headlines

Before even taking into account the aftermath of the “unexpected” NFP result, it has been amazing to see over these past few months the number of experts, especially those that reside solely within the “science” of economics, proclaiming a successful engineering of the long sought-after recovery.  That this has been the third such claim in as many years is lost in the noise of confusing “headwinds” that are somehow beyond the control of those that now control most everything within the financial arena.  Stock speculators are beneficial components to the healthy financial transmission mechanism into the real economy (even when all they are supposed to do is provide liquidity 20,000 times per second), but anybody that dares speculate in the far more vital energy sector (or any real commodity) is the pure incarnation of evil.  That these two apparently disconnected speculative classes are really one and the same shows just how obtuse (not always intentionally) economists and the pandering classes really are.

Deconstructing Corzine's lawyered up rat speak.

What's your wild guess? 

Report: China Surpassed U.S. in 2010

Today's initial claims number printed at 357K, on expectations of 355K, a number which next week will be revised higher once again, likely to 362K. The game here is simple - just show a decline in claims, as what happened to last week's number, also revised higher, this time from 359K to 363K, just so it can show a 6K decline and allow the idiot media to blow such headline as "Weekly US unemployment benefit applications fall to 357,000, lowest in 4 years" from AP and "Jobless Claims in U.S. Decrease to Lowest Level in Four Years" from Bloomberg. In reality, this is the third consecutive miss of consensus in a row. Give us a break - funny then when one considers that last week's consensus was 350K, which has since been revised to 363K. Or what about that 348K print the week prior which ended up being a more realistic 364K. In other words, the headlines were 348K, 359K, 357K, and somehow this is indicative of anything more than outright and endless data manipulation. Needless to say, when next week the number is revised to a far greater miss, nobody will care as the embargoed headlines will once again say "Jobless Claims in U.S. Decrease to Lowest Level in Four Years" and the sheep will keep on buying it over and over and over. What is also notable, is that just like yesterday's ADP number, today's claims data gives no hint what to expect from tomorrow's market holiday NFP.

European equities are taking losses as North America comes to market, with particular underperformance noted in the periphery bourses. Risk-aversion pushed both Spanish and Italian yields higher, with the spread between the Spanish 10-year and the Bund crossing above 400BPS for the first time since Late November 2011. The yields have now come off their highs but still remain elevated. It should be noted that markets are generally light today heading into the Easter weekend as investors take risk off the markets, so large surges in volumes have been observed. In the FX markets, EUR/CHF briefly broke below the SNB’s staunchly defended 1.2000 level on some exchanges, but uncertainty remains over the exact low due to different exchanges registering different prints. Needless to say, all exchanges witnessed a 30pip spike upwards in the cross with significant demand seen pushing the cross away from the floor. EUR/CHF now trades around the 1.2020 level.

More pain in Spain has been the theme so far in the European morning as poor auction results across three lines has resulted in significant widening in the 10-yr government bond yield spreads over benchmark bunds with the Spanish 10yr yield up some 24bps on the day. In combination with this the latest Germany Factory orders also fell short of analysts’ expectations and as such the lower open in bund futures following yesterday’s less than dovish FOMC minutes has been completed retracted and we now sit above last Friday’s high at 138.58.

Oh where to begin. The weakness in the markets started late last night when Australia posted a surprising second consecutive deficit of $480MM on expectations of a $1.1 billion surplus (with the previous deficit revised even higher). This is obviously quite troubling because as we pointed out 3 weeks ago when recounting the biggest Chinese trade deficit since 1989 we asked readers to "observe the following sequence of very recent headlines: "Japan trade deficit hits record", "Australia Records First Trade Deficit in 11 Months on 8% Plunge in Exports", "Brazil Posts First Monthly Trade Deficit in 12 Months " then of course this: "[US] Trade deficit hits 3-year record imbalance", and finally, as of late last night, we get the following stunning headline: "China Has Biggest Trade Shortfall Since 1989 on Europe Turmoil." So who is exporting? Nobody knows, but everyone knows why the Aussie dollar plunged on the headline. The shock sent reverberations across Asian markets, which then spilled over into Europe. Things in Europe went from bad to worse, after Germany reported its February factory orders rose a modest 0.3% on expectations of a solid 1.5% rebound from the -1.8% drop in January. But the straw on the camel's back was Spain trying to raise €3.5 billion in bonds outside of the LTRO's maturity, where the results confirmed that it will be a long, hard summer for the Iberian country, which not only raised far less, or €2.6 billion, but the internals were quite atrocious, blowing up the entire Spanish bond curve, and sending Spanish CDS to the widest in over half a year.

Bernanke has laid the groundwork for the next massive dislocation.

Seasonal adjustments are not forever. 

So much for the Hatzius and Hilsenrath prognostications. Headlines coming in:

• FOMC SAW NO NEED TO EASE ANEW UNLESS GROWTH SLOWS, MINUTES SHOW
• MOST FOMC PARTICIPANTS SAW `LITTLE EVIDENCE OF COST PRESSURES
• FOMC PARTICIPANTS SAID LABOR MARKET CONDITIONS HAD IMPROVED
• MOST FOMC PARTICIPANTS EXPECTED INFLATION RATE AT 2% OR LESS
• MANY FOMC PARTICIPANTS SAW `EASED' STRAINS IN GLOBAL MARKETS
• MOST ON FOMC SAW TEMPORARY IMPACT FROM RISING OIL, GAS PRICES
• FOMC SAID SIGNIFICANT OUTLOOK CHANGE COULD ALTER 2014 RATE PLAN

Apparently $4 gas has an impact.

European cash equities are trading in the red heading towards the US session, with particular underperformance in the periphery as financials continue to remain the biggest laggard. The EU session so far has consisted of downbeat commentary in regards to both Ireland and Portugal. An EU/ECB report noted that, Portuguese debt is now predicted to peak at 115% of GDP in 2013 and that contraction in 2012 is likely more pronounced than thought. Elsewhere, the Irish Fiscal panel said Ireland may need extra budget cuts to reach its 2012 target and 2012 growth has weakened. In terms of economic releases the UK observed a stronger than expected reading on its Construction PMI hitting a 21-month high, which saw some brief strength in GBP.

European cash equities are seen mixed as the market heads into the US session, with the DAX index the only bourse to trade higher at the midpoint of the European session. European markets were seeing some gains following the open after the weekend release of better than expected Chinese manufacturing data, however the main price action of the day occurred after some European press reports that the Bundesbank had stopped accepting sovereign bonds as collateral from Portugal, Ireland and Greece garnered attention, however the Bundesbank were quick to deny reports and state that it continues to accept all Eurozone sovereign bonds. Following the denial, participants witnessed a slight bounceback, but failed to push most markets into the green.  Data releases from Europe so far have been varied, with outperformance seen in the UK Manufacturing PMI, beating expectations and recording its highest reading since May of 2011. However, the French manufacturing PMI came in below expectations, weighing on the CAC index as the session progresses. A further release from the Eurozone has shown February unemployment coming in alongside expectations recording a slight increase from January to 10.8%.

That the BLS perpetually distorts and manipulates data is no secret and has been reported previously both here and elsewhere numerous times. That the BLS also has a habit of leaking critical market moving data to various entities is also well known. However, we had yet to see just what the BLS is capable of when it comes to fudging and outright slaughtering economic data in a presidential election year. The result is nothing short of a 3 sigma stunner.

Actually, in retrospect this may well be the funniest pair of headlines in one place ever.

• SINO-FOREST TO FILE FOR BANKRUPTCY, MAY SEEK SALE OF COMPANY

But...

• SINO FOREST SEEKING $4B IN DAMAGES AGAINST MUDDY WATERS

Uh? What? #Ref! #Ref! #Ref! We wonder: if Sino Forest files for bankruptcy in its forest of imaginary trees, did it really file for bankruptcy?