Archive - Nov 2014 - Story

Following the gross distortions of the ISM Services Employment index, which printed at a seasonally adjusted near record high, the whisper number for today's NFP was well above the official consensus estimate of 235K. Instead what happened was, naturally, what nobody expected: a miss, with the headline print coming in at 214K, well below the 235K expected, and down substantially from last month's upward revised 256K. Looks like the momentum is stalling fast. And  just to complete the farce, the unemployment rate of the nation that just threw out democrats in protest over the economy.... dropped to 5.8%

• US Change in Nonfarm Payrolls (Oct) M/M Exp. 235K (Low 140K, High 314K), Prev. 248K, Jul 180K.
• US Unemployment Rate (Oct) M/M Exp. 5.9% (Low 5.8%, High 6.1%), Prev. 5.9% European
• This will be the first employment report since the Fed announced the conclusion of QE3
• Stronger data of late has increased expectations of a solid October report
• Seasonal factors could also be supportive
• Focus could again may turn to the wage component of the jobs report as the Fed looks to exit easy policy

There was a time when the merest hint of Russia military activity at the Ukraine border would do the unthinkable: challenged central planners and send stocks lower. Who can forget the market drubbing when the Russian humanitarian convoy was going to enter east Ukraine and allegedly carry a DIY army? Well, those days are long gone. Because with Ukraine repeating day after day after day, how many Russian soliders have entered the country, how many artilery shells have landed, and how Putin is just salivating to invade the economically devastated country, everyone completely tuned out. Case in point, yet another report earlier today from Kiev, according to which "a column of 32 tanks, 16 howitzer artillery systems and trucks carrying ammunition and fighters has crossed into eastern Ukraine from Russia." Market reaction: absolutely none.

• The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare (Matt Taibbi)
• Explains the midterm results: Optimism precedes job data (Reuters)
• EU Dream Ebbs Amid Weak Growth, Putin's Jets, 25 Years After Wall Came Down (BBG)
• SEC Probing Trading Activity at Apple Supplier GT Advanced (WSJ)
• Boehner touts bills to repeal Obamacare, build Keystone (Reuters)
• China Gold Buying Means Price Floor to Standard Chartered (BBG)
• High-Speed Ad Traders Profit by Arbitraging Your Eyeballs (BBG)
• Central Banks Can’t Be ‘Only Game in Town’ Boosting Economies (BBG) - less talking, more getting to work

European shares fall, reversing earlier gains, with the banks and tech sectors underperforming and basic resources, oil & gas outperforming. Companies including ArcelorMittal, Allianz, Swiss Re, Richemont released results. The Spanish and Italian markets are the worst-performing larger bourses, the U.K. the best. The euro is stronger against the dollar. Japanese 10yr bond yields rise; German yields increase. Furthermore, the pullback in the USD-index from overnight highs has also provided the commodity complex with some upside and thus has seen basic materials and energy name outperform to the benefit of the FTSE 100. Elsewhere, Allianz’s (+4.9%) impressive pre-market report has helped halt the move to the downside for the DAX which trades with modest gains of 0.3%. Fixed income markets continue to hold fire (albeit in marginal negative territory) with volumes exceedingly thin ahead of key risk events. And with that, all eyes move to today's Nonfarm payroll expected to print at 235K, after last month's 248K. Something to keep in mind: the average seasonal adjustment to the October data is almost exactly 1 million, so yet again the fate of the US and global economy, will be determined by an Arima X 13 "fudge factor."

Dozens of young people camping out at the front of a popular store... can only mean one thing?

Please don't claim anything changes if one party or the other is in the majority. Anyone clinging to that fantasy is delusional.

"Drop that plate right now!" – Florida police to 90-year-old WW2 vet Arnold Abbott as he tried to feed homeless people

It appears money can't buy happiness after all...

We cannot possibly make the following statement any more clearly or strongly: Policymakers and pundits, with rare and courageous exceptions, are marching (and looking) in precisely the wrong direction.

The recent spread of Ebola has led to a tragic loss of human lives and stands to devastate West African economies. As the situation has evolved, and despite the equity market's apparent belief that it's all over, Goldman has examined the global economic and market implications of the outbreak.

Following the release of the quarterly monetary policy report from the People’s Bank of China, it is becoming clear, as Goldman Sachs notes, that stimulus - via cuts to system-wide RRR and/or benchmark interest rates - is becoming less and less likely. The PBOC's introduction of a new facility called the medium-term lending facility (MLF) allows 'targeted' easing, and as one local economist noted, "it shows the central bank is very reluctant to loosen monetary policy." The PBOC has broadened its toolkit to arrest an economic slowdown, while seeking to avoid adding financial risks, as The PBOC said it would "continue to implement a 'prudent' monetary policy and use various tools to manage liquidity." Not the exuberant stimulus-fest the talking-heads are calling for reminding us, as Pettis previously concluded, "In China, it will be no different. Growth miracles have always been the relatively easy part; it is the subsequent adjustment that has been the tough part."

The Keynesian notions of “potential GDP” and “aggregate demand” have no basis in the real world. They are revealed doctrine. They are the religion of the state’s economic policy apparatus. Its bad enough that this destructive economic religion leads to the farcical forecasting games evident in the EC’s chronic updates and slow-walks of the GDP numbers down. The evil, however, is that the Keynesian apparatchiks will not desist in their destructive money printing and borrowing until they have suffocated free market capitalism entirely, and have monetized so much public debt that the financial system simply implodes.