Greece, to the host city of Berlin. German artist Walter Lemcke designed the polish stainless steel torch, which, perhaps unintentionally, resembled one-half of a 10-pound dumbbell. It was a brute object—efficient, simple, and mostly clear in its purpose. In other words, it was totally German.
Eighty years later, the torch—in its various incarnations—remains the most symbolically rich matchstick ever created. Each Olympiad gets a bespoke design in homage to the host country and the games. Next year, Rio will host the summer games, and some 12,000 people will carry it through Brazil’s cities, villages, forests and beaches as a symbol of what that means for such a wildly diverse country.
