And so the “most important payrolls number” at least until the October FOMC meeting when the Fed will once again do nothing because suddenly the US is staring recession in the face, is in the history books, and as previewed earlier today, at 142K it was a total disaster, 60K below the consensus and below the lowest estimate. Just as bad, the August print was also revised far lower from 173K to 136K. And while it is less followed, the household survey was an unmitigated disaster, with 236,000 jobs lost in September.
If you thought the headline jobs print was bad, wait till you see this.
As Bloomberg reports, “JPMorgan Chase & Co. is set to pay almost a third of a $1.86 billion settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit-default swaps market, according to people briefed on terms of the deal.”
Following yesterday’s collapse in the Nikkei, when a 4% drop pushed it red for the year below 17,000, down 20% from a high of 21,000 hit just over a month ago, we had just one question for Japan’s pension fund “fudiciaries” who have been “greatly rotating” out of bonds for the past few years as the primary sources for BOJ debt monetization, dumping trillions in fixed income yen, and promptly buying up equities: equities which have gone nowhere in 2015, and which have posted massive losses in the third quarter. The question was:
What are Japan’s pension fund losses after the Nikkei wipeout from 21k to 17K?
— zerohedge (@zerohedge) September 29, 2015
Less than 24 hours we got the answer, when moments ago Nikkei reported thatQ3 losses at (at least one) pension funds were just under JPY 10 trillion in the third quarter. Continue reading »
According to ADP, for the first time this decade, the US hasn’t created a single manufacturing job for the entire year. In fact, it has lost some 6,600 jobs. But don’t worry: we hear “economic recoveries” driven by hiring of minimum wage retailers, low-wage teachers, and of course, waiters and bartenders, are all the rage in this business cycle.
During the “recovery” from the Great Recession, the land of Lincoln had more people enter the food-stamps program than start jobs. Food-stamps growth in Illinois has outpaced jobs creation by a 5-4 margin… and stunningly, has put 25 people on food stamps for every manufacturing job created during the recession recovery.
Since the start of June, global equity markets have lost over $13 trillion. World market capitalization has fallen back below $60 trillion for the first time since February 2014 as it appears the world’s central planners’ print-or-die policy to create wealth (and in some magical thinking – economic growth) has failed – and failed dramatically. To rub more salt in the wounds of monetray policy mumbo-jumbo, despite endless rate cuts and balance sheet expansion around the world, the last 4 months have seen an 18% collapse – the largest since Lehman.…
Nearly four months ago on June 2nd, something very unusual happened in Edmonton, Alberta, Canada.
The price of propane actually became negative, hitting an unbelievable -0.625 cents per gallon.
It’s hard to believe that the price of a productive commodity could become so beat down by the market that producers would practically have to pay you to take it off their hands.
Now that’s cheap. And completely nuts. Continue reading »
Unlike previous gold probe cases, this one will have major consequences. How do we know? Because just like in LIBOR-gate, just like in FX-gate, it is the biggest rat of all, Swiss megabank UBS, that is about to turn on its former criminal peers. As Bloomberg reported earlier “UBS was granted conditional leniency in Swiss antitrust probe of possible manipulation of precious metal prices.” Why would UBS do this? The same reason UBS did so on at least on two prior occasions: the regulators have definitive proof it is involved, and gave it the option to turn evidence and to rat out its cartel peers, or face even more massive financial penalties. UBS, as usual, choice the former.
Update: And there it is: GLENCORE DEBT INSURANCE COSTS SURGE TO RECORD HIGH; 5-YR CREDIT DEFAULT SWAPS RISE 207BASIS POINTS FROM FRIDAY’S CLOSE TO 757 BASIS POINTS
Those who listened to our reco to buy Glencore CDS at 170 bps in March 2014 can take the rest of the year off. As of this moment, GLEN Credit Default Swap were pushing on 600 bps, 4 times wider, and on pace to take out the 2011 liquidity crunch highs. After that, it’s smooth sailing to all time wides and the start of a self-fulfilling prophecy which leads to the Companys’s IG downgrade and the collapse of trillions in derivative notionals as what may be the trading desk of the biggest commodity counterparty quietly goes out of business.
Glencore is in total free-fall across all markets today. Most worrying for systemic risk concerns is the rush into credit protection that has occurred, as counterparties attempt to hedge their exposures. Forthe first time since 2009, Glencore CDS are being quoted with upfront pricing (something that happens as firms become seriously distressed). Based on the latest data, it costs 875bps per year (or 14% upfront) to buy protection against a Glencore default (which implies – given standard recoveries – a 54% chance of default).
According to Janet Yellen, we are still on pace to raise rates in 2015. While the rate hike was supposed to happen this month, it got derailed by the August market selloff, volatility in China, lackluster work force numbers, and a variety of other factors.
Despite the Fed continuing to kick this down the road, they continue to claim that we are in the middle of an ongoing recovery. There’s just one problem with that: things are getting worse than pre-crisis levels for millions of the poorest Americans.
Because most everything we buy gets more expensive over time, we have to earn more money each year just to maintain our existing standard of living. When we’re not given raises that keep up with this rate of inflation, we’re effectively suffering a pay cut.
“The discrepancy between economic growth and the two key indicators’ growth in the first six months did not fit with previous patterns, but industrial restructuring is a new factor, and should be taken into account when analyzing the new situation.”
The global commodity collapse is finally starting to take its toll on what China truly cares about: the employment of the tens of millions of currently employed and soon to be unemployed workers.
On Friday, in a move that would make even Hewlett-Packard’s Meg Whitman blush, Harbin-based Heilongjiang Longmay Mining Holding Group, or Longmay Group, the biggest met coal miner in northeast China which has been struggling to reduce massive losses in recent months as a result of the commodity collapse, just confirmed China’s “hard-landing” has arrived when it announced on its website it would cut 100,000 jobs or 40% of its entire 240,000-strong labor force. Continue reading »
While the world was focused on the content of Yellen’s Thursday speech in Amherst for clues on whether the Fed Chair would back off her disturbingly dovish outlook on the world, what was the real surprise was the delivery: as we showed previously, there was a very troubling 100 second interval at the very end of the 50 minute, 5,000+ word speech, in which the 69-year old Yellen suddenly seemed unable to read the words on the page, was rereading the same phrase over and over, paused for long stretches at a time, and then had a violent reaction that forced her to end her speech prematurely. Watch it again below.