Archive - Sep 6, 2013 - Story

Earlier we pointed out the latest amusing scapegoat for the "soft" jobs report: it wasn't the weather this time, but the porn inudstry, and specifically the exodus of 22k "actors" due to an HIV scare. Whether or not this truly amusing justification for the recent, and ongoing, weakness is relevant is unknown, but what is known is that there appears to have been another great rotation to take place in the just as amusingly-called US economic "recovery" - a rotation out of actors and into, where else, waiters and bartenders.

As WaPo illustrates in the great infographic below, lawmakers appear to be tentatively dividing into four camps over military action in Syria.

The ongoing deterioration in earnings is something worth watching closely.  The recent improvement in the economic reports is likely more ephemeral due to a very sluggish start of the year that has led to a "restocking" cycle.  The sustainability of the uptick is crucially important if the economy is indeed truly turning a corner toward stronger economic growth.  However, with interest rates rising, oil prices surging and the Affordable Care Act about to levy higher taxes on individuals, it is likely that a continuation of a "struggle" through economy is the most likely outcome.  This puts overly optimistic earnings estimates in jeopardy of be lowered further in the coming months ahead as stock buybacks slow and corporate cost cutting continues to become less effective.

After months of rock-hard gains in stocks, and an extended period of firming in the headline jobs data, some are noting that today's limpness in the jobs data is temporary, driven by an unexpected choke down of staffing in the porn industry. As Bloomberg reports, a big surprise in today's report was a 6% decline in the number of people working in the "motion picture and sound recording industries." It turns out that, as WaPo notes, the U.S. porn industry stopped working for a week after an actress tested positive for HIV. It seems we should all be pulling for a revival of the porn industry to raise the economy from its slumber.

“Will we help Syria? We will,” the Russian leader said recalling that Russia had already been helping Syria through arms supplies and economic and humanitarian cooperation, including provision of humanitarian aid. In reply to the question what other country in the world may theoretically be subjected to aggression similar to that Syria is facing, Putin said, “I do not want to think that any other country will be subjected to any external aggression.” A military action against Syria will have a highly deplorable impact on international security at large, Putin emphasized. He said he was surprised to see that ever more participants in the summit, including the leader of India, Brazil, the South African Republic, and Indonesia were speaking vehemently against a possible military operation in Syria. Putin cited the words of the South African President, Jacob Zuma, who said many countries were feeling unprotected against such actions undertaken by stronger countries.

"While the August employment report was a moderate disappointment, we believe it is probably not weak enough to prevent the FOMC from tapering in September. However, it does raise the likelihood of a "dovish taper," which could include a small size of the overall adjustment to purchases, and which we think would likely coincide with an enhancement of the forward guidance."

Following a "spirited" town hall in Phoenix forcused on Syria, Senator John McCain made comments to a local TV crew. "The fact is [Syrian President] Bashar Assad has massacred 100,000 people. The conflict is spreading... The Russians are all in, the Iranians are all in, and it's an unfair fight," McCain told KFYI's Mike Broomhead. "And no one wants American boots on the ground. Nor will there be American boots on the ground because there would be an impeachment of the president if they did that." McCain also slammed Obama, exclaiming "the president has bungled this beyond belief." CBS reports that McCain then added that the President "announced that he's going to strike and then say, 'No, I'm going to the American Congress.' I can't believe how badly he’s mishandled this issue."

News? Who needs news when the New York Fed shares, allegedly, a direct trading connection with HFT momentum ignition behemoth Citadel.

Between the two of them, this much: $1,414 billion, or 25% of all foreign held US Treasury paper.

By now even a 5 year old gets what is going on and that Russia will simply not back down. So why can't the US president?

UPDATE: WTI breaks back over $110

After the initial knee-jerk reaction to the dismal jobs data, stocks began to fade and bonds continued to rally as traders realized the Taper is coming no matter what (sentiment, deficits, technicals, and international resentment) and growth is weaker than expected. However the big slamdown occurred this morning when Putin confirmed Russia will help Syria if there is an external strike (cough USA cough). As the chart below shows, this week has been all about "war" and continues to be so... Gold, Crude Oil, and Bonds remain well bid and the USD is sinking (as JPY carry unwinds en masse).

President Obama will take to the teleprompter (and hopefully Q&A) this morning amid the growing tensions on St. Petersburg. After confirming the Fed's taper yesterday, and following Putin's comments this morning on Syria, President Obama has his hands full but of course he still has the French with him... even if his own party are not?

Following a supposedly "warm" 20-30 minute conversation this morning with President Obama, Russian President Putin has rattled the sabre one more time:

PUTIN SAYS RUSSIA TO ASSIST SYRIA IN CASE OF EXTERNAL ATTACK

This will not end well... and of course will raise more doubts among Congress that this 'strike' makes sense. Equity markets are not amused...

While we already have the quantiative components of today's jobs number (horrendous), here is the qualitative breakdown. For the time constrained readers we will jump to the conclusion: absolutely abysmal, to a degree perhaps not seen in years. Of the 169K jobs added, the vast majority, some 144K or 85% of the entire August gain, consisted of the lowest paying jobs possible:

• +44K jobs added in Retail Trade
• +43K added in Education and Health
• +27K added in Leisure and Hospitality
• +17K added in Government (looks like sequester effect has finally "tapered")
• +13K added in Temp Help services