Hiring In The US Remains Far Below Pre-Recession Levels

As the chart below shows, while the US may have, somehow, recouped all of its post-recession job losses as was widely trumpeted everywhere on Friday, it sure didn't achieve this courtesy of a vibrant hiring labor market. In fact, as the chart below show, while the US may have recovere its annualized job change number, per the non-farm payrolls survey, of just about 2.4 million, or about 200K per month, the pace of US hiring is still just about half of where it should be based on the pre-recession trends.

China's "Evaporated" Collateral Scandal Spreads To Second Port

The biggest news in the sage surrounding Chinese evaporated collateral troubles at Qingdao, which as noted is merely the 3rd largest Chinese port, is that this scandal has now spread to a second Chinese port: Penglai, which is also located in the Shandong province. Putting some size numbers for context: Qingdao's copper inventory is about 50,000 tons, compared to 800,000 tons in Shanghai, analysts say. There's "little evidence" for now that traders in Shanghai fraudulently have pledged collateral to banks, said Sijin Cheng, an analyst with Barclays Research in Singapore. Little evidence will become "lots" in the coming days when we expect more "discoveries" at all other bonded warehouses as the relentless inflow of commodities finally reverses and the beneficiaries finally demand possession. As everyone who has followed even the simplest Ponzi schemes knows, this is the part of the lifecycle when many tears are shed by most.

B-1 Stealth Bomber "Friendly Fire" Strike Kills 5 US Soldiers In Afghanistan

It seems President Obama's "pullback" is not going as planned in Afghanistan. NBC News reports 5 U.S. soldiers killed in Afghanistan may have been the victims of a friendly-fire incident. American and Afghan troops were conducting security sweeps on polling sites ahead of this weekend's run-off for the Afghan presidential election when they came under attack from Taliban forces. The Americans called in an airstrike amid fierce fighting and, according to U.S. officials, the B-1 Stealth Bomber strike somehow went terribly awry.

Tepper Is Nervous... About His Prenup

When David Tepper speaks, markets (especially those short) quake as the sheep blindly follow him into the breach; so when he said he "was nervous" recently, bulls got scared (briefly). As PageSix reports this morning, Tepper is nervous once again as the world's highest paid fund manager has split with his wife of nearly 30 years. The split could well be the most expensive hedge fund divorce ever and we suspect comments such as this did not help... "What do you think I should do with it? . . . I could buy an island. I could buy a private jet . . . I could get myself a 22-year-old!"

Goldman Explains How Big China's Rehypothecation Problem Is (Hint: Very)

"Step 4: Repeat Step 1-Step 3 as many times as possible, during the period of LC (usually 6 months, with range of 3-12 months). This could be 10-30 times over the course of the 6 month LC, with the limitation being the amount of time it takes to clear the paperwork. In this way, the total notional LCs issued over a particular tonne of bonded or inbound copper over the course of a year would be 10-30 times the value of the physical copper involved, depending on the LC duration."

Oops.

Precious Metals Jump As China Unwind Fears Spread

While we have become conditioned to accepting the morning meltdown in gold and silver prices that occurs with all too frequent visible-handedness around 8amET, this morning's mini melt-up is odd for 2 reasons: 1) It's Tuesday, which means sell everything that's not stocks; and 2) as we explained here and here, the unwind of the China CFDs could well lead to a notably higher gold (and silver) price as the forward hedges are lifted.

Frontrunning: June 10

  • Ukraine, Russia Fail to Reach Deal in Natural-Gas Talks (WSJ)
  • Boko Haram Kidnaps More Girls in Nigeria (WSJ)
  • Déjà vu: echoes of pre-crisis world mount (FT)
  • Money market rates hit new low as ECB moves gain traction (Reuters)
  • 'Dark Pools' Face New SEC Probe (WSJ)
  • Buffett Ready to Double $15 Billion Solar, Wind Bet (BBG)
  • White House-Congress rift over Bergdahl deal deepens (Reuters)
  • Taxpayers Face Big Medicare Tab for Unusual Doctor Billings (WSJ)
  • Lean Retirement Faces U.S. Generation X as Wealth Trails (BBG)
  • Employers’ skills gap claim does not show up in US wage data (FT)
  • He is holding out for the Zuckerberg overbid: Donald Sterling says LA Clippers not for sale (WSJ)

Overnight USDJPY Selling Gives Algos An Early BTFATH BTFD Opportunity

The tidal patterns of this market have become so well-known to even the least observant: push the USDJPY (or other JPY carry pairs) higher starting around 6am Eastern, then ramp it just before US open to launch cross-asset momentum ignition algos in FX which then carry over to spoos and the broader "market." In the meantime, overnight selling of USDJPY allows a reset before ensuing buying during the US daytime session. Rinse. Repeat. Sure enough, just after 6 pm Eastern, the same USDJPY which catalyzed yet another all time high close had been sold off, leading to a 0.85% drop in the Nikkei and US equity futures which are showing an unprecedented ungreen color. Don't worry though: the pattern is too well-known and practiced by now, and we fully expect USDJPY levitation to pick up shortly, which is the only signal ES-algos need, trampling over any kind of newsflow both good and bad, and leading to yet another all time record high which it goes without saying is completely detached from any underlying reality at this point and at any time over the past 5 years.

No Drinking Water In Venezuela Until Bankers Get Paid Back

2013 was a good year for Goldman Sachs investments in Emerging Markets, most notably Venezuelan bonds (as they bet on socialism and won). A year later and Goldman's EM debt portfolio is still loaded with Venezuelan bonds... and the arrears are mounting. As Bloomberg reports, at a time when Venezuela’s record $25 billion in arrears to importers has its citizens waiting hours in line to buy drinking water and crossing borders in search of medicine, President Nicolas Maduro is using the nation’s dwindling supply of dollars to enrich bondholders.

How Is This Not A Massive Conflict Of Interest?

Henry Ford once said, “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” We hope this brief discussion raises that 'understanding'.

Bronze Swan Lands: Goldman Explains How The China Commodity Unwind Will Happen

Over a year ago we were the first to bring the topic of China's shadow banking system's problematic rehypothecation issues to the general trading public. In "The Bronze Swan Arrives: Is The End Of Copper Financing China's "Lehman Event"?" we explained how the Chinese commodity financing deals (CCFDs) worked and how they would inevitably be a systemic event for the nation so dependent on the shadow banking system for its credit (and its "growth"). The day has arrived when the Bronze Swan is landing (and it's unlikely to be soft). As we have discussed recently, the probe into 'missing' collateral (or multiple-used collateral) at China's Qingdao warehouse is a major problem... and now Goldman confirms, the Qingdao situation likely to continue ongoing CCFD unwind and has the potential to leave foreign banks with undercollateralized loans and/or losses.

Jim Grant: What Henry Hazlitt Can Teach Us About Inflation In 2014

“Excessively low interest rates are inflationary because they mean that bonds, stocks, real estate and unincorporated businesses are capitalized at excessively high rates, and will fall in value even though the annual income they pay remains the same, if interest rates rise.” If interest rates were artificially low, it would follow that prevailing investment values are artificially high. I contend that they are, and you may or may not agree. Natural interest rates — free-range, organic, sustainable — are what we need. Hot-house interest rates — the government’s puny, genetically modified kind — are the ones we have.

A Visual Trip Through The World's Mining Ghost Towns

As each of the following seven towns from history around the world boomed on the back of resource-hungry bubbles, no one could have foreseen (or even believed) that it would ever end... but as the following dismal images show - end it did. Is this the future for North Dakota or Texas? or Silicon Valley? (of course not stupid... it's different this time).

Jobs Friday: What The Bubblevision Revelers Missed

Yes, the nonfarm payroll clocked in at 138.5 million jobs and thereby retraced for the first time the point at which it stood 77 months ago in December 2007. This predictably elicited another “milestone of progress” squeal from the mainstream media. So you have to wonder. Did these people skip history class? Do they understand the vital idea of “context”? So if you want to try a little “context” absurdity recall this. So far we have created a trifling 100k “new” jobs since the last cyclical peak. During the equivalent 77 months in the Reagan era the US economy actually generated 150 times more jobs!

Japan Has "Inappropriately Omitted" 80 Bombs-Worth Of Nuclear Fuel In IAEA Report

We are sure it's just an oversight... but given Abe's increasingly nationalist banter (and an economy set to plunge in Q2 after Q1's pre-tax-hike surge), it is certainly worth noting that, as The Japan Times reports, Japan failed to include 640 kg of unused plutonium in its annual reports to the International Atomic Energy Agency in 2012 and 2013, in what experts are terming an "inappropriate omission." The unreported amount is enough to make about 80 nuclear bombs. reassuringly, officials noted "there is no problem in terms of security against nuclear terrorism," but as another pointed out, "should make efforts to improve" its reporting. Well, yeah, especially given that Japan possesses the largest amount of plutonium among nonnuclear weaponized nations.

Risk Analysis In The Golden Age Of The Central Banker

Because we are living in the Golden Age of Central Bankers, and that wreaks havoc on the fundamental nature of market expectations data....

  1. the VIX is not a reliable measure of market complacency.
  2. the wisdom of crowds is nonexistent.
  3. fundamental risk/reward calculations for directional exposure to any security are problematic on anything other than a VERY long time horizon.
  4. I’d rather be reactive and right in my portfolio than proactive and wrong.

The Golden Age of the Central Banker is a time for survivors, not heroes. And that’s the real moral of this story.

Obama Unveils Student Loan Debt Bubble Bailout

"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation," notes the always astute White House... and so it's time to do something about that... by bailing the bad debtors out with US taxpayers money. As we have been vociferously warning, not only has the student loan debt bubble expanded massively (as the easiest credit substitute for real-world working and unemployment) but delinquencies on the 'easily available' credit is soaring with "consequences such as a damaged credit rating, losing their tax refund, or garnished wages." Consequences, as we have been taught now, are not acceptable for this administration and so President Barack Obama will issue an executive action on Monday aimed at making it easier for young people to avoid trouble repaying student loans.

The Great Insanity In Context (200 Years Of European Bonds)

We have had The Great Depression, The Great Moderation, and The Great Recession... but now, thanks to central banks around the world, we have The Great Insanity. Nowhere is the disconnect between market rates and fundamental realities more evident than in European peripheral bond yields. While it is easy to look at the last decade and wonder how it is possible that such heavily indebted (and increasingly indebted) nations could have seen bond yields collapse... but as Deutsche Bank's Jim Reid explains, a glance at France, Italy, and Spain bond yields over the last 200 years shows that this really is a unique time in history (and not in a good way).

The US Labor Market In One Chart (According To The Fed)

Having spent the last few years blowing away the importance of the unemployment rate propaganda as participation rates have now become mainstream media discussion points, we were not surprised when the Fed admitted that it uses a "dashboard" of various employment measures (even if the world watches payrolls data as if there life depended upon it). As The Fed's Jim Bullard shows in his latest presentation, there are 13 variables the Fed follows. As the following chart shows, the surge in temporary help services hardly supports the great news that Friday's jobs data appeared to be (given stock market reactions).