Initial claims rose very modestly this week but the smoother 4-week average hit fresh cycle lows at 271k - just shy of the lowest level since 1973. Continuing claims also fell to new cycle lows at their lowest since 2000. It appears, as we have noted previously, that peak job-related cost-cutting has been achieved. However, it's not all unicorns and ponies... as Chicago Fed National Activity Indicator printed a disappointing -0.15, the 4th month in a row of contraction.
Even without a double seasonal adjustment, the Fed may very well surprise with not only a September, but even a June hike. After all recall that to Yellen stocks are now clearly overvalued, and the cornered Fed Chairwoman is between a rock and a hard place - keep failing to rase rates and risk another bond tantrum as all the shorts are squeezed leading to even more illiquidity and volatility, or slowly take the air out of the stock bubble (good luck with that).
The fact that Saudi Arabia is on the U.N. Human Rights Council at all is more than sufficient to make a mockery out of the entire body. Nevertheless, it appears this ridiculous membership isn’t enough for the Saudis, and the Washington Free Beacon is reporting that the medieval desert monarchy is angling to take over the head position when the leadership position becomes available after 2016.
It is becoming increasingly clear that the Syriza show will ultimately have to be canceled in Greece (or at least recast) if the country intends to find a long-term solution that allows for stable relations with European creditors, but as we noted on Wednesday, it may be time for Greeks to ask themselves if binding their fate to Europe is in their best interests. Indeed, it's time to take a hard look at the political ramifications of the June 5 IMF deadline and ask if the troika will, in the final analysis, be successful in using financial leverage to undermine the democratic process.
- Once-Unthinkable Criminal Pleas by U.S. Banks Get Investor ‘Meh’ (BBG)
- The E-Mail That Helped Catch Barclays: ‘ISDAfix Is Manipulated’ (BBG)
- CFTC Said Preparing ISDAfix Probe Talks in Weeks: Credit Markets (BBG)
- Islamic State takes control of Syria's Palmyra in westward advance (Reuters)
- Tensions High as Greece Gets Smallest Aid Rise Yet (BBG)
- The Rise of the $50,000 Rental (BBG)
- U.S. says South China Sea reclamations stoke instability (Reuters)
- First Hanergy Now Goldin: Hong Kong Stocks Drop Like Stones (BBG)
The big news overnight was neither the Chinese manufacturing PMI miss nor the just as unpleasant (and important) German manufacturing and service PMI misses, but that speculation about a rate hike continues to grow louder despite the abysmal economic data lately, with the latest vote of support of a 25 bps rate increase coming from Goldman which overnight updated its "Fed staff model" and found surprisingly little slack in the economy suggesting that the recent push to blame reality for not complying with economist models (and hence the need for double seasonal adjustments) is gaining steam, and as we first suggested earlier this week, it may just happen that the Fed completely ignores recent data, and pushes on to tighten conditions, if only to rerun the great Trichet experiment of the summer of 2011 when the smallest of rate hikes resulted in a double dip recession.
There's trouble brewing in The South China Sea, where Beijing has been using "scores of dredgers" to turn reefs into islands in the Spratly archipelago. Reports that Washington is looking into options for countering China's island-building project, have set up a contentious scenario that culminated in Beijing advising the US to "refrain from provocative action" in the area. Now, China is telling US surveillance planes to "Go now!"
"Europe faces the risk of a second revolt by Left-wing forces in the South after Portugal’s Socialist Party vowed to defy austerity demands from the country’s creditors and block any further sackings of public officials", The Telegraph reports. In sum, the reason why concessions (any concessions) to the Greeks are a non-starter in Athens' negotiations with creditors is that the IMF, the European Commission, and most especially Germany, want to send a clear message to any other 'leftist radicals' who may be thinking about using the "one move and the idea of EMU indissolubility gets it" routine as a way to negotiate for breathing room on austerity pledges, will get exactly nowhere and will have a very unpleasant time on the way.
“You can’t stop an idea whose time has come.”
According to The China People's Daily, Indonesia has just sank a large Chinese vessel and 40 other foreign ships caught fishing in The South China Sea. AP confirms that Indonesian authorities blew up and sank the 41 vessels... which seems like something that might just lead to some serious escalation if true...
JPMorgan expects U.K. won’t delay the promised in out referendum on EU membership until 2017 but will put the issue to vote in late 2016 instead. Given the ruling Conservatives have only a small majority, any legislation could fail if euro skeptics within the party vote against it, suggesting the party leadership will want to get the issue resolved sooner rather than later. The prospect of a vote could weigh on the economy, again arguing for an earlier vote, so here are the pros and cons of Brexit simplified...
We do not have to choose between liberty and security. We can have both, and we can provide it for ourselves as our own protectors. Sheepdogs be damned. Each citizen is his first and best line of defense. Only when the American people take on the philosophy of self-defense rather than government reliance will we be free of fear from terrorism and free of fear from tyrannical government. This is the answer to the propaganda of militarization. ISIS does not matter. It is what we ultimately do about ISIS or similar threats that matters, and martial law is not the answer.
Chinese Manufacturing PMI missed expectations, printing a contractrionary 49.1 (against 49.3 expectatons) for the 3rd month in a row. While this was a small pick up from last month's 48.9 print, it hardly signals 'success' for the various easing efforts unleashed upon an all-knowing investing public. After yesterday's weakness in Chinese stocks, one would think a disappointing PMI was just the ticket to send investors wild with buying in anticipation of more easing, but now, Chinese stocks have erased early modest gains and are fading back...
Militarization Is More Than Tanks & Rifles: It’s a Cultural Disease, Acclimating Citizens To Life In A Police StateSubmitted by Tyler Durden on 05/20/2015 - 22:00
The problems we’re grappling with have been building for more than 40 years. They’re not going to go away overnight, and they certainly will not be resolved by a report that instructs the police to simply adopt different tactics to accomplish the same results - i.e., maintain the government’s power, control and wealth at all costs. This is the sad reality of life in the American police state.