RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 06/08/10

If listening to Mark Zandi makes you punch your monitor every time, this is, as always, required reading.

Banks have been lamenting the abysmal volume in stocks over the past two months, and threatening they will fire people and stuff. Well, all they need are a few more days like today. The chart below says it all.

As expected last week, the ECRI Leading Indicator may have seen its lows. After hitting -10.7% last week, this week the annualized rate of change rose to -10.3% (on par with two weeks ago). Watch for the ECRI creators to suddenly change their tune and start espousing all the virtues of their index, now that it is in an upswing. Of course, the fact that it predicted a recession when it dipped below -10% is irrelevant - we have yet to leave the depression. Plus at this point it doesn't matter: today's NFP number has told us all we need to know about the future of money printing by the glorious Chairman.

Little by little, the macro economists at all the sellside shops have been turning bearish. Jan Hatzius, once again proves his worth, by seeing the writing on the wall sooner than most of his colleagues and turning negative about a month ago. Yet in a field in which the faux bullishness of a "strategist" directly correlates to the amount of capital at risk of complete wipeout should stocks begin approaching their true value, there are those who clutch to every straw of optimism harder than a drowning man on the verge of going over the Niagra Falls. One such specimen is Bank of America's Neil Dutta, who through thick and thin has kept "the 99% empty glass is 1% full" perspective for far too long. Which is why we would like to call Mr Dutta out: in a note to clients from two days ago, Neil said: "If our forecast for +125,000 in private payrolls comes to"fruition, we think the economy should be able to generate the kind of income growth necessary to offset the fiscal fade coming in the back half of this year." Well, Neil, your permabullish forecast has once again come well short of reality. It is time to admit you have been wrong, and no, saying next month's NFP will finally be better is just not going to cut it anymore: even Christina Romer got that memo. So please spare us the sugar coating and for once tell the truth as you see it, and not as your corporate overlords at 1 Bryant Park demand you spin it. For your own sake.

July Non Farm Payrolls miss expectations, coming in at -131,000, way below the consensus of -65,000, yet the unemployment rate drops once again to 9.5% as even more people drop out of the labor force. Total Private Payrolls rise only 71k, on consensus estimates of +90k. The June Jobs report is revised majorly downward to -221K, from -125K, as the double dip gets yet another validation. The 2 Year Treasury just hit another fresh all time low of 0.5136%. And the stunner: those working actually declined by 159,000 to 138.960 million, even as another 381 thousand left the labor force between June and July, resulting in an actual drop in the unemployment rate from 9.6% to 9.5%. Another NFP debacle which will certainly cause stocks to sure by at least 5% as QE 2 is now absolutely inevitable.

• Asian shares mixed on Friday, weighed by caution ahead of key U.S. jobs data.
• China's stocks decline on inflation, policy outlook; Developers retreat.
• European stocks advance ahead of jobs data; financial-sector earnings provide a lift.
• US Same-store sales rose 2.9% in July vs. cons est. of 3.1%: Retail Metrics.
• AIG's operating profit rises 17%.
• Allianz's Q2 profit down 46% on lower income from own investments.
• Beazer's orders falls 33%; posts loss of $27.8M despite $55.2M in debt-retirement gain.