23Jul2015 Market Close: Oil Falls, U.S. Markets Fall, DOW Off 119 And Tomorrow Doesn’t Look Good Either

Oil Prices Enter Bear Market

U.S. oil prices sank into a bear market Thursday as a global glut of crude shows little sign of abating.

Bank of America Financial Chief Exits as Part of Shake-Up

Bank of America is shaking up its management team, replacing its chief financial officer, its wealth-management chief and naming a new official to oversee the firm’s stress tests with the Federal Reserve.

Giant Fund Flips View on China: Steer Clear

The world’s biggest hedge fund has turned on the world’s fastest-growing economy. Bridgewater Associates, one of Wall Street’s more outspoken bulls on China, says the country’s recent stock-market rout will likely have broad, far-reaching repercussions.

Wall Street falls for third day as earnings disappoint

(Reuters) – Wall Street fell for the third straight day on Thursday following disappointing results and forecasts from companies including 3M and Caterpillar , adding to U.S. profit concerns.

China Electricity Consumption Grows At Slowest Pace In 30 Years

Chinese Electricity Consumption year-to-date grew at 1.3% year-over-year in June. As China People’s Daily reports, this is the slowest pace for mid-year in 30 years according to China Electricity Council.

As China People’s Daily reports,

China Electricity Council released “A Brief on 2015 Jan.-Jun. Electricity Industry” on July 21, reporting a declined acceleration rate on power consumption of 1.3%- the lowest acceleration rate in 30 years.

According to the brief, the first half of 2015 sees a total electricity consumption of 2662.4 billion kWh all over China. Electricity supply relatively surpasses the demand, but the investment in electricity construction still increases.

The data varies in different areas. There are 19 provinces whose acceleration rates are above the 1.3% national average, and there are 9 provinces whose acceleration rates are below zero.

The data also …

Uber, Santander partnership on car loans is over

SAN FRANCISCO (Reuters) – A partnership between Uber Technologies and Banco Santander SA’s U.S. auto loan unit is over, Uber told Reuters, removing one of the country’s most prominent car lenders from a program trumpeted by the app-based ride service.

Netmarble Takes Stake in SGN, Extending Asia’s Reach Into U.S. Mobile Games

In the last year, large Chinese and Japanese companies, including Tencent and Sega, have pumped tens of millions of dollars into American mobile gaming firms.

3 Things: Steel, Sentiment, & Productivity

Submitted by Lance Roberts via STA Wealth Management,

Strength Of Steel

Yesterday, I discussed the issues surrounding the Fed’s ongoing determination to hike interest rates despite evidence of a weakening economic environment. To wit:

“The Federal Reserve raises interest rates to slow economic growth to keep an economy from overheating which would potentially lead to a sharp rise in inflationary pressures. Since commodities are the basis of everything that is bought, consumed or other utilized; if there were indeed inflationary pressures on the rise commodity prices should be on the rise. As shown, this is clearly not the case.”

Last night, the World Steel Association released its June crude steel production report that showed volumes declining to 136 million tons. This is a drop of 2.4% from a year ago.

The decline in steel production, and subsequently the components that go into making steel like iron ore and coking coal, are further evidence that economic activity is far weaker than most analysts currently estimate. This is particularly the case in the U.S. where production of crude steel in June fell by 8.5% on an annualized basis.

Furthermore, the crude steel capacity utilization ratio for the 65 countries that the WSA tracks was 72.2% which is 3.5% lower than a year ago.

Nikkei to Buy Financial Times for $1.3 Billion

The sale of the FT Group to the Japanese media company comes after the financial newspaper’s British owner, Pearson, decided to focus on its growing education business.

The Company At The Center Of The Criminal Fed Leak Probe Was Just Sold

By now, it is common knowledge that the Fed’s leak of material, market moving data to Medley Global’s Regina Schleiger has become the reason for not only a Congressional subpoena which Janet Yellen has been resisting because, supposedly, the Fed is above the law and can decide which subpoenas to respond to (and will make sure anyone who dares to ask her any sensitive questions on the topic never speaks to her again as Pedro da Costa found out recently) but also a DoJ and OIG criminal investigation. So far there has been no actual charges as the Fed stonewalls and refuses to cooperate but even if it did, we doubt that anyone would dare to throw the central-planner of the formerly free world in prison.

But what about Medley? Why not subpoena and get sworn testimony from Regina or her employer to find out what happened from the other, less “protected” side? Actually that may have crossed the DOJ’s mind.

First, a reminder of just who Medley Global is:

MGA is the leading global provider of macro policy intelligence for the world’s top hedge funds, institutional investors, and asset managers. Our services and global network cover G20 plus Emerging Markets, Central Banks & Geopolitics, Global Oil and Energy Markets.

In short: an “expert network” (remember those? that’s how Stevie Cohen made his billions paying insiders for m …

Credit Suisse Swings to Profit in Second Quarter

The Swiss bank said that it benefited from strong results in the Asia-Pacific region, but that weakness in the fixed-income markets pressured its investment bank.

Japan’s Nikkei buys Financial Times in $1.3 billion deal

LONDON (Reuters) – Japanese media group Nikkei has agreed to buy the Financial Times from Britain’s Pearson for $1.3 billion, putting one of the world’s premier business newspapers in the hands of a company influential at home but little known outside Japan.

Big Trouble In Not So Little China…

Why hasn’t the panic of the recent decline followed by the government induced rally spilt over into other markets? While there was obvious concern that answer is simple enough… The Shanghai Stock Exchange Composite index rose 150% for the 12 months through June 12th. The rally, however, wasn’t based on any material upswing in economic fundamentals. Instead, over much of this period, the economy slowed with both exports and domestic demand weakening as did corporate profits. Capital outflows increased and even with high trade surpluses, the balance of payments turned negative for two quarters. Importantly, the authorities continued to guide public expectations towards lower medium-term growth as they had done over the past two years.

But after a very lackluster performance at best for the preceding four and half years, sometime at the start of 2H14, market sentiments changed. It is likely that talks of market liberalization, including an opening of the capital account, and in particular the authorities’ presumed intention to “rebalance” the economy’s portfolio from the excessive and worrisome dependence on bank credit to more equity and bond financing is likely to have been the catalyst.

Starting last November, the PBOC also began cutting lending rates and bank reserve requirements. While the easing was intended to support growth and liquidity, which had dried up because of increased capital outflows, market participants took this as corroboration of the government’s intended “support” for equity market expansion.

Talks of A-share’s inclusion in the MSCI index that could potentially bring in significant foreign inflows added to the …

Laws passed, Greece to open bailout talks as recession pushes goals further

ATHENS/BRUSSELS (Reuters) – Greece’s creditors prepared on Thursday for the start of bailout talks in Athens, after lawmakers adopted a second package of reform measures before dawn despite a left wing rebellion that may bring early elections.

Strategic Petroleum Reserve No Longer Key Part Of US National Security

Submitted by Nick Cunningham via OilPrice.com,

The U.S. Strategic Petroleum Reserve (SPR), once seen as a cornerstone of America’s energy security, is losing its shine in Washington.

The SPR was established in the aftermath of the 1973-1974 oil embargo, which led to high gasoline prices, fuel rationing, price controls, and long lines at gas stations. The U.S. government decided to stockpile oil in salt caverns in Texas and Louisiana, fuel that could be used in the event of a supply outage. Today, the SPR holds 695 million barrels of oil.

In the decades since, oil from the SPR has only been released a handful of times – including the Persian Gulf War in 1990-1991, Hurricane Katrina in 2005, and during the Arab Spring in 2011.

Sales from the SPR have often undergone quite a bit of scrutiny in the U.S. Congress. It is seen as a stockpile only to be tapped as a last resort measure, with the intention to supply the market only when there is a short-term disruption in supply (as in the examples mentioned above). Even the 2011 sale from the SPR was met with harsh criticism from certain members of Congress, who argued that the petroleum release was not needed.

When President Barack Obama announced the sale of 30 million barrels following turmoil in Libya that knocked supplies offline and raised oil prices, Republicans were incensed. “But by tapping the Strategic Petroleum Reserve, the President is using a national security instrument to address his domestic political problems. …

GM earnings more than doubles on U.S. truck demand; shares jump

DETROIT (Reuters) – General Motors Co shares rose on Thursday after the automaker reported adjusted net income that more than doubled in the second quarter, driven by North American truck sales and continued strength in China.

Wall Street Pulls in Its Horns in Connecticut

The contraction of the Stamford, Conn., operations of two global banks could stand as an indicator of how Wall Street as a whole is faring.

PIMCO “Sees Long-Term Value” In Chicago’s “Junk” Ahead Of Key Court Ruling

Back in May, the Illinois Supreme Court set a de facto precedent for lawmakers across the country when a bid to cut pension benefits was struck down in a unanimous ruling. Anyone who might have been confused as to the significance of the decision got a wake up call from Moody’s when the ratings agency, citing the read-through for Chicago’s fiscal situation, downgraded the city to junk.

As we noted at the time, Moody’s decision was bad news for a number of reasons, not the least of which was the fact that mayor Rahm Emanuel was looking to refi nearly a billion dollars in floating rate debt into fixed rate notes and borrow another $200 million to pay off the related swaps. The ratings agency’s actions also gave creditors accelerated payment rights, meaning the city could have been on the hook for some $2.2 billion in principal and interest on its outstanding liabilities.

But the larger story revolves around the implications for other fiscally challenged state and local governments, and as we noted in “States Turn To Pension Ponzi To Plug Funding Gaps,” one “solution” is to issue pension-obligation bonds, in what amounts to a nightmarish delay-and-pray scheme that’s virtually assured to end in still larger deficits. Meanwhile, Moody’s has found that using realistic return assumptions to calculate pension liabilities – as opposed to the absurd practice of accepting the assumptions of the pension funds themselves – makes lawmakers angry which is why some officials are now “omitting” Moody’s from deals. “We wanted a fresh set of eyes,” one financial officer told WSJ last month referring to the decision to not hire Moody’s. “Yes, a ‘fresh set of eyes,’ a …

Common Sense: Ruth Porat May Be Just What Investors Think Google Needs

With the arrival of Ruth Porat as Google’s chief financial officer, the corporate culture shifts to mature and fiscally responsible from impulsive and undisciplined.

The State of Uber: How It Operates in the U.S.

The app company has expanded its ride-sharing service in the United States by juggling regulations on state, city and local levels.