Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
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Your Daily Business Fix
Ben Bernanke moved over to the Senate Banking Committee floor Thursday, after testifying to the House panel the day before. This morning he referred to debt default as a “catastrophic” consequence.
The levity of the situation became more clear last evening, when Moody’s (NYSE: MCO) warned the U.S. would be placed on ratings watch for downgrade on the likelihood of a temporary default.
Tempers are flaring in Washington, with the President reportedly storming out of a meeting, and accusations being hurled at the GOP. Senator McCaskill said Senator McConnell had lost his mind, and Eric Cantor was labeled childish, while some asked why he was even there. What bothers yours truly most is that the common American has absolutely no clue of the immense importance behind America’s avoiding default at all costs. If Americans knew what hangs in the balance, there would be millions of them amassed outside of Congress’ halls today.
Retail Sales were reported for June this morning. Sales growth was relatively non-existent, rising just 0.1%. Economists were looking for no change, so the news was a modest positive. That said, when excluding auto sales, retail sales incurred no change, which was short of expectations for a 0.1% increase. The month was one characterized by a low consumer mood, with gasoline prices only just easing off of a $4 high and all hell breaking loose overseas and in Washington D.C. too. As far as July goes so far, some of the data has been better (referring to ICSC and Redbook weekly sales reports), attributed to nice weather and perhaps some pent-up demand.
Producer Price Rise
Inflation watchers got what they feared this morning and some. Producer Prices decreased by 0.4%, but that came on the backtracking of petroleum. Economists expected the headline PPI to fall by 0.3%. The problem came on the Core PPI, which while seen running up to 0.2% in June, actually showed price increase of 0.3%... and they say there’s no inflation.
Jobless Claims Less Bad
Weekly Initial Jobless Claims came in 22K lower in the week ending July 9. At 405K, claims met the economists’ consensus, but remain above the 400K psychological threshold. That said, this data bears watching over the weeks ahead as there may be an authentic improving trend developing. The four-week moving average illustrates this, showing another mild improvement this week, down 3,750 to 423,250. It’s just hard to imagine any improvement in such an uncertain environment; thank God for the common American’s disconnection to economic events.
Consumer Mood Less Lousy
Bloomberg’s Consumer Comfort measure got a little better but consumers appear to still be feeling under the weather. The report, which showed deterioration in the consumer mood last week, improved this week to negative 43.9, from -45.5 the week before.
Business Trade Data
The Business Trade Data looked a lot like what we saw on the Wholesale level. Business Inventories increased 1.0%, versus expectations for a 0.8% rise in May. This may seem like good news, but only until we study Business Sales, which fell 0.1%. A similar contrast occurred in April, and this is souring news for economy watchers. Inventories appear to be building due to sales growth slowing, and that is not good. The Inventory-to-Sales Ratio deteriorated as a result to 1.28 in May from 1.27 in April.
Italy Passes Austerity
Italian debt costs increased ahead of the vote, but austerity measures were passed in Italy today. This should help to quell some of the latest concerns about European contagion, and it may offer some support to the euro.
China Demands Protection
China’s Foreign Ministry said it hopes the U.S. will adopt “responsible policies” to protect the interest of investors. China is of course the largest lender to the United States, which threatens default if the debt ceiling is not raised by August 2nd.
Natural Gas Inventory
For the week ending July 8, the EIA reports that natural gas inventory increased by 84 Bcf. Stocks were still 218 Bcf short of last year’s mark and 52 Bcf under the five-year average for this time of year. Counter to expectations you may have regarding air conditioner usage and demand for natural gas, because of its use in heating, the greatest draw on stores comes in the winter.
Gold to $1600!
We outlined our expectations for gold to reach $1600 in a premarket article today, but warned that the European banking stress tests could offer support to the euro against gold tomorrow. We also noted that Moody’s warning should knock some sense into DC legislators. The latest uncertainty around the U.S. and European most current affairs have fueled gold’s rise against fiat currency generally.
CORPORATE NEWS WIRE
J.P. Morgan Chase (NYSE: JPM) reported better than expected results this morning, driving the stock up 3% deep into Thursday morning trade. JPM earned $1.27 per share, versus consensus expectations for $1.21, based on Bloomberg’s survey. The company attributed its results to 49% stronger investment banking profits and better credit card customer reliability.
Yum! Brands (NYSE: YUM) reported last evening, beating estimates and raising its outlook. The stock is up 2% today as a result. The operator of KFC, Taco Bell and Pizza Hut said booming Chinese business led it to raise its guidance. YUM earned $0.65 a share against analysts’ expectations for $0.61. The company raised its full year EPS growth expectations to 12% from 10%. Still, while its China sales were booming, U.S. same-store sales declined across the company’s chains.
The corporate wire has a meeting scheduled at H.B. Fuller (NYSE: FUL). An FDA panel reviews Seattle Genetics’ (Nasdaq: SGEN) Hodgkins disease cancer drug. Raptor Pharmaceuticals (Nasdaq: RPTP) participates in the Cystinosis Research Network Conference.
The day’s EPS schedule highlights reports from J.P. Morgan Chase (NYSE: JPM), Google (Nasdaq: GOOG), DHT Holdings (NYSE: DHT), Independent Bank Corp. (Nasdaq: INDB), MEDTOX Scientific (Nasdaq: MTOX), Ocean Power Technologies (Nasdaq: OPTT), Alliance Financial (Nasdaq: ALNC), Angiodynamics (Nasdaq: ANGO), Biostar Pharmaceuticals (Nasdaq: BSPM), Bridgford Foods (Nasdaq: BRID), China HGS Real Estate (Nasdaq: HGSH), China Natural Resources (Nasdaq: CHNR), Chinanet Online (Nasdaq: CNET), Citizens First (Nasdaq: CZFC), Commerce Bancshares (Nasdaq: CBSH), CoreSite Realty (NYSE: COR), Cubist Pharmaceuticals (Nasdaq: CBST), Fairchild Semiconductor (NYSE: FCS), First of Long Island (Nasdaq: FLIC), Highway Holdings (Nasdaq: HIHO), J.B. Hunt (Nasdaq: JBHT), National Bankshares (Nasdaq: NKSH), Oxygen Biotherapeutics (Nasdaq: OXBT), Pacwest Bancorp (Nasdaq: PACW), Peregrine Pharmaceuticals (Nasdaq: PPHM), Resources Connection (Nasdaq: RECN), SigmaTron (Nasdaq: SGMA), SinoTech Energy (Nasdaq: CTE), Suffolk Bancorp (Nasdaq: SUBK), Texas Industries (NYSE: TXI) and Washington Federal (Nasdaq: WFSL). Article interests S&P 500 investors (NYSE: SPY), Dow investors (NYSE: DIA), NASDAQ investors (Nasdaq: QQQQ) etc.
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