Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

NEW$ & VIEW$ (3 JULY 2014)

SHOWTIME!
  • June Nonfarm Payrolls: +288K vs. consensus +212K, +224K previous (revised from 217K).
  • Unemployment rate: 6.1% vs. 6.3% consensus, 6.3% previous.
Gas Prices Wallop Wallets As Americans drive to barbecues and the beach in coming days, they will be paying more for gas than on any Independence Day weekend since the record highs of 2008.

A gallon of unleaded gasoline cost an average of $3.67 Wednesday, almost 20 cents above last year’s price, according to automobile club AAA. In California, drivers have been paying well over $4 a gallon for weeks. (…)

A jump in gasoline prices is unusual for this time of year. Prices typically peak around Memorial Day, the start of the summer driving season. According to AAA, prices at the pump fell by an average of 21 cents a gallon in June in the past three years. But they rose this year due to the turmoil in Iraq. (…)

In reality, this is not a big deal, yet.image

Retail Rents on Rise as Space at a Premium Shopping-center owners continued to increase rents in the second quarter as a host of retailers in expansion mode jockeyed for dwindling available space in existing high-quality centers.

REFLATION
Germany Approves Minimum Wage

Germany’s parliament gave the green light to the country’s first national minimum wage Thursday despite criticism from employers who said the new law could result in job losses.

Wrapping up months of tough negotiations, 535 of the 601 lawmakers that cast their vote adopted a statutory wage floor of €8.50 ($11.60) an hour, starting from 2015, with a two year-transition period granted to some sectors. The law also excludes some groups from the minimum wage who are believed to be at the greatest risk of being priced out of the job market, such as the long-term unemployed, those under 18 and short-term interns. (…)

ECB Leaves Interest Rates Unchanged The European Central Bank held interest rates unchanged despite signs of persistently weak inflation that threatens the region’s fragile recovery.
Sweden Cuts Main Interest Rate Sweden’s Riksbank made a surprisingly large cut to its main interest rate, lowering borrowing costs for the first time in six months to boost a sagging inflation rate.

The Riksbank said it would cut its main repo rate to 0.25% from 0.75%. (…)

The Governor of the Riksbank Stefan Ingves said at his news conference that Swedes were already borrowing too much and that Sweden’s high and rising household debt levels were unsustainable. However, he also made clear that it was for others outside the Riksbank to deal with. (…)

EUROZONE COMPOSITE PMI AT 52.8, ORDERS STRONG

The eurozone economy saw further solid growth of output in June, rounding off the best quarter of economic expansion in the region for three years. The outlook for the second half of the year was mixed, however, as signs that the upturn in output was losing momentum were offset by stronger inflows of incoming new business.

At 52.8 in June, unchanged from the flash estimate, the final Markit Eurozone PMI® Composite Output Index signalled expansion for the twelfth consecutive month. Although the rate of increase eased for the second month running to its lowest in the year so far, PMI data for the second quarter as a whole are consistent with a mild acceleration in GDP growth to around 0.4%. New business levels, meanwhile, rose at the fastest pace in over three years.

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Manufacturing production and services business activity rose at similar rates during June, with both sectors seeing output growth slow over the month.

The upturn in economic activity in Italy accelerated – reaching a three-year high – underpinned by strengthening order inflows. Although output growth in Germany ticked lower for the second month in a row, the pace of expansion was still in line with the average for the current 14-month sequence of increases. Growth of output and new orders also slowed slightly in Spain. France remained the major negative spot on the eurozone growth picture, recording the sharpest contraction of output for four months in June. Business activity and new orders contracted in both the manufacturing and service sectors.

Eurozone employment rose moderately for the third month running in June, with job creation registered in Germany, Italy, Spain and Ireland. Further cuts were reported in France, continuing a near-constant sequence of reduction seen since early-2012.

Input cost inflation hit a seven-month high in June, with increases in input prices reported by manufacturers and service providers. There were reports of higher oil prices and staff costs. Meanwhile, the rate of decline in output charges eased, as factory gate price inflation ticked higher and service sector charges fell at a slower pace.

Business activity in the eurozone service sector expanded for the eleventh successive month in June. The Eurozone Services Business Activity Index dipped to a three-month low of 52.8, from 53.2 in May, but nonetheless provided a solid end to the best quarter for three years.

The outlook for the sector also remained relatively bright, with the growth rate for new orders accelerating to its highest since May 2011 and business confidence hitting a three-month peak. A third successive month of modest job creation also suggested that services companies remained optimistic regarding the coming months.

Business activity and new orders rose in Germany, Italy, Spain and Ireland. Ireland again recorded the steepest expansions, with the growth rates in output and new orders at or close to seven-year peaks. This underpinned a stronger gain in payroll numbers. Germany was in second position in the output growth table, despite seeing rates of expansion in activity and new business ease slightly from May’s highs. German service providers also reported solid job creation. Spain saw a modest increase in employment, despite slower rates of increase for both demand and output.

The performance of the Italian service sector continued to brighten in June, with business activity and new orders rising at the sharpest rates since November 2010 and July 2007 respectively. This failed to result in job creation, however, with staffing levels broadly unchanged over the month.

France remained the main drag on the generally positive performance of the eurozone service sector, being the only one of the big-four nations to record a contraction in either business activity or new orders. Employment fell for the eighth successive month.

Input price pressures continued to increase at eurozone service providers in June, as costs rose at the fastest pace since November 2013. This mainly reflected higher oil prices and staff costs. Strong competition prevented companies from passing the increase on to clients, however, as selling prices fell for the thirty-first month running.image