While not nearly as horrific as recent months, in which the vast majority of job additions were relegated to the worst paying sectors possible, the month of April did see a pick up across virtually all industries (except for one of the best paying fields of course, Information), however four of the top six industries that saw job pick ups were once again in the lowest paying fields: Education and Health, Retail Trade, Temp Help and Leisure and Hospitality. The two best paying fields: Financial Services and Information saw a combined 3K jobs added between them.
How can this be possible? Bond yields are at record lows and stock prices near record highs across Europe and even the ever-increasing debt-to-GDP characteristics of the perennially weak periphery are able to issue bonds willy-nilly as if nothing had ever happened. So how come 18.9 million people across Europe were unemployed in the euro area in March? Spain - actually trading at its cheapest cost of funding of all time (below 3%) - accounts for 6 million of those. As Bloomberg's Niraj Shah notes, Greece and Spain have the highest jobless rates in Europe at 26.7% and 25.3%, respectively. That contrasts with 4.9% in Austria. The overall unemployment rate was unchanged at 11.8% in March from February after the previous month’s read as youth unemployment continues to rise.
One Million People Dropped Out Of Labor Force In April: Participation Rate Plummets To Lowest Since 1978Submitted by Tyler Durden on 05/02/2014 - 07:54
And so the BLS is back to its old data fudging, because while the Establishment Survey job number was a whopper, and the biggest monthly addition since January 2012, the Household Survey showed an actual decline of 73K jobs. What is much worse, is that the reason the unemployment rate tumbled is well-known: it was entirely due to the number of Americans dropping out of the labor force. To wit, the labor force participation rate crashed from 63.2% to 62.8%, trying for lowest since January 1978! And why did it crash so much - because the number of people not in the labor force soared to 92 million, the second highest monthly increase ever, or 988K, only 'better' than January 2012 which curiously was the one month when the establishment survey reported a 360K "increase" in jobs.
Great news - unemployment rate is tumbling (stocks rally and bond yields rip higher). Bad news - unemployment rate is tumbling (for all sorts of technical reasons that are entirely fallacious and do not reflect reality at all - stocks dump)... Bonds - after 2 days of aggressive short-squeeze covering - are bouncing higher in yield and stocks not holding any bid (with gold down) as better-than-expected data headlines suggest the punchbowl is steadily disappearing over the horizon. The USD is surging with USDJPY pumped up to 103 (but stocks not holding it for now) Perhaps bonds will recover once they sniff below the surface...
Jobs soar higher by 288K, far higher than expected 218K, and well above the 203K revised
Unemployment rate 6.3%, tumbles from 6.7% and well below expected 6.6%
Average hourly earnings M/M +0.0%, Exp. 0.2%; Average hourly earnings all employees Y/Y: 1.9%, Exp. 2.1%
Nigel Farage's UKIP has opened up a clear lead in the run up to next month’s elections for the European Parliament. According to ComRes, 38% of Britons certain to vote say that they would cast their ballot for the party, compared to 27% who would vote for Labour, 18% who would vote for the Conservatives and 8% who would vote Lib Dem. UKIP is damaging Conservative hopes as 67% of 2010 Tory voters are now saying they would vote for UKIP. However, it's not all rainbows and unicorns for the euro-skeptic party, as - somewhat expectedly - almost one third of Britons think that UKIP is a racist party; even as 48% believe UKIP has sensible policies.
- UBS 180K
- HSBC 195K
- Bank of America 215K
- JP Morgan 220K
- Goldman Sachs 220K
- Citigroup 225K
- Deutsche Bank 240K
- Barclays 250K
- Ukraine attacks rebel city, helicopter shot down (Reuters)
- Euro Unemployment Holds Near Record Amid Factory Gains (BBG)
- Yellen’s Fed Resigned to Diminished Growth Expectations (BBG)
- Junket Figure's Disappearance Shakes Macau's Gambling Industry (WSJ)
- China tried to undermine economic report showing its ascendancy (WSJ)
- Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm (BBG)
- AstraZeneca Snubs Pfizer Approach That U.K. Won’t Block (BBG)
- Missing Jet Recordings May Have Been 'Edited' (NBC)
- RBS turns corner as first-quarter profit trebles (Reuters)
- Japan household spending hits four-decade high, wages key to outlook (RTRS) while Real Incomes Drop 3.3% in March, 6th straight decline
Another day where the taken for granted overnight futures levitation is missing (despite a rather rampy USDJPY), indicates that algos are likely waiting for guidance from today's NFP data (buy if beat, buy more if miss) before committing monopoly money. The consensus for today's NFP is 218K, (up from 192K), although as Goldman notes the whisper number is as high as 240K. As DB says, the honest truth is that markets are in one giant holding pattern at the moment with volatility and conviction low. One evidence of this is the AAII weekly sentiment indicator which shows the % bullish, bearish or neutral on the US stock market for the next six months. This week the neutral indicator (40.78) is at its highest level for 9 years. No wonder volumes and volatility are low if investors are lacking a directional bias. Yesterday’s reaction to the ISM manufacturing was interesting. Though the headline number came in firmer than expected (54.9 vs 54.3 expected) and more than 1pt higher than last month’s reading of 53.7, the UST and equity reaction suggested that the data had actually surprised to the downside.
After a few days of extended verbal foreplay, it was only a matter of time before Ukraine finally snapped and resumed a military operation to regain the lost cities in the east, especially once the warmongering IMF made it explicitly clear that should Ukraine lose control of pro-Russian controlled cities the $17 billion bailout package would be lost too. Sure enough, early this morning Kiev launched a military operation to regain control of the pro-Russian separatist stronghold of Slovyansk, overrunning numerous roadblocks and surrounding the city, officials said, but meeting stiff resistance from militants who managed to shoot down at least one helicopter.
While the US is quick to demand the rest of the world turn its economic back on Russia - especially the Europeans, it appears they are discovering - just as Putin warned, the world is considerably more inter-dependent than they thought. Following Chuck Hagel's orders to review the Air Force reliance on Russian rocket engines used to launch US military satellites, Bloomberg reports the Pentagon admits it "has no great solution" to reduce its dependence on the Russian-made engine.
Journalism and investment research have a lot in common, notes ConvergEx's Nick Colas; after all, both essentially ask the customer to freely part with three scarce resources: time, attention and money. It’s been a tough decade or two for both the newsroom and the research department in that effort, but at least one prominent venture capitalist, Marc Andreessen, thinks there is a future for the news business, however, due to a rising middle class in emerging markets and mobile Internet distribution. While this audience may not (yet/ever) be hankering to read Buy-Sell-Hold reports on their smartphones, Andreessen’s recently published 8-fold strategy for journalism has lessons for investment research as well. The big takeaway: sell-side research needs to change a lot – and quickly - to survive as anything more than an advertising vehicle for brokerage firms.
The still-dominant consensus view that America’s economy is poised to single-handedly yank the world out of its lethargy is likely to be disappointed once again with the odds high that our economy will remain burdened by growth-inhibiting monetary policies. In addition, it will continue to be negatively impacted by various other impediments, including a populace that is increasingly under-employed, an unwieldy and inscrutable tax code, a Rube Goldberg-like healthcare system, an increasingly ossified infrastructure, and a regulatory apparatus that congests the lungs of our economy, small businesses... weaning the stock market off of casino capitalism promises to be anything but pain-free. But did any responsible adult really believe there would be no pay-back for all these years of the Fed’s force-fed gains? If you do, you probably also believe foie gras grows on trees.
The consensus for tomorrow's non-farm payrolls print is 218k (and ranges from 155k to 292k across the 94 "economists" surveyed by Bloomberg. Goldman forecasts 220k - around consensus - thanks to the long-awaited full normalization of weather conditions in April which could provide some additional boost. In addition, the employment components of all ten major business surveys released so far improved in April, in each case to a level consistent with increased employment. They expect that the unemployment rate declined to 6.6% in April and a 0.2% increase in average hourly earnings (AHE). Wages will be the object of much attention following a flat read on AHE in March, likely reflecting the unwinding of weather distortions
If you don’t like how things work in a free market, just change the rules and financial engineer whatever the results you would like to achieve. And so, since 1995 we have been going from boom to bust from one bubble to the next as we try to navigate the financial markets that have been turned into a circus act.