Archive - Oct 5, 2012 - Story

AAPL is down 1.5% and once again testing its 50DMA. Now trading the range of Tuesday's closing ramp-fest and below its closing VWAP... BTFD?

Italy's FTSEMIB is up 5% this week, Spain's IBEX +3%, Portuguese government bond spreads are 82bps lower, and EURUSD is 1.25% higher this week - all biggest bull moves in 6 weeks. It would appear that all is well and Europe is saved - who knew? Credit markets are running tighter in a hurry with subordinated financials and XOver leading the way (as uber-high-beta bets are on) and all European financial and corporate credit indices at post-roll tights (lowest risk in 3 weeks). FYI - European bank senior and subordinated credit risk is now at its lowest in a year - and almost 40% lower than its post-LTRO (remember the encumbrance and deposit outflows) highs. EURUSD is close to multi-year highs relative to swap-spreads - but Europe is fixed so that's ok (especially with Merkel popping over to Athens?). One last thing - the majority of all this strength occurred today.

Several weeks ago, the platinum producing company that started it all (after police killed 34 of its striking workers at its Marikana South African mine) Lonmin, conceded and agreed to a 22% wage hike. In doing so it once again proved that in game theory he who defects first, defects best. Shortly thereafter the strike spread to all other South African mining industries, and has even spilled over into the trucking industry, whose ongoing strike has crippled the country and threatens to paralyze all commerce. The only reason for the continued worker boldness: Lonmin folding to worker demands, in the process empowering all other workers in the African country to demand equitable treatment. Which is why today's news that that "other" platinum miner in South Africa has decided to go the opposite route, and instead of yielding to worker demands for a raise, has gone and fired 12,000 workers taking part in a three-week strike. How this dramatic shift in the balance of power affects the already struggling country, and its mining sector remains to be seen. However, if recent events are any indication, he doubt local workers will just put down their banners and go back to work as per the old status quo. In the meantime, look for ever less platinum,and gold, to be produced by this mining powerhouse.

It appears social unrest is resurgent on the streets of Bahrain once again.  Following the funeral procession earlier in the week (of a young boy who died in earlier street battles with police), protesters are once again gathering and marching to the Pearl Roundabout. Police are active with tear gas and fires are breaking out... via Twitter: #Bahrain is in chaos.

As a job-safe Big Bird might have said "one of these things is not like the other" as we look at the performance difference between financials and industrials in the new normal. While short-term newsflow keeps banks to'ing-and-fro'ing, the inevitable truth is that it appears it is different this time - and not in a good way.

The fact-digging continues, this time out out of Goldman, which has some less than stellar words about what the superficial consensus says was a strong number. Then again, Goldman's agenda is pure goldilocks: an economy that is not too strong and just right for another $2 trillion of QEternity at a minimum. Remember: if jobs were to really surge someone might ask Bernanke if when he will stop his $85 billion/month flow program aka QE3.

The Greeks only assume the mantle of serfdom to keep the pipeline of capital flowing. They have damaged their national psyche in the process and caused undue pain for their citizens but it must seem simpler, to the elite of Greece, to beg rather than go back to work. The problem for Europe now is that the amount of money is so large and the pain will be so great that they wince at the consequences of their misbegotten strategy. Europe provided money, demanded austerity, and kept the charade in play far longer than good sense would dictate. Now, however, I would assert; the tragedy is about to end and the farce about to begin.

Here's a peculiar statistical aberration:

• Household Survey people employed: +873,000 (source)
• Part-time jobs for economic reasons: +582,000 (source)

-> 582,000 divided by 873,000 = 0.666666666666*

Aka: precisely two thirds. Whatever are the odds... Goalseeking much Arima-X-12?

If yesterday was the Romney-rally, is today going to be the Obama-rally?

We already noted the absolutely stunning surge in reported Household Survey jobs which "added" 873,000 jobs, or the most since 2003 and the second most in the past decade, which was just a little bit off the Household Survey used in the monthly NFP jobs changes, which came at 114,000, or about 8 times less. But what was the reason for this epic jump in Household survey jobs? Simple, and those who have read our series on America's transition to a part-time worker society know the answer. The reason is that the number of part-time people employed for economic reasons soared by 582,000 to 8,613,000, the most since October 2011, and the largest one month jump since February 2009, when "restoring" confidence in the economy was all the rage... and just before the Fed announced the full blown QE1 in March of 2009. Odd symmetry.

There was a time when only fringe blogs and digital dickweeds would suggest the BLS data was anything but entirely above board. That time has ended!

Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers

— Jack Welch (@jack_welch) October 5, 2012

For the second time this week, NYSE Liffe has halted all London Commodities, Paris Commodities, and London Universal Stock Futures trading - due to a 'technical issue'. Simply remarkable...

Complete preelection "massaging" farce.

We've discused how to forecast it, how to trade it, and its politicial implications, so just to tie it all up in a bow, here are the 'surprise' factors for September's NFP over the last 14 years - mostly a miss!