Archive - Feb 6, 2015 - Story

As already observed, when it comes to tracking the job losses in the energy space, the BLS had some rather significant "seasonally-adjusted" or otherwise issues in January, reporting just 1.9K job losses in the oil and energy exploration space, when the reality was orders of magnitude higher. But while the Bureau of Labor Services may have failed to notice the collapse of the highest-paying US jobs (after Wall Street of course), it determined that over 250K jobs were created in other sectors. Where were they?

Happily ignoring the 'fact' that the unemployment rate rose in the US today, talking-heads continue to proclaim the US economy will be the economic engine of the world going forward... cleanest dirty shirt... where else are you going to invest. Of course this ignores the fact that US Macro data has been a disaster over the last 2-3 months. But there is one dissident voice who dares to speak up... Canadian Finance Minister Joe Oliver said on Friday, although the United States is carrying the world economy at the moment, "that is simply not sustainable." Blasphemy!!

As UBS' Maury Harris proclaims in the headline, "don't be out of the office on June 17th" - the mid-year FOMC meeting. Today's jobs data will only serve to boost the Fed's confidence that they are reading the labor market correctly, and that is being rapidly 'priced-in' to the short-end of the yield curve as implied rates surge...

Following his outburst at the "independence" of the Turkish Central Bank earlier this week (which crashed the Lira), President Erdogan has opened his mouth again this morning...

*ERDOGAN: TURKEY NEEDS NEW CONSTITUTION AND PRESIDENTIAL SYSTEM, and
*ERDOGAN SAYS PEOPLE SHOULD RESEARCH NEW YORK TIMES OWNERS

So the blame for his nation's weakness is an independent central bank and the NY Times... The Lira just passed 2.47 to the USDollar - a record low.

Remember that whopping 353K jobs number in November? Well, following the data revision, it was boosted by 20% to a whopping 423K - the second biggest monthly increase in jobs in the 21st century! And breaking it more fully down, what was supposed to be a total gain of 2,952K jobs in 2014 has now been revised to 3,197K. And the best news of the day: that average weekly wage you thought you were collecting during all months of 2014? That too was just revised higher across the board.

It would appear "good news is good news" this morning as better-than-expected payrolls data (but the unemployment rate rose so they'll need to spin that) has sent stocks higher, bond yields higher-er, and the US Dollar higher-est. PMs are weaker, crude is sideways. EURUSD is back under 1.14 as the week's volatility continues.

So much for expectations that January, missing on 9 out of 10 previous occasions, will miss again, as the BLS just reported that in January a whopping 257K jobs were added, far above the 228K expected, and up from December's 252K which was revised as part of the annual BLS data revision to 329K, a whopping 147K revision! The unemployment rate rose from 5.6% to 5.7%, above the 5.6% expected. But most notable, the average hourly earnings surged from last month's -0.2% by a whopping 0.5%, the highest monthly jump in average hourly earnings since November 2008. It remains to be seen just how this is happening with mass layoffs in the oil patch, but what is now practically assured is that the Fed will have no choice but to hike as soon as June.

Despite ECB funding restrictions and German demands, it appears Greece will not yield to the pressures from its 'peers' to toe-the-line and accept servitude. None other than Greek FinMin Varoufakis made that very clear this morning...

WILL NOT AGREE TO ANY DEAL RELATING TO PREVIOUS BAILOUT PROGRAMME AT NEXT WEEK'S EUROGROUP - GOVERNMENT OFFICIAL

While ECB's bank supervisor Nouy has proclaimed Greek banks "safe", it appears the market is not so sure as Greek Bank bonds fade along with weakness in EURUSD. It seems last night's pro-government protests have emboldended Syriza further to keep their promises, much to the chagrin of Merkel et al..

Remember the "great rotation"? Neither do we, because the bank that year after year coined the term to prepare investors for a renormalization of the economy as bond yields rise alongside stocks (something that happens in any normal, non-centrally planned banana world), that would be Bank of America for anyone confused, just reported that in the latest week, EPFR data showed inflows to all fixed income funds of $16.04 billion – the highest on record going back to at least 2008. On the "other side of the spectrum were stocks that had $5.52bn of outflows, down from a $1.62bn inflow in the prior week." And just like that, it's a bond-pickers' market, even as central banks trade with each other in various dark pools to keep global equities, and thus confidence, stable even as the capital tsuniami screams deflation for years to come.

• RadioShack files for bankruptcy; Sprint to take over some stores (Reuters)
• Kansas To Issue Bonds and Invest Proceeds to Boost Pension Returns (WSJ)
• Merkel to Make Last Push With Putin as Pessimism Prevails (BBG)
• Islamic State in Syria seen under strain but far from collapse (Reuters)
• Texas Swagger Fades Fast as Oil Town Squeezed Hard by OPEC (BBG)
• SEC probes Blackberry options trading ahead of Reuters report about Samsung talks (Reuters)
• Spanish Bonds Underperform Italy’s as Podemos Gains Popularity (BBG)
• Steelworkers Union Rejects Offer From Refiners (WSJ)
• Brazil January Inflation at Fastest Pace in Nearly 12 Years (BBG)

It has been a quiet overnight session, following yesterday's epic short-squeeze driven - the biggest since 2011 - breakout in the S&P500 back to green for the year, with European trading particularly subdued as the final session of the week awaits US nonfarm payroll data, expected at 230K, Goldman cutting its estimate from 250K to 210K three days ago, and with January NFPs having a particular tendency to disappoint Wall Street estimates on 9 of the past 10. Furthermore, none of those prior 10 occasions had a massive oil-patch CapEx crunch and  mass termination event: something which even the BLS will have to notice eventually. But more than the NFP number of the meaningless unemployment rate (as some 93 million Americans languish outside of the labor force), everyone will be watching the average hourly earnings, which last month tumbled -0.2% and are expected to rebound 0.3% in January.