Good morning! It’s already Thursday, and Argentina just defaulted. Here’s what you need to know…
1. Big night. US GDP grew a huge 4% in Q2, a big beat on expectations for a 3% increase, and a huge snap-back from the contractionary first quarter. Some are concerned that such a significant portion of the increase was down to a rise in inventories. Chris Rupkey, chief economist at Bank of Tokyo Mitsubishi UFJ, is less concerned, noting the big recent increases in consumer confidence: “Apart from the inventories issue, is it a real 4% or is it a mirage? The consumer is back… Things can’t go too far wrong if the consumer is out shopping,” he wrote in a note to clients. It underlines why we’ve been we paying so much attention to big shifts in consumer confidence here in Australia.
2. The S&P500 hit another all-time high, as the Fed’s monthly statement contained no surprises on the continuing of the taper program, but in the end stocks closed largely flat in the US session, with the Dow falling 0.2%, and the S&P and the Nasdaq up 0.05%. Stocks were flat in Asia yesterday too, and the ASX futures contract is up a single point as we head towards the open. Yawn.
3. Alan Greenspan’s warning on stocks. The former Fed chairman said overnight the “stock market has recovered so sharply for so long you have to assume somewhere along the line we’re going to get a significant correction“. But, he added, “I would not say that we are grossly overpriced at this point in a historical context.”
4. Another school shelling in Gaza. An Israeli artillery attack killed 15 Palestinians sheltering in a UN-run school and another 17 near a street market overnight. The death toll from the three weeks of fighting is now more than 1,300 and there’s no ceasefire in sight.
5. Argentina defaulted. Again. They’ve failed in negotiations with so-called “vulture funds” who have refused to take a haircut on the $1.3 billion owed to them for a decade – because a constitutional clause would trigger a much bigger exposure if they acquiesced. Finance minister Axel Kicillof made the announcement from New York a short time ago. “This was a situation of extortion,” he said. “We will not just sign anything that could lead to more external debt for Argentina… We will avoid it with all of our weapons.” More here.
6. There’s nothing scarier than an EMP blast. At least that’s the view of billionaire hedge fund manager Paul Singer – the guy who has led the “vulture fund” consortium of Argentinian creditors mentioned above – who writes about the risks of an electromagnetic pulse event in a current letter to clients. He says it’s a “risk that stands way above the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence,” making it scarier than a nuclear exchange, he says. EMPs have been in the news lately after it emerged a naturally-occurring one from the Sun came dangerously close to enveloping the Earth a couple of a years ago. More here.
7. Snapchat’s global reach. The picture-messaging app has become the No.1 iPhone app in 13 countries and the No.2 or No.3 in 15 others. Here’s a map, with a No.1 rank shown orange, No.2 in red, and a No.3 in yellow. It hit No.2 in Australia, with this data taken from April 4.
8. Orlando Bloom and Justin Bieber punched on over Miranda Kerr. They really did – there’s video proof of last night’s battle in a restaurant in Ibiza. Bloom thinks Bieber got too close to Miranda when the pair split in 2012. He seemed to retalitate by hanging out with Bieber’s ex Selena Gomez earlier this year. And somehow they crossed paths last night, with Paris Hilton, Diddy, and Lindsay Lohan watching on. Celebgasm ensued.
9. An exciting Commonwealth Games update. Australia’s Athletics head coach was sent home after he spoke publicly about his feud with Sally Pearson. Usian Bolt denied calling the Games “a bit s..t”. An Aussie athletes was charged with assault. And the Poms are on top of the medal table, four medals behind us overall, but two gold in front. Disaster.
10. Go home winter, you’re drunk. Sydney’s expected to reach a top of 25C today, and July hasn’t even finished yet. The last time that happened was back in 1990. If the mercury passes 23C, it will be the warmest three consecutive July days in Sydney since record-keeping began. And the city is guaranteed the record of the most July days over 18C – 24 from 31.
Bonus item: A CIO who reads this column told me he reads from the bottom up because he likes to “start with the video of the squirrel on waterskis” and then work back towards the markets. I don’t think we’ve ever featured a squirrel on waterskis. But here’s a bunch of cows chasing a remote control car around a field.
Have a great day. I’m on Twitter: @colgo
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