Global Manufacturing PMI Plunges To 6-Month Lows

JPMorgan's global manufacturing PMI tumbled to its lowest level since October 2013 in April with the fastest 2-month drop in almost 2 years. At 51.9, the index is still in expansion (for the 17th month in a row) but the employment sub-index dropped as there is no sign of a post-weather bounce across the world.

The Good, And Bad News About US Jobs In One Chart

While we are tired of seeing various numbers and charts "explaining" the US employment situation as much as the next guy, here is just one final, and decidedly simple chart, summarizing precisely where the US job market stands.

The good news: in April, 118.4 million Americans had a full-time job, the most since November 2008.
The bad news: in April 9.8 million Americans were unemployed, 92 million people were out of the labor force, and 27.3 million people had part-time jobs. A total of 129.1 million, the most since ever.

Caught On Tape: Ukraine Helicopter Firing Rockets, Shot Down

Just 2 days after the first Ukrainian military helicopter was shot down, Ukraine's defense ministry confirms an Mi-24 chopper was shot down in the eastern region of Donetsk. As the following clip shows, it appears the helicopter came under large-caliber machine gun fire, a flash is seen, and then the chopper falls from view. The Defense Ministry confirms the pilots survived as the chopped crashed into a nearby river. One wonders how many more helicopters (that are in working condition and still have a full gas tank) Kiev, i) has; and ii) can afford to lose to eastern separatists as the Ukraine conflicts becomes an all out civil war?

ISM Services Jumps To 8-Month High But Employment Tumbles

At 51.3, the employment sub-index of the ISM Services data is at its lowest since May 2013 (ex February's "weather" impacted plunge). But hey - who cares about jobs, the headline improved to 8-month highs and beat expectations so sell JPY and buy stocks... new export orders (and new orders overall) rose to 8 months highs (but we don't need jobs for that?)... As an aside, Prices Paid surged to its highest since October 2012 as cost-push inflation appears to be looming.

Markit Reports Slowest Service Jobs Creation In Over A Year

While modestly better than expected, Markit's Services PMI fell in April from March's snap-back "we are saved" post-weather bounce.. and that's the good news! While abover "50" and this in expansion mode, job creation slipped to 13-month lows! As Markit summarizes, "the surveys are also signalling an easing in the rate of job creation since the start of the year, pointing to private sector payroll growth in the region of 100k, meaning a substantial slowing compared to the recent average 225k increases signalled by official data over the past three months."

Charlie Munger Slams HFT: "They Are Like Rats In A Granary"

None other than status-quo-hugger Berkshire Hathaway's Charlie Munger took aim at the scourge of HFT this morning; blasting high-frequency traders as "the functional equivalent of letting rats into a granary," and exclaims "it does the rest of civilization no good at all." Buffett reminds that HFT is "not a liquidity provider, " explaining that while it does produce volume, that is not the same as liquidity; and while the Oracle opines (incorrectly) that the small investor has never had it so good, Munger is quick to point out that the money HFT makes does not come from heaven and in fact it is the small investor who is hurt by the fact that large investors (who mostly act on small investors' behalf) are severely impacted. Even the usually abstinent Bill Gates remarks upon HFT as "adding no value.. because when the liquidity is needed, it isn't there." Munger sums it up: "I don't like it."

Widespread Airplane Grounding Was Due To U-2 Spy Plane Flyover "Overloading" Air Traffic Computers

One of the more peculiar news from last week was the grounding of all flights for several hours at several airports in the Southwestern United States and the grounding of planes bound for the region from other parts of the country. As so often happens when there is no specific reason at the time, the error was blamed on a computer "glitch" - the computer problem at a Federal Aviation Administration center slowed the journeys of tens of thousands of arriving and departing passengers at LAX. And that would have been all we heard of it had it not been for some additional digging by NBC which on Saturday, citing unnamed sources, reported a U-2, a Cold War-era spy plane still in use by the U.S. military, "passed through air space monitored by the Los Angeles Air Route Traffic Control Center and appears to have overloaded a computer system at the center."

4 Ukraine Soliders Killed, 40 Wounded As Fighting In East Escalates

There was a humorous moment on the tape overnight when news hit that Germany was set to propose new (and improved) Geneva talks on Ukraine, according to German foreign minister Frank-Walter Steinmeier. According to Bloomberg, the aim of new Geneva talks would be to correct failure of parties to adhere to accords forged in first talks in city. "New Geneva talks would seek to boost OSCE presence in Ukraine to ensure compliance with April accord, with observers also acting as mediators in local conflicts." Yes, utopia is great, and here's to hoping that once, just once, Russia will ignore the fact that it has every geostrategic advantage in the ongoing conflict and will pull back. In the meantime, here is what happened overnight as fighting in the Ukraine civil war continued unabated, claiming more lives and dozens of injueries overnight: UKRAINE TROOPS SUFFER 4 KILLED, ABOUT 30 WOUNDED IN SLOVYANSK

Key Events In The Coming Week

This week, markets are likely to focus on US ISM Nonmanufacturing, services and composite PMIs in the Euro area (expect increases), ECB’s Monetary Policy Decision (expect no change in policy until further ahead), and Congressional testimony by Fed’s Yellen.

10Y Yield Hits 7-Month Lows As Gold Surges

With Japan out and Europe quiet, markets are without their normal random Nikkei headline or ECB quote of the day to juice JPY (unable to break back above 102) and stocks (for now)... and of course, it's not Tuesday. Treasury yields are lower for the 5th day in a row with 10Y breaking below 2.57% (Feb lows) to its lowest in 7 months; 30Y continues to tumble to fresh 11-month lows (below 3.35%). Gold remains bid, now pressing up to $1315 (and well above its 200-day-moving-average) and silver is rallying. Stock futures are weak having lost the post-China PMI lows as Ukraine fear continues to rise. As far as "costs", Russian stocks are down for the 2nd day in a row (around the same as US stocks for now) but the Ruble is modestly stronger even as Russian bonds weaken slightly to 9.43% yields.

Target Chairman & CEO Resigns

It seems being ultimately responsible for the largest data breach is US history has its consequences for the bucks-stops-here CEO and Chairman of Target:


Target share prices is down modestly on the news, testing its 200DMA.

Frontrunning: May 5

  • Fed’s Fisher Says Economy Strengthening as Payrolls Rise (BBG)
  • Russia Knows Europe Sanctions Ineffective With Tax Havens (BBG)
  • EU Cuts Euro-Area Growth Outlook as Inflation Seen Slower (BBG)
  • U.S. Firms With Irish Addresses Get Tax Breaks Derided as ‘Blarney’ (BBG)
  • Portugal exits bailout without safety net of credit line (Euronews)
  • Puzzled Malaysian Air Searchers Ponder What to Try Now (BBG)
  • Barclays, Credit Suisse Battle Banker Exodus, Legal Woes (BBG)
  • Germany says euro level not an issue for politicians (Reuters)
  • Alibaba-Sized Hole Blown in Nasdaq 100 Amid New Stock (BBG)
  • Obamacare to save large corporations hundreds of billions (The Hill)

Futures Slide As Ukraine War Refuses To Go Away, 10 Year Yield Tumbles To February Lows

After months of ignoring events in Ukraine, HFT algos suddenly, if one for the time being, have re-discovered just where the former USSR country is on the map, and together with the latest economic disappointment out of China in the form of its official manufacturing PMI which missed expectations for the sixth month in a row, futures are oddly non-green at this moment now that talk of a Ukraine civil war is the new black (after two months of ignoring the elephant in the room... or rather bear in the room). Lighter volumes, courtesy of holidays in Japan and UK, have not helped the market breadth and stocks in Europe are broadly lower with the DAX (-1.33%) and CAC (-1.19%) weighed upon by risk off sentiment and market positioning for the eagerly anticipated ECB policy meeting especially after the EU cuts its Euro-Area 2014 inflation forecast from 1.0% to 0.8%. But what's bad for stocks continues to be good for equities, and moments ago the 10Y dropped to a paltry 2.57%, the lowest since February... and continuing to maul treasury shorts left and right.

The State Will Always Transcend Its Limits

Court challenges to constitutionally dubious laws that have been introduced since the WTC attack, as well as to the highly questionable activities of the national security apparatus, have been regularly stopped in their tracks with the argument that the plaintiffs 'lacked standing'. In the case of the indefinite detention provision this argument is especially bizarre, since all those who will acquire 'standing' in the future will no longer have access to the courts – the very thing the plaintiffs tried to challenge. This seems hardly compatible with how a nation of laws is supposed to operate, but as Rothbard pointed out, the State will always find a way to transcend its limits.

Gold Jumps Back Above 200DMA As USDJPY & Stocks Continue Slide

The weekend's re-escalation in Ukraine has sent gold popping $10 (and back above its 200DMA) and FX carry (and thus US equities) sliding in the early overnight trading. With Japan out (and Europe set for another holiday) volume are, and will likely remain, low. Critically, USDJPY is back under 102, even as Japan's central bank governor proclaims:


Which means Nikkei futures are also lower - down over 300 points from Friday's highs (and Chinese stocks are falling on the back another weak PMI print). Treasury futures are bid suggest 2bps more yield compression back below Friday's low yields at 2.57% for the 10Y.

China Manufacturing PMI Misses 6th Month In A Row As Home Sales Collapse 47% YoY

For the 6th month in a row, China HSBC Manufacturing PMI missed expectations. With a 48.1 flash print for April (vs 48.3 expectation) this is a very modest rise from March's 48.0 but is the 4th month in a row of contraction for the broader-based HSBC-version of the PMI (as opposed to the official more-SOE-biased version which remains in modest expansion). This is the longest streak of contraction since Oct 2012 (and the 3rd consecutive month of new order contraction). As if that was not enough to upset the 'recovery is around the corner' crew, home sales in China in the most recent (most frenetic typically) period, collapsed 47% year-over-year (and a stunning 65% in tier-2 cities). But apart from that - everything's great in the newly appointed largest economy on earth...


NATO Fighter Jet Presence Triples In Baltic States

The clip below explains that in response to Russia no longer following the globalist playbook, NATO has tripled its air policing mission assets guarding the skies over the Baltic region.  In the video: Danish fighter jets land in Estonia, while Poland and the United Kingdom take over guarding the skies in Lithuania, tripling the NATO air policing mission strength in the Baltic region.

Kyle Bass Sums It All Up: "Proceed With Caution"

From fears of Argentinian devaluations (and a 26-year-old running policy) to Japan's structural collapse; from Europe's false hope to China's bubbles; and from the Fed taper to the US hydrocarbon revolution, Hayman Capital's Kyle Bass provides a broad-based presentation of global risks and opportunities in the clip below. The Q&A is where Bass comes alive and is well worth the price of admission for a hedge fund manager unafraid to discuss the possibility that the status quo is unsustainable. Bass sums it all up perfectly succinctly, "proceed with caution."

What Really Matters When War Hits?

Only one thing is relied upon when words turn to deeds...UK warship HMS Edinburgh sails home via Arctic Ocean- 5 tons of Russian gold on board, part payment for war supplies