WEEK UPCOMING

The oracles at Jackson Hole have spoken not leaving much for the entrails scavengers to feed on and so we move to next week, a busy one with durable goods orders for July on Tuesday, some home prices and other home sales data for June gets released, consumer confidence and what could turnout to be some interesting numbers from Germany. Earnings reports take a backseat this week going into the Labor Day weekend.


Monday, August 25

US Economics (Time Zone: EST)

10:00 New Home Sales (July) - expected 428K, prior 406K
10:30 Dallas Fed - exp 13.0, prior 12.7
11:30 Treasury to sell $29b 3-month bills and $25b 6-month bills

Global Economics (Time Zone: GMT)

08:00 EUR German IFO Current Assessment, Expectations

Earnings

After:
Prospect Capital (PSEC)

Tuesday, August 26

US Economics (Time Zone: EST)

08:30 Durable Goods Orders (July) - expected 7.6%, prior 0.7%
08:30 Durable Goods ex Transporation - exp 0.5%, prior 0.8%
08:30 Cap Goods Shipments Nondef Ex Air - exp 0.5%, prior -1.0%
08:30 Cap Goods Orders Nondef Ex Air - exp 0.2%, prior 1.4%
09:00 FHFA Home Price Index (June) - exp 0.3%, prior 0.4%
09:00 S&P/Case Shiller 20 City MoM (June) - exp -0.1%, prior -0.31%
09:00 S&P/CS YoY - exp 8.22%, prior 9.34%
10:00 Consumer Confidence Index (August) - exp 88.5, prior 90.9
10:00 Richmond Fed - exp 6, prior 7
11:00 Fed to purchase $2b-$2.5b notes in 11-19 year range
11:30 Treasury to sell 4-week bills
1:00 Treasuty to sell $29b 2-year notes

Global Economics (Time Zone: GMT)

NZD Trade Balance
02:00 CNY July Leading Economic Indexeda

Earnings

Before:
Best Buy (BBY)

After:
Bob Evans Farms (BOBE)
Sanderson Farms (SAFM)

Wednesday, August 27

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
11:00 Fed to purchase $950m-$1.15b bonds in 22 to 30-year range
11:30 Treasury to sell $13b 2-year FRN (reopening)
1:00 Treasury selling $35b 5-year notes

Global Economics (Time Zone: GMT)

06:00 EUR German GfK Consumer Confidence

Earnings

Before:
Express (EXPR)
Michaels Co (MIK)

After:
Lannett (LCI)
Workday (WDAY)

Tiffany's (TIF)

Thursday, August 28

US Economics (Time Zone: EST)

08:30 Initial Jobless Claims - exp. 300k, prior 298k
08:30 Continuing Claims - exp 2500k, prior 2500k
08:30 GDP Annualized QoQ (2Q second estimate) - exp 3.9%, prior 4.0%
08;30 Personal Consumption - exp 2.4%, prior 2.5%
08:30 GDP Price Index - exp 2.0%, prior 2.0%
08:30 Core PCE QoQ - exp 2.0%, prior 2.0%
10:00 Pending Home Sales MoM (July) - exp 0.5%, prior -1.1%
11:00 Kansas City Fed - exp 9, prior 9
1:00 Treasury selling $29b 7-year notes

Global Economics (Time Zone: GMT)

Japan Investors Purchases of Foreign Stocks/Bonds
01:00 AUD New Home Sales
01:30 CNY Industrial Profits
07:55 EUR German Unemployment Change
12:00 EUR German Consumer Price Index (Aug prelim)
12:30 CAD Current Account Balance

Earnings

Before:
Abercrombie & Fitch (ANF)

After:
Omnvision (OVTI)
Splunk (SPLK)

Dollar General (DG)

Friday, August 29

US Economics (Time Zone: EST)

08:30 Personal Income (July) - expected 0.3%, prior 0.4%
08:30 Personal Spending - exp 0.1%, prior 0.4%
08:30 PCE Deflator MoM - exp 0.1%, prior 0.2%
08:30 PCE Deflator YoY - exp 1.6%, prior 1.6%
08:30 PCE Core MoM - exp 0.1%, prior 0.1%
08:30 PCE Core YoY - exp 1.5%, prior 1.5%
09:00 ISM Milwaukee (Aug) - exp 60.00, prior 63.87
09:45 Chicago PMI (Aug) - exp 56.5, prior 52.6
09:55 University of Michigan Confidence (August final) - exp 80.2, prior  79.2

Global Economics (Time Zone: GMT)

JPY Employment Data
JPY National CPI (July)
JPY Tokyo CPI (Aug)
JPY Retail Sales
JPY Industrial Production (Jul prelim)
05:00 JPY Housing Starts
08:00 CHF Unemployment Rate (Jul prelim)
09:00 EUR CPI (Aug advance)
12:30 CAD 2Q GDP

Earnings

No major earnings scheduled

Twitter: @MichaelSedaccaRead more: http://www.minyanville.com/business-news/markets/articles/economic-data-earnings-

WHERE'S THE NEXT BULGE

If you like flashes there's plenty to go around.

The flash purchasing managers' report for China recently came in lower than expected and the flash PMI for the Eurozone block of currencies in July dropped to 52.8 from 53.8, not a sign good for EU manufacturing. 

Still above the benchmark 50 level that tell if an expansion is still in progress, it's a subdued number given all the other issues floating around today. these are the kind of concerns that will put further pressure on the ECB to get more aggressive in its monetary policy.

Bond investors showed their hand in this call by pushing yield on many bonds to record lows. the Spanish 10-year bond yield fell to a record euro-era low of 2.37 percent.

Much of the gloom is now fostering talk about the EU going into a Japanese-style lost decade, hardly soothing to ECB bankers as the pressure on them mounts for what would be in the eyes of many QE to the rescue too late.

Meanwhile, on a broader scale, here's a headline from today's Financial Times, "Geopolitical threats knock executives' confidence." 

The proportion of executives who believed the global environment would worsen over the next six months has nearly doubled to 18 per cent, nearly one in five respondents, from just 9 per cent at the end of last year, according to the Times.

One of the fears it seems is the growing concern abut a Russia-West trade war and now growing worries about Brazil, one of the BRIC nations, and South America's largest economy. Brazil's friendliness meter seems to have taken a turn for the worse, many executives believe. this slide in confidence has happened over the past two years. 

So the water filled balloon is going to get pushed one way or the other. It's going to be fun seeing where it bulges next.  
t. man hatter

EU UNDERDOGS

  
A while back we suggested putting some cash to work in Europe. There's some value there despite all the concern about deflation or the absence of inflation. 

We briefly mentioned it in "Money Made Here."  Now some hedge fund managers also known as activists, according to today's Financial Times, are starting to snoop around for opportunities. European market valuations have trailed those in the U.S. and, per the Times, some companies there have been hit hard "by the continent's debt crisis, are more open to radical shake ups of their businesses than ever before." 

This is not new and if history is any indication not the easiest road to activate.The important point for regular investors is the valuation part. One can play this if there is a recovery, and there will be one at some point, by looking for individual solid companies, sector funds and specific country funds.

In another report, also in today's Times, "Institutional Investors' top 10 asset classes" for the next six to 12 months, European Union equities are far down the list at seven, even behind emerging market and high yield debt. At the top spot are Emerging market equities, followed by US and Global equities. 

We like the underdog flavor of that list given how often Wall Street pundits turn out wrong.
t. man hatter


   

AROUND THE WEB

1. Brazil Election Impact
http://www.marctomarket.com/2014/08/is-marina-new-modi.

2. Tears and Tear Gas
http://www.blacklistednews.com/Tear_Gas_Is_A_Banned_Chemical_Weapon%2C_But_US_Lobbying_Made_It_Okay_For_Domestic_Use...

3. Happiness Is What?
http://resourceinsights.blogspot.com/2014/08/id-be-happier-if-i-didnt-write-this.html

4. There's An Old Joke: What's The Difference Between A Barroom And An Elephant's Fart?
http://www.zerohedge.com/news/2014-08-19/summing-fed-policy-2-words-vroom-crash

5. Money And Mary Jane
http://www.theguardian.com/world/2014/aug/19/colorado-cannabis-marijuana-black-market

6. Energy Roadblocks Ahead?
http://energytomorrow.org/blog/2014/aug/stricter-ozone-rule-nonattainment-for-kentucky

7. Watch The US Consumer
http://www.marketwatch.com/story/dont-count-on-us-consumer-to-save-economy-2014-08-19

8. One Of The Few Articles That Tells Truth About Phony EU Austerity
http://www.bloombergview.com/articles/2014-08-19/european-austerity-is-a-myth

LOVE THOSE LEGISLATORS.

Californians and those in the nation's capitol should love this chart and their legislators, too.

JACKSON HOLE QUIJA BOARDS

t. man hatter
Anyone who doesn't see through the glass darkly needs to look several more times.

Concern about deflation--especially in the European Union--has created hoards of easy money. Borrowing costs in Italy and Spain on 10-year debt are below their pre-crisis levels.

Despite a host of geopolitical nonsense around the globe, investors continue to pile into these riskier peripheral assets. There was even a mild MSM led celebration about Spain's economic recovery being underway. Now, however, that looks like just so much wishful thinking.


Here's a quote from http://globaleconomicanalysis.blogspot.com/2014/08/recovery-mirage-in-spain-dissipates.html that tells the real story about that fake recovery.

Spain has been living on borrowed time for years, accumulating a huge debt to maintain their level of consumption and investment-their standards of living. Between 2002 and 2007, Spain was amassing a growing external deficit, as more and sell less abroad (exports) and bought more (imports), bringing its foreign debt grew.

This imbalance is reflected in a very specific indicator, the current account deficit, which in 2007 reached a record high close to 10% of GDP. That is, the entire country that year said external financing close to 100 billion euros to cover their consumption and investment.

The fact that the trade deficit has risen again after the minimum economic rebound in recent quarters is a sign of weakness, because it demonstrates the strong dependence Spain still external financing to maintain their level of consumption and investment.

Don't be disturbed by the broken English. As the article, if you care to read it, points out this is a translation from Spanish to English.

Some of this celebration centered on a sick sort of pride like my kid is the smartest kid in the dumbest row of his class at school. Think U.S.economy here versus the rest of the world. Two-year U.S. Treasuries yield 40 basis points.

If that's investors' idea of a flight to safety, as a colleague recently put it, it's more like bond bungee jumping. Troubles don't happen often but when they do.....

Later this week those central bank oracles, Mario Draghi and Janet Yellen at Jackson Hole, will ease most of our concerns by pretending that they know what's going on and have their macro and micro thumbs firmly plastered on their economic Ouija boards.

Both these bureaucrats want one thing: investors to continue ramping up their appetite for risk and yield. It's a sort of please-take-more-risk kicking-the-can pandering of the worse sort. 

Perhaps the ugliest nightmare of bureaucrats like Draghi and Yellen is people who are starting to get it, the last people these quasi- politicians want to ever get it, everyday, middle class people.

Here's a quote from letters to the editor in today's Wall Street Journal. It's a bad news, good news quote.

Europe's economic malaise and youth underemployment are caused by a much bigger force here than the cost of labor protections ("Young, European and Broke," page one, Aug. 9). The real driver is Europe's ever-expanding social welfare state and the increasing tax load it demands from the populace. Europeans have finally burdened themselves sufficiently to depress investment and innovation so much that maintaining economic stability is all but impossible and expansion is just about out of the question. 

As of late, America too has embraced this notion and followed Europe's lead. Well, it isn't all bad. At least they are illuminating the road ahead for us so we know where we're going.

Ken Ratkovich

If you got an idea where we're headed and you want to do that most politically sacrilegious thing, according to the elitists pushing those global buttons, and protect you and yours and make some money, money they never intended you to have, keep asking questions and demanding answers. 

And keep reading. And by all means don't let the MSM apologists disparage you from owning hard assets like gold.
 

WRONG AGAIN

We recently published a chart (What The Market Offers) showing just how long retail investors have been wrong when it comes to investing.

Well, despite the MSM ballyhoo about a current rotation, supposedly following the one that never happened earlier this year, it looks as if retailers are setting themselves up for being wrong again.

This week's issue of Barron's featured an article about a Great Rotation that didn't happen but another one that seems to be in full swing

But there's a lot more going on here than investors exiting stocks and going into bonds. A closer look at what's driving the flows in each category points to a very different Great Rotation -- for stocks, out of active funds and into passive ones, and for bonds, out of the safe and into the unknown.

According the article, "July was the third consecutive month in which investors pulled money out of U.S. equity" funds and sent that green stuff to what is perceived by them as safer haunts or so-called index funds.

To use the jargon of the Street this money is flowing from active management to passive management, one of the reasons being how poorly active engagement has done during this crazy year and that active usually takes a greater bite from investor pocketbooks.

Well, spare you the large numbers just suffice it to say they are big especially if you happen to be one of the bigger fund mangers like Vanguard or Fidelity. Now most of us know about the low-interest rate, yield-starved scenario of recent months and how investors have crawled farther out on the risk limb to try to compensate.
   
Fidelity better known for active management has seen large outflow while Vanguard one of the stalwarts in passive or index management has seen huge inflow. Recall that John Bogle the founder of Vanguard is a big advocate of index investing. But there's another story here.

Over in the bond market both active and passive funds have seen huge inflows. This money, per Barron's, is not flowing into traditional bonds funds any longer, but some new puppies on the Street geared toward eliminating interest rate risk. The new players are so-called "unconstrained, flexible, go any-where" funds.

If that sounds a bit more risky you might be on to something. And again, according to Barron's, most of these funds are run by new managers who have never experienced volatile interest rates scenarios.

And today's Wall Street Journal ran a story about how big money is now flowing back into these lower-rates or junk bonds.

Large institutions are snapping up U.S. junk bonds, taking advantage of a price slide triggered by an exodus of individual investors. 

Many big money mangers say they remain bullish on these risky corporate bonds despite concerns that the market is overheated and worries that geopolitical unrest could fuel a rush to safer assets. 

Here's a quote from the WSJ piece from a high-yield manager that summarizes the matter:

Investors who panic in these selloffs--it's the wrong thing to do...."
t.man hatter

SADDLE UP

As we mentioned in "UPCOMING WEEK" the Fed holds its annual Jackson Hole Symposium this week all rip and raring to go with a fancy title, too: "Reevaluating Labor Market  Dynamics."

 The economic guessing is about to run amok. What will Fed Chair Janet Yellen say, more dovish gibberish or something traders can cut a few decent trades off? Or will she pull the hood off the bird of prey and unleash some hawkish language to the surprise of nearly everyone?

 Well, we probably got a little carried away there. So don't bet on it.

And what will prove the more meaningful of the two, the FOMC minutes from July 30 or the palaver at Jackson Hole?

What we do know is the Fed has a plan. And that's what scares the hell out of us.
t. man hatter

 

OUR VIEW

 

If all those anti-pipeline protestors in Boston don't want natural gas, folks in Texas sure do.

The Texas region will turn almost exclusively to natural gas to meet the growth in demand for     electricity over the next 25 years, according to a government analysis.

Natural gas is Texas’ most widely used fuel for electricity generation now, though coal is a close second. Nuclear power and renewables — mostly wind — generate far less than either of the fossil fuels, according to numbers crunched by the U.S. Energy Information Administration.

The balance of power will shift even further  through 2040 as gas-fired generation rises by 81 million megawatt hours and accounts for most of the growth in the Texas Reliability Entity — a federally approved electricity monitoring region  that includes most of the Texas grid.

Other forms of power generation are expected to remain virtually flat through 2040, according to the report.

Natural gas-fueled electricity will begin become significantly more common than coal generation after 2016, as cheap sources of gas from the Permian Basin and Eagle Ford shales, coupled with the relatively high cost of building new coal plants, make gas a more attractive option. 

The region’s electricity demand is expected to grow by 0.9 percent each year, according to the Energy Information Administration, an Energy Department agency.

A story in one of the scribes today pointed out that China is "believed to hold the world's largest recoverable shale resources..." It goes on to say the "suggestion that the world is anywhere close to being independent of oil (hydrocarbons) is ridiculous. It's going to be a long while before we are all driving Teslas or BMW i8s."

This is just one of many issues that divide this a nation, something we believe is extremely healthy, notwithstanding all the MSM blabber.The former administration divided this nation deeply, a state many feel that has only been exceeded by the current Washington crowd.

If, for example, this administration's foreign policy waffled anymore it's be on the menu at IHop

Again, we say this is healthy, transparent; people need to know who their enemies are. Bring it out in the open. If the good people of Boston don't want more pipelines, we say great. Forget cake. Let them freeze; they have a right to make that choice. 

They have a right to follow their elected inept leaders. This is not endemic to the U.S. Look around the world today and find a continent where there's no fighting going on. 

And what's happening in Missouri is another example. It's not about what MSM would have you believe, race. It's about human beings and turning your local police departments into military units. We'd say quasi-military, but that would be gilding the damn lily.

Someone posted a picture on the Internet of a Gulf War veteran in his military garb next to a local police department swat team member with the caption that pointed out the swat guy had more armor on than a US soldier at war. If that sounds normal to you, perhaps you need to move to Missouri.

It's time. It's push back time against all this phony political correctness that's been dogging this nation for the last generation or so. People are up to their uvulas with it all and it has nothing to do with all the MSM lies about race, religion and the like.

It's about the interminable regulations that have decimated the middle class and now threaten worse.

It's decision time. And you're going to have to decide. The late JFK was fond of quoting Dante and his passage about hell's hottest places being preserved for those who keep their neutrality during a crisis.

Phony attempts to rule this country via abusive executive, judicial or legislative powers is over as soon as you decide to declare it over.

That's our view. We hope you know yours.



 

UPCOMING WEEK

It was a mixed week in the market with the DJIA down 60 to close at 16,662, the S&P 500 off a fraction to 1,955.06 from 1.955.18 and the Nasdaq up 12 at 3,987. Bond yields dropped again in a flight to safety and oil, of course, rallied on the Ukrainian news.

Five sectors were up and three were down with Energy, Utilities, Health Care, Materials and Consumer Staples up. Next week is another busy one with data about housing, the CPI and FOMC minutes from three weeks ago to go along with the start of the Fed's annual Jackson Hole meetings.

Monday, August 18

US Economics (Time Zone: EST)

10:00 NAHB Housing Market Index (Aug) - expected 53, prior 53
11:00 Fed purchasing $950m-$1.15b bonds in 22 to 30-year range
11:30 Treasury to sell $29b 3-month bills and $25b 6-month bills

Global Economics (Time Zone: GMT)

01:30 CNY July Property Prices
09:00 EUR Eurozone Trade Balance

Earnings

After:
Urban Outfitters (URBN)

Tuesday, August 19

US Economics (Time Zone: EST)

08:30 Consumer Price Index YoY (Jul) - expected 2.0%, prior 2.1%
08:30 CPI Ex Food & Energy YoY - exp 1.9%, prior 1.9%
08:30 Housing Starts (Jul) - exp 970K, prior 893K
08:30 Building Permits - exp 1000K, prior 973K
11:00 Fed to purchase $250m-$350m notes in 11-19 year range
11:30 Treasury to sell 4-week bills, $25b 52-week bills

Global Economics (Time Zone: GMT)

03:00 NZD RBNZ 2-Year Inflation Expectations
08:30 GBP CPI

Earnings

Before:
Home Depot (HD)
Dick's Sportings Goods (DKS)
Medtronic (MDT)
TJX (TJX)

Wednesday, August 20

US Economics (Time Zone: EST)

07:00 MBA Mortgage Apps
2:00 FOMC Minutes

Global Economics (Time Zone: GMT)

AUD RBA's Stevens delivers semi-annual testimony
JPY Trade Balance
04:30 JPY All Industry Activity Index
06:00 EUR German PPI
08:30 GBP BoE Minutes

Earnings

Before:
Target (TGT)
PetSmart (PETM)
Hain Celestial (HAIN)
Madison Square Garden (MSG)

After:
Hewlett-Packard (HPQ)
L Brands (L)

Lowe's (LOW)
Staples (SPLS)
American Eagle Outfitters (AEO)

Thursday, August 21

US Economics (Time Zone: EST)

08:30 Initial Jobless Claims - exp. 300k, prior 311k
08:30 Continuing Claims - prior 2544k
10:00 Philly Fed - exp 20.0, prior 23.9
10:00 Existing Home Sales - exp 5.00M, prior 5.04M
10:00 Leading Index - exp 0.6%, prior 0.3%
11:00 Fed to purchase $2.05b-$2.5b notes in 7 to 10-year range

Fedspeak

Jackson Hole Fed symposium begins

Global Economics (Time Zone: GMT)

Japan Investors Purchases of Foreign Stocks/Bonds
01:00 AUD Consumer Confidence Index
01:35 JPY Manufacturing PMI (Aug prelim)
01:45 CNY HSBC Manufacturing PMI (Aug prelim)
06:00 CHF Trade Balance
07:00 EUR France Manufacturing PMI (Aug prelim)
07:30 EUR German Manufacturing PMI (Aug prelim)
08:00 EUR Eurozone Manufacturing PMI (Aug prelim)
08:30 GBP Retail Sales
08:30 GBP Public Budget
14:00 EUR Eurozone Consumer Confidence (Aug advance)

Earnings

After:
Gap (GPS)
Ross Stores (ROST)

Dollar Tree (DLTR)
Aeropostale (ARO)

Friday, August 22

US Economics (Time Zone: EST)

No major reports scheduled

Fedspeak

Jackson Hole Fed symposium begins

Global Economics (Time Zone: GMT)

12:30 CAD CPI

Earnings

No major earnings scheduled

Twitter: @MichaelSedacca

Read more: http://www.minyanville.com/business-news/markets/articles/economics-economic-data-earnings-reports-earnings/8/15/2014/id/55659#ixzz3AWb9QS6f