After last week's tumble to 280k, initial jobless claims rose modestly this week to 293k (slightly better than expected) but remain near a dovish-Yellen-crushing 14-year low. Continuing claims also remain at cycle lows around 2.4 million (rising modestly - by 7k - this week). The labor department cites no unusual or estimated claims this week. It appears this is as good as it gets and the Fed has reached its 'job-creating' mirage peak...
- Apple CEO Cook Goes From Record Sales to IPhone Stumbles (BBG)
- Deal With Saudis Paved Way for Syrian Airstrikes (WSJ)
- Drone delivery: DHL 'parcelcopter' flies to German isle (Reuters)
- Tory Burch Hires Ralph Lauren Veteran as Co-CEO (WSJ)
- Apple releases iOS 8 workaround to fix dropped cell service (Reuters)
- Ukraine Probes Ex-Minister Over $3 Billion Russian Bond (BBG)
- Goldman Sachs-Led Group Near Deal to Buy Messaging Startup Perzo (WSJ)
- U.K. Seeks to Criminalize Manipulation of 7 Benchmarks (BBG)
It has been a relatively subdued session, with not much action in either stocks or bonds - European stocks rise for the second day on US market momentum from yesterday; Asian stocks are mixed advance while metals decline with Brent, WTI crude, U.S. equity index futures. The biggest highlight in overnight action, however, was once again the Dollar whick climbed to a fresh 4-year high, on pace to strengthen for 2 straight months for first time since March. The reason: ongoing sentiment that there will be a major dispersion between central banks, with the USD tightening just as other central banks join the liquidity fray. To wit, ECB data showed that lending decline in Europe slowed to -1.5% y/y in Aug. vs -1.6% in July and the latest statement from Draghi who said in Lithuania that economic reform possible without devaluing currency.
The Canadian government has had to warn its citizens not to carry cash to the USA because the USA does not presume innocence but guilt when it comes to money...
"Are you confused by what is going on in the Middle East? Let me explain."
While it is easy, even sentimental, to pin what may (or may not) be a bubble, or as some call it - market - top on the recent liquidity and euphoria-soaking IPO of China's megaretailer Alibaba and its sliding chart since it broke for trading, a la what the Blackstone IPO did to the previous bubble, it is also wrong. The reality is that the attention of what few carbon-based investors and traders are left, is glued to very different chart: the one below from Deutsche Bank, showing the between the S&P and the total assets owned by the Fed. Read on for the reason why.
Thanks to a dizzying barrage of lies, mainstream media fear-mongering and a couple of beheadings, the Obama Administration finally achieved its long sought after war in Syria. The tactic that proved most effective in mobilizing the American public back into a shivering, post-9/11 fetal position, was the same tactic used by elites in the UK to convince Scotland against voting for independence. That tactic... is fear.
With a 66% chance of default/devaluation implied by the Venezuelan credit market, BofA economist Francisco Roriguez sprung an unusual question on the struggling socialist nation's central bank during a routine visit - Can you show me your gold?
Day after day, the status-quo hugging, momentum-chasing talking heads that infest the world of investing will pile their clients' money into 'what is working' with little regard for 'value', risk (as defined by Howard Marks), or business uncertainty. Precious metals are sliding so 'sell' anything related to the precious metals industry. Biotech and software are surging so buy it all with both hands and feet... However, as the following two charts from Harvard Business Review suggest that strategy is in fact the absolute 'riskiest' approach to managing money as they break down the most (and least) uncertain industries in America.
Despite the strong consensus view that the U.S. is on a stronger economic footing than a year ago, and clearly working with stronger momentum than other major economies, The PunchLine's Abe Gulkowitz suggests the scary array of possible flashpoints in the U.S. and certainly overseas will continue to haunt policymakers and the markets.
"Real Housewives of Orange County" meets Wold of Wall Street - BBC's 'Traders: Millions By The Minute' 2-part documentary goes inside the competitive world of financial traders to meet the men and women who play the markets in London, New York, Chicago and Amsterdam. As The BBC describes, this show offers a rare, personal portrait of what life is like for the people who do this lucrative but relentless job, against a backdrop of non-stop news, globalised markets and the rise of ultra-fast computers capable of placing millions of trades at a time. We can only assume that Johnny-5 and his algorithmic friends refused to be part of this in-depth look at market participants.
The US economy and financial system are in worse condition than the Fed and Treasury claim and the financial media reports. Gold serves as a warning for aware people that financial and economic trouble are brewing. In the 21st century, US debt and money creation has not been matched by an increase in real goods and services. The implication of this mismatch is inflation. Without the price-rigging by the bullion banks, gold and silver would be reflecting these inflation expectations.
While we already know that "work is punished" in America, with almost 20% of Americans' disposable personal income made up of US government transfer payments (up from just 5% 60 years ago), it is perhaps no surprise that Bloomberg's Comfort Index shows the jobless in America haven't been this comfortable since 2007...
"In conclusion, this analysis finds little evidence of the permanent structural damage to the economy’s productive potential that many commentators see as the main culprit for the subpar recovery from the Great Recession..." and Surprise... "our model suggests that monetary policy played an important role in cushioning the blow from the financial crisis and in sustaining the recovery, which could have been significantly more disappointing without the aggressive actions undertaken by the Fed."
Having infamously "thrown in the bearish towel" late last year (must read), Hugh Hendry's Eclectica fund has not enjoyed the kind of money-printing melt-up euphoria he had hoped for in 2014. According to his August letter to investors, the fund is -10.9% year-to-date, shrinking the firm's performance since inception to a mere +0.7%. His positions are intriguing but his commentary can be summed with this sentence alone, "when central banks are actively pursuing a goal of higher prices the most rational course is to tenaciously remain invested in equities." And so he is...