Archive - May 2012

Expectations were for an increase in non farm payrolls of 160,000, and a 8.2% unemployment rate. We got +115,000, and 130,000 privates. Unemployment rate at 8.1%, lowest since January 2009. Schrodinger is alive and well.

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With everyone and their mother scrambling to come up with some utterly meaningless number (why is it meaningless? Because From January to March seasonal adjustments have "added" 4,477,000 jobs, and the monthly error interval is 100,000) to game the headline, which algos just can't wait for to send the market soaring (on either "virtuous circle" or "More QE" signals), here is our best suggestion on how to predict what the US economy will do all the way to the Planck constant. And at a sunk cost of only $24.99 to US taxpayers for bailed out US bank strategists, we are confident that expense committee will be able to say no to these oh so very critical products for the new "alive or dead" normal.

Here is what happened in Europe overnight, and why the market sentiment is already negative in advance of an NFP number which many are watching closely as a miss of expectations will cement the thesis that the US economy has now rolled over and will likely need more nominally dilutive aid from central planners to regain its upward slope:

• Spain Services PMI for April 42.1 – lower than expected. Consensus 45.4. Previous 46.3.
• Italian Services PMI for April 42.3 – lower than expected. Consensus 43.7. Previous 44.3.
• France Services PMI for April 45.2 – lower than expected. Consensus 46.4. Previous 46.4.
• Germany Service PMI for April 52.2 – lower than expected. Consensus 52.6. Previous 52.6.
• Euro-area Service PMI for April 46.9 – lower than expected. Consensus 47.9. Previous 47.9.

And while the data was bad enough to send European stocks and US stock futures lower, the latest meme spreading as the first US traders walk in, is one of reNEWed QE expectations already, if a very weak one for now.

• Japan has 54 nuclear reactors, but as of Saturday, not one of them will be in operation (Guardian)
• US Readies Proposal to Clamp Down on Fracking (Reuters)
• California pension fund (CALSTRS) sues Wal-Mart, alleges bribery (Reuters)
• New Ripples for Gupta Case: Goldman Share Price, Volume Began Climbing Even Before Rajaratnam Trades (WSJ)
• China says blind dissident can apply to study abroad (Reuters)
• China paper calls Chen a U.S. pawn; envoy is a "troublemaker" (Reuters)
• Samsung’s New Galaxy S Phone Raises Heat on Apple Iphone (Bloomberg)
• Draghi predicts 2012 eurozone recovery  (FT)
• Tumbling Home Ownership Marks a Return to Normal (Bloomberg)
• Zuckerberg Facebook IPO to Make Him Richer Than Ballmer (Bloomberg)
• SEC probes Chesapeake and its chief (FT)

Here is what Wall Street expects will be announced at 8:30 am Eastern today:

And while as usual the actual number will be largely meaningless, and is merely an indication of our headline chasing nature since as the BLS itself says the error interval is +/- 100,000, a few hnndred purely statistical jobs will make or break the market and send it soaring on either "virtuous circle" expectations, or on NEW QE coming back with a bang.

In this final part of the four-part series from The Heritage Foundation, we look at the scale of the entitlement society we live in relative to the Federal Budget. Medicare, Medicaid, and Social Security spending is set to explode, placing enormous pressure on other priorities such as defense and the rest of the budget.

As Oilprice.com embarks on its Top 5 series, we thought it expedient to begin with our take on the key figures shaping and influencing U.S. renewable energy efforts, not least because the issue of energy security is being prioritized in campaigning ahead of U.S. presidential elections. In considering from the numerous choices for these top five slots, we take into account a number of variables, including investment in renewable energy, the ability to influence policy and shape public opinion, and advocacy efforts. This goes well beyond simply counting coin – it is about innovation, imagination, vision, risk and patience. Arguably, these people will play an important role in your life and leisure, for better or worse.

Excessive spending has created record levels of debt and deficits, and the worst is yet to come, threatening opportunity and prosperity for younger generations. In these 10 charts, via The Heritage Foundation, we highlight the third (and arguably most frightening) in our four-part series on the Federal Budget - Debt & Deficits.

In 2006, Michael Pettis (one of the best known on-the-ground academic-and-practitioner experts on China) started making a number of predictions based on what he thought was the necessary and logical development of China’s growth model. Some of these predictions seemed fairly outlandish, especially to China analysts – Chinese and foreign – who had very little knowledge of economic history or other developing countries, but many of them so far have turned out quite well. As more and more analysts are beginning to understand the constraints of the Chinese growth model he thought it might be useful to list some of these predictions to get a sense of what might be still to come. Hold on to your hard-landing hats.

In this second part of the four-part series describing the state of the Federal Budget, we present 10 charts courtesy of The Heritage Foundation on Federal Revenues. America’s growing tax burden is a drag on the economy and will reach record levels without policy changes.

Nut cases. That’s what they are. And if you take an interest in them, you are a nut case, too. That’s the consensus among credentialed economists who describe advocates of a return to the monetary regime known as the gold standard. In fact, the economic pack will marginalize you as a weirdo faster than you can say "Jacques Rueff," if you even raise the topic of monetary policy in relation to gold. If we are going to speak of consensus, let’s not forget one that is truly universal: Our economic system stands a good chance of breakdown in coming years. The only way to limit damage from such a breakdown is to ready ourselves to choose other models by learning about them now. Not to do so would be nuts.