Links for May 8, 2017

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While it is accepted wisdom that energy is the most important commodity complex, representing more than 80% of the dollar volume of trading in commodity markets, there are dozens of important raw materials and soft commodities that also serve as important barometers of the global economy. Two of the major commodity indexes — the CRB Commodity Index and the S&P GSCI Commodity Index SPGSCI, +0.42%  — seem to be performing a rather uncomfortable rollover after what seems to be a completed weak rebound off a climactic low in January 2016. The “rollover” effect is clearly illustrated at the right end of this chart.

The commodity conundrum — why are prices so weak? - MarketWatch

Legendary bond investor Jeffrey Gundlach, founder of Double Line Capital, told a group of investors to be very afraid of the US stock market. He was speaking at the Sohn Investment conference. Specifically, he told attendees to go long the iShares Emerging Markets ETF and short the S&P 500. He argued the outperformance of passive investors in the S&P 500 and the underperformance of Emerging Markets are both cyclical — and both of those cycles are about to change.

Jeff Gundlach Sohn short SPY long EM - Business Insider

Shopping for stock market insights is poised to become as seamless as buying a purse on eBay Inc. Or so hopes a slew of startups. As asset managers prepare for new European rules that will put more distance between analysts and investment banks, online research marketplaces are emerging as a way to price and sell investment ideas. The so-called ORMs may be looking at a $2.4 billion opportunity by 2025, making up 30 percent of global research spending, according to Quinlan & Associates’ Benjamin Quinlan.

New Startups Aim to Be the EBays for Market Research - Bloomberg

Two top Fed officials, speaking at a Hoover Institution conference panel, argued that because estimates for the "neutral" interest rate are now around 3%, the central bank is likely to need to bring rates down to zero more frequently than in the past. This means the Fed will find itself reaching for other policy tools to add stimulus to growth and employment, namely large-scale purchases of government bonds like the ones undertaken during and after the financial crisis. "I think it is inevitable that we’re going to be talking about the balance sheet expanding during recessions," said Eric Rosengren, president of the Boston Fed.

FED OFFICIAL: QE is 'inevitable' when the next recession hits - Business Insider

Consuming cheese, milk and yoghurt – even full-fat versions – does not increase the risk of a heart attack or stroke, according to research that challenges the widely held belief that dairy products can damage health. The findings, from an international team of experts, contradict the view that dairy products can be harmful because of their high saturated fat content. The experts dismiss that fear as “a misconception [and] mistaken belief”. The results come from a new meta-analysis of 29 previous studies of whether dairy products increase the risk of death from any cause and from either serious heart problems or cardiovascular disease. The study concluded that such foodstuffs did not raise the risk of any of those events and had a “neutral” impact on human health.

Eating cheese does not raise risk of heart attack or stroke, study finds | Society | The Guardian

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According to the Bureau of Labor Statistics, the U.S. economy generated 211,000 net new jobs in April, bringing total job creation in this labor market recovery to over 15 million. That is a large number, but at this stage it still falls behind the labor market recovery of the 1990s and is a far cry from job creation during the recovery of the 1980s. Still, at 79 months old, one cannot deny that this has been a lengthy and impressive cycle thus far.

Keeping our heads above water: Wage gains barely outpace inflation | TheHill

If the US economy is ever going to reach breakout speed, it's got some serious work to do — literally. Amid a raft of other economic data that has been mixed to trending lower as of late stands one number: a punk productivity level that is holding back economic growth. The trend is important as it stands as likely the primary divider between the acceleration that President Donald Trump has projected against the reality that has been the case for most of the past decade. "The persistent decline in productivity growth represents one of the most important medium-term global economic challenges," analysts at Moody's said in a lengthy report on the issue released Thursday. "Slow productivity growth, along with population aging, implies that future output growth will be materially slower than in the past."

The economy can't break out because of low productivity

As the market receives seemingly conflicting news about the state of the economy, Jim Cramer sifted through the uncertainty to find the market-movers that really matter. On Wednesday, the market soared on a strong jobs report from ADP, but the Federal Reserve's minutes coaxed the bears out of the woodwork and sent interest rates plunging. To make matters worse, House Speaker Paul Ryan indicated that passing tax reform may take even longer than health care. "His statement really crushed things. We know that his statement is the kiss of death for the industrial and financial bull," the "Mad Money" host said. And with the Labor Department's nonfarm jobs report coming on Friday, Cramer said now is as good a time as any to exercise discipline and not chase any investments.

Cramer pinpoints three market-movers that should set off warning bells

Glance at a map and you’ll realise that Spain – sitting, as it does, along the same longitude as the UK, Portugal and Morocco – should be in Greenwich Mean Time (GMT). But Spain goes by Central European Time (CET), putting it in sync with the Serbian capital Belgrade, more than 2,500km east of Madrid. So why are Spaniards living behind their geographic time zone? In 1940, General Francisco Franco changed Spain’s time zone, moving the clocks one hour forward in solidarity with Nazi Germany. For Spaniards, who at the time were utterly devastated by the Spanish Civil War, complaining about the change did not even cross their minds. They continued to eat at the same time, but because the clocks had changed, their 1pm lunches became 2pm lunches, and they were suddenly eating their 8pm dinners at 9pm.

BBC - Travel - The real reason why Spaniards eat late

Some travelers in the U.S. are about to get even less comfortable in the skies. Seats on some American Airlines AAL, +0.11%  forthcoming Boeing BA, -0.03%  737 Max jetliners will now come with two inches less of legroom in coach, CNN reported this week. The “pitch,” or distance between the seats, was previously 31 inches and will now shrink to 29 in three rows of these airplanes. The rest of its main cabin will see the pitch decreased from 31 to 30. (American did not immediately respond to request for comment for this story).

American Airlines to shrink legroom for these coach passengers - MarketWatch

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Apple Inc. AAPL, +0.86% said it issued $7 billion in corporate bonds, according to a Securities and Exchange Commission filing late Thursday. The tech giant said it issued $500 million in floating-rate bonds due in 2020, $750 million in floating-rate bonds due in 2022, $1 billion in 1.8% bonds due in 2020, $1 billion in 2.3% bonds due in 2022, $1.75 billion in 2.85% bonds due in 2024, and $2 billion in 3.2% bonds due in 2027. Apple has been using debt to pay shareholders while holding most of its $256 billion in cash overseas to avoid repatriation taxes. The company increased its shareholder-return program last week to $300 billion in concert with a quarterly earnings report that showed Apple added slightly more debt than cash in the quarter. Since Apple launched its shareholder-return program in 2012, its long-term debt has risen from zero to nearly $85 billion as of the end of last quarter.

Apple issues $7 billion in corporate bonds - MarketWatch

I’m fairly certain very few of you have heard of broker price opinions, or BPOs, but it’s something I think we should all become aware of given the influence of BPOs in the market for valuing residential real estate securitized bonds. Before we get to that, let’s revisit a little contemporary American robber baron history. In the immediate aftermath of the U.S. financial crisis, financial oligarchs immediately got to work helping Main Street climb out of the Wall Street created ditch by buying foreclosed homes from hordes of newly destitute Americans and then renting them back to those same people.

Are US Taxpayers Now On The Hook For Risky Wall Street Real-Estate-Backed Bonds? | Zero Hedge

Dissenters in the face of the relentless emerging-market rally are speaking out. A drop in oil prices and China’s crackdown on leverage -- spurring this month’s rout in industrial metals and iron ore -- is setting the stage for a correction in developing-country assets, according to a growing chorus of investors and analysts. While still in the minority, they warn a tide of capital inflows and a jump in bullish positions have left valuations at an inflated level after gains in emerging-market stocks, bonds and currencies this year.

This Is What Can Kill the Emerging Market Rally - Bloomberg

TThe allegations about how the Monaco-based agent Mino Raiola has earned £41m from all three parties involved in Paul Pogba’s move from Juventus to Manchester United broke over Fifa just as its ousted ethics committee chairmen were accusing it before the annual congress here of cutting their work off at the knees..

Paul Pogba transfer shows Mino Raiola’s power in stark contrast to Fifa inaction | Football | The Guardian

A recent study by the British Medical Journal found that those who stuck to closer to the Japanese dietary guidelines – a diet high in grains and vegetables, with moderate amounts of animal products and soy but minimal dairy and fruit – had a reduced risk of dying early and from heart disease or stroke. As their diet is traditionally high in soy and fish this may also play a significant role in this reduced risk of cardiovascular disease. The Japanese also have the lowest rates of obesity amongst men and women as well as long life expectancy.

Why is the Japanese diet so healthy? | BBC Good Food

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"Every time I get accustomed to low volatility, like we were towards the end of the Greenspan era, and we think we have all the levers under the control ... something erupts to remind us that the idea that anybody is in control of everything is hubris," Blankfein told CNBC's "Power Lunch" from the sidelines of the company's director symposium in Chicago.

Goldman Sachs CEO Lloyd Blankfein says the market's low volatility is worrisome

In a recent VoxEU.org eBook (Dolado 2015), several labour economists review the relevance of policy lessons from their specific country experiences in order to: (i) improve the transition from school to work, (ii) foster the creation of more jobs for young people, and (iii) increase the well-being of youths overall. Additionally, they look at the recent proposal of a new ‘Marshall Plan’ of the European Commission – the so-called Youth Guarantee – to find a coordinated solution to youth joblessness.

How can Europe reduce youth unemployment? | World Economic Forum

As recent research by economists Fatih Guvenen, Greg Kaplan, Jae Song, and Justin Weidner shows, lifetime income for most American men has been declining for decades; only by sending women into the formal labor force en masse have most American families managed to improve their material situation. Other researchshows that economic mobility and opportunity are declining as well -- most Americans are making less than their parents did, and those in the lower ends of the distribution tend to be stuck there.

Working Class Has the Blues, and Elites Lack Answers - Bloomberg

however, it is worth recalling that in 1967 the greatest double-A side in history, ‘Penny Lane’/’Strawberry Fields Forever’ by The Beatles, was kept off the UK top spot by Engelbert Humperdinck

The Summer of Love: fact or fiction? | The Independent

Researchers have come up with an unusual proposal to slow, or even reverse, the cognitive decline that comes with old age: small, daily doses of cannabis extract. The idea emerged from tests on mice which found that regular, low doses of tetrahydrocannabinol (THC) – the main psychoactive ingredient in cannabis – impaired memory and learning in young animals, but boosted the performance of old ones.

Daily dose of cannabis extract could reverse brain's decline in old age, study suggests | Science | The Guardian

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China is pledging more than $100 billion to finance projects under its "One Belt, One Road" strategy, an ambitious initiative to strengthen the world's second-largest economy's investment, influence and trade links to the rest of the globe.

China pledges more than $100 billion in Belt and Road projects

Steady growth in wages has driven U.S. labor costs to exceed 10% of revenues — that’s good news for paychecks, but a potential crimp on corporate margins. It’s especially rattling for the small-caps that tend to concentrate their business on home turf and not vary a workforce across international markets. For now, improved revenue growth—companies are in the midst of a generally solid round of quarterly reports—should provide the balance to keep net profit margins roughly flat in 2017, even with the drag of labor costs, said Ben Snider and the portfolio strategy team at Goldman Sachs, in a note. And there remains some debate over just how fast wages are catching up to a tighter labor market... Snider and team estimate that for each 100-basis-point acceleration in wage growth, S&P 500 SPX, -0.15%  average earnings per share is trimmed by 1%. And small-cap earnings are twice as sensitive, they said. The small cap-focused Russell 2000 RUT, -0.53%  loses an average of 2% in average earnings with the same acceleration in wage growth.

Could rising wages scuttle the small-cap stock surge? - MarketWatch

We believe the eurozone can gain more momentum in a reflationary world. France has joined Germany and Spain as a growth engine. Our analysis points to pent-up demand for greater investments, perhaps as revived animal spirits give companies confidence to take on new projects. We find that markets appear too pessimistic on Europe's prospects – a big reason why we are positive on risk assets in the region. Inflation expectations have finally perked up but the European Central Bank is poised to stay patient on policy to help cement this shift.

Europe's stealth comeback | BlackRock

Robotic eye surgery sounds terrifying, but this robot is a whole lot more precise than even the most skilled of human surgeons.

Robot Eye Surgeon Is 10x More Precise Than The Most Steady-Handed Human | Digital Trends

It was wonderful to watch that Juventus defence in Turin, men for whom to defend is a kind of muscular physical art, strung together across the pitch like a Renaissance frieze of a particularly heroic battlefield massacre. Chiellini in particular, with his noble, beaky profile, resembles a huge, sad medieval ivory chess piece come to life and crammed into a black and white striped shirt. They really are going to look good holding up that trophy three weeks from now.

All hail Luka Modric, the maestro who makes Real Madrid’s superstars tick | Barney Ronay | Football | The Guardian