Risk on - short yen for euros, buy stocks. Rinse, repeat. EURJPY back to 1.000 correlation with the S&P. Algo signals working AOK.
The latest update in the ongoing GSE drama comes from Barney Frank who during a conference of black, Hispanic and Asian Realtors
in Washington said the following: “Please don’t think this is federally guaranteed, I don’t
think it is, I don’t think it should be, I don’t feel any
obligation to bail you out.” Well, that comes almost two year two late after the government already made all GSE lenders whole. Barner's posturing is merely in response to Republican efforts to account properly for GSE liabilities which, courtesy of their conservatorship status, are explicitly backed by the government. Of course, should the GSEs be put on the budget, the US debt/GDP, as pointed out previously on Zero Hedge, would surge by nearly 50%, from 90% to 140%. But Barney Frank, just like Peter Orzsag, is all about semantics.
My parents were lucky, because they started saving in earnest in the early 1980s, at the outset of what would become the biggest bull market of all times and, by the time the bull market came to an end in 2000, they were home and dry. In that 20 year period, a global equity portfolio generated an annualised real return of just over 13% in dollar terms, equivalent to a total inflation-adjusted return of about 850%! Unfortunately, not everyone has been that privileged. My generation has only been saving for the last decade or so, and we are still under water. $100 invested in April 2000 is worth about $77 today in real terms. I, together with hundreds of millions of other baby boomers across the world, am now chasing whatever returns I can find to ensure that my retirement can be enjoyed in relative comfort. But the force is not with us. The equity market continues to be a dangerous place and the value of our property has also fallen precipitously. - Niels Jensen, Absolute Return Partners
With economic optimism back over the U-3 data, which was "surprisingly" not impacted by mid-winter snow (but as Art Cashin says, a horrible number would have been seen as a buying catalyst due to the "non-recurring" nature of snow in February), many seem to have missed that real unemployment, or the BLS' U-6 series actually climbed by 0.3%, to 16.8% from 16.5% in January. Additionally, the Non-Seasonally Adjusted U-6 number was barely changed, and was flat at 17.9%, just a hair away from January's record 18%.
- Fannie, Freddie may ask banks to eat $21 billion of sour loans (Bloomberg)
- Tresuries tumble after snow posturing ends up being great strawman (Bloomberg)
- No snow issues here - striking greek workers shut down transport, try to storm parliament (Bloomberg)
- French debt coming under investor scrutiny (Reuters)
- Singapore's GIC becomes UBS' biggest shareholder (Bloomberg)
- Market forecast- confusing (Barron's)
- How much does the national debt matter? (Forbes)
Following the NFP report, the AUDJPY surges by 1.42 to 81.54, after almost breaking 80 yesterday. The carry trade is back with a vengeance. The status quo is happy to continue as nobody has read Seth Klarman's lessons.
Key highlights from the February report:
- Total Civilian labor force at 153,512, compared to 153,170 in January
- Actual unemployment: 14,871, compared to 14,837 in January
- The pool of available workers at 21,041, 239k increase from January's 20,802
- The Over 20 split of unemployed men/women was 10.0%/8.0%
- The labor force participation rate was 64.8%, compared to 64.7% in January
- Average hourly earnings increased by +0.1% compared to consensus estimate of +0.2%
- Total average hours worked in the private industry at 33.8, down from 33.9 in January; The low was in the Leisure and Hospitality services at 25.7, the high in Mining and Logging at 42.6
- Asian stock markets rise as optimism ahead US jobs report grows; Tokyo jumps 2 percent.
- Asian stocks rose, after U.S. jobless claims fell & on speculation Bank of Japan will expand easing measures.
- China plans to sell $29B of Yuan debt this year as part of stimulus.
- China sets 8% GDP goal for 2010.
- Fed Presidents say interest rates need to be low early in US recovery.
- Greece raised $6.85B in a bond sale, but looming debt auctions by EU countries could make it difficult for borrowing more.
- Japan says it won't comply with possible bluefin tuna export ban ahead of key int'l vote.
RANsquawk 5th March Morning Briefing - Nonfarm Payroll Special
Must Read: Seth Klarman On The True And False Lessons From The Financial Crisis, Blasts Government Market InterventionSubmitted by Tyler Durden on 03/04/2010 - 23:17
The government can always rescue the markets or interfere with contract law whenever it deems convenient with little or no apparent cost. (Investors believe this now and, worse still, the government believes it as well. We are probably doomed to a lasting legacy of government tampering with financial markets and the economy, which is likely to create the mother of all moral hazards. The government is blissfully unaware of the wisdom of Friedrich Hayek: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”) - Seth Klarman
In the end, are foreign leaders right to scare their people with tales of Japan? Certainly, the hyperbole is overblown; the Chinese, especially, should be so lucky. But nor should apologists for deficits point to Japan as reason to be calm about outsized stimulus packages. Japan’s ability to trudge on in the face of huge adversity is admirable, but the risks of crisis ahead are surely greater than bond markets seem to recognize. - Ken Rogoff
At the start of today's Chinese National People's Congress, Chinese premier Wen Jiabao poured water over expectations that the renminbi may appreciate any time soon, and also indicated that China will "continue its expansionary fiscal policy" by maintaining appropriately loose monetary policy (translation: it is now next to impossible for the Chinese supertanker to steer off direct collision course with the bubble iceberg). He also noted that "The foundation for global economic recovery remains weak; financial risks have not been completely eliminated" and, most disturbingly, said that "trade protectionism is clearly reasserting itself." The ramification for US trade policy as a result of this admonition will likely continue to be made felt over the next 12 months. Yet in an odd moment of clarity, when discussing the domestic economy, Wen noted "latent risks in the banking and public finance sectors among the key challenges to economic growth, alongside now-standard warnings about industrial overcapacity and shortcomings in income distribution." As for the biggest question of how China will approach the USD-CNY relationship, Wen provided little clarity besides promising to "continue to improve the mechanism for setting the (yuan) exchange rate and keep it basically stable at a reasonable and balance level." As Market News notes, that wording, which is frequently trotted out in government statements, is identical to that contained in last year's report.
Federal Reserve Balance Sheet Update: Week Of March 3; 98% Of Q.E. Over; Just $35 Billion In MBS/Agency Purchases LeftSubmitted by Tyler Durden on 03/04/2010 - 20:55
The fed has completed $169.1 billion of $175 billion in the agency MBS program: there is just 3% of Agency dry powder remaining (no new purchases in the week ending March 3). The Fed has completed $1.22 trillion of its $1.25 trillion MBS debt purchase program, or 98%, through March 3 (including the $10 billion announced today). There is now just $35 billion left in Quantitative Easing capacity.