A Glimpse Inside The Department Of Labor's Curious Initial Claims Seasonal Adjustment

Something curious happened earlier today when the DOL revealed its latest initial claims number: while the seasonally adjusted print declined by 10,000 to an expectations beating 316K (a change that identically matched what happened to the Seasonally Adjusted print a year ago), the unadjusted number rose by 37,229 to 363K. That's ok: after all that's what "seasonal adjustments" are for - to take a volatile number which historically posts an abnormal jump or drop in any given week and smooth it out, right? Wrong. Because as the DOL also reported a year ago, the supposedly same "seasonal adjustment" applied to the same week in 2012, when the claims number was 390K adjusted and 359K unadjusted, should have been adjusted in the same direction. And while the 390K claims print in 2012 was indeed a 10,000 drop from the prior week's 400K, the unadjusted number instead of being an increase, was actually a drop, one of 44,768 jobs. How does this same "recurring" seasonal adjustment look further back - after all it is seasonal, so there should be some recurring logic for a specific time of the year? The answer is shown on the chart below.

UMich Consumer Confidence "Recovers" - Hovers At 10-Month Lows

Unlike every other measure of consumer confidence, sentiment, or comfort, the 'final' UMich Consumer Confidence print recovered its "flash" collapse and managed to beat expectations. However, before the party streamers are broken out, this uptick leaves the confidence data the 2nd lowest since Jan 2013 - led by - drum roll please - the expectations for the future (which rose from a preliminary 62.3 to final 66.8). Perhaps troubling is the drop in inflation expectations - down to 2.9% year ahead, the lowest since Oct 2010. So unlike the rest of the surveys, UMich finds consumers more confident about the future but in the baffle-em-with-bullshit category, expecting disinflationary pressures to grow. Of course, there are seasonality factors - its the holidays nearly - and we note that the 75.1 print is lower than any Nov print from 2004-2008.

Bitcoin Tops $1000

Well that escalated quickly. Having broken above $900 yesterday to new record highs (and a 100% gain in a week), the crypto currency is not looking back now. On what is higher than average volume this morning, Bitcoin just broke above the magic $1000 level for the first time (at $1025). Meanwhile, the BTC China "arb'd" rate is around $950 for those playing at home; and Litecoin has just topped $26 (from $4 a week ago!).

Chicago PMI Beats Expectations On Highest Inventory Build Since September 2006

Those who were looking at the JPY monkeyhammering at 9:42 spotted the exact moment the November Chicago PMI number was released early to MarketNews subscribers, and also knew precisely that the number would be a beat. Sure enough, at 9:45 when the number was released for broad distribution, this was confirmed because while the headline number dropped from last month's epic 65.9 to 63.0, it was still a sizable beat of expectations of 63.0, with the Employment number rising from 57.7 to 60.9 the highest since October 2011. However, one look at the internals shows that not all was well. In fact, with New Orders dropping from 74.3 to 68.8, production sliding from 71 to 64.3 and backlogs down from 61.0 to 59.8, the forward looking metrics all dipped so it was all up to that old faithful channel stuffer - Inventories - to fill the gap. And fill the gap it did, by soaring from 48.0 to a whopping 61.1, the highest number since September 2006!

Inflation Watch: Thanksgiving Dinner Edition

While shoppers will perceive the discounts on Black Friday as 'saving' them fortunes, the cost of the 2013 Thanksgiving Day dinner may be the most expensive ever. As the gorging commences, despite an entirely benign inflation in the eyes of the Federal Reserve, the prices of everything from chocolate chip cookies to ice cream are on the rise. But it is the centerpiece of the meal that is weighing on pocket-books. As Bloomberg's Michael McDonough notes, Americans are paying the most for whole frozen turkeys since the Bureau of Labor Statistics began publishing data on the series in 1980.

No CapEx Recovery: Durable Goods Disappoint As Capital Goods Orders And Shipments Decline

While the Census Bureau disclosed that headline Durable Goods declined in October by 2.0% (and much more on an unadjusted basis), this was in line with expectations, and was driven by an unexpected -15.9% collapse in new aircraft orders, driven by Boeing which had a 60% drop in orders, down from 127 to only 79 for the month. However, the big surprise was in the ex-transport durable goods number, which declined by -0.1%, crushing expectations of a 0.5% increase and down from last month's revised +0.2%. In other words, the modest rebound in orders in late summer now appears to have been purely a function of channel stuffing, which now has to work its way through the system, as manufacturing with unfilled orders dropped by a whopping -3.1%.

"Clean" Initial Claims Drop To Lowest In 2 Months

Initial claims fell 10k from last week's revised (and missing 5 states) data for its biggest beat in 2 months and lowest print in 2 months. The 'consistent' YoY ebbing of the initial claims print (aside from the last month or so's statistical glitches and idiocy) is all too predictable and the market simply shrugged as the claims data remains the least correlated to any sense of employment reality of all jobs data. This is the first supposedly "clean" data with no estimates in 2 months, however, the BLS is quick to point out that "claims are difficult to seasonally adjust during holidays" - so another pinch of salt for this data point.

Iran Seizes Saudi Fishing Vessels, Arrests 9 Sailors

It didn't take long to escalate Iran-Saudi relations, or the lack thereof, following this weekend's nuclear (non) deal. Moments ago Iran's Fars news agency reported that Iran’s coast guards have seized two Saudi fishing vessels after they entered the Islamic Republic's territorial waters, a provincial official announced on Wednesday. “Yesterday, the coast guards deployed in the country’s Southern waters came to spot two vessels in Iran’s protected waters in the South using electronic and optic tools and equipment,” Commander of Bushehr province Coast Guards Qalandar Lashkari said. He said that the Iranian coast guards rushed to the scene and were faced with two vessels which were illegally fishing in the Iranian waters under the Saudi flag.

Frontrunning: November 27

  • Winter storm lashes eastern U.S., threatens Thanksgiving travel (Reuters)
  • Fed Reveals New Concerns About Long-Term U.S. Slowdown (BBG)
  • Private equity keeps $789bn of powder dry (FT) - because they are "selling everything that is not nailed down"
  • Merkel and SPD clinch coalition deal two months after vote (Reuters)
  • Japan approves new state secrecy bill to combat leaks (BBC)
  • CLOs are the new black: Volatile Loan Securities Are Luring Fund Managers Again (WSJ)
  • Health website deadline nears (WSJ)
  • Norway Debates $800 Billion Wealth Fund’s Investment Options (BBG)
  • Set of global trade deals stalls (WSJ)
  • Berlusconi To Learn Fate In Senate  (Sky)
  • Silvio Berlusconi withdraws support from Italy’s government (FT)

Goldman Reveals "Top Trade" Reco #3 For 2014, In Which Tom Stolper Goes Long The USDCAD

It's one thing to fade broad Goldman trade recommendations (and thus trading alongside Goldman and against muppets). It is, however, a gift from god when such a trade comes from none other than the greatest (once again, if you bat 0.000 or 1.000 on Wall Street you are great in both cases) FX strategist of all time: Goldman's Tom Stolper, whose fades over the past 5 years have generated over 20,000 outright pips. So what does Stolper see? "All told, there are a number of reasons why the Canadian Dollar has scope to weaken. Some of these have been a factor for some time but the notable weakening in the external balance, the gradual shift in the BoC communication and the prospect of Fed tapering and the associated risks all suggest that 2014 may be the year when the CAD weakens more materially after many years in narrow trading ranges. In line with our recently changed forecasts, we expect $/CAD to rally to 1.14 on a 12-month basis, with a stop on a close below 1.01. This would imply a potential return of 7% including carry." So one Goldman 2014 Top Trade generates a total return of 7% in 12 months - and one should do this why when one can make 7% in the Russell 2000 at its current daily pace of increase of 1.0% in one week. That said, the only question is: 1.01 in how many days?

Yen Carry Lifts Risk Around The Globe In Quiet Overnight Trade

In a carry-trade driven world in which news and fundamentals no longer matter, the only relevant "variable" is whether the JPY is down (check) and the EUR is up (check) which always results in green equities around the globe and green futures in the US, with yesterday's sudden and sharp selloff on no liquidity and no news long forgotten. The conventional wisdom "reason" for the overnight JPY underperformance against all major FX is once again due to central bank rhetoric, when overnight BOJ's Kiuchi sees high uncertainty whether 2% CPI will be reached in 2 years, Shirai says bank should ease further if growth, CPI diverge from main scenario. Also the BOJ once again hinted at more QE, and since this has proven sufficient to keep the JPY selling momentum, for now, why not continue doing it until like in May it stops working. As a result EURJPY rose above the 4 year high resistance of 138.00, while USDJPY is bordering on 102.00. On the other hand, the EUR gained after German parties strike coalition accord, pushing the EURUSD over 1.36 and further making the ECB's life, now that it has to talk the currency down not up, impossible. This is especially true following reports in the German press that the ECB is looking at introducing an LTRO in order to help promote bank lending. Since that rumor made zero dent on the EUR, expect the ongoing daily litany of ECB rumors that the bank is "technically ready" for negative rates and even QE, although as has been shown in recent months this now has a half-life measured in minutes as the market largely is ignoring whatever "tools" Draghi and company believe they have left.

London's Mayor Says We Should "Thank The Super Rich"

If you thought you had seen it all when it comes to sob stories of the “super rich” following the comparison of the criticisms of banker bonuses to the lynching of black people in the south by AIG’s CEO in September, think again. The latest groveling, inane defense of the “super rich” comes from none other than the gatekeeper of the largest oligarch whorehouse on planet earth. The Mayor of London, Mr. Boris Johnson. Now we warn you, do not read the following Op-Ed on a full stomach. The vapid, nonsensical, Onion-like prose may very well induce fits of nausea and uncontrolled regurgitation. This is quite frankly one of the worst things we have ever read. It echoes like a sort of grandiose ass-kissing ritual one would have encountered in a Middle Age court from an aspiring manservant of the realm, desperately trying to rapidly advance a coupe of notches up the social strata of some decadent feudal kingdom. Simply put, Boris Johnson should be ashamed to show his face in public after writing such disingenuous garbage.

"I Fear For What’s Coming" – 68% Of Americans Believe The Country Is On The Wrong Track

Are you deeply concerned about the future of America?  Is something in your gut telling you that our system is fundamentally broken and that the mainstream media is not telling you the truth about what is happening?  If so, you are definitely not alone.  Right now, there are millions upon millions of Americans that are absolutely horrified as they watch this nation deteriorate.  In fact, according to an analysis of recent polling data conducted by Real Clear Politics, approximately 68 percent of all Americans believe that the country is on the wrong track and only 23.5 percent of all Americans believe that the country is on the right track.

53% Of Bankers Say Ethics Inhibit Career Progression - Here's Why

The Economist found, rather sadly, despite all the glad-handing and happy-talk, that 53% of financial services executives believed that strict adherence to ethical conduct would make career progression difficult. As this former Wall Street trader told The Guardian, "a precedent needs to be set, to slow down Wall Street's wild behavior. A reminder that rules are there to be followed, not exploited." The reason, among others, is summed up by the following, "if a customer wants a red suit, you sell them a red suit. If that customer is Japanese, you charge him twice what it costs."

The Punch Line: The Complete Macroeconomic Summary And All The Chart To Go With It

As stocks hit new records and small investors—finally—return to the market, some analysts are getting worried. Risk assets have rallied to previous bubble conditions. Powered by unprecedented refinancing and recap activity, 2013 is now the most productive year ever for new-issue leveraged loans, for example. This has been great for corporations as financing and refinancing has put them on a stronger footing. Where M&A activity still lags the highs of the last boom, issuers have jumped into the opportunistic pool with both feet. And why not? Secondary prices are high and new-issue clearing yields remain low. Yet very inadequate movement has been evidenced on the hiring front. And after all the improvement in ebitda, where do we go from here? Forward guidance will clearly be harder. One might argue that we are back in a Goldilocks fantasy world, where the economy is not so strong (as to cause inflation and trigger serious monetary tightening) or so weak (as to cause recession and a collapse in profits) but "just right". Yet, it seems unlikely that issuers with weaker credit quality could find it so easy to sell debt without the excess liquidity created by the Fed and other central banks.

The Top Ten Market Mysteries

To paraphrase Mark Twain, "It isn't the stuff you don’t know that will kill you – it's the stuff you're sure about but is totally wrong that will do you real harm."  As a corollary to this fateful phrase, Convergx's Nick Colas has collected a list of market "knowledge" that is questionable at best and harmful at worst.

The Hidden Secrets Of Money Part 5: When Money Is Corrupted

Having exposed the "biggest scam in history" is Part 4 (following Part 1, Part 2, and Part 3), Mike Maloney's fifth episode serves as an ideal primer for those waking up to the monetary matrix around them, as it clearly shows the history of true money and why it so important to our freedom. The quality of a society is directly proportional to the quality of its money. Debase a currency for long enough, and you end up with dangerous deficits, debt driven disasters, and eventually...delusional dictators. History proves this to be true.

Kevin Warsh Exposes The Fed's Market-Based Dilemma In Under 90 Seconds

"The reality is,"Kevin Warsh exclaims, "QE policy favors those with big balance sheets, those with risk appetites, and access to free money," while real people "are still looking around and saying what is fed policy doing for me." The problem, he explains, is a disconnect between what markets are discounting about the future and the Fed's credibility with regard their apparently divergent forecasts for unemployment, growth, and interest rates. In a little under 90 seconds, Warsh explains the dilemma and sums up the Fed perfectly, "they're just talking, rather than acting."

Guest Post: 3 Myth's About Rising Interest Rates

The mainstream media staple 'common wisdom' within the financial markets is that when the Federal Reserve "tapers," or eventually ceases, its current bond buying program that interest rates will begin to rise. However, there are three primary issues which should be considered that fail to support this widely held belief. The Federal Reserve has gotten itself trapped into creating an asset bubble in the equity markets because any reversal of policy leads to severely negative economic consequences.  With the current economic recovery cycle already very extended in historical terms, along with the financial markets, it is unlikely that we have just begun a growth cycle that will allow the Federal Reserve to extract its support.  The reality is quite the opposite, and the next asset rotation will not be from bonds to stocks; but just the opposite.