Archive - Dec 5, 2014

Here's a paradox: a month after the democrats were massacred in the House in the midterm elections due to America's revulsion with the non-recovery, and a week after the worst start to the holiday shopping season since Lehman, the WSJ tells us that 2014 will be the best year for jobs in the New Millennium.

“I know the police cause you trouble;
They cause trouble everywhere.
But when you die and go to heaven;
You find no policeman there” 
--Woody Guthrie

But, but, but payrolls data was awesome!! US Factory Orders tumbled 0.7% in October (missing 0.0% expectations) for the 3rd month in a row (for the first time since June 2012). Rather notably, the only other time we had 3 straight months of factory orders declines was in the recession and the 2012 decline was saved by QE3. The data was ugly across the board: Non-durable orders -1.5%, non-defense, ex-air tumbled 1.6%, and inventories-to-shipments levels are at the year's highs. More problematically for GDP enthusiasts, October inventories of manufactured nondurable goods decreased 0.5% to $249.0 billion driven by petroleum and coal products (but wait lower oil prices are unequivocally good right?)

The ink isn't dry yet on the amazing midterm drubbing of the democrats over what most Americans said were deteriorating economic issues and a recovery that continues to only be there on BLS goalseeked paper, and lo and behold, here is Obama, about to boast about today's whopper of a jobs number, in which the BLS proudly reported the US hired some 321K workers in November, mostly temps, secretaries, retail and leisure workers and teachers. That, and the president is also expected to announce the choice of Ash Carter as the new Secretary of Defense.

 THE bubble, the biggest bubble in financial history: an incredible $100 trillion monster that is now growing by trillions of dollars every few months.

Having started 2014 - coincidentally - at 16,300 (both Dow Industrials and Nikkei 225), by mid-year the Dow was trading 2200 points above its Japanese counterpart. Since then things have changed as the JPY has careened headlong towards collapse, Japanese stocks have resurged and at 18,060, trades 150 points above the Dow at 17,910...  However, in USD terms, Japanese stocks are -4.5%, while The Dow is +9.15% year-to-date.

Curious just what the "quality" of jobs that comprised the best jobs report in nearly 3 years? Here is the answer: Retail Trade, Education and Health, and Leisure and Hospitality, as well as Administrative Assistants, cumulatively made up more than half of the jobs gains in the month. All minimum-wage or just above paying jobs. Which is why anyone who believes that wages rose at the rate the BLS would like you to believe, may want to wait until the inevitable downward revision.

Because nothing says global slowdown, oil crash, HY spread blowout, currency collapse like a (purportedly forward-looking indicator of risk) VIX with an 11 handle...

The Bank of Russia this week made its heaviest currency intervention in more than a month, according to WSJ, to try to stem the escalating trend of Ruble collapse... but it's not working. Chatter of three significant interventions this week (which are quite apparent in the USDRUB chart) have had less and less positive impact on the currency and even with warnings of jail for FX speculators, the post-intervention selling continues. It appears, however, that the main pressure today is in the Russian bond market as 10Y RUB Bonds cracked 80bps higher to 12.04% yield... the pressure mounts on Putin.

It is no secret to properly informed readers that the U.S. economy is mired in a Greater Depression. All claims of economic growth and a “U.S. recovery” are nothing more than a flimsy fraud. This fiction requires nothing more than lying about the rate of inflation, as all estimates of GDP are directly derived from the official rate of inflation.

While the seasonally-adjusted headline Establishment Survey payroll print reported by the BLS moments ago may be indicative of an economy which the Fed will soon have to temper in an attempt to cool down, a closer read of the November payrolls report shows several other things that were not quite as rosy. First, the Household Survey was nowhere close to confirming the Establishment Survey data, suggesting jobs rose only by 4K from 147,283K to 147,287K, and furthermore, the breakdown was skewed fully in favor of Part-Time jobs, which rose by 77K while Full-Time jobs declined by 150K.

HOLY MOLY that’s a biggie

After an initial "good news is bad news" kneejerk lower in stocks, USD strength (and thus JPY weakness) is providing the ammo to 'prove' this is good news, but problematically the bounce is fading (of course, there's a long way and a lot more VIX to sell to manage this narrative green). Oil is up modestly (growth?). Treasury yields are surging (10Y +7bps) and gold and silver and sliding...

If the Fed needed a flashing red light that the time for a first rate hike is overdue, it just got it moments ago when the BLS reported that in November some 321K jobs were added, a 4 sigma beat to the 230K expected, and well above the revised 243K in October. In fact, this was the biggest monthly jobs addition since January 2012!

Between professional economists, CNBC's "Nail The Number", and Twitter #NFPGuesses, the range of today's guesses for payrolls is between 100k and 400k...