• GoldCore
    08/22/2014 - 05:07
    The former powerful mafia boss, turned motivational speaker and author, Michael Franzese, warned on CNBC that stocks are a bubble, Wall Street is crooked and advised people to own physical gold...

Initial Jobless Claims

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Futures Tread Water As Ukraine Tries To Steal The Jackson Hole Scene





While today's key events were supposed to be the Jackson speeches first by Janet Yellen at 10:00am Eastern and then by Mario Draghi at 2:30 pm, Ukraine quickly managed to steal the spotlight yet again when moments after the first Russian humanitarian aid convoys entered Ukraine allegedly without permission, Kiev first accused Russia of staging a direct invasion, even if moments later it changed its tune and said it had allowed the convoy in to "avoid provocations." In other words, your daily dose of Ukraine disinformation, which initially managed to push futures down some 0.3% before futs regained virtually all losses on the subsequent clarifications. Expect much more conflicting, confusing and very provocative headlines out of Kiev as the local government and the CIA try to get their story straight.

 
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Initial Jobless Claims Drop Back Under 300k; Continuing Claims Lowest Since June 2007





Following last week's surge back over the 300k Maginot Line, the Labor Department print this week is 298k (sigh of relief heard around the world). This is also the week that BLS surveys for the Augsut NFP print. Continuing claims fell once again to 2.500 million - the lowest print since June 2007. So great news... that explains why stocks are fading modestly off the highs in reaction.

 
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Futures Levitate To Fresh Record Highs On Just Right Mix Of Bad News





With the FOMC Minutes in the books, the only remaining major event for the week is the Jackson Hole conference, where Yellen is now expected to talk back any Hawkish aftertaste left from the Minutes, and which starts today but no speeches are due until tomorrow. And while the Minutes were generally seen as hawkish, stocks continue to levitate, blissfully oblivious what tighter monetary conditions would mean to an asset bubble, which according to many, is now the biggest in history. And speaking of equities, US futures climbed to a fresh record high overnight on just the right mix of bad news.

 
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Initial Jobless Claims Jump 21,000 To Biggest Miss In 3 Months





With expectations set at multi-year cycle lows of 295k, the 311k print is a major disappointment (the biggest miss since early May) as initial jobless claims jumped 21k to the highest since June. Ithas now been 3 weeks without a new cycle low in claims - perhaps too early to call a trend change - but notably 31k off the lows in late July. Continuing claims also rose markedly, missing expectations for the 6th of the last 7 weeks.

 
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Here Comes The European Triple-Dip: Negative German GDP Sends Bunds Under 1% For The First Time Ever





The hammer finally hit for Europe when overnight both Germany and France reported Q2 GDP prints that missed expectations, the first actually contracting at a 0.2% rate with consensus looking for -0.1%, while France remained flat vs expectations for a tiny 0.1% rise. As a reminder, this GDP is the revised one, which already includes the estimated contribution of drugs and prostitution, suggesting the actual underlying economic growth is far worse than even reported. Then again, this is hardly surprising considering all the abysmal data out of Europe and the rest of the world in recent weeks, and with the Russian trade war sure to trim even more growth, look for all of Europe to join Italy in its first upcoming triple-dip recession in history.

 
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Europe Continues To Deteriorate Leading To Fresh Record Bund Highs; All Eyes On Draghi





There were some minor fireworks in the overnight session following the worst Australian unemployment data in 12 years reported previously (and which sent the AUD crashing), most notably news that the Japanese Pension Fund would throw more pensioner money away by boosting the allocation to domestic stocks from 12% to 20%, while reducing holdings of JGBs from 60% to 40%. This in turn sent the USDJPY soaring (ironically, following yesterday's mini flash crash) if only briefly before it retraced much of the gains, even as the Pension asset reallocation news now appears to be entirely priced in. It may be all downhill from here for Japanese stocks. It was certainly downhill for Europe where after ugly German factory orders yesterday, it was the turn of Europe's growth dynamo to report just as ugly Industrial Production which missed expectations of a 1.2% print rising only 0.3%. Nonetheless, asset classes have not seen major moves yet, as today's main event is the ECB announcement due out in less than an hour. Consensus expects Draghi to do nothing, however with fresh cyclical lows in European inflation prints, and an economy which is clearly rolling over from Germany to the periphery, the ex-Goldmanite just may surprise watchers.

 
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Spot The "Data Dependent" Fed Policy





"Data dependent" or "making it up as they go along?"

 
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Previewing Tomorrow's 'Anti-Goldilocks' Payrolls Data





It appears - judging by today's shenanigans - that good news for Main Street (rising employment costs) is bad news (for stocks), though obviously there are other factors; but tomorrow's payrolls data is the last best hope before the Fed finishes its taper for them to pull a 'data-driven' U-turn out of the bag. Consensus is for a drop from last month's exuberance at 288k to 230k (with Barclays slightly cold and Deutsche slightly hot). The fear, for market bulls, is that the print is anti-goldilocks now - not bad enough to provide excuses for lower-longer Fed rates; and not high enough to justify the hockey-stick of miraculous H2 growth priced into stocks. Average S&P gains on NFP Friday are 0.5% but recently have become more noisy.

 
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Propaganda Full Frontal: A Little High Level Intervention And This Is What Happens





There is no grammatical justification for why two days ago, AP did it again, when a "harshly" worded tweet by the AP became this, just four hours later.

 
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Futures Tumble On Espirito Santo Loss, European Deflation, Argentina Default





It has been a deja vu session of that day nearly a month ago when the Banco Espirito Santo (BES) problems were first revealed, sending European stocks and US futures, however briefly, plunging. Since then things have only gotten worse for the insolvent Portuguese megabank, and overnight BES, all three of its holdco now bankrupt, reported an epic loss despite which it will not get a bailout but instead must raise capital on its own. The result has been a record drop in both the bonds (down some 20 points earlier) and the stock (despite a shorting ban instituted last night), which crashed as much as 40% before stabilizing at new all time lows around €0.25, in the process wiping out recent investments by such "smart money" as Baupost, Goldman and DE Shaw. The result is a European financial sector that is struggling in the red, while adding to its pain are some large cap names such as Adidas which also tumbled after issuing a profit warning relating to "developments" in Russia. Then there was European inflation which printed at 0.4%, below the expected 0.5%, and the lowest in pretty much ever, and certainly since the ECB commenced its latest fight with "deflation", which so far is not going well. The European cherry on top was Greece, whose dead cat bounce is now over, after May retail sales crashed 8.5%, after rising 3.8% in April.

 
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Initial Jobless Claims Plunge to Jan 2006 Lows, Government Warns Of "Seasonal Volatility"





So much for the idea of 'slack' in the economy, initial jobless claims just plunged 19k week-over-week to 284k (vs 307k expected) - the lowest since Jan 2006 (which was the lowest print since May 2000). This is the biggest beat of expectations in over 2 years. Continuing claims fell modestly. Let's not go popping the champagne corks of full recovery quite yet as non-seaonally-adjusted claims collapsed by their most in 6 months as the government saw fit to warn data-consumers that "claims are often very volatile this time of year," as auto shutdowns can cause claims to fluctuate. In other words, ignore this noise.

 
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Overnight Manufacturing PMI Euphoria Boosts Futures To Fresh Record Highs





Ever since going public, it appears that Markit's giddyness about life has spilled over into its manufacturing surveys: after a surge in recent Markit mfg exuberance in recent months in the US, it was first China's turn overnight to hit an 18 month high, slamming expectations and fixing the bitter taste in the mouth left by another month of atrocious Japan trade data (where even Goldman has thrown in the towel on Abenomics now) following which the euphoria spilled over to Europe just as the triple-dip recession warnings had started to grow ever louder and most economists have been making a strong case for ECB QE. Instead, German July mfg PMI printed at 52.9, above the 52.0 in June and above the 51.9 expected while the Composite blasted higher to 55.9, from 54.0, and above the 53.8 expected thanks to the strongest Service PMI in 37 months! End result: a blended Eurozone manufacturing PMI rising from 51.8 to 51.9, despite expectations of a modest decline while the Composite rose from 52.8 to 54.0, on expectations of an unchanged print. Curiously the soft survey data took place as Retail Sales declined both in Italy (-0.7%, Exp. +0.2%), and the UK (-0.1%, Exp. 0.3%), which incidentally was blamed on "hot weather." Perhaps Markit, now that it has IPOed successfully, can step off the gas or at least lobby to have surveys become part of GDP.

 
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"Seasonal Adjustment" Swings Initial Jobless Claims From 6-Month Highs To Cycle Lows





Yet again the fate of the US economy is left to seasonal adjustments... Non-seasonally-adjusted initial jobless claims surged over 47,000 this week to its worst in 6-months. But by the magic of PhD adjustment, this translated into 3,000 seasonally-adjusted drop from last week, beating expectations and printing near 'recovery' cycle lows. We can only imagine the adjustments needed to cope with Microsoft's layoffs. 2014 has seen the smallest percentage drop in initial claims since the crisis began.

 
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