another site
The market took one look at today’s dismal jobs data and marked down the data-dependent Fed’s rate-hike schedule to record lows. June odds are now at 4% – the lowest on record…
And even out to Feb 2017 there is a less than 50-50 chance of The Fed acting…
via http://ift.tt/1WNE88J Tyler Durden
In addition to the poor headline Establishment survey print which rose only 160,000 in April, coupled with a deplorable Household survey employment number which plunged by 316,000 for the month and below levels seen in February, an even more concerning development was the resumption in the deteriorating trend in the US labor force participation rate, which in recent months had been on a steady increase as far fewer workers were dropping out of the workforce (contrary to convention wisdom, this was not driven by new entrants into the labor force).
All that changed today, when the number of Americans not in the labor force soared by a whopping 562,000 in April, pushing the grand total of people not in the labor force back over 94 million and fast approaching the all time high of 94.6 million.
As a result, the participation rate, which recently had climbed to 63% or the highest since early 2014, has once again resumed its downward slope with the April print down to just 62.8% as the poor labor and demographic conditions once again emerge as a key driver within the US workforce.
via http://ift.tt/1rxBHeF Tyler Durden
So much for the only indicator that confirmed a “strong recovery.” In yet another Goldman jinx which just two days ago boosted its payrolls forecast from 225K to 240K, moments ago the BLS reported that ADP’s ominous print was right when it said that April payrolls rose only 160K, far below the 200K expected, and higher than just 1 of 92 economist expectations. This was the lowest print since last September’s 145K.
Private payrolls rose 171K on expectations of a 195K print, with last month’s 230K revised steeply lower to 184K.
The unemployment rate also missed expectations of a drop to 4.9% and stayed flat at 5.0%.
The March 215K job growth was revised lower to 208K, while the February was also revised lower from 242K to 233K for a net -19K drop.
* * *
According to the BLS, total nonfarm payroll employment increased by 160,000 in April. Over the prior 12 months, employment growth had averaged 232,000 per month. In April, employment gains occurred in professional and business services, health care, and financial activities, while mining continued to lose jobs. (See table B-1.)
The breakdown:
Professional and business services added 65,000 jobs in April. The industry added an average of 51,000 jobs per month over the prior 12 months. In April, job gains occurred in management and technical consulting services (+21,000) and in computer systems design and related services (+7,000).
In April, health care employment rose by 44,000, with most of the increase occurring in hospitals (+23,000) and ambulatory health care services (+19,000). Over the year, health care employment has increased by 502,000.
Employment in financial activities rose by 20,000 in April, with credit intermediation and related activities (+8,000) contributing to the gain. Financial activities has added 160,000 jobs over the past 12 months.
Mining employment continued to decline in April (-7,000). Since reaching a peak in September 2014, employment in mining has decreased by 191,000, with more than three-quarters of the loss in support activities for mining.
Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, showed little or no change over the month.
The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in April. The manufacturing workweek and overtime remained unchanged at 40.7 hours and 3.3 hours, respectively. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was up by 0.1 hour to 33.7 hours.
In April, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.53, following an increase of 6 cents in March. Over the year, average hourly earnings have risen by 2.5 percent. In April, average hourly earnings of private-sector production and nonsupervisory employees increased by 5 cents to $21.45.
The change in total nonfarm payroll employment for February was revised from +245,000 to +233,000, and the change for March was revised from +215,000 to +208,000. With these revisions, employment gains in February and March combined were 19,000 less than previously reported. Over the past 3 months, job gains have averaged 200,000 per month.
via http://ift.tt/1STJc6T Tyler Durden
The machines went wild when the dismal jobs data struck. The instant reaction was a complete crush of VIX (despite stocks tumbling, Gold surging, and bond yields plunging), but that rapidly turned around and now VIX is heading higher again…
broadly speakinmg it is “risk-off” for now but VIX is being manhandled to remain positive into the open…
via http://ift.tt/1STJ8Us Tyler Durden
In what may be one of the least relevant payroll reports in a long time as the Fed already knows the labor market is doing better quantiatively (qualitatively it has been all about low-paying jobs gaining at the expense of higher paying manufacturing and info-tech positions) and as has further demonstrated it is no longer jobs data dependent, here is what Wall Street consensus expects: total payrolls +200,000, down from 215K in March; a 4.9% unemployment rate; average hourly earnings rising 0.3% (last 0.3%) M/M and 2.4% Y/Y (last 2.3%); on labor force participation of 63%.
As RanSquawk adds, expectations are for a reading of 200K, squarely in-line with the Fed’s benchmark figure, representing continued strength in the labour market. Given the middle of the road expectations, some may take note of yesterday’s ADP report, which came in well below expectations (156K vs. Exp. 195K (Prev. 200K, Rev.194K) despite it being widely considered an unreliable indicator. Other recent labour market indicators show that the US labour market is still in fine health, however, the most recent Job Openings and Labour Turnout Survey (JOLTS) came in just below expectations (5445 vs. Exp. 5490, Prev. 5541, Rev. 5604) but printed a strong 5K+ reading none the less. Finally, last month’s NFP report printed higher than expected unemployment (5.0% vs. Exp. 4.9%), although some noted that this was partly due to an uptick in the labour force participation rate. If the headline comes in reasonably close to the expected, this metric could garner particular focus given the weakness last time round.
The previous FOMC meeting saw the Fed keep rates on hold, with Esther George the lone dissenter and shed little light on the gradient of the rate hike path. They did however express a rather dovish tone on inflation expectations, and since then (April 27th) the USD has weakened significantly, printing fresh year lows in this week’s session. Fed rhetoric since the meeting has largely been a reiteration of the statement provided with the rate decision, although there has been a renewed emphasis on the data dependency of the Fed.
Forecasts by bank:
The full expectations histogram:
Here is a quick summary of market sentiment heading into payrolls courtesy of DB and Joe LaVorgna who has one of the most bearish forecasts at 175K (vs 200K consensus), and well below one of the most bullish calls, that from Goldman which sees 240K.
Welcome to random number generator day, also more commonly known as US nonfarm payrolls. The current consensus forecast is for a 200k print this afternoon although it’s interesting to see that the range of forecasts are from as low as 160k to as high as 315k. Our US economists are sitting at the lower end of that range and are forecasting for a below-market 175k gain. This is based on their view that upon closer inspection of the sectors responsible for job growth last quarter, the details reveal that retail trade has accounted for a disproportionate share of these gains (in the fact the pace of which is the fastest since 1994). They expect the pace of hiring in this sector to moderate somewhat closer to its 12-month average this month. As well as this, temp hiring, which has historically been a leading indicator of payroll growth, has declined over the same period and so these trends together contribute to their below-consensus forecast.
If DB is the bearish case, Goldman is the bullish case. Here it is summarized:
We expect a 240k gain in nonfarm payroll employment in April. We increased our forecast from an initial estimate of 225k published last Friday as a result of the improvement in the employment component of the ISM non-manufacturing survey released this week. Our revised estimate is above consensus expectations for a 200k increase. Most labor market indicators were roughly in line with their recent trends in April, but improvements in reported job availability and the ISM non-manufacturing survey suggest a bit more strength. Payroll employment rose 215k in March and has risen at an average pace of 209k over the last three months and 234k over the last year.
Arguing for a stronger report:
- Service sector surveys. The employment components of the service sector surveys were mixed in April, but we attach the greatest weight to the ISM non-manufacturing survey, whose employment component rebounded from recent lows (+2.7pt to 53.0).
- Job availability. The Conference Board’s labor differential—the difference between the share of consumers saying jobs are plentiful vs. hard to get—improved a touch to +1.4 in April from +0.2 in March. The index remains below the highs reached in prior expansions.
Arguing for a weaker report:
- ADP. ADP reported a 156k gain in private payroll employment in April, about 50k below the recent average.
- Weather. Winter weather swings can have large effects on payrolls, especially in the construction and leisure and hospitality sectors.
Neutral factors:
- Manufacturing surveys. The employment components of the manufacturing surveys were mixed to softer in April
- Jobless Claims. The four-week moving average of initial jobless claims leading into the payroll reference week was basically unchanged.
- Online job ads. The Conference Board’s Help Wanted Online (HWOL) report showed increases in both new and total online ads in April.
- Job cuts. According to the Challenger, Gray & Christmas report, job cuts were roughly flat on a seasonally-adjusted basis. Job cuts in the energy sector remained elevated in April.
As Bloomberg’s Richard Breslow adds, “partially because of Wednesday’s non-manufacturing ISM and more probably because DXY had a good week, economist forecasts have been ratcheted up. The whisper number, however, seems to be all over the place, suggesting traders are unconvinced about what the market will do under various outcomes. Overnight options volatility shows little anxiety or commitment.”
* * *
For traders’ benefit here is a “rule of thumb primer on how to trade today’s report from BofA:
Post-payroll market reactions: bullish for HY & stocks if “Goldilocks” release (175-225K); most bullish for gold & Treasuries if weak payroll (<125-150K); most bullish for $, Tech, Europe, Japan if strong payroll (>250K)
Some more thoughts from RanSquawk:
Given the backdrop of USD weakness, any surprise reading to the upside could lead to some significant USD strengthening, especially when one considers the interest rate differentials between the US, Europe and Japan. Conversely, given strong labour conditions are now a fundamental pillar in all present Fed and market models for the future tightening of monetary policy, any surprise to the downside could cause the USD to re-test the weeks (and Year) lows. Should the headline print relatively inline, focus may fall upon the other metrics in the report. Given the concentration of fed rhetoric on inflation forecasts, particular attention may be on average hourly earnings given its implications on wage inflation.
Finally, here is Richard Breslow’s full take on why “NFP wil tell an anecdote not a story”
Looking ahead to today’s nonfarm payroll report, you have to ask yourself two questions. How am I going to trade the numbers? And what does this mean for the FOMC in June and beyond? The answers are likely to be, quite rightly, different.
NFP days tend toward the volatile, so outlier numbers really do matter for trading. But the Fed already knows the labor market is doing better. It’s not what’s keeping them on hold.
The wage piece is the only component with lasting potential to change the narrative. Narrative means market versus central bank rate hike expectations, not speeches. And not whether June is a “live meeting” or not.
Partially because of Wednesday’s non-manufacturing ISM and more probably because DXY had a good week, economist forecasts have been ratcheted up. The whisper number, however, seems to be all over the place, suggesting traders are unconvinced about what the market will do under various outcomes. Overnight options volatility shows little anxiety or commitment.
Even with estimate creep, bond yields have been bid and futures remain priced at 10% rate hike chance for June. It was telling (and amusing) yesterday, that while Fed speakers were inspiring headlines like, “Fed’s Williams says 2 or 3 rate hikes this year seems reasonable,” yields kept ticking lower.
In the last 24 hours alone, three more central banks joined the growing list of those worried about global growth and falling inflation. Australia and Czech Republic both warned of downward price pressures. Mexico said that since March the international outlook has deteriorated and warned of renewed risk of heightened financial market volatility. And don’t forget, developments in Turkey are potentially very bad news for Europe counting on a deal over refugees.
Trade today like there’s no tomorrow, because come Monday we’ll again be data-dependent, June live and wondering what’s the next shoe to drop.
via http://ift.tt/23ux2pY Tyler Durden
In what is the latest confirmation that nobody believes the “rally”, the latest fund flow data from EPFR showed that US mutual fund and ETF flows turned sharply negative for stocks and high yield this past week (ending on May 4th). The outflow from stocks was $16.9BN following a $1.29bn inflow in the prior week. This was the biggest outflow from stocks since the Sep’15 capitulation on back of China devaluation.
In credit land it was likewise a rush into safety, with what BofA dubs a “massive preference for quality over junk in credit continues: largest IG bond inflows in 13 months contrasts with largest HY bond outflows in 3 months”:
High yield flows turned to a $2.34bn outflow, driven mostly by just one ETF. High yield reported a $0.23bn inflow the week before. Inflows to high grade remained strong, however, falling marginally week over week to $2.76bn from $3.09bn. The decline was due to both an acceleration of outflows from short-term funds to $0.23bn from $0.14bn and a decline in flows outside of short-term funds to $2.99bn from $3.23bn. Both high grade funds ($1.75bn) and ETFs ($1.01bn) continue to report strong inflows (Figure 2).
Some other notable flow observations from Michael Hartnett:
Unwind of “long-$ plays” continues…longest streak of outflows from European equity funds in 8 years (Chart 2), longest Japanese equity outflow streak since Feb’12
Biggest outflows in Technology funds in 12 weeks ($0.9bn) as relative performance of tech slumps to 8-month low
Massive preference for quality over junk in credit continues: largest IG bond inflows in 13 months contrasts with largest HY bond outflows in 3 months Oil rally stoking rotation into EM debt & TIPS funds
Precious metals: $1.7bn inflows (largest in 9 weeks) (inflows in 16 of past 17 weeks)
And the punchline: YTD flows show risk-off asset allocation…$83bn out of equity funds and rotation into both fixed income ($56bn) & precious metals funds.
Those wondering just who is pushing the market higher if everyone is selling, aside from the traditional fallback answer of “corporate stock buybacks”, sadly we don’t have more to add.
via http://ift.tt/1SRytNv Tyler Durden
(Spoiler note: Those wishing to know nothing about a movie prior to seeing it might want to steer clear of reviews before doing so.)
Captain America: Civil War is packed with enough blockbuster super-stuff—scads of characters, oodles of travelogue mileage, and acres of eye-punishing shakey-cam action—to fuel two movies. But Civil War is of course only one movie, and so its excess of just about everything overwhelms its virtues.
As has been the case ever since the Marvel Cinematic Universe was launched eight years ago, with Iron Man, this film is another way station en route to some sort of super-duper Avengers movie of the indeterminate future. Whether that galactic wrap-up will ever actually be reached is teasingly uncertain: a pair of purportedly climactic Infinity War films are in the works, but keep in mind that the Avengers’ comic-book exploits have been going on for more than 50 years. Anyway, in this third Captain America picture, a crowd of familiar faces is once again assembled. That it’s such a large crowd is one of the movie’s problems, writes Kurt Loder.
from Hit & Run http://ift.tt/1WdQj0i
via IFTTT
The Republic will survive an election, David Harsanyi writes, but the Republican party is a different story:
For those who are idealists about the Constitution—and there are probably far fewer than some of us like to imagine—there are a number of reasons to sabotage The Trump Party, even if it ends with a Clinton presidency. The first is to salvage some of your own dignity and principles. But there are other long-term political advantages to beating back an authoritarian populist who peddles conspiracy theories and big-government schemes and doesn’t have a freshman-level comprehension about the basic workings of American governance.
The first political advantage is to save our divided government. On the same day Trump wins the GOP Indiana primary and secures the party’s nomination, he decides to use a National Enquirer story—the future in-flight publication of Air Force One—to accuse opponent Sen. Ted Cruz’s father of helping Lee Harvey Oswald assassinate President John F. Kennedy. This was just an amuse-bouche of the utter stupidity that down-ballot GOP candidates will have to deal with, justify, rationalize, ignore, excuse or support every day for the next six months or so. One hopes the stench of this kind of endorsement clings to them for the rest of their unprincipled and, hopefully, short political careers.
from Hit & Run http://ift.tt/1WdQkBa
via IFTTT
Overnight Media Digest
WSJ
– U.S. House of Representatives Speaker Paul Ryan said Donald Trump had “work to do” to unify the Republican Party and demonstrate his commitment to conservative principle. (http://on.wsj.com/1UDAiyM)
– General Motors Co and Lyft will begin testing a fleet of self-driving Chevrolet Bolt electric taxis on public roads within a year, as the companies seek to fight off Silicon Valley giants amid a reshaping auto industry. (http://on.wsj.com/1UDAfTy)
– Sanofi sent a letter to Medivation saying it would try to remove and replace members of the U.S. biotech firm’s board if it didn’t engage in takeover talks. (http://on.wsj.com/1UDAbmT)
– Apple Inc and SAP SE said they would cooperate to help developers create iPad and iPhone apps tapping the German software giant’s database services and analytics. (http://on.wsj.com/1UDAcHx)
FT
* British retail tycoon Philip Green on Thursday hit out at UK lawmakers for leading what he called a “trial by media” in relation to last week’s fall into administration of department store BHS.
* France’s Sanofi has threatened to oust the board of Medivation if the U.S. cancer drugmaker continues to resist its $9.3 billion takeover offer. The company also indicated prospect of a higher bid if its target agreed to enter talks.
* Burberry is evaluating the appointment of a senior manager to support its chief executive, Christopher Bailey, amid concerns from investors after the company’s share price saw a sharp fall.
* Italy’s third-largest lender by assets, Banca Monte dei Paschi di Siena said its first-quarter profits fell by more than a third, highlighting concerns about its pile of bad loans and collapsing share price.
NYT
– After years of debate about the health risks of electronic cigarettes, the U.S. Food and Drug Administration on Thursday issued sweeping new rules that prohibits sale of electronic cigarettes to anyone under 18. (http://nyti.ms/1Yc0u2p)
– NRG Energy, moving to complete its reorganization after the ouster of its chief executive last year, is paring back involvement in two of its alternative energy ventures as it seeks to cut costs and streamline operations, the company announced on Thursday. (http://nyti.ms/24wg3JM)
– The leaders of the two most powerful labor unions in the U.S. – the Service Employees International Union and the American Federation of State, County and Municipal Employees – are completing a plan that calls for unusually close cooperation in political campaigning, organizing and bargaining in states and cities across the country. (http://nyti.ms/1XbwDZS)
– A suit challenging media mogul Sumner Redstone’s mental competence, filed by a former companion, who was removed from his house and his will, goes to trial on Friday. (http://nyti.ms/1O1uL3E)
Canada
THE GLOBE AND MAIL
** Ontario school boards wanting to buy properties from other boards will be forced to pay as much as private developers do in some areas under new provincial rules that are causing divisions in the education sector. (http://bit.ly/23uhm5)
** The Supreme Court of Canada has closed the door on an application by Nortel Networks Corp’s U.S. bondholders to try to make a claim for extra interest payments on their $4 billion of outstanding notes. (http://bit.ly/23ui57e)
** Conservative MPs who voted to support the Trudeau government’s physician-assisted-dying bill as it makes its way to committee for further study say they did so on the word of their constituents – with some even pushing for more people to be eligible than the Liberal legislation currently allows. (http://bit.ly/1UEcT09)
NATIONAL POST
** The head of Canada Revenue Agency says the federal body is in the midst of a “blitz” on the Isle of Man tax scheme that heightened public and regulatory concerns over offshore accounts. (http://bit.ly/23ulnaF)
** The liquidity crisis at First Quantum Minerals Ltd is largely over, company executives said on Thursday, though there is still a lot of work required to improve the balance sheet. (http://bit.ly/23ulDGB)
** The shut down of energy facilities accelerated on Thursday, taking off line about 1 million barrels – close to 40 percent – of Alberta’s daily oilsands production, as a wildfire that started near Fort McMurray spread south to new producing areas. (http://bit.ly/23ulFyl)
Analyst Actions:
via http://ift.tt/1T2elad Tyler Durden
Nicholas Kehagias, a sheriff’s deputy in Harnett County, North Carolina, came to John Livingston’s house in the middle of the night, looking for two people who weren’t there. Ten minutes later, Livingston was lying in a pool of blood on the floor of his porch, mortally wounded by three rounds from the deputy’s gun.
Last month a grand jury declined to indict Kehagias for second-degree murder in connection with the November 15 shooting. But a recent investigation by the Raleigh News & Observer suggests the deputy’s behavior that night fits a pattern of excessive force and needless escalation of encounters with local residents.
Kehagias was responding to an assault complaint. The fight did not happen at Livingston’s house, but Kehagias thought two of the people allegedly involved might be there. When Livingston said they weren’t, Kehagias did not believe him. He wanted to come in and have a look around. Not unless you have a warrant, Livingston said, shutting the door, which hit Kehagias on his foot and arm. The deputy viewed that as an assault and barged into Livingston’s house along with his partner, determined to vindicate the affront by handcuffing Livingston and hauling him off to jail.
But Livingston did not want to be handcuffed, and a struggle ensued, during which Kehagias, a 26-year-old who is six feet, two inches tall and weighs 230 pounds, was unable, even with his partner’s help, to control Livingston, a 33-year-old who was five feet, nine inches tall and weighed 130 pounds. Kehagias sprayed Livingston with pepper spray, elbowed him in the ribs, and repeatedly shocked him with a Taser, but still could not manage to get him in handcuffs. Livingston picked up the Taser, which Kehagias had dropped, and turned it against the deputy, at which point Kehagias drew his pistol and and shot Livingston three times, once in each arm and once in the chest. Livingston might have survived, but the EMTs arrived late, having gone to the wrong address.
While the basic facts of the struggle, which was witnessed by Livingston’s roommate and a visiting friend as well as the cops, are pretty clear, the deputy’s justification for firing his weapon is a matter of dispute. “He was stronger than me every time we turned around,” Kehagias told The News & Observer‘s Mandy Locke. “I was trying to fight for my own life.” Apparently the grand jury agreed that Kehagias reasonably feared for his life once Livingston grabbed the Taser. But the real question is what Kehagias was doing in the house to begin with. “If someone says, ‘No, you are not allowed in my house. Come back with a warrant,’ I’m done,” he told Locke. “If I’m leaning there and talking to you, and all of the sudden you decide to slam the door on me, I think that’s a pretty important distinction.”
Important enough to get into a situation where Kehagias says he felt he had no choice but to use deadly force? Before Kehagias decided he had to arrest Livingston, the only real injury was to the deputy’s pride. If he had been willing to tolerate that, Livingston would still be alive. The News & Observer calls the shooting “a death that defies reason,” which seems about right.
Locke found evidence that Kehagias, who at the time of the shooting had been a deputy for two and a half years, has a low tolerance for perceived disrespect. “In that time,” the paper reports, “he used force—pepper spray, a Taser, a gun—more than any other deputy in the department, according to records provided by the sheriff’s office and emergency dispatchers. In 2014 and 2015, he also arrested more people on charges of resisting a public officer than any other deputy—26 times.”
In one incident, Michael Cardwell, a 66-year-old veteran who called for help because his thyroid was out of control, ended up with a broken femur and hip after a close encounter with Kehagias. Cardwell, like Livingston, does not seem like a formidable opponent: He is five feet, seven inches tall and weighs 160 pounds. Kehagias said he tackled Cardwell only after Cardwell pushed him and that Cardwell “assaulted” him by spitting out pepper spray in his general direction. He also complained that his uniform pants were torn during the encounter. Cardwell was charged with assault and property damage.
from Hit & Run http://ift.tt/1SRvkgO
via IFTTT