Archive - Sep 2015 - Story

If only the data - that apparently The Fed is 'dependent' on - would collapse. The surging JOLTS data has lifted September rate-hike odds - after a week of sliding - and dragged The Dow more than 200 points off its morning highs...

As WSJ reports, "the European Union on Wednesday proposed redistributing 160,000 refugees across the bloc and speeding up procedures to send back those who don’t qualify for asylum, in a bid to improve a stuttering response to the largest wave of migration on the continent since the aftermath of World War II."

Earlier today, all eyes were focused on Janet Yellen's favoriote Jobs indicator - the JOLTS report, and especially the total nonfarm Job Openings. And here a big problem appeared because while the Fed is now facing tremendous pressure from the outside not to hike in September, the JOLTS report not only gave a green light, but literally shrieked a rate hike in September is inevitable. The reason: the Job Openings number soared from 5.323MM to a new record high of 5.753MM, smashing expectations of a drop to 5.3MM. In fact, the monthly increase in openings of 430,000 was the highest stretching all the way back to April 2010, and was the fourth highest monthly jump in the history of the series!

Once welfare spending and subsidies of Elites collapses, the social and political stability of oil exporters becomes extremely fragile. The leadership of oil exporters without a stash of USD to tide them over as oil prices crash would be wise to start building their bug-out island fortresses.

Remember when two months ago Schauble, jokingly, offered Jack Lew to "trade" Greece for Puerto Rico? Something tells us in the interim period the German finmin changed his mind because while the Greek can has been kicked again, if only for the time being until bailout #4, the full severity of the Puerto Rican insolvency was laid out for all to see moments ago when top officials and outside advisors to the commonwealth released a highly-anticipated report showing that island's whopping funding gap of $28 billion will at best be reduced to "only" $13 billion over the next several years. Worse: according to the report of the so-called Working Group, the Treasury’s single cash account and Government Development Bank would exhaust available liquidity before the end of the year

Since Icahn announced he was going activist on Cheniere Energy one month ago, he has not exactly hit a home run, with the stock tumbling 20% from Icahn's initial price, and closing at $56.75 yesterday: hardly good news for the outspoken billionaire. Today Icahn got some more bad news when famous short-seller Jim Chanos announced on CNBC that his latest heretofore undisclosed short is precisely Cheniere, which he described as a "looming disaster" alleging that demand for liquid natural gas isn’t growing.

Nothing to see here, move along. Amid dismally low volume, it appears the JPY-driven rampathon continues... But it may just have run out of greater fool stops (at last week's highs) to run - unless USDJPY 122 comes soon...

In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done? Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages.  If the Fed takes no action in September, it’s hard to imagine any economic or jobs report that wouldn’t support ZIRP or near-ZIRP in the minds of the money printers and the Wall Street gamblers they pleasure.

With Spain's Catalan region on the verge of electing pro-independence parties and seeking autonomy from central rule, the government (clearly worried) has ramped up the rhetoric on what consequences lie ahead. In a rather stunning outburst for a supposed democracy, CNA reports, the Spanish Defence Minister, Pedro Morenés, assured that the army won’t act in Catalonia as long as "everybody fulfills their duty." The Catalan minister for the presidency exclaimed Morenes statement was "out of this world," and could only be made by "someone who is afraid of democracy." The army will "enforce the Constitution," Morenes concludes, unless "members strictly obey the rules." As one pro-independence minister opined, "threatening and trying to intimidate means that you are only left with stupidity."

30Y Treasury yields are up 40bps from the Black Monday flash-crash panic low yields, breaking back above 3.00% for the first time since the end of July.  It appears China selling (and rate locks) is trumping Element Capital's buying (for now).

This key barometer of global equities dropped to a level that it could ill-afford to lose. And while a bounce should transpire from here, the fact that the index has been traversing this level for the past 8 days reminds us that significant potential risk awaits should it fall off the precipice.

"We believe a global recession scenario has become the most likely global macroeconomic scenario for the next two years or so. Helicopter money drops would be the best instrument to tackle a downturn in all DMs. We expect to see QE #N, where N could become a large integer, as part of the monetary policy response in the US and the UK, and QEE2 in Japan." 

• All surveyed analysts expect the Bank of England to keep monetary policy unchanged, with the bank rate at 0.5% and the Asset Purchase Facility at GBP 375bln
• Headline UK CPI printed at 0.1% for July, still well below the BoE’s mandated 2% target
• The accompanying minutes release is expected to once again show an 8-1 vote split in favour of keeping rates on hold

"... we came into yesterday’s session decently net short; not aggressively so, but not marginally so either. However, it made no difference; we were short in a rampaging bullish move and we had no choice but to rush to cover much of the net short position immediately upon the opening of trade on the NYSE... We’ve no choice. The market has spoken and it has  spoken loudly."

- Dennis Gartman

• Global stocks rally as investors scent fresh stimulus (Reuters)
• Japan's Nikkei 225 Rises 7.7% for Biggest Gain Since October 2008 (BBG)
• China's Stocks Advance for Second Day Amid Stimulus Speculation (BBG)
• Abe Pledges Corporate Tax Cut as Investments Slump (BBG)
• U.S. to shift 50 staff to boost office handling Clinton emails (Reuters)
• Chinese Premier Li Keqiang Says China Doesn't Want a Currency War (BBG)
• One Thing China Got Right (BBG)