Financial Markets and Economy
Wall Street is in for a rollercoaster ride of a session Wednesday (Market Watch)
A report on China’s second-quarter economic growth, due at 10 p.m. Eastern on Tuesday, threatens to reignite a selloff in the country’s fragile stock market.
Federal Reserve Chairwoman Janet Yellen is scheduled to speak Wednesday morning about the central bank’s economic outlook to the House Financial Services committee, one day after a disappointing retail-sales report. That report, combined with a weak reading on employment gains from July 3, have caused investors to second-guess whether the pace of U.S. economic expansion has been strong enough to coax the central bank to raise interest rates in September.
And by the end of the day in Athens, the Greek Parliament must decide whether or not to adopt a raft of unpopular and stringent reform measures demanded by the country’s international creditors.
Asian shares tread cautiously before key events (Business Insider)
Asian stocks inched cautiously higher on Wednesday, taking their cue from Wall Street ahead of key events including Chinese economic data, a Bank of Japan policy decision and congressional testimony by the U.S. Federal Reserve chief.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> edged up 0.1 percent, while Japan's Nikkei stock index <.N225> advanced 0.5 percent in early trade.
Iran No Qatar Even With the Worlds Second-Biggest Gas Reserves (Bloomberg)
Natural gas made Qatar’s citizens the richest in the world within a generation. Even with bigger fuel reserves, Iran will struggle to follow its neighbor’s path.
In an economy less and less about ‘stuff,’ retail sales don’t matter as much (Market Watch)
Sure, now that the number was bad, here comes an argument why that number should be discounted.
Guilty as charged. Retail sales did disappoint in June, but in an economy less and less about “stuff,” the number isn’t as useful indicator.
"Everybody Benefits By Avoiding Defaults": Citi Explains How To Goalseek Student Loan ABS Ratings (Zero Hedge)
We last checked in on America’s $1.2 trillion student debt bubble a little over two weeks ago.
At the time, we noted that Moody’s had just placed 106 tranches in 57 securitizations backed by student loans on review for downgrade. It was the second such warning Moody’s had issued in the space of just 3 months.
The U.S. is facing a $1 trillion pension shortfall (CNN)
But the gap between what states have promised retirees and how much is saved to fund those payments has grown, according to a new report from Pew Charitable Trusts. States are short $968 billion for their pension systems, an increase of $54 billion over the year before. When debts from local programs are taken into account, the total shortfall tops $1 trillion, according to the report.
Three states — Illinois, Kentucky and Connecticut — have less than half of their pension programs funded. Illinois is in the hole by more than $100 billion.
Clash of the Commodity Kingpins (Bloomberg)
Sam Walsh, the mild-mannered Australian CEO of London-based mining giant Rio Tinto Group, insists he remains on cordial terms with Ivan Glasenberg, the brash South African who leads the global mining and commodities trading firm Glencore. Sure, Glasenberg approached Walsh’s boss—Rio Tinto Chairman Jandu Plessis—in July 2014 and proposed a merger that would likely have cost Walsh his job. Sure, Glasenberg doesn’t miss a chance to tell the world that Walsh and his fellow Big Mining executives don’t comprehend the basic economics of supply and demand. Still, Walsh told the Times of London in December, “We’re big boys, and this is business. It’s not personal.”
Systemic Risks Surge As Correlation Among Stocks Shoots Higher (Gavekal Capital)
Despite everyone saying "it's a stock-picking market" (notably one of Cliff Asness' pet peeves) recent co-movements in global equities suggests once again that there is just one factor driving returns as systemic codependence surges…
I went to a marijuana dispensary in Colorado and it felt just like visiting a wine store (Business Insider)
I don't smoke marijuana, but I recently visited Colorado and decided to check out a marijuana dispensary.
Colorado's tourism industry has been skyrocketing, and many claim it's due to January 2014's legalization of the possession and sale of cannabis.
Whether that's true or not, dispensaries are estimated to have brought in $295 million in sales as well as $51 million in tax revenue in 2014. Colorado is ranked one of the fastest-growing economies in the country, and its unemployment rate has seen the biggest drop in the US.
Iran Deal Makes Oil Markets Shrug, for Now (Bloomberg)
The nuclear agreement announced on Tuesday between Iran and global powers is being called historic and monumental. But in the oil market, it looked pretty … blah.
For U.S. banks, depositors could spoil joy of higher interest rates (Business Insider)
Rising U.S. interest rates may not boost bank profits by as much as many executives and investors hope, JPMorgan Chase & Co <JPM.N> Chief Executive Jamie Dimon said on Tuesday.
Investors expecting the Federal Reserve to lift rates this year have purchased U.S. bank shares, helping them perform much better than the overall U.S. stock market. Rising rates allow banks to charge higher rates on their loans, which can boost their income.
Yums Sales Miss Projections After China Remains Mired in Slump (Bloomberg)
Yum! Brands Inc., the fast-food company that owns KFC, Pizza Hut and Taco Bell, posted second-quarter sales that missed analysts’ estimates after its beleaguered China segment remained mired in a slump.
Revenue fell 3.1 percent to $3.11 billion in the period, the Louisville, Kentucky-based company said in a statement on Tuesday. Analysts estimated $3.19 billion on average for the quarter, which ended June 13.
To Cut or Not to Cut? Vale Makes First Move in Iron Ore Debate (Bloomberg)
Monday’s decision by Brazil’s Vale to cut some iron ore production has reignited debate about the responsibility of producers to help stem a price collapse that’s eroding profits for the world’s biggest mining companies.
Big Investors Are Holding the Highest Amount of Cash Since Lehman's Collapse (Bloomberg)
Cash is king, according to the results of the latest Bank of America Merrill Lynch fund manager survey.
Global poverty rates have been cut in half since 1981 (Business Insider)
We recently looked at a Pew Research Center study on the state of global poverty, and we decided to take a look at the recent history of poverty.
Will BofA Discount to Book Value Enhance Earnings? (24/7 Wall St)
Bank of America Corp. (NYSE: BAC) is scheduled to report its second quarter financial results Wednesday before the markets open. The consensus estimates from Thomson Reuters call for $0.36 in earnings per share (EPS) on $21.32 billion in revenue. The same period from the previous year had $0.19 in EPS on $21.96 billion in revenue.
First-quarter EPS missed the consensus estimate by two cents for a downside surprise of nearly 7%. The stock price rose 10.6% during the second quarter. The bank is expected to continue its cost-cutting ways, and operational efficiency may be a more potent driver of revenues and profits than anything else. The forward P/E ratio is 10.76 and the price-to-book ratio is 0.79.
These charts show why GoPro has a shot at dominating the drone market (Market Watch)
GoPro Inc. is set to launch a quadcopter drone in the first half of 2016, and FAA data shows the action-camera company could be a behemoth that challenges current drone makers for market dominance.
Find stocks expensive? Bonds are pricier (CNN)
Whether they are searching for stocks or bonds, there simply aren't many doorbuster discounts to be had.
After all, many stocks are trading at all-time highs. But bonds too are trading at expensive or very expensive levels compared with their historical norms, according to a BlackRock analysis.
Punters See Grexit Probability Slide to 9% From 50% (Bloomberg)
The chances of Greece tumbling out of the euro area are the lowest since the end of January, according to gamblers on Betfair Group Plc's online betting exchange.
A potential return of Iranian oil to the market could not have come at a worse time (Business Insider)
The world powers and Iran struck a deal on Tuesday to curb Iran's nuclear program for at least 10 years in exchange for billions of dollars in relief from international sanctions.
Eurozone struggles with obstacles to getting Greece short-term financing (Market Watch)
Eurozone governments were racing Tuesday to find a way to get Greece some desperately needed short-term financing within the next few days, but legal and political obstacles were complicating the effort, European officials said.
A deal struck by eurozone leaders Monday on a new rescue loan for Greece foresees the debt-stricken state implementing tough economic overhauls and budget cuts in exchange for as much as €86 billion in new loans.
Honda's U.S. auto finance arm to pay $24 million over loan pricing problems (Business Insider)
A U.S. auto finance arm of Honda Motor Co <7267.T> will pay $24 million in restitution over allegations that its loan pricing practices caused minority customers to pay higher interest rates than white borrowers did, U.S. regulators said on Tuesday.
The U.S. Consumer Financial Protection Bureau and Department of Justice said American Honda Finance Corp also would change its pricing and compensation system to reduce the potential for discrimination.
Politics
This Presidential Candidate Wants To Extend Health Care To Undocumented Immigrants (Think Progress)
At a roundtable in New York on Tuesday, Democratic presidential candidate and former Gov. Martin O’Malley (D) released his immigration platform for “New Americans,” announcing that he would go further than President Obama on immigration policies by enacting sweeping reforms to provide deportation relief for undocumented immigrants.
But one topic in particular has driven O’Malley further left than any of the other Democratic presidential candidates: expansion of health care to undocumented immigrants.
The Iran Deal Upends U.S. Politics (The Atlantic)
The Iran nuclear deal upends the security of the Middle East region. Old alliances have been shoved aside. Massive new resources have been put at the disposal of the Iranian regime. The security implications of the agreement will take time to be felt. The U.S. political consequences will be immediate.
The Iran deal presents Republicans with a sharp binary choice. Line up with President Obama in support of a treaty achieved mostly by American concessions that puts Iran on the path to an internationally accepted nuclear weapon sometime in the 2020s? A treaty that bypasses Congress’ role and that is opposed by every U.S. ally in the region, including but not limited to Israel? No cash prize for predicting how the Republican primary electorate will align.
Technology
Ultra-Thin Computer Chips Offer Breakthrough Technology (Idea Connection)
IBM’s has developed an ultra-thin, transistor-equipped computer chip with four times the capacity of conventional chips—opening the door to a new generation of faster computers.
The prototype chips are 7 nanometers wide, about 1/10,000th the width of a human hair, and could allow up to 20 billion transistors to be placed on a chip the size of a fingernail. In the computer world, the breakthrough is particularly exciting because it confirms that Moore’s Law (which states that the number of transistors per square inch on an integrated circuit should double every two years) can continue as expected, at least for a while longer.
Health and Life Sciences
Dairy offers more probiotic bang for the buck (Futurity)
Does it matter where you get your daily dose of probiotics—in food or a supplement—as long as you get them? The answer, according to two new studies, is a resounding yes.
Probiotics are living bacteria and yeasts that offer a variety of health benefits, especially for the digestive system. They’re available in yogurt and a variety of other fermented foods and beverages as well as in nonfood supplements.
Life on the Home Planet
Humans Aren’t Special: Carl Safina’s 'Beyond Words' Delves Deep Into Animal Minds (Popular Science)
Spending hours watching whales, wolves, and elephants in their natural habitats presents wildlife biologists with mountains of data that would quickly overwhelm most animal lovers. But when the time comes to catalog it all, renowned marine ecologist Carl Safina reminds us that the work is far from tedious. In his new book, Beyond Words, he calls it “beautiful, urgent, an almost holy quest for deeper intimacy” with the natural world. In effect, he’s describing his own book, which brings readers on a critical journey towards reevaluating their relationships with the natural world.
In Drought, Puerto Rico Rations Water, Setting Off a Collection Frenzy (NY Times)
On an island that is flirting with default, fending off comparisons to Greece and losing its people to the mainland, the biggest problem most people face is something more elemental — one of the worst droughts in Puerto Rico’s history.
There has been so little rain here that two months ago the government was forced to start rationing water on the populous eastern side of the island, including in many San Juan neighborhoods. Carraizo, the major reservoir serving parts of the city, has dropped nearly 18 feet in recent months, shrinking so noticeably that people can now fish off its sandy shores. The last time water rationing was ordered on the island was two decades ago.
