Archive - Oct 2014

Interested why despite the euphoric headline NFP print, a cursory glance deeper inside the payrolls report reveals weakness after weakness, with both participation plunging again and wages the worst since last summer? Here is the answer: 4 of the top 5 largest job additions in September, retail trade, leisure and hospitality, education and health and temp help, were of the lowest quality, and paying, jobs possible. So yes, America added a whole lot of minimum wage waiters, store clerks, groundskeepers and temps: truly the stuff New Normal "recoveries" are made of.

We continue to be told that the US economy is in recovery and stronger than ever. The press trumpets heavily massaged data (GDP growth and the unemployment number) while ignoring data that clearly indicates the US economy is in the toilet (labor participation rate, median income, etc).

Carmen Segarra said, “I come from the world of legal and compliance, we deal with hard evidence. It’s like, we don’t deal with, you know, perceptions.”

How ironic. Segarra worked at the Fed.

The Wall Street Journal's Fed-whisperer Jon Hilsenrath has explained (briefly) how traders should think after the better-than-expected (but fewer in the workforce) jobs data..."early interest rate increases next year - though not the Fed’s expected path before today - remain on the table."

The good news in today's jobs report is that at 248K, more jobs than expected were added in September.

And now, the bad news: What happened in September when the BLS just reported that average hourly earnings for all private industries were $24.53, is that this was only one of 6 months since the failure of Lehman, when there a sequential decline in average hourly earnings, down from $24.54 in August.

Speculators continue to sell paper and electronic gold while prudent buyers in China, India and elsewhere  continue to accumulate physical bullion.

This dichotomy can only last for so long before the powerful forces of actual physical demand in the small physical gold market lead to higher prices.

Good news... the unemployment rate is the lowest since mid 2008... but it seems the "good" news has now been understood as 'meh' news since it does nothing to stall the tightening path the Fed is on. Equity markets initial kneejerk higher has been roundtripped... Treasury yields blew 4-5bps higher but have now roundtripped... The USDollar remains bid but is also rolling over and the initial drops in gold and silver are reversing higher.

If the August payroll print was only +142, since revised to +180, it was largely offset by the September jump, which saw some 248K jobs added int he month, beating expectations of a 215K print, with a net prior revision of +69K jobs. And while with the revision of the August data the near-record streak of 200K+ jobs numbers was broken, we now have the longest running stretch of positive monthly job gains in history. On the other hand, the unemployment rate slid to jujst 5.9% from 6.1%, the lowest since July 2008.

With the September jobs report, perhaps one of the most irrelevant monthly updates from the BLS in a long time, due out in less than half an hour, BofA's Chart of the Day looks at what has become the most sticky issue in the monthly jobs report of late: where the inflation-adjusted income growth, or lack thereof, can be found. What it finds is that the average American can still hope for rising real wages: they just have to be massively underwater on unrepayable student debt.

Now that the seal has been broken, the American Ebola cases are coming fast and furious, and a few days after the first case of the deadly disease made its way to US soil, overnight we learned that an American cameraman helping to cover the Ebola outbreak in Liberia for NBC News has tested positive for the virus and will be flown back to the United States for treatment. The news broke late last night, when NBC reported that the freelancer, Ashoka Mukpo, 33, was hired Tuesday to be a second cameraman for NBC News Chief Medical Editor and Correspondent Dr. Nancy Snyderman. Snyderman is with three other NBC News employees on assignment in Monrovia, reporting on the Ebola outbreak.

• How you know it is all a lie: Pelosi Presses Obama to Talk Up Stronger U.S. Economy (BBG)
• Secret Goldman Sachs Tapes Put Pressure on New York Fed (NYT), Uh, no they don't
• Clashes Break Out at Hong Kong Protest Site (WSJ)
• N.Y. Fed Lawyer Says AIG Got Billions Without Paperwork (BBG)
• Ebola’s Disease Detectives Race to Track Others Exposed (BBG)
• UPS, FedEx Want Retailers to Get Real on Holiday Shipping (WSJ)
• No more mailman at the door under U.S. Postal Service plan (Reuters)

• Citigroup 175K
• HSBC 200K
• Deutsche Bank 200K
• JP Morgan 225K
• Morgan Stanley 230K
• Goldman Sachs 230K
• BofAML 235K
• UBS 250K

In is only fitting that a week that has been characterized by deteriorating macroeconomic data, and abysmal European data, would conclude with yet another macro disappointment in the form of Markit's sentiment surveys, for non-manufacturing/service (and composite) PMIs in Europe which missed almost entirely across the board, with Spain down from 58.1 to 55.8 (exp. 57.0), Italy down from 49.8 to 48.8 (exp. 49.8), France down from 49.4 to 48.4 (exp. 49.4), and in fact only Russia (!) and Germany rising, with the latter growing from 55.4 to 55.7, above the 55.4 expected, which however hardly compensates for the contractionary manufacturing PMI reported earlier this week. As a result, the Composite Eurozone PMI down from 52.3 to 52.0, missing expectations, as only Germany saw a service PMI increase. And yet, despite or rather thanks to this ongoing economic weakness, futures have ignored all the negative and at last check were higher by 9 points, or just over 0.4%, as the algos appear to have reconsidered Draghi's quite explicit words, and seem to be convinced that his lack of willingness to commit is merely "pent up" commitment for a future ECB meeting. That or, more likely just another short squeeze especially with the "all important" non-farm payrolls number due out in just over 2 hours, which for the past 24 hours has been hyped up as sure to bounce strongly from the very disappointing, sub-200K August print.

Low interest rates are a direct cause of credit bubbles, and this is what is happening in Singapore

"If they're not lying, they are grossly incompetent," said Dr. Gil Mobley, a microbiologist and emergency trauma physician from Springfield, Mo. as he checked in and cleared Atlanta airport security wearing a mask, goggles, gloves, boots and a hooded white jumpsuit emblazoned on the back with the words, "CDC is lying!" As The Atlanta Journal-Constitution reports, Mobley says the CDC is "sugar-coating" the risk of the virus spreading in the United States.