Archive - Apr 2015

Our current faith in central banks' ability to "make the economy all better, all the time" is horrendously misplaced.

America continues to be a country where there are only jobs for old men, those 55 and older, who saw a 329,000 increase in jobs in the past month. Every other age group saw job losses!

Without the aid of a VIX safety-wire, this morning's bad news has been unceremoniously sold in US equity futures markets this morning. Having just closed, with The Dow down 200 post-Payrolls, the S&P joins the Dow in the red for 2015...

Was it just the - as predicted - algos running wild in short-term run stops or did USDJPY (and EURUSD) swing violently in the seconds before the payrolls print because, yet again, someone got to see the number early?

Iceberg ahead!

Uh-oh... the payrolls "bad news" does not appear for now to be bad enough to prompt a "good news" buying mania as perhaps - just perhaps - the market is coming around to the total farce of smoke and mirrors of lower rates and QE doing anything for the real economy is being exposed... Dow futures are down 90 points, TSY yields down 7-8bps and USD weakness spreads as carry trades are unwound en masse.

We warned yesterday that the "whisper expectation is for a NFP print that will be well below consensus, somewhere in the mid-100,000s if not worse now that the bartender hiring spree is over", and we were right: moments ago the BLS reported that in March a paltry 126K jobs were added, nearly 50% below the 245K expected, and the lowest monthly increase since March 2013.The unemployment rate was unchangned at 5.5%. The January and February data was also revised significantly lower, and subtracted a grand total of 69K jobs.

Oil prices will remain subdued for the next 20 years. That comes from a new policy brief from Stanford economist Frank Wolak, who says that a series of phenomena – surging U.S. shale production, a weakening OPEC, the shale revolution spreading globally, efficiencies in drilling, and more natural gas substitution for oil – will combine to prevent oil prices from rising above $100 per barrel anytime soon.

With all but Johnny 5 left to man the trading desks, is it any wonder this is happening...

Amid growing pressure from their 'Troika colleagues' with Eurogroup Chair Dijsselbloem noting there is "still a long way to go" on Greek proposals and The IMF withdrawing its staff in Athens; new prime minister Alexis Tsipras heads to Russia to meet with Putin early next week. As Kremlin spokesman, Dmitry Peskov noted - somewhat intriguingly - "Greece has not asked [Russia] for financial aid... yet," as Tsipras is expected to seek agreement for a 'road map' of initiatives on the political and economic levels. Greek default risk has resurged in the last few days to its highest since the last 'restructuring'...

• Iranians celebrate, Obama hails 'historic' nuclear framework (Reuters)
• Iran Nuclear Accord Hailed as Landmark After Marathon Talks (BBG)
• Two New York City women accused of planning 'terrorist attack' (Reuters)
• Cyprus Lifts Capital Controls Two Years After Deposits Bail-In (BBG)
• Jury Hits Chrysler With $150 Million Penalty in Boy’s Death (WSJ)
• Greece says ready to make IMF payment on April 9 (Reuters)
• Germanwings Co-Pilot Set Plane to Go Faster Before Crash (BBG)
• IBM hire advisers to deal with restless investors - sources (Reuters)

Mission Accomplished...

The appointment of a number of non-Ukrainians to important government posts appears to have been implemented as a move aimed at curbing corruption. This was almost certainly under “orders” of Western powers which are currently financing Ukraine’s government. The IMF wants to get its money back one day, and that won’t be possible unless some things change rather dramatically. However, we believe this also means that the Minsk agreement will not hold forever. In US neo-con circles the idea of Kiev negotiating with the rebels in the East is detested – only unconditional surrender is held to be acceptable.

When all else fails, pre-emptively blame the weather...

Yemen descends into chaos as rebels storm the central district in the key port city of Aden (the site of a local branch of Yemen's central bank) while Al Qaeda militants stage raid on a Mukalla prison freeing 300 inmates. Meanwhile, a Saudi soldier was killed along the border while Chinese soldiers arrived to evacuate civilians.