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Following remarks that are identical to those from yesterday, today Yellen will conclude her semi-annual testimony, this time by presenting her vision about the economy and the path of future rate hikes to the Senate Banking Committee. Surprises, if any, will come during the Q&A.
Watch the hearing live below.
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2Y yields crashed 10bps overnight – the biggest plunge in yields since September’s FOMC fold on rate-hikes. The rest of the Treasury bond complex also saw yields crash with 10Y flash-crashing 20bps – amid collapsing liquidity – at its deepest.
Then – as if by magic – a sudden crazed Yen seller appeared and lifted all risk boats (and bond yields) “off the lows.”
One wonders how long this ‘intervention’ will last…
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Gold has reached, and so far held, notable resistance around $1200. However, as Goldman notes, there’s scope to extend much higher over time.
The current area includes the 100-wma and the trend across the highs since March ’14 (wedge resistance). It’s formed an exhaustive looking candlestick pattern and oscillators seems to be turning. Basically, it seems a good place to start a corrective pullback. The 100-wma in particular was an important pivot in determining the start of the late-’12 decline.
From a wave count perspective, the market is likely in the initial stages of a counter-trend ABC correction which could eventually retrace ~38.2% of the 5-waves from ’11 to 1,381. From a pure techs perspective, breaking from a declining wedge would initiate a medium-term target back at the start of the pattern ~1,392.
Bottom line, although 1,200-1,202 might hold in the near-term, there’s scope to extend much higher over time.
Source: Goldman Sachs
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As JPM put it best earlier today, “It’s Hard To Imagine An Uglier Morning.” And while a direct BOJ intervention shortly after 7 am, one which the local government was non-comittal on…
… coupled with a modestly better than expected initial claims report, has brought some normalcy back to what initially was a furious selloff, today will likely be one of those days when Yellen will have to come up with a big rabit out of her congressional testimony hat in just over an hour.
For now, here is, courtesy of Nanex, a forensic market-level look at the key events that took place so far this morning:
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It seems like so long ago, but really isn’t. In 2013, President Barack Obama acknowledged that the IRS had in fact been directing extra scrutiny to broadly defined right-wing “Tea Party” groups as they applied for various forms of tax-code recognition. In fact, Obama forced out the acting commissioner of the agency and pledged publicly, “I will not tolerate this kind of behavior in any agency, but particularly the IRS given the power that it has and the reach that it has in all of our lives.”
Paul Caron, a Pepperdine University academic who runs the always interesting TaxProf blog, recently celebrated the 1000th day of the scandal, which he argues (convincingly) has never really been covered or investigated fully. After Obama’s first big statements, interest drifted away for the most part and even the president’s bald acknowledgements that something was rotten at the IRS started to be walked back.
In a new USA Today column, Glenn Reynolds of Instapundit, who’s been linking to TaxProf for the past 1,000-plus days, sums up the social implications of the IRS scandal:
It’s not just that evidence overwhelmingly points to the IRS having been weaponized in an effort to neutralize Obama’s Tea Party opposition. It’s that ordinary Americans can look at this and conclude that there’s no reason to follow the law if they can get away with breaking it since the people in charge of enforcing the law clearly regard it with contempt.
In an influential essay several years back, Gonzalo Lira warned of the coming middle-class anarchy, when ordinary Americans decide to be no more lawful than they have to be.
There are plenty of nations that work that way — where both the ruling class and the ruled view the law with contempt and obey it only when forced to. Such places are, generally, not as nice as places where the rule of law pertains. But avoiding that kind of outcome requires principles and self-discipline on the part of the ruling class, something that contemporary America conspicuously lacks. Welcome to the era of hope and change.
Watch “3 MORE Reasons To Fear the IRS”:
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Is the ACLU going soft on the First Amendment? That’s the troubling question raised by University of Washington law professor Ronald Collins, who notes that the ACLU just began its annual fundraising campaign and released an accompanying “National ACLU Workplan,” which, in the organization’s own words, “lays out [the ACLU’s] plans for the year ahead [and] always addresses the most critical civil liberties challenges facing our country.”
Yet as Collins reports, “surprisingly, protecting free-speech freedoms is not listed as one of this year’s ‘critical civil liberties’ issues. Neither of the documents contains any mention of the First Amendment.”
Collins also shared this discouraging comment from Harvey Silverglate, noted criminal defense and civil liberties lawyer, co-founder of the Foundation for Individual Rights in Education, and former board member of the Massachusetts ACLU (and sometime Reason contributor). To say the least, Silverglate is not optimistic about the ACLU’s long-term commitment to securing First Amendment rights:
Sadly, it comes as no surprise that the national ACLU Board and Staff are nowhere to be seen in the increasingly difficult battle to protect First Amendment freedom of expression rights. This is especially so in areas where the ACLU, more and more, pursues a political or social agenda where the overriding importance of the goal transcends, in the eyes of ACLU’s leadership, the needed vitality of free speech principles neutrally and apolitically applied. Fortunately, some ACLU state affiliates still carry the free speech battle flag, but they are a diminishing army in a war that is getting more and more difficult, even though more and more important, to wage.
Read the whole thing here.
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Initial jobless claims dropped notably last week (from 285 to 269k) but the overall trend (away from the noise) appears in tact. The smoother4-week average remains near 12-month highs and as Goldman notes weakness is widespread – "there is only limited evidence that the rise in claims is due to distress in the energy sector." Continuing claims dropped modestly to 2.239mm but, as Goldman adds, "the persistence of the recent move suggests more might be going on, and we are treating the increase as more than just noise."
And finally, here is Goldman explaining why it is time to be concerned…
Initial and continuing claims for unemployment insurance benefits have moved steadily higher since late last year. After nearing their respective post-crisis lows of 256k and 2,146k this past October, initial and continuing claims are now higher by 29k and 112k, respectively. Both series can be volatile, and one should be cautious about reading too much into the week-to-week changes. But the persistence of the recent move suggests more might be going on, and we are treating the increase as more than just noise.
And moreover, Goldman warns that they find only limited evidence that the recent increase in claims directly relates to distress in the energy sector.
And looking forward, every 1k increase in claims (relative to the breakeven rate) implies a slowdown in monthly payroll growth of just over 4k. Therefore, a further rise in claims to 300-315k, if sustained, could imply payroll growth closer to a trend-like rate—assuming the benefits take-up rate and other aspects of labor market flows remain unchanged.
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A gunman has killed at least 6 people in an attack on an education department in southern Saudi Arabia, multiple sources confirm.
The attacker has been arrested. From Arab News:
A teacher armed with an automatic weapon stormed a Ministry of Education office in the southern region of Jazan and shot dead at least six people on Thursday, local media reported.
Three other office staff were injured, online news site 3alyoum.com said, quoting Jazan police.
The office is located in Al Dayer governorate, eastern Jazan.
Police have cordoned off the office compound and were looking for the assailant, who is said to be teaching at a secondary school, the report said.
Disgruntled employee (maybe he was mad that the kingdom rolled back fuel subsidies) or excuse to invade Syria? We’ll see.
Reuters: Saudi newspaper Sabq says at least five people have died in a gun attack on an education department in southern #SaudiArabia
— Sky News Newsdesk (@SkyNewsBreak) February 11, 2016
BREAKING: Senior Saudi interior ministry official confirms gun attack on education department in southern part of kingdom
— Newsweek Middle East (@NewsweekME) February 11, 2016
BREAKING: Saudi newspaper Sabq reports gun attack on education department in southern Saudi Arabia, at least 5 killed
— Newsweek Middle East (@NewsweekME) February 11, 2016
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“Whatever it takes” is not enough, it would appear as the fragility and interconnectedness forced upon the European banking/sovereign finance ponzi has rapidly come home to roost for Draghi and his followers. Peripheral bond risk has flipped from “hold your nose” buys to panic sells with Portugal risk exploding 200bps in the last week. As the European banking system’s credit risk rises 2012-crisis-like, it seems belief in a bigger bazooka is fading fast.
It’s not just Deutsche Bank…
Smashing European Peripheral risk higher…
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