Archive - Apr 2, 2015 - Story

Greece officially runs out of cash on April 9 according to Reuters, citing Eurozone officials, and with interest payments due on the 17th and the 20th, and with €2.4 billion in t-bills coming due in two weeks, BofAML outlines the end game. 

This long-term weakening of the economy is the direct result of financialization and the Federal Reserve's policy of propping up impaired debt with more debt and constantly bringing demand forward with zero interest rates.  The U.S. economy is slowing to stall speed--the point when gravity overcomes the lift provided by central bank free money. This deceleration is evident in a number of indicators such as gross domestic product (GDP), which is now at 0% according to the Federal Reserve Bank of Atlanta's GDPNow model.

It appears Beijing isn’t opposed to throwing billions behind serving as a lender of last resort and we can’t help but wonder if the new round of Petrobras financing is indicative of where China will steer initial AIIB funding — that is, into oil and into Washington's backyard.

Anyone scratching their head how it is possible that in an environment of a soaring dollar the US trade balance just tumbled, and printed its smallest monthly deficit since 2009, here is the answer: in January, US imports (with the delta entirely in the goods, not services, column) plunged from $232 billion to $222 billion, a whopping $10.2 billion or 4.4% drop, and the biggest monthly decline in US imports since the peak of the financial crisis in the aftermath of the Lehman collapse.

The volatility in initial claims continues: after last week's drop to 282K pulled the heavily-watched number back under 300K, this week we have seen even less layoffs, with the DOL reporting that only 268K claims for unemployment benefits were filed in the past week, well below the 286K expected. The 4-week moving average was 285,500, a decrease of 14,750 from the previous week's revised average. The previous week's average was revised up by 3,250 from 297,000 to 300,250. And while it is no secret that US labor data leave much to be desired it was today's trade data that will shock many, after the BEA reported that in February, the US trade deficit collapsed to just $35.4 billion, a 17% plunge compared to the $42.7 billion January revision, and far below the $41.2 billion expected. The $7.3 billion drop in the deficit was the largest since the $8.3 billion drop posted in June of 2013. And even more notable: the total February deficit was the lowest since October 2009!

• Samaras Says He’d Join Alliance to Keep Greece in Euro (BBG)
• Tensions with Warren camp could loom over Clinton campaign (Reuters)
• Ackman Report on Herbalife in China Figures in Probe (WSJ)
• Al Shabaab storms Kenyan university, 14 reported killed (Reuters)
• Iraq’s Four-Mile Line of Supertankers Fuels Shipping-Rates Surge (BBG)
• Menendez's fate could sharpen Republicans' edge in Senate (Reuters)
• IRS Chief Chides Ted Cruz Over 'Abolish the IRS' Mantra (BBG)
• Yemen Houthi fighters backed by tanks reach central Aden (Reuters)

Unlike yesterday's vertigo-inducing overnight session, today has been a smooth sea by comparison even if one which has flowed from the top left to the bottom right for now, with futures erasing all of the last minute surge which was HFT programmed to sticksave the S&P just green for the year and then some. It is difficult to pinpoint the catalyst that will be today's market narrative although with NFP in just over 24 hours, falling on a holiday which will allow S&P futures just 45 minutes of trading after the BLS report hits before closing for the day, and with the weak ADP not to mention the 0.0% GDP, the "whisper" expectation is for a NFP print that will be well below consensus, somewhere in the mid-100,000s if not worse now that the bartender hiring spree is over. The fact that March payrolls have missed on 6 of the last 7 reports probably adds to the dollar weakness, even if a huge miss tomorrow may just be the catalyst Yellen needs to launch the QE4 trial balloon.