Archive - Apr 3, 2015 - Story

In a move presaged by objections from politicians and some smaller EU financial institutions, the German lender L-Bank is suing the ECB in a bid to avoid falling under the central bank’s direct supervision. WSJ calls this "the most radical step by a European bank against ECB supervision [and] highlights the headwinds the ECB is facing from some politicians and smaller lenders in Germany, Europe’s biggest economy."

The American economic and financial landscape is vastly different than it was following World War II. The wealth gap between the rich and the poor has shifted sharply to the upper 10% of the population. For that group, the economic picture is considerably brighter than for those in the bottom 80%. For Byron, whose personal net worth is in the billions, this is truly a "Picasso economy," for the majority of everyone else it is more like a "starving artist sale."

If wage growth for over 80% of America's workers is sliding even as wage growth for all American is flat, that must mean that the wage growth for the tiny 17% of America that is its bosses and supervisors must be soaring. And sure enough, it is. In fact, as the chart below shows, wage growth of "supervisory" workers has never been higher!

Yesterday we warned that "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." As already noted, we were spot on with the abysmal jobs print, the worst since 2013. We were also correct about the end of the "bartender hiring spree" because as the following chart shows, the number of "Food Services and Drinking Places" workers, aka waiters and bartenders just saw its worst monthly increase since June of 2012.

Our current faith in central banks' ability to "make the economy all better, all the time" is horrendously misplaced.

America continues to be a country where there are only jobs for old men, those 55 and older, who saw a 329,000 increase in jobs in the past month. Every other age group saw job losses!

Without the aid of a VIX safety-wire, this morning's bad news has been unceremoniously sold in US equity futures markets this morning. Having just closed, with The Dow down 200 post-Payrolls, the S&P joins the Dow in the red for 2015...

Was it just the - as predicted - algos running wild in short-term run stops or did USDJPY (and EURUSD) swing violently in the seconds before the payrolls print because, yet again, someone got to see the number early?

Uh-oh... the payrolls "bad news" does not appear for now to be bad enough to prompt a "good news" buying mania as perhaps - just perhaps - the market is coming around to the total farce of smoke and mirrors of lower rates and QE doing anything for the real economy is being exposed... Dow futures are down 90 points, TSY yields down 7-8bps and USD weakness spreads as carry trades are unwound en masse.

We warned yesterday that 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", and we were right: moments ago the BLS reported that in March a paltry 126K jobs were added, nearly 50% below the 245K expected, and the lowest monthly increase since March 2013.The unemployment rate was unchangned at 5.5%. The January and February data was also revised significantly lower, and subtracted a grand total of 69K jobs.

Oil prices will remain subdued for the next 20 years. That comes from a new policy brief from Stanford economist Frank Wolak, who says that a series of phenomena – surging U.S. shale production, a weakening OPEC, the shale revolution spreading globally, efficiencies in drilling, and more natural gas substitution for oil – will combine to prevent oil prices from rising above $100 per barrel anytime soon.

With all but Johnny 5 left to man the trading desks, is it any wonder this is happening...

Amid growing pressure from their 'Troika colleagues' with Eurogroup Chair Dijsselbloem noting there is "still a long way to go" on Greek proposals and The IMF withdrawing its staff in Athens; new prime minister Alexis Tsipras heads to Russia to meet with Putin early next week. As Kremlin spokesman, Dmitry Peskov noted - somewhat intriguingly - "Greece has not asked [Russia] for financial aid... yet," as Tsipras is expected to seek agreement for a 'road map' of initiatives on the political and economic levels. Greek default risk has resurged in the last few days to its highest since the last 'restructuring'...

• Iranians celebrate, Obama hails 'historic' nuclear framework (Reuters)
• Iran Nuclear Accord Hailed as Landmark After Marathon Talks (BBG)
• Two New York City women accused of planning 'terrorist attack' (Reuters)
• Cyprus Lifts Capital Controls Two Years After Deposits Bail-In (BBG)
• Jury Hits Chrysler With $150 Million Penalty in Boy’s Death (WSJ)
• Greece says ready to make IMF payment on April 9 (Reuters)
• Germanwings Co-Pilot Set Plane to Go Faster Before Crash (BBG)
• IBM hire advisers to deal with restless investors - sources (Reuters)