Archive - Jan 8, 2016

As we noted in the jobs preview, only a super strong number had any chance of prompting a market reaction, and sure enough, the just announced December print of +292,000 smashed expectations of +200K, surging from last month's upward revised 252K. So time for another rate hike, right? Not so fast: as usual, the fly in the ointment was a well-familiar one: wages simply did not grow, and with Wall Street expecting a 0.2% increase in average hourly wages, in December not only was there no wage growth, but in fact, average hourly earnings posted a tiny decline from $25.25 to $25.24.

This week is simply the worst we had in recent history for markets, RBS exclaims, the worst ever start to the year for The Dow, the worst since 1999 for S&P and the second-worst for credit since 2008. Worst still is, they think there’s more weakness ahead and that many fundamental risks will continue to haunt markets. Why? Simple! Investors drank too much policy kool-aid last year.

Now that the Fed has commenced its rate hike cycle, the jobs report suddenly takes on far less significance because only a massively "outlier" print will have an impact on Fed thinking, thinking which so far appears undented despite a raging manufacturing recession across the US. This means that the December jobs could be the "most important ever" only in retrospect.

"Saudi Aramco confirms that it has been studying various options to allow broad public participation in its equity through the listing in the capital markets of an appropriate percentage of the Company’s shares and/or the listing of a bundle its downstream subsidiaries."

• U.S. jobs market seen fairly healthy despite slowing economy (Reuters)
• China State Funds Said to Buy More Shares After Market Rout (BBG)
• Global Stocks Gain Some Respite (WSJ)
• U.S. Jobs Data Take on Added Importance With Markets in Turmoil (BBG)
• GOP Health Plans Are Works in Progress (WSJ)
• For economy czar of crisis-hit Venezuela, inflation 'does not exist' (Reuters)

U.S. STOCK INDEX FUTURES PAIR GAINS SLIGHTLY AFTER CHINA'S CENTRAL BANK SAYS IT WILL FURTHER LIBERALIZE INTEREST RATES - RTRS

Translated: even more devaluation + even less intervention = bad for risk.

The half-life of the latest "market supporting" intervention by the Chinese government: just about 12 hours.

Giant Sucking Sound ...