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Goldman Payroll Post-Mortem: Fed Will Modify Forward Guidance, Possible June Rate Hike

Payroll employment continued to grow at a strong pace, exceeding consensus expectations. The unemployment rate fell due to lower participation. With the final employment report in hand before the upcoming FOMC meeting, we think the Committee will modify its forward guidance on March 18. Our forecast remains for the first hike in the fed funds rate to occur in September, but today's data affords the possibility of a hike as early as June



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Post-Payrolls Reaction: Stocks, Bonds, Commodities Drop, Dollar Pops, As "Good News Is Bad News"

When the better-than expected headline data hit, stocks briefly questioned its reality then plunged. Bond yields initially tumbled (before the number had hit newswires) but once it did, they soared back higher (now up 6-8bps on the day). Crude plunged, bounced, and re-plunged as most commodities are notably lower amid the surge in the US Dollar. Good news, it appears is really bad news as a boxed-in Fed will be forced to raise rates.



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"As Goes Apple, So Goes America" - Apple To Replace AT&T In The Dow

When all else fails...

*APPLE WILL JOIN THE DOW JONES INDUSTRIAL AVERAGE, WSJ SAYS

Prepare for unknown craziness as the world's largest and most-owned stock will dominate another index (along with Goldman as we noted previously).



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Americans Not In The Labor Force Rise To Record 92.9 Million As Participation Rate Declines Again

For those (very few now, with even the Fed admitting the unemployment rate has become a meaningless, anachronistic relic) still wondering why the unemployment rate dropped once again, sliding from 5.7% to 5.5%, the reason is that while the number of unemployed Americans dropped by 274K thousand while those employed rose by 96K, the underlying math is that the civilian labor force dropped from 157,180 to 157,002 (following the major revisions posted last month), while the people not in the labor force rose by 354,000 in February, rising to a record 92,898,000 (people who currently want a job rose to 6,538K) matching the all time high number of Americans not in the labor force.



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US Trade Deficit Worse Than Expected As Auto Exports Tumble

As Chinese exports crashed in January (and imports were extremely weak), one could be forgiven for expecting the US trade deficit to be more extreme than the tumble it experienced in December... but no. The US Trade Deficit printed $41.8bn, slightly worse than the $41.1bn expectation but 'better' than the adjusted $45.6 billion. Imports dropped 3.9% in January and Exports fell 2.9% but YoY imports fell 0.17% and exports fell 1.75% - the last time both fell YoY was November 2008. This is the 2nd month in a row of worse than expected deficits (and 4th of last 5). The shift is led by big drops in Food & Beverage (-9.1%) and Auto (-7.0%) exports and an 11.3% plunge in Industrial Supplies imports.



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February Payrolls Surge To 295K, Smash Expectations Of 235K, Unemployment Rate Drops To 5.5%

Well, a June rate hike it is, because despite all the talking down of the February NFP number which was supposed to be whacked due to snow, it just came out and it is a doozy at +295K, smashing expectations of 235K, and above the January 239K (revised lower from 239K).



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What Wall Street, And Twitter, Expect From Today's Payrolls Number

The one thing to note about today's "decisive" jobs number, is that most are scrambling to warn that they really have no idea what it will be due to yet another unprecedented instance of cold weather and snow in the winter (see "Goldman Warns Snow May Leads To Lower Jobs Number, But Snowstorms Will Result In Higher Wages"). The reality is that, based on recent ADP trends and the shale patch reality and recent ISM/PMI surveys, today's NFP should print well below 200,000 (unless some 100,000 bartenders were hired in the deep of winter), not where Wall Street consensus expects it, at 235,000 (on a range of 150K to 370K.



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Frontrunning: March 6

  • 5 Things to Watch in February’s Jobs Report (WSJ)
  • Draghi Declares Victory for Bond-Buying Before It Starts (BBG)
  • Apple Pay Sign-Ups Get Tougher as Banks Respond to Fraud (WSJ)
  • As World’s Hottest Economy Unravels, Nigerians Feel the Squeeze (BBG)
  • EU discontent over French budget deal's 'political bazaar' (Reuters)
  • Foreign Takeovers See U.S. Losing Tax Revenue (WSJ)
  • Goldman Shareholders’ Hope for Bigger Payout Dashed by Fed (BBG)
  • Europe Stocks Headed for 31% Surge This Year Amid QE, Citi Says (BBG)
  • Dollar revs up for jobs data, euro bonds rally on ECB (Reuters)


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Overnight Wrap: Euro Plummets As Q€ "Priced In", Futures "Coiled" Ahead Of Payrolls

The question stands: how much longer will the Fed allow the ECB to export its recession to the US on the back of the soaring dollar, and how much longer will the market be deluded that "decoupling" is still possible despite a dramatic bout of weakness in recent US data. Look for the answer in today's BLS report, which - if the Fed is getting secound thoughts about its rate hike strategy in just 3 months - has to print well below 200,000 to send a very important message to the market about just how much weaker the US economy is than generally perceived. For now, however, the ECB is getting its way, and the question of just how much European QE is priced in, remains open, with peripheral bond yields dropping to new all time lows for yet another day, while the EURUSD has plunged to fresh 11 year lows, sliding below 1.094, and making every US corporation with European operations scream in terror.  Looking at markets, US equities are just barely in the red, coiled to move either way when the seasonally-adjusted jobs data hits.



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Lord Rothschild Warns Investors: "Geopolitical Situation Most Dangerous Since WWII"

For Lord Rothschild, preserving wealth has "become increasingly difficult," recently, as he warns, rather ominously, "we are faced with a geopolitical situation as dangerous as any we have faced since World War II." Furthermore Lord Rothschild summarizes his thoughts briefly, eloquently, and ominously... as he touches on the global debasement of fiat currencies, disappointing growth (in light of massive monetary stimulus), and extreme stock market valuations. As Rothschild Wealth Management noted last year, equities are not well supported by current valuations, while monetary policy is limited by high debt levels and interest rates that are already close to zero... exposing equities to a potentially sharp correction.



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Private Police: Mercenaries For The American Police State

The growing dilemma we now face is private police officers outnumber public officers (more than two to one), as the corporate elite transforms the face of policing in America into a privatized affair that operates beyond the reach of the Fourth Amendment. What we’re finding ourselves faced with is a government of mercenaries, bought and paid for with our tax dollars, all the while claiming to be beyond the reach of the Constitution’s dictates. When all is said and done, privatization in the American police state amounts to little more than the corporate elite providing cover for government wrong-doing. Either way, the American citizen loses.



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Caught On Tape: The Moment Mario Draghi Gets Heckled, "You're Biased..."

Perhaps echoing two entire nations' frustration, one reporter loses his cool when Mario Draghi explains how everyone else in Europe gets free money except Greece and Cyprus...



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Gold Prices And Real Interest Rates

Are gold prices going to US$ 5,000 or US$500 an ounce?



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Chart Of The Day: Recession Dead Ahead?

The past two times US manufacturing orders declined at this rate, the US economy was already in a recession.



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ISIS Set Iraqi Oil Fields On Fire, Stalls Military Advance

Thick black smoke billowing from oil wells northeast of the city of Tikrit is obstructing Shi'ite militiamen and Iraqi soldiers attempts to drive ISIS from the Sunni Muslim city after militants set them on fire. Reuters reports a witness and a military source said Islamic State fighters ignited the fire at the Ajil oil field to shield themselves from attack by Iraqi military helicopters. As we noted previously, the battle for Tikrit is key as it will determine whether and how fast the Iraqi forces can advance further north and attempt to win back Mosul, the biggest city under Islamic State rule.



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