Archive - Jun 3, 2011

...You will need it. The EURUSD has officially confirmed the much dreaded "Insane YoYo" formation. As a reminder the last time we had a dreaded chart spotting (The Hindenburg Omen from August 12, 2010), the Fed was forced to launch QE2 two weeks later. On a more serious note, the imminent announcement of a favorable Troica report on Greece will likely send the pair up 100 pips.

Two charts that confirm that the US economy is, and has been for the past 3 years, in nothing short of a depression...

Take away the Birth/Death adjustment of 206,000 and the Real NFP is: -150,000. This is the biggest monthly B/D adjustment in over a year. And if as all the pundits claimed last month, demanding the McDonalds addition of 62,000 janitorial, part-time jobs be added to the May number, the economy really lost over 200,000 in May. Time to price in QE 666.

Massive collapse in the American employment situation: May NFP at 54K, down from 244K, and not only below consensus of 165K, but below the lowest economist prediction of 65K. Private payrolls increased just 83K on expectations of 170K. Manufacturing payroll dropped 5K on expectation sof a 10K rise.  The unemployment rate was 9.1%, although U-6 declined from 15.9% t 15.8%. The absolute number of unemployed increased fom 13.747 million to 13.914 million. For the third month in a row the Labor Force Participation rate remained flat at 64.2%.  

When The Lord tells you to panic... You panic. And beg for QE 3, 4, 5, etc. Just think of the poor bankers.

Some may recall that it was the abysmal August 2010 NFP number that set off the QE 2 chain of events (courtesy of Goldman Sachs, which promptly downgraded the economy, only to upgrade it 4 months later in the worst call to ever come out of its economic department). We may be 45 minutes away from another August... On the other hand, a solid beat in NFP means QE 3 is off the table for a long time, which will really spook stocks.

Here are the key scheduled events over the next several months in Europe. These are the known events. Uknown ones, such as the expulsion of Greece, or the unwind of the monetary experiment, a revolution here and there, are obviously not noted.

In addition to the weak NFP number expected today which should put further pressure on a dollar, already trading at a several week low, Greek Ta Nea reports that the catalytic announcement by the Troika on the Greek economy is expected to come out later today. Unlike previous rumors that Greece was expected to miss every bailout parameter, the rumor this time is that the report will show a "mixed picture" meaning that the market is supposed to believe that there is a risk that the next tranche, worth €12 billon, of Greece's current E110 billion aid package, may not be disbursed. Of course it will be: the last thing Europe's bankers will do, especially after all the recent posturing, is to shoot themselves in the foot, and before the weekend at that. As a result we expect a double whammy of USD hits, which however will mean that the EURUSD will soon be back to levels that are high enough (1.46-1.48) that will make the announcement of QE3 problematic, as the next step lower in the USD would likely lead to a EURUSD of 1.70-1.80.

• Still no go on the white smoke, a few more weeks: Hilsenrath - Dallas Fed's Fisher Says More Easing by Fed Not Needed (WSJ)
• Chinese Economic Slowdown May Lead to 75% Plunge in Commodities, S&P Says (Bloomberg)
• EU should control member states' budgets, says bank boss (Guardian)
• Syrian Violence Tests U.S. (WSJ)
• SAC Again? Probe Deepens of Alleged Inside Trades at FDA (WSJ)
• Pushing for a return to the gold standard (LATimes)
• Wheat Futures Climb for Second Day on Weather Concerns in U.S., EU, Canada (Bloomberg)
• Europe E. Coli Outbreak is Deadliest on Record (Bloomberg)
• EU, IMF Wind Up Greek Economy Review (Bloomberg)
• China Ministry: 1H Industry Output To Slow to 13.5% (Market News)

And a few other things Apple...

A snapshot of the European Morning Briefing covering Stocks, Bonds, FX, etc.
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