Tag Archives: usa

NFP :: What to watch for ?

  • U.S. economy added 533,000 jobs during the first three months of the year

What do we need to analyse ?

-To keep pace, job creation would need to accelerate in April
-Watch which sectors of the economy are adding jobs.
-Flirting with Full Employment
-Average hourly earnings
-The participation rate … its been a bit of a puzzle
Note:
After NFP we will get another risk of a gap open on Sunday/Monday ( 7 May )

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    America has allowed its oil companies to export oil as announced in private letters to oil companies. This will, for sure, cause a stir in the global oil markets and lead to lower prices. Global oil prices previously soared due to the fall in the supply of oil- stoppage of oil exports…
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  • 82
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  • 77
    Most people that discuss the "economic collapse" focus on what is coming in the future.  And without a doubt, we are on the verge of some incredibly hard times.  But what often gets neglected is the immense permanent damage that has been done to the U.S. economy by the long-term…
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For investors, the key to 2017 will

 

For investors, the key to 2017 will not be Brexit, nor the French elections but rather USA bond yields. If the 10-year yield breaches 3pc we would expect major dislocations in many markets and a huge repricing of assets across the globe.

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    EUR/USD fresh highs after breaking through 1.3650 resistance and 50DMA at 1.3655  
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    David Matsuda had never been a mariner or an administrator before he became the head of the U.S. Maritime Administration in 2009. He had been a government lawyer and a congressional staffer, focusing on railroad issues; the ringtone on his phone was the choo-choo of a train. Matsuda had never been…
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  • 65
    On Thursday Mohamed A. El-Erian was on CNBC`s Halftime Report and he said something that a lot of people have been saying regarding the bond market, and it needs to be cleared up, because the amount of poor understanding regarding the bond market by people who make their living, i.e.,…
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Reaction to the Trump election victory

The dichotomy of reaction to the Trump election victory from the mainstream media versus financial markets is truly extraordinary.

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    The largest technology stock offering in history is looming, but few in Silicon Valley seem to care. http://www.nytimes.com/
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    For the first time, New York City has surpassed Moscow for the most billionaire residents, according to the latest global rich list from Hurun, a group that tracks wealth in China. According to Hurun, New York added 14 billionaires this year, bringing its total to 84. Moscow, meanwhile, lost a…
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  • 68
    If Trump commits to introducing positive changes such as cutting taxes and boosting infrastructure spending, then it will be “happy days” again for investors What did portfolio managers said about Trump area? There are two spectacularly different scenarios for stocks under the new president, depending on which Trump shows up…
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  • 68
    Jordan Belfort, whose memoir “The Wolf of Wall Street” was turned into a film by Martin Scorsese, expects to earn more this year than he made at his peak as a stockbroker, allowing him to repay the victims of his fraud. “I’ll make this year more than I ever made in my…
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  • 60
      For investors, the key to 2017 will not be Brexit, nor the French elections but rather USA bond yields. If the 10-year yield breaches 3pc we would expect major dislocations in many markets and a huge repricing of assets across the globe.
    Tags: markets, usa

All investment decisions must be re-evaluated as the Trump era dawns

If Trump commits to introducing positive changes such as cutting taxes and boosting infrastructure spending, then it will be “happy days” again for investors

What did portfolio managers said about Trump area?

  1. There are two spectacularly different scenarios for stocks under the new president, depending on which Trump shows up at the Oval Office, according to legendary investor Jim Rogers, chairman of Rogers Holdings.
  2. “For better or worse, President Trump has become a reality,” said Brian Belski, chief investment strategist at BMO Capital Markets, in a note.
  3. “The last few weeks have perhaps given us a prologue for what to expect, but now the conversation changes from ‘What will he do?’ to ‘What is he doing?’,” wrote Andrew Adams, an analyst at Raymond James, in a note to clients.
  4. Inflows into equities have dwindled to $1.7 billion this week from $8.1 billion in the previous week, according to data from Bank of America Merrill Lynch.

 

Much about President Donald Trump’s policies are yet shrouded in mystery but there is one thing that Wall Street appears to be certain of — nothing will be the same.

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The Weight of Geopolitics. Is Democracy in Decline?

Politics follows geopolitics, or so it has often seemed throughout history. When the Athenian democracy’s empire rose in the fifth century B.C.E., the number of Greek city-states ruled by democrats proliferated; Sparta’s power was reflected in the spread of Spartan-style oligarchies. When the Soviet Union’s power rose in the early Cold War years, communism spread. In the later Cold War years, when the United States and Western Europe gained the advantage and ultimately triumphed, democracies proliferated and communism collapsed. Was this all just the outcome of the battle of ideas, as Francis Fukuyama and others argue, with the better idea of liberal capitalism triumphing over the worse ideas of communism and fascism? Or did liberal ideas triumph in part because of real battles and shifts that occurred less in the realm of thought than in the realm of power?

These are relevant questions again. We live in a time when democratic nations are in retreat in the realm of geopolitics, and when democracy itself is also in retreat. The latter phenomenon has been well documented by Freedom House, which has recorded declines in freedom in the world for nine straight years. At the level of geopolitics, the shifting tectonic plates have yet to produce a seismic rearrangement of power, but rumblings are audible. The United States has been in a state of retrenchment since President Barack Obama took office in 2009. The democratic nations of Europe, which some might have expected to pick up the slack, have instead turned inward and all but abandoned earlier dreams of reshaping the international system in their image. As for such rising democracies as Brazil, India, Turkey, and South Africa, they are neither rising as fast as once anticipated nor yet behaving as democracies in world affairs. Their focus remains narrow and regional. Their national identities remain shaped by postcolonial and nonaligned sensibilities—by old but carefully nursed resentments—which lead them, for instance, to shield rather than condemn autocratic Russia’s invasion of democratic Ukraine, or, in the case of Brazil, to prefer the company of Venezuelan dictators to that of North American democratic presidents.

Meanwhile, insofar as there is energy in the international system, it comes from the great-power autocracies, China and Russia, and from would-be theocrats pursuing their dream of a new caliphate in the Middle East. For all their many problems and weaknesses, it is still these autocracies and these aspiring religious totalitarians that push forward while the democracies draw back, that act while the democracies react, and that seem increasingly unleashed while the democracies feel increasingly constrained.

It should not be surprising that one of the side effects of these circumstances has been the weakening and in some cases collapse of democracy in those places where it was newest and weakest. Geopolitical shifts among the reigning great powers, often but not always the result of wars, can have significant effects on the domestic politics of the smaller and weaker nations of the world. Global democratizing trends have been stopped and reversed before.

Consider the interwar years. In 1920, when the number of democracies in the world had doubled in the aftermath of the First World War, contemporaries such as the British historian James Bryce believed that they were witnessing “a natural trend, due to a general law of social progress.”[1] Yet almost immediately the new democracies in Estonia, Latvia, Lithuania, and Poland began to fall. Europe’s democratic great powers, France and Britain, were suffering the effects of the recent devastating war, while the one rich and healthy democratic power, the United States, had retreated to the safety of its distant shores. In the vacuum came Mussolini’s rise to power in Italy in 1922, the crumbling of Germany’s Weimar Republic, and the broader triumph of European fascism. Greek democracy fell in 1936. Spanish democracy fell to Franco that same year. Military coups overthrew democratic governments in Portugal, Brazil, Uruguay, and Argentina. Japan’s shaky democracy succumbed to military rule and then to a form of fascism.

Across three continents, fragile democracies gave way to authoritarian forces exploiting the vulnerabilities of the democratic system, while other democracies fell prey to the worldwide economic depression. There was a ripple effect, too—the success of fascism in one country strengthened similar movements elsewhere, sometimes directly. Spanish fascists received military assistance from the fascist regimes in Germany and Italy. The result was that by 1939 the democratic gains of the previous forty years had been wiped out.

The period after the First World War showed not only that democratic gains could be reversed, but that democracy need not always triumph even in the competition of ideas. For it was not just that democracies had been overthrown. The very idea of democracy had been “discredited,” as John A. Hobson observed.[2] Democracy’s aura of inevitability vanished as great numbers of people rejected the idea that it was a better form of government. Human beings, after all, do not yearn only for freedom, autonomy, individuality, and recognition. Especially in times of difficulty, they yearn also for comfort, security, order, and, importantly, a sense of belonging to something larger than themselves, something that submerges autonomy and individuality—all of which autocracies can sometimes provide, or at least appear to provide, better than democracies.

In the 1920s and 1930s, the fascist governments looked stronger, more energetic and efficient, and more capable of providing reassurance in troubled times. They appealed effectively to nationalist, ethnic, and tribal sentiments. The many weaknesses of Germany’s Weimar democracy, inadequately supported by the democratic great powers, and of the fragile and short-lived democracies of Italy and Spain made their people susceptible to the appeals of the Nazis, Mussolini, and Franco, just as the weaknesses of Russian democracy in the 1990s made a more authoritarian government under Vladimir Putin attractive to many Russians. People tend to follow winners, and between the wars the democratic-capitalist countries looked weak and in retreat compared with the apparently vigorous fascist regimes and with Stalin’s Soviet Union.

 

Read more here :  http://www.brookings.edu/research/articles/2015/01/democracy-in-decline-weight-of-geopolitics-kagan

 

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What To Expect From NFP?

 

The following are the expectations for today’s US December jobs reports as provided by the economists at 15 major banks.

Goldman: Change in Nonfarm Payrolls (Dec): 230k Unemployment Rate (Dec): 5.7%.

Deutsche: Change in Nonfarm Payrolls (Dec): 200k Unemployment Rate (Dec): 5.7%.

Morgan Stanley: Change in Nonfarm Payrolls (Dec): 240k Unemployment Rate (Dec): 5.7%.

Nomura: Change in Nonfarm Payrolls (Dec): 232k Unemployment Rate (Dec): 5.7%.

SEB: Change in Nonfarm Payrolls (Dec): 230k Unemployment Rate (Dec): 5.7%.

Citi: Stay long USD into payrolls. With 240k the median expectation (Citi 220k), we think pressure points touch on both the headline print and revisions with 250k + 40k revisions and 200k – 40k revisions respectively sensitive levels. For policy, wages (0.2%MoM e) and unemployment (5.7% e) could matter more. Undershoots on unemployment and ticks up in wages will be very positive USD and potentially hit higher beta FX.

RBS: Market focus is obviously on US NFPs. Consensus is ~240k; RBS estimate is 225k with upside risks on holiday hiring. Unemployment rate likely to fall by 0.1pp to 5.7%. short EUR/USD and long USD/ZAR on a strong number (225k+). Long AUD/USD on a disappointment.

BNPP: Our economists are more optimistic than the market, expecting a 275k gain in December nonfarm payrolls, just below the impressive three-month trend of 278k. The unemployment rate should fall to 5.7% and as labour market slack is eroded we suspect the Fed and market participants will increasingly focus on measures of wage growth. The bar for the employment data to alter the Fed’s plans to hike in mid-year appears quite high – a stronger reading is unlikely to rush the Fed into move in Q1 given the low CPI profile, while one weak report would do little to alter the picture of what has been a very robust trend. The USD rally appears set to continue in 2015, but with markets already positioned for the move, tactical flexibility if warranted in our view.

SocGen: All the forward indicators we have seen point to the main themes being maintained – strong NFP, falling unemployment and subdued wage growth. We’re looking for 305k 5.6% and a +0.1% hrly earnings increase which should keep the annual rate at 2.1%. That of course, is much better in real terms now, than it was a year ago! The 2013 monthly average NFP gain was 194k, the average so far in 2o14 (Jan-Nov) is 241k, an indication of the acceleration we have seen.

BTMU: Our NFP model predicts an NFP print today of 210k, which is a little less than the consensus 240k – which coincidentally is exactly the discrepancy for the whole of 2014. The model average for 2014 is at 211k while the actual NFP average for 2014 stands at 241k. So our model is pointing to something around consensus which would certainly help confirm steady jobs growth in the US and would confirm that nearly 3mn jobs were created in 2014. Other employment variables are also pointing to continued strength.

Credit Suisse: The recent payroll trends look impressive, with ten consecutive increases of at least 200K, the longest such streak since the mid-1990s, and the 6- and 12-month averages at cycle highs. We project another strong month for nonfarm payrolls at 250K (Consensus: 240K). We expect the unemployment rate to remain steady at 5.8% (Consensus: 5.7%). We look for a 0.2% mom improvement in average hourly earnings (in line with consensus), which would push the year-on-year rate to 2.2%, the high end of the 1.9%-2.2% range of recent years.

BofA: While we look for another strong jobs report, we do not expect a repeat of November which showed job growth of 321,000. We look for nonfarm payrolls to increase 250,000 in December, which is in line with the 6-month average of 258,000. We look for private payrolls to increase 240,000 and the public sector to add 10,000 jobs. The leading indicators suggest continued strength in the labor market with the conference board labor differential narrowing two points to -10.6, initial jobless claims continuing to fall and manufacturing surveys showing further growth. Among the components, we anticipate a slowdown in retail hiring after the growth of 50,000 in November. It seems that the holiday shopping season started earlier this year, prompting greater hiring in November, but likely less in December. We also see risk of a slight slowdown in manufacturing job growth as suggested by the regional surveys. Along with solid job growth should come a decline in the unemployment rate. We look for the unemployment rate to slip to 5.7% from 5.8%. Household job growth is extremely noisy, increasing only 4,000 in November after average growth of 458,000 in September and October. We think we should see a bounce higher in December, which will likely push the unemployment rate lower. We also look for little change in the labor force participation rate, which has been moving sideways in a choppy fashion in recent months.

Standard Chartered: ‘Regression to the mean’ is our expectation for Friday’s employment data (08:30 ET). November’s 321,000 non-farm payroll (NFP) print is unsustainable, in our view. We look for a drop to 240,000 in December, closer to trend (the one-year average in payrolls is 228,000/month). This would be consistent with recent US data, such as softer ISM surveys and durable goods data, which suggest that Q3-2014’s GDP outperformance (5.0% q/q SAAR) may not have been repeated in Q4-2015 and may not be sustained in Q1. Still, a 240,000 payroll reading would be interpreted as robust. The unemployment rate is likely to resume its downtrend after plateauing at 5.8% in the past two months. We see a 0.1ppt drop to 5.7%, but note that a planned annual revision to the household survey introduces higher-than-usual uncertainty.

Credit Agricole: We look for a 215K rise in December nonfarm payroll employment, with the unemployment rate holding steady at 5.8%. Based on data at hand, nonfarm payroll growth likely moderated in December, rising 215K following a 321K advance in November. Initial unemployment claims fell to 289K in the week ending 13 December, down 6K from the November average. This is supportive of +200K payroll gains. Employment indexes on the Empire State and the Philly Fed manufacturing surveys are consistent with solid manufacturing employment, with both remaining at positive levels in December. However, manufacturing jobs likely rose by less than the 28K pick-up in November. Private service-providing payroll growth also likely softened from the previous 266K increase (the strongest since January 2012), though we will confirm our projection on incoming service-sector survey data.

Danske: The main event is the US employment report for December. We expect total payrolls to show a gain of 195,000 in December, which is below consensus expectations of 240,000. The main reason for our below-consensus call is that we expect some payback from the strong November gain of 321,000

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The (Real) Bank of America

David Matsuda had never been a mariner or an administrator before he became the head of the U.S. Maritime Administration in 2009. He had been a government lawyer and a congressional staffer, focusing on railroad issues; the ringtone on his phone was the choo-choo of a train. Matsuda had never been a banker, either. This was relevant because MarAd, in addition to its basic duties involving vessels and ports, ran a perennially troubled $2 billion credit program that had propped up U.S. shipbuilding since the Great Depression. When Matsuda took the helm, the program was sinking again, heading for its worst defaults since a massive loan to help the billionaire investor Sam Zell build cruise ships had gone bust in 2001. Whatever Matsuda’s Washington career had prepared him for, it hadn’t prepared him to be Uncle Sam’s repo man on the high seas.

“It was like walking into a nightmare,” says Matsuda, 42, a former transportation adviser to the late Democratic Senator Frank Lautenberg. “I looked around and said, ‘Guys, what’s happening?’”

The Bush administration’s last MarAd loan guarantee, a $140 million deal to help a politically connected firm build two “superferries” to shuttle passengers around Hawaii, imploded shortly after Matsuda arrived. MarAd got stuck with the ferries, which it eventually offloaded to the Navy. Then a marine services outfit with a MarAd loan went bankrupt, prompting panicky meetings about whether seizing its collateral—a supply boat at work in Nigeria’s offshore oil industry—would spark an international incident. Then another dying shipping company missed a payment on a loan secured by four double-hulled oil tankers. After weeks of confusion, MarAd’s lawyers informed Matsuda he needed to arrest the four football-field sized ships.

“Honestly, I didn’t even know you could arrest ships,” he recalls.

MarAd struggled just to locate the tankers, which were scattered around the Gulf of Mexico and the Eastern Seaboard. One captain apparently turned off his transponders to evade detection. “They were moving from port to port to avoid us,” an official recalls. “We’d go looking for a ship, they’d be gone before we got there.” The four ships were finally tracked down in three states; federal marshals had to board them, place them under arrest and claim them for the government. MarAd ended up selling them for scrap, recovering just $7 million of the $88 million it was owed.

This is what can happen, Matsuda says, when a little marine agency like MarAd is assigned to evaluate big-money credit deals. “It’s never going to lure financial talent away from Wall Street,” says Matsuda, who left the government in 2013 and is now a transportation consultant in Washington. “It’s not a bank.”

No, MarAd is not a bank. It’s more accurate to say it runs the shipbuilding-loan division of a much larger bank—in fact, America’s largest bank.

 Read more: http://www.politico.com/magazine/story/2015/01/federal-loans-bank-of-america-113920.html#ixzz3OCjcDWzN

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5 THINGS TO WATCH AT THE DECEMBER FED MEETING

The Federal Reserve holds its last policy meeting of the year on Tuesday and Wednesday, resulting in plenty of material to be scoured for clues about when interest rates will start inching up. The central bank’s policy committee releases its statement and new economic projections at 2 p.m. Wednesday, followed by Chairwoman Janet Yellen’s press conference at 2:30 p.m. Here are five key things to keep an eye on.

A ‘CONSIDERABLE TIME’ TO SAY GOODBYE?

THE LABOR MARKET

OIL PRICE SPILLOVERS

INFLATION EXPECTATIONS, FINANCIAL STABILITY

OVERSEAS OUTLOOK

 

Full Text can be found here : http://blogs.wsj.com/briefly/2014/12/16/5-things-to-watch-at-the-december-fed-meeting/

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When hedge funds are overwhelmingly on the same side as the broader market, you know it’s a crowded trade.

 

When even hedge funds are overwhelmingly on the same side of an investment as the broader market, you know it’s a crowded trade.

This is where the euro finds itself going into 2015. Traders, investment banks, asset managers and the so-called “smart money” of hedge funds are all betting on a weaker euro, leaving the only point of disagreement being by how much.

The rationale behind it is simple: the European Central Bank will aggressively ease monetary policy by undertaking a large-scale government bond buying programme to prevent low growth and inflation from strangling the region’s economy.

The contrast between monetary easing and weak economic growth in the euro zone with likely monetary tightening and stronger growth in the United States should push the euro lower.

ECB president Mario Draghi has indicated that the central bank is poised to expand its balance sheet by around 1 trillion euros of asset purchases, including politically sensitive purchases of government debt.

It is a policy that has already been adopted by the U.S., UK and Japanese central banks since the 2007-08 financial crisis, with varying degrees of success.

But the only problem with the expectation of a lower euro next year is that everybody shares it.

“I’ve never seen such a big consensus in my 20 years of investment life,” said Yves Kuhn, chief investment officer at Banque Internationale à Luxembourg.

“I just don’t like a consensus like that.”

http://www.reuters.com/article/2014/12/09/markets-euro-idUKL6N0TS3GT20141209

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    För 10 år sedan verkade den globala ekonomin att vara på bättringsvägen.  Räntorna gick ner till 1 %, Storbritannien var i sitt 12:e år av oavbruten tillväxt, Kina var en del av WTO och alla trodde på att marknaderna själva kunde korrigera sig. Den monetära systemkrasch som kom var oförutsedd…
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A Checkpoint with this Week’s Expected End of QE

 

What’s New: With the curtain falling on the Fed’s QE. let’s take a look at what’s been happening of late for US Treasuries. The yields on the 10-, 20- and 30 year Treasuries have generally trended downward since the end of 2013.

The latest Freddie Mac Weekly Primary Mortgage Market Survey last Thursday puts the 30-year fixed at 3.92%, well off its 4.53% 2014 peak during the first week of January and its lowest rate since June 2013.

 

Here is a snapshot of the 10-year yield and 30-year fixed-rate mortgage since 2008.

A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is a long look since 1965, starting well before the 1973 Oil Embargo that triggered the era of “stagflation” (economic stagnation with inflation). I’ve drawn a trendline connecting the interim highs following those stagflationary years. The red line starts with the 1987 closing high on the Friday before the notorious Black Monday market crash. The S&P 500 fell 5.16% that Friday and 20.47% on Black Monday.

Here is a long look back, courtesy of a FRED graph, of the Freddie Mac weekly survey on the 30-year fixed mortgage, which began in May of 1976.

A Perspective on Yields Since 2007

 http://www.advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php

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