Archive - Jan 9, 2015

The situation in France is going from bad to worse. First there is the two Paris terror-attack suspects hostage crisis in an industrial estate north of Paris. Secondly, an apparently linked (according to police) hostage crisis is also under way in an East Paris kosher grocery, where a suspect in the Thursday fatal shooting of a police officer in Paris' Monrouge area, identified as Amedi Coulibaly, 32, has now issued a warning that he will kill hostages if police storm the terror-attack brothers. What is even more curious is that Coulibaly met with French President Sarkozy in 2009, hoping to find a job.

Just 2 days after President Obama reflected on his glorious 'save' of the US auto industry - forgetting to explain how so much of this 'buying frenzy' has been predicated on massive low-quality-borrower-based credit extensions - The Wall Street Journal bursts the bubble of 'contained-ness'. Auto loan delinquency rates are surging to levels not seen since 2008 and stunningly, more than 8.4% of borrowers with weak credit scores who took out loans in the first quarter of 2014 had missed payments by November. As even glass-half-full-status-quo-hugger Mark Zandi is forced to admit, "It’s clear that credit quality is eroding now, and pretty quickly."

After evading the French police for nearly three days, a few hours ago the Charlie Hebdo murder suspects were cornered in an industrial building near Charles de Gaulle airport in the town of Dammarin-en-Goelle, 26 miles northeast of paris and 8 miles away from the airport, where they are said to have taken a hostage. Heavily armed police blocked approaches to the town and helicopters hovered in the fog overhead. Agence France-Presse said the men have taken a hostage. According to reports, the suspects have established police contact with the police and have said they are ready to "die as martyrs."

What will you accept as real--your intuition that something is deeply amiss in America, or the official propaganda that all is well? The goal of this war is to persuade you to surrender your independence and intuition in favor of passive acceptance of the cleverly cloaked tyranny of the current arrangement. If they cannot persuade you, then disorienting you will do. Misdirecting your intuition is victory enough.

In our Wonderland Matrix; we are frequently sold perversion by our corrupt governments, criminal banks, and (of course) the parrots of the Corporate media. Black is white. Down is up. Bad is good.

With respect to the latter perversion; while we have many examples to choose from, there could be no better selection than the obscenity dubbed by the Big Banks themselves as “too big to fail”. Regular readers are already familiar with my condemnation of this fraud, as too-big-to-fail is literally nothing but (very) thinly-veiled blackmail.

Will Oil find a Support in the coming weeks? Whats the long term impact of low OIL prices?

For those wondering why average hourly earnings in December plunged by -0.2% on expectations of a 0.2% increase and why the November "Green shoot" surge in wages of 0.4%, which everyone took as a signal of imminent wage inflation was cut in half here is the answer: in December the number of workers employed in Food Service and Drinking Places, i.e., sub-minimum wage waiters and bartenders jumped by 43,600: the highest monthly increase since 2012.

Goldman last made a meaningful downward revision to their EURUSD forecast in August, just after ECB President Draghi’s speech at Jackson Hole. At the time, the message was that EURUSD has begun a protracted weakening trend, reflecting cyclical underperformance vis-à-vis the US and a more activist ECB, which would take the single currency to parity versus the Dollar by 2017. Today, Goldman further revises down their longer-term forecasts, bringing the end-2016 forecast to 1.00 (from 1.05) and that for end-2017 to 0.90 (from 1.00).

While headline exuberance over the payrolls print sparked a kneejerk higher in stocks, the record drop in earnings and the further drop in the labor force are leading bond yields and crude oil lower. Gold is modestly hgher and the USDollar is rallying.

Another month, another attempt by the BLS to mask the collapse in the US labor force with a goalseeked seasonally-adjusted surge in waiter, bartender and other low-paying jobs. Case in point: after a modest rebound by 0.1% in November, the labor participation rate just slid once more, dropping to 62.7%, or the lowest print since December 1977. This happened because the number of Americans not in the labor forced soared by 451,000 in December, far outpacing the 111,000 jobs added according to the Household Survey, and is the primary reason why the number of uenmployed Americans dropped by 383,000.

On the surface, the December jobs report was good, with 252K jobs added, higher than the 240K expected, leading to a fresh cycle low unemployment rate of 5.6%, down from 5.8% and below the 5.7% expected, and with the November data revised to a whopping 353K from 321K, a net change of 50K including the October revision. However it was the average hourly earnings where the real details were hid, and it was here that Wall Street was expecting a 0.2% increase. Intead the BLS reported a whoppping 0.2% decline in average hourly earnings, with the last month's 0.4% jump revised lower by half to 0.2%.

• Deutsche Bank 200K
• HSBC 211K
• Citigroup 220K
• Goldman Sachs 230K
• Morgan Stanley 240K
• JP Morgan 240K
• Credit Suisse 250K
• UBS 270K

Even as the Charlie Hebdo shooting suspects, who have holed up in the town of Dommartin with a hostage in tow, are engaged in what is likely a final showdown with the police, a second hostage situation appears to have developed in a Kosher grocery in eastern Paris, where according to preliminary reports the shooter from the Montrouge policewoman killing yesterday, has taken several hostages. According to AFP, Fresh shooting broke out in eastern Paris on Friday, with reports that an armed man had taken a hostage at a kosher grocery store. "The gunman was suspected of being the same man who killed a policewoman in southern Paris on Thursday, who is thought to have links to the assailants who stormed." AFP just added that at least 5 hostage are involved in the parallel hostage situation.

• Police Surround Paris Terror Suspects Near CDG Airport (BBG)
• ECB Said to Study Bond-Purchase Models Up to 500 Billion Euros (BBG)
• How OPEC Weaponized the Price of Oil Against U.S. Drillers (BBG)
• German Industrial Production Falls Amid Plunge in Energy Output (BBG)
• Car Loans See Rise In Missed Payments (WSJ)
• Jim O'Neill threatens he will replace BRICs with ICs (BBG)
• Oil heads for seventh weekly loss as supply glut drags (Reuters)
• Armed man takes hostage in kosher grocery in Paris (AFP)
• Janus Chairman Didn’t Know Details of Gross’s Investment (WSJ)
• Kaisa Bondholders Dream of White Knight as Default Becomes Real (BBG)