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Stock Futures Keep Losses, Gold Near Highs After Worst Jobs Report Since 2013
As market participants slowly make their way back to trading desks around the post-Easter world, and especially the US where a truncated session on Friday morning ended in tears for anyone hoping for a 2015 US recovery following an abysmal March nonfarm payrolls print, they find that unlike on previous occasions, the equity futures liftathon is nowhere to be found this morning, with the S&P set to resume trading in the red for 2015.
That, however, should hardly come as a surprise with Q1 earnings season about to start, a season which is expected to post a decline in non-GAAP EPS terms, with Q2 and Q3 set to follow, all of this coming after a quarter which as we showed yesterday, tumbled over 17% (!) Y/Y in GAAP EPS terms.
Newsflow has been slow this weekend, with no material developments on the Greek front where Greece overnight agreed to repay its debt to the International Monetary Fund by April 9, IMF chief Christine Lagarde said after a meeting with Greek Finance Minister Yanis Varoufakis. There was speculation ahead of the visit that Athens might fail to meet the 460-million-euro ($501-million) IMF installment if forced to choose between the IMF and paying government workers. As AFP reported, Lagarde said repaying the IMF debt was in the country's best interest. "Continuing uncertainty is not in Greece's interest and I welcomed confirmation by the minister that payment owing to the Fund would be forthcoming on April 9th," Lagarde said in a statement.
In other words, Greece has "agreed" not to default. Still, many wonder if this is just another ploy to buy time (after all Greece is merely borrowing money from the Troika to repay the Troika with nothing sticking in the local economy, a recipe for a prompt government overhaul), while the Tsipras government pivots East, something we first suggested three months ago. As the Telegraph suggests this morning, "Greece's bail-out drama is threatening to take a geostrategic turn to the east. A mere three weeks after his maiden trip to Berlin, Prime Minister Alexis Tsipras is on the road again, this time heading to the heart of Greece's eastern hegemon. On Wednesday, the 40-year-old premier will sit down for his first official meeting with Russian counterpart President Vladimir Putin at the Kremlin. The timing is not fortuitous."
Fears of a Leftist alliance with Putin's Russia first emerged after Syriza's landslide election win in late January. The nascent government moved to quickly condemn economic sanctions placed on Moscow.
In a nod to their long-standing historical ties, Mr Tsipras's Moscow trip was announced as Greeks marked the anniversary of their foundational War of Independence, when Tsar Alexander I allied with the Mediterranean state to throw off three centuries of Ottoman rule.
The dalliance with Kremlin has since intensified as Greece's creditor show no signs of lessening the squeeze on the country.
Ahead of his visit, a defiant Mr Tsipras revived calls for the EU to halt sanctions and open up diplomatic channels with the Kremlin. In a hint at Greece's simmering tensions with Brussels, the Syriza leader attacked economic warfare as a "dead-end policy".
It remains to be seen if and how much use Russia and China may have for Greece and a foothold in Europe, however with Greek money gone, things will move fast.
Away from Greece, whose future remains in limbo, the biggest development over the holiday weekend was a Goldman note in which the central-bank friendly firm launched the first trial balloon against rate hikes, and using an "analysis" conducted on the Fed's own FRB/US reality simulator, determined that "it is hard to be “reasonably confident” in the inflation outlook given current economic conditions, unless several inflation drivers rise at the same time. We therefore do not have much confidence in the inflation outlook and believe that the right policy would be to put hikes on hold for now."
This catalyzed a jump in gold, which reached the resistance band in the mid-$1220s overnight before once again finding paper selling pushing it lower. A breakout here may lead to a huge short squeeze as noted yesterday courtesy of a record number of gold shorts.
It is unclear if this open hint toward the end of easing season is what catalyzed it, or whether the realization that there is no Iran "deal" but merely a framework which will be gutted over the coming months and in the process likely undo any "oil embargo" progress, but overnight WTI has jumped and at last check was trading back over $50 once again. Late on Thursday a joint statement from parties involved in nuclear talks over Iran stated sufficient progress had been made to keep negotiations ongoing until 30th June and Iran's Tasnim said that banking and oil sanctions to be removed after the deal has been agreed which caused selling pressure in crude futures into the NYMEX pit close. However, since then WTI and Brent prices have been supported by the weaker USD as well as news that Saudi Arabia have increased their official selling prices for all Asian exports during May. Furthermore, the latest CFTC data shows that bullish bets on oil have been increased by the most in four years.
In FX markets, the USD remains roughly near its post-NFP lows after the latest jobs report from the US showed a substantial miss on the headline and subsequently pushed back expectations for a Fed rate hike. Elsewhere, with European participants away from market, things remain relatively subdued, although EUR has been granted some reprieve after promising developments regarding Greece despite the latest CFTC data showing record shorts for EUR.
The coming week, as is traditional following NFP, will be quieter than normal, with all eyes today on Non-mfg ISM at 10:00 am expected to print down from 56.9 to 56.5 (with the Markit PMI serving as a humorous and once again totally disconnected from reality foil). If this is indeed the "kitchen sink" period, expect a major downside "surprise" in this latest soft-data report. Also on deck today is the Labor Market Conditions Index.
Bulletin Headline Summary from Bloomberg and RanSquawk
- Friday’s NFP headline fell short of expectations, leading to selling pressure in USD and US equities, while bolstering treasuries
- Over the weekend, Greece confirmed they will make their April 9th repayment to the IMF
- While Europe remains away from market, today’s session will see notably lower volumes than normal
- Treasuries steady after Friday’s rally on worse-than-expected March payrolls (+126k vs +245k estimate); New York Fed’s Bill Dudley to speak this morning on economic outlook.
- Conviction that Fed might raise rates mid-year fades after weak payrolls; some economists reserving judgment to see whether further data confirm stalling growth
- While policy makers are suggesting there’s something wrong with UST yields that aren’t climbing as the economy recovers, traders are signaling there’s little reason yields can’t, and won’t, stay depressed
- The Fed has “been wrong for so long,” said Jeffrey Gundlach; “Their incremental input in what will happen in the future has been literally of no value, because the market’s pricing has been closer”
- Saudi Arabia raised official crude oil prices for Asia for a second straight month as refining margins improved; the country’s oil minister said global demand was improving as lower prices boost use
- Greece is stepping up efforts to find allies in the U.S. and Russia as cash reserves run dry while an agreement on additional funding from the country’s euro partners still looks like weeks away
- Yemen’s Houthi movement is ready to resume talks to resolve the country’s crisis if the Saudi-led military coalition stops airstrikes, though it won’t accept the kingdom-backed deposed president returning to power
- Iran’s military chief congratulated Supreme Leader Ayatollah Ali Khamenei for negotiators’ success in reaching a nuclear agreement with six world powers, in an open backing of President Hassan Rouhani’s government
- Obama said engaging with Iran on a nuclear accord doesn’t mean the U.S. will forfeit its military superiority or fail to protect Israel
- Mizuho plans to hire as many as 200 people from RBS in the U.S. as part of its deal to buy loans from the British lender, a person with knowledge of the matter said
- Japan stocks rise; European markets closed. U.S. equity- index futures decline. Crude and gold higher, copper falls
US Event Calendar
- 8:30am: Fed’s Dudley speaks in Newark, N.J.
- 9:45am: Markit US Composite PMI, March final (prior 58.5)
- Markit US Services PMI, March final, est. 58.6 (prior 58.6)
- 10:00am: Labor Market Conditions Index Change, March (prior 4)
- 10:00am: ISM Non-Mfg Composite, March, est. 56.5 (prior 56.9)
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Wild prediction here: stocks will see the low of the day at around 8:31 a.m.
And if it doesn't??
What a bitch it is to live in a fiat western world.
"the right policy would be to put hikes on hold for now."
Gosh....do you think?
Rates will go up on their own regardless of the Fed now cause there's a lack of collateral plus Grexit will cause a liquidity crisis.
The dollar will have several "heart attacks" before rates move. Note even though the dollar is 'higher' in exchange rate note, the cost of imports is not lower in real terms. Ummmm
Euro imports should be 20 pts. lower and gas should be 2 dollars a gallon. This rise in USD is a warning sign.
""the right policy would be to put hikes on hold for now."
Gosh....do you think?"
Not really, no, but that is what will happen irregardless.
Pay attention....there's gonna be a test later.
"Wild prediction here: stocks will see the low of the day at around 8:31 a.m."
Yep.
..then 'break'... then get 'self help'...
A green close tomorrow, then?
It's all Bullshit!!! The day is young. Might even have a green close today. It's all a rigged casino.
Astute observation Mr. Winkle.
This rate hike talk is a total pant load. There will be no rate hike...not no way,not no how!
The un-fed sticks to the Goldman scprit... hell the un-fed is Goldman. Jack Yellen just waits for his/her marching orders!
Who run US of A?
John Boehner runs Bartertown......under the protection of Nancy Pelosi.
No those two are fully corrupted politicos performing the tasks the elite ask of them. Both caught of insider trading, no different than J Edgar Hoover picking up his bribes at the Del Mar race track.
~ For some Monday morning humor! I am certain everyone knows how much will be cut? ZERO!
April 6th 2015
* Corporation for Public Broadcasting Subsidy -- $445 million annual savings.This list is purported to be a GOP recommendation for budget cuts.
* Save America 's Treasures Program -- $25 million annual savings.
* International Fund for Ireland -- $17 million annual savings.
* Legal Services Corporation -- $420 million annual savings.
* National Endowment for the Arts -- $167.5 million annual savings.
* National Endowment for the Humanities -- $167.5 million annual savings.
* Hope VI Program -- $250 million annual savings.
* Amtrak Subsidies -- $1.565 billion annual savings.
* Eliminate duplicating education programs -- H.R. 2274 (in last Congress), authored by Rep. McKeon , eliminates 68 at a savings of $1.3 billion annually.
* U.S. Trade Development Agency -- $55 million annual savings.
* Woodrow Wilson Center Subsidy -- $20 million annual savings.
* Cut in half funding for congressional printing and binding -- $47 million annual savings.
* John C. Stennis Center Subsidy -- $430,000 annual savings.
* Community Development Fund -- $4.5 billion annual savings.
* Heritage Area Grants and Statutory Aid -- $24 million annual savings.
* Cut Federal Travel Budget in Half -- $7.5 billion annual savings
* Trim Federal Vehicle Budget by 20% -- $600 million annual savings.
* Essential Air Service -- $150 million annual savings.
* Technology Innovation Program -- $70 million annual savings.
*Manufacturing Extension Partnership (MEP) Program -- $125 million annual savings..
* Department of Energy Grants to States for Weatherization -- $530 million annual savings.
* Beach Replenishment -- $95 million annual savings.
* New Starts Transit -- $2 billion annual savings.
* Exchange Programs for Alaska Natives, Native Hawaiians, and Their Historical Trading Partners in Massachusetts -- $9 million annual savings
* Intercity and High Speed Rail Grants -- $2.5 billion annual savings.
* Title X Family Planning -- $318 million annual savings.
* Appalachian Regional Commission -- $76 million annual savings.
* Economic Development Administration -- $293 million annual savings.* Programs under the National and Community Services Act -- $1.15 billion annual savings.
* Applied Research at Department of Energy -- $1.27 billion annual savings.
* Freedom CAR and Fuel Partnership -- $200 million annual savings..
* Energy Star Program -- $52 million annual savings.
*Economic Assistance to Egypt -- $250 million annually.
* U.S.Agency for International Development -- $1.39 billion annual savings.
* General Assistance to District of Columbia -- $210 million annual savings.* Subsidy for Washington Metropolitan Area Transit Authority -- $150 million annual savings.
*Presidential Campaign Fund -- $775 million savings over ten years.* No funding for federal office space acquisition -- $864 million annual savings.
* End prohibitions on competitive sourcing of government services.
* Repeal the Davis-Bacon Act -- More than $1 billion annually.
* IRS Direct Deposit: Require the IRS to deposit fees for some services it offers (such as processing payment plans for taxpayers) to the Treasury, instead of allowing it to remain as part of its budget -- $1.8 billion savings over ten years.
*Require collection of unpaid taxes by federal employees -- $1 billion total savings. WHAT'S THIS ABOUT?
* Prohibit taxpayer funded union activities by federal employees -- $1.2 billion savings over ten years.
* Sell excess federal properties the government does not make use of -- $15 billion total savings.
*Eliminate death gratuity for Members of Congress. WHAT???
* Eliminate Mohair Subsidies -- $1 million annual savings.
*Eliminate taxpayer subsidies to the United Nations Intergovernmental Panel on Climate Change -- $12.5 million annual savings.* Eliminate Market Access Program -- $200 million annual savings.
* USDA Sugar Program -- $14 million annual savings.
* Subsidy to Organization for Economic Co-operation and Development (OECD) -- $93 million annual savings.
* Eliminate the National Organic Certification Cost-Share Program -- $56.2 million annual savings.*Eliminate fund for Obamacare administrative costs -- $900 million savings.
* Ready to Learn TV Program -- $27 million savings..
* HUD Ph.D. Program.
* Deficit Reduction Check-Off Act.
Do they get headaches over at the un-fed after a meal? They all put their hands to their cheeks like they're in some kind of deep pain.
MOAR MOHAIR
Last I checked mohair don't cause moar pain.
Nothing about the multi-trillion dollar bankster bailouts, go figure.
Why are people interested in gold? It's just the original, independent money, that's all.
Unleash your inner barbarian....
Sir, the Huns are at the gate......tell them to come on in.
If those guys are running out of the building.....it's time for us to walk in.
When you see them running out of the building, there won't even be a light bulb left to scavenge.
Well if us peasants know the rate hike talk has been total bullshit for the last few years, no doubt the Global cabal which has been desperately dumping dollars knows its bullshit as well.
I know the dollar is up...big deal. If the dollar being up and a massive abundance of oil is at our disposal well then gas should be .99 cents a gallon and food costs way down as well.
https://m.youtube.com/watch?v=2TMcGb3bW-k
I support this type of monetary reform.
I quit working. Its too hard and not worth it.
All futures across the world bright green
All futures across the world bright green
And after YEARS of extremely low rates they can't even raise it a miniscule amount? .... Says it all for the "recovery" that isn't
Why is everyone so worried about a paltry 0.25% hike? Of course the fed will do it in Jun as they cannot lose control and fall into a Japanese trap. Equities are also over heated....
Gold holders (myself included) deserve a little love, having been bitch-slapped daily for almost 4 years.
Truly, I expect the slapping to continue first thing tomorrow morning.
Eventually, they'll get the labor force participation rate down to zero. Then these ugly jobs reports will stop.
Aaaaand the market is barely down
Aaannnnd the market is up
Dow up 200 points... fuck this shit