Archive - Dec 4, 2015 - Story

Keynes is dead – unfortunately his etatiste nonsense didn’t expire with him. Meanwhile, the long run is catching up with those who have so far failed to die.

The positive US payrolls report has sent December rate hike odds up to around 80% and along with the 'all clear' from Hilsy, one would expect relative 'strong dollar' flows front-running the divergent policy directions about to be undertaken by The Fed. However, EURUSD continues to rise this morning... here's why... (until Draghi puts everyone straight)

After plunging to 17-month lows just 2 weeks ago on a CDC report that ecoli was more widespread than previously believed, Chipotle Mexican Grill is plunging once again on a new CDC report of seven more ill people and Illinois, Maryland, and Pennsylvania have been added to the list of states reporting illnesses, bringing the total to nine states.  

Whether or not the Fed actually manages to raise rates in the real world is less important than maintaining USD hegemony. No empire has ever prospered or endured by weakening its currency.

What happens next?

Here is one of the reasons why the Fed is confident the US economy is strong and resilient enough to sustain a rate hike: since January, the US has added 293,900 waiter & bartender positions and zero manufacturing workers.

In a somewhat depressing show of the farce that is Europe's immigration policy, local media reports "apocalyptic scenes" on the northern Greek border where "economic migrants" who are not entitled to leave Greece's provisional camps are fighting with 'refugees' who are entitled to leave, and head into other European nations. Petrol bombs and stones flew through the air, fists, kicks and wrestling on the ground as migrants hindered refugees from entering Macedonia (FYROM). People have injured, trampled and faint, among them many babies as some migrants tried to pass together with the refugees and were apparently hindered with stun grenades fired by the FYROM police.

OPEC HAS AGREED TO OIL OUTPUT POLICY ROLLOVER, SETS TARGET AT 31.5 M B/D AFTER INDONESIA JOINS: DELEGATE. This increases the output limit up from 30 million but is merely reflective of the current real output from the Cartel of 31.5 million barrels. And crude is crashing, Ruble is dumping and gold is jumping.

The next time you wonder where the Fed Chairwoman is seeing wage growth, the answer is simple: they are looking at your boss' paycheck, yours... not so much.

"Friday’s employment report clears the way for the Federal Reserve to raise short-term interest rates by a quarter-percentage point at its Dec. 15-16 policy meeting, ending seven years of near-zero interest rates."

"We live in a dystopian investment world, whose markets have morphed into an Orwellian backdrop of omnipresent government intervention and manipulation that is increasingly dictated by the quant community -- who worship at the altar of prices and price momentum (and are agnostic on values)."

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 319,000 to 6.1 million in November, following declines in September and October.

As Reuters reports, "Israel has quietly tested ways of defeating an advanced air-defense system that Russia has deployed in the Middle East and that could limit Israel's ability to strike in Syria or Iran, military and diplomatic sources said."

It appears the December rate hike is now cemented following the BLS' report that November jobs rose by 211K, higher than the 200K expected, and well above Janet Yellen's "whisper" number of just 100,000 being sufficient. This follows an even stronger revision to the October number from 271K to a whopping 298K. The unemployment rate remained flat at 5.00%, in line with expectations, while hourly earnings rose 0.2% in November, just as expected.