If predicting yesterday's EURUSD (and market) reaction to the ECB announcement was easy enough, today's reaction to the latest "most important ever" nonfarm payrolls number (because remember: with the Fed getting out of market manipulation, if only for now, it is imperative that the economy show it can self-sustain growth on its own even without $85 billion in flow per month, which is why just like the ISM data earlier this week, the degree of "seasonal adjustments" are about to blow everyone away) should be just as obvious: since both bad news and good news remain "risk-on catalysts", and since courtesy of Draghi's latest green light to abuse any and every carry trade all risk assets will the bought the second there is a dip, the "BTFATH mentality" will be alive in well. It certainly was overnight, when the S&P500 rose to new all time highs despite another 0.5% drop in the Shcomp (now barely holding on above 2000), and a slight decline in the Nikkei (holding on just over 15,000).
Over the last few years central banks have had a policy of quantitative easing to try to keep interest rates low – the economy cannot pay high energy prices AND high interest rates so, in effect, the policy has been to try to bring down interest rates as low as possible to counter the stagnation. The severity of the recessions may be variable in different countries because competitive strength in this model goes to those countries where energy is used most efficiently and which can afford to pay somewhat higher prices for energy. Whatever the variability this is still a dead end model and at some point people will see that entirely different ways of thinking about economy and ecology are needed – unless they get drawn into conflicts and wars over energy by psychopathic policy idiots. There is no way out of the Catch 22 within the growth economy model. That’s why de-growth is needed.
In today's abnormally quiet overnight session one could hear a pin, or the USDJPY, drop: with everyone focusing on the ECB announcement in one hour, not a single algo is willing to make any big moves, or even start some momentum ignition, ahead of Draghi's announcement, which absent launching full scale QE, which it won't, will be a disappointment which means the EUR will ultimatly move higher after a kneejerk lower as the market forces Super Mario to do even more next time. As Bloomberg adds, a cut in refi and deposit rates is fully priced in and latest price action suggests investors brace for disappointment if ECB stops short of signaling asset purchases or other liquidity measures to combat deflation.
While the US media is still hung up on the idea of exporting its apparently abundaent gas to Europe to rescue them from Russia's iron-grip, the reality, as Cheniere Energy's CEO exclaimed "it's so much nonsense, I can't believe anyone believes it," and so it is that the Europeans, who have their own gas deposits may be left to solve their dependence issues alone. As Stratfor notes though, even with new supplies coming online, Russia's market share will not be threatened, though Moscow's ability to use natural gas prices and supplies as a political tool will diminish over time, particularly in countries outside its immediate borders.
France Responds To US BNP Fine, Will Train Hundreds Of Russian Seamen To Operate French-Made WarshipSubmitted by Tyler Durden on 06/04/2014 09:03 -0400
France has suddenly found itself battling two populist fronts: on one hand it had to continue its foreign policy track of siding with NATO and the US when it comes to Russian developments; on the other it had to responds to howls of protest from the population bashing the US for having the temerity to punish its flagship bank (recall "France Furious At US $10 Billion BNP "Masterful Slap", "Racketeering" Fine"). Today, it was revealed that in weighing the two evils, it picked what it thought was the lesser one, and as the WSJ reports "a group of 400 Russian sailors are scheduled to arrive on June 22 in the French Atlantic port of Saint-Nazaire to undergo months of instruction before some of them pilot the first of two Mistral-class carriers back to Russia in the fall, said one of these people."
- At least 74 dead in crashes similar to those GM linked to faulty switches (Reuters)
- Obama Calls for $1 Billion Europe Security Fund; Will Increase U.S. Military Presence in Eastern Europe (WSJ)
- Euro Inflation Slowing More Than Forecast Pressures ECB (BBG)
- China accelerates as euro zone stumbles (Reuters)
- Russia says Ukraine situation worsening, submits U.N. resolution (Reuters)
- Secondary Sales Squeeze Investors (WSJ)
- Barclays Said to Start Cutting Jobs in Investment Banking Unit (Bloomberg)
- Backlash Grows on Release of Sgt. Bowe Bergdahl in Taliban Prisoner Swap (WSJ)
- For fallen soldiers' families, Bergdahl release stirs resentment (Reuters)
- PIMCO's Gross stares at record outflow (Reuters)
When it comes to ridiculous, bizarre, and even "insane" contraptions, projects and ideas, China is indeed second to none. Which is why it was only a matter of time before China's engineers came up with unprecedented "solutions" to what has rapidly become perhaps the biggest problem for people living in China: air quality, in a broad sense, and specifically: unprecedented smog covering all the major metropolises on a daily basis. But fear not: China is on top of it. Declaring war on air pollution, the PRC is prepared to pump 1.7 trillion yuan ($277 billion) into coming up with solutions to curb the fuzzy sludge that opaques most of their country’s cities. This has led to the creation of several new and innovative, interesting — even ridiculous — pollution fighting methods. So here, courtesy of VJ, are the 13 most head-scratching proposals intended to do just that: fix China's smog.
The weather-bounce is over. After 3 months of bounce-back from January's plunge, ISM Manufacturing dropped to 53.2, significantly missing expectations. Across the board the sub-indices were disappointing with rising prices paid (lower margins), falling new orders, falling employment, and falling production. Once again the "meteoroconomists" have outdone themselves as this print was below the lowest estimate (and at the total opposite of Joe Lavorgna's highest of all expectations at 57.0)
Are China and Russia moving toward to a formal alliance? Some believe that a new China-Russia alliance is now emerging and this will eventually lead to a multi-polar world order. Others disagree by pointing to problems in China-Russia relations such as historical mistrust, the lack of a common threat, and conflicting interests in Central Asia. However, the U.S. should be careful not to make another strategic mistake that would only facilitate a formal China-Russia alliance.
The officially released agenda of the prestigious Bilderberg club meeting (attendees listed here) is not true, claims Russia Today show host Daniel Estulin, a longtime watcher of the ‘secret world govt’ group. He says he obtained the real agenda for this year’s gathering in Copenhagen. An insider leaked the list of talking points for the ongoing Bilderberg conference to the investigative journalist last week, he said. The list has nine items, seven of which he shared... from Nuclear diplomacy and the disturbing rise of Nationalism; it was a focus on Barack Obama's foreign policy that drew our attention most closely...
June is seasonally a poor month for gold and technical damage means gold could be manipulated lower again before half year end ... As one astute commentator said on Twitter this week, being able to acquire cheaper gold given the state of the world today is "like being given discounts on life-rafts on the Titanic ... "
Following Russia’s historic $400 billion natural gas supply deal with China last week, Japanese lawmakers are looking to revive efforts to tap into Russian natural gas supplies themselves.
Equity Blow Off Top Takes Brief Overnight Rest, Prepares For Another Session Of Low Volume LevitationSubmitted by Tyler Durden on 05/30/2014 07:03 -0400
Last night's docket of atrocious Japanese economic data inexplicably managed to push the Nikkei lower, not because the data was ugly but because the scorching inflation - the highest since 1991 - mostly driven by import costs, food and energy as a result of a weak yen, and certainly not in wages, has pushed back most banks' estimates of additional QE to late 2014 if not 2015 which is as we predicted would happen over a year ago. As a result the market, addicted to central bank liquidity, has had to make a modest reassessment of just how much disconnected from reality it is willing to push equities relative to expectations of central bank balance sheet growth. However, now that the night crew trading the USDJPY is replaced with the US session algo shift which does a great job of re-levitating the pair, and with it bringing the S&P 500 higher, we expect this brief flicker of red futures currently observable on trading terminals to be promptly replaced with the friendly, well-known and "confidence-boosting" green. The same goes for Treasurys which lately have been tracking every directional move in stocks not in yield but in price.
Since so many people are still slightly confused about how all the pieces come together in this move lower in yields, we feel the need to add some follow-up commentary.
Several of the largest oil companies in the world are doubling down in Russia despite moves by the West to isolate Russia and its economy. To be clear, the oil companies are not legally running afoul of international sanctions. But their collective shrug in the face of European and American pressure to boycott Russia – along with the $400 billion natural gas deal Russia signed with China last week – illustrates the difficulty with which the West will have at undermining Russia’s energy sector, if it chose to do so. Russia is too big of a prize for the likes of ExxonMobil, BP, and Shell. Or viewed another way, the moves to deepen business in Russia suggest that the world’s biggest oil companies are confident that the U.S. and Europe won’t be so bold as to truly attack Russia’s energy machine.