Weather affected jobs; weather affected manufacturing; and weather affected the global outlook for the economy… but weather did not affect the US ISM Services index which modestly beat expectations. However, at 54.0 (vs a 53.7 expectation), ISM Services remain notably below the three-year average and while new orders rose modestly, they remain a smidge above 5 year lows… Today we saw how bad weather is used to explain away the bad January numbers (ADP), but when the number is better than expected, the weather spin is ignored and it is a “reflection of the stronger economy” as was the case with the just released Services ISM number – and that is how you pick and choose the components that fit your narrative… and the tapering trend can continue.

 

 

A small beat but well below the average of the “recovery”…

 

Spot the bounce in new orders…

 

Full table:

 

What the respondents said…

Some of the respondents indicate that weather conditions have impacted their business. There remains a bit of uncertainty about the overall economy for some of the survey respondents; however, the majority feel positive about continued economic growth.

“Slight increase in business being seen currently.” (Management of Companies & Support Services)

“Business conditions continue to improve.” (Information)

“Activity picking up on new-year projects.” (Finance & Insurance)

“All phases of the business seem to be getting stronger and have good first half-year outlooks and booked business.” (Professional, Scientific & Technical Services)

“Sales has shown signs of improvement, but lack a sustained pattern to build confidence.” (Retail Trade)

“Casual dining remains challenging, tends to slow after the holidays.” (Accommodation & Food Services)

“Intense weather in several areas of the country is perceived to have contributed to a slow start in what otherwise is historically a strong month.” (Wholesale Trade)

via Zero Hedge http://ift.tt/1jfAHpb Tyler Durden

“It is absolutely impossible to forecast” Ukraine’s exchange rate, BNP Paribas notes in an ominous report today. Considering Ukraine’s huge need to cover its current account deficit, the country is increasingly reliant on financial inflows – and these will be difficult to secure. The Hyrvnia has collapsed this morninng to 9.00 back near December 2008 lows as BNP warns “The NBU faces a difficult task: let the FX rate devalue to a ‘new fair level’ without triggering a run on hryvnia retail deposits, which might have already started.” Relying on external support amid a forced devaluation “increases risks of disorderly adjustement,” and that appears to happening.

 

Ukraine’s currency – the Hyrvnia has collapsed to 9.00 this morning…

 

BNP’s warnings today (via Bloomberg):

“It is absolutely impossible to forecast” hryvnia’s exchange rate, BNP Paribas analysts Serhiy Yahnych and Yevgeniy Orudzhev in Kiev write in report today.

 

Ukraine’s current-account gap, unstable funding and anti-govt protests have “created a dangerous Molotov cocktail, which now seems to turn into a currency crisis:” BNP

 

“The National Bank of Ukraine conducted only a minor intervention yesterday, which led to increased demand for dollars this morning:” BNP

 

“The NBU faces a difficult task: let the FX rate devalue to a ‘new fair level’ without triggering a run on hryvnia retail deposits, which might have already started. Furthermore, it is forced to conduct devaluation having no external support package, which increases risks of disorderly adjustement:” BNP

BNP comments seem extremely accurate from last year…

… rebalancing of the current account has been virtually zero over the last few months.

 

Considering Ukraine’s huge need to cover its current account deficit, the country is increasingly reliant on financial inflows. These will be difficult to secure,

 

…

 

We expect FX reserves to nosedive to USD 18bn by the end of 2013, underlining the case for a weaker local currency. Ukraine badly needs to rebalance its current account, with calls for a more flexible (and weaker) FX rate getting louder.

via Zero Hedge http://ift.tt/1ipJyRA Tyler Durden

“It is absolutely impossible to forecast” Ukraine’s exchange rate, BNP Paribas notes in an ominous report today. Considering Ukraine’s huge need to cover its current account deficit, the country is increasingly reliant on financial inflows – and these will be difficult to secure. The Hyrvnia has collapsed this morninng to 9.00 back near December 2008 lows as BNP warns “The NBU faces a difficult task: let the FX rate devalue to a ‘new fair level’ without triggering a run on hryvnia retail deposits, which might have already started.” Relying on external support amid a forced devaluation “increases risks of disorderly adjustement,” and that appears to happening.

 

Ukraine’s currency – the Hyrvnia has collapsed to 9.00 this morning…

 

BNP’s warnings today (via Bloomberg):

“It is absolutely impossible to forecast” hryvnia’s exchange rate, BNP Paribas analysts Serhiy Yahnych and Yevgeniy Orudzhev in Kiev write in report today.

 

Ukraine’s current-account gap, unstable funding and anti-govt protests have “created a dangerous Molotov cocktail, which now seems to turn into a currency crisis:” BNP

 

“The National Bank of Ukraine conducted only a minor intervention yesterday, which led to increased demand for dollars this morning:” BNP

 

“The NBU faces a difficult task: let the FX rate devalue to a ‘new fair level’ without triggering a run on hryvnia retail deposits, which might have already started. Furthermore, it is forced to conduct devaluation having no external support package, which increases risks of disorderly adjustement:” BNP

BNP comments seem extremely accurate from last year…

… rebalancing of the current account has been virtually zero over the last few months.

 

Considering Ukraine’s huge need to cover its current account deficit, the country is increasingly reliant on financial inflows. These will be difficult to secure,

 

…

 

We expect FX reserves to nosedive to USD 18bn by the end of 2013, underlining the case for a weaker local currency. Ukraine badly needs to rebalance its current account, with calls for a more flexible (and weaker) FX rate getting louder.

via Zero Hedge http://ift.tt/1ipJyRA Tyler Durden

Figure 1 is a weekly chart of the SP500 with the $VIX data hidden. The indicator in the lower panel assesses the current value of the $VIX relative to pass swing points in that data. There are two points worth making.

TACTICAL BETA is 100% FREE — QUANTITATIVE STRATEGIES on GOLD, BONDS, EQUITIES — GO NOW!

WEEKLY

Since April, 2013 the indicator has been diverging negatively from the price action. (I have been making this point since September, 2013; see this video.) The failure of the $VIX to break below a value of 12 and the failure of the indicator to confirm the highs in price are noteworthy. These distortions are now being corrected. The indicator is rolling over, and a bottom in prices won’t be achieved until the indicator hits bottom as well. This is several weeks away. Thus the trend in prices is down.

(For the record this is what I said on January 14: “The $VIX has failed to break 12 or rather more importantly, a level of 12 continues to be where selling in the equity markets takes place. I have contended that the inability of the $VIX to break below the 12 level is a sign that the current market rise is not sustainable, and this divergence has been going on for over 6 months now. In essence, the $VIX has failed to confirm the price action. More importantly, it appears that the rocky start by the equity markets this week will see the $VIX close above a prior key pivot point. This always suggests caution as the possibility of a trend change in the equity markets is very real.”)

Figure 1. $VIX/ weekly

DAILY

But there is hope!!

Figure 2 is a daily chart of the SPY with the $VIX data in the lower panel. The $VIX is sitting at a level where 4 out of the 6 short term/ intermediate term bottoms took hold in 2013. Will 2014 be the same? This is the test for the $VIX and the markets. Look for the markets to put up a fight, but from this perspective, the tide has already turned.

Figure 2. $VIX/ daily

TACTICAL BETA is 100% FREE — QUANTITATIVE STRATEGIES on GOLD, BONDS, EQUITIES — GO NOW!

via Zero Hedge http://ift.tt/1kT3mhO thetechnicaltake

Click here to follow ZeroHedge in Real-time on FinancialJuice

We’ve all done it, haven’t we? Chucked something in the wash and turned it on too high, only to see it pop out at the end of the cycle and it ends up the size of your hamster. Well, Obama has been doing the same. Except this time it’s not your winter woollies that he’s shrinking, it’s the greenback.

The US currency is shrinking as a percentage of world currency today according to the International Monetary Fund. It’s still in pole position for the moment, but business transactions are showing that companies around the world are today ready and willing to make the move to do business in other currencies.

The US Dollar has long been the world’s number one denomination in world currency supply. It represents 62% of total holdings in foreign exchange in central banks around the world. But, it is in for a tough race from up-and-coming strong currencies. The Japanese Yen and the Chinese Yuan are both giving the Americans a good run for their money. The Swiss franc is too (surprisingly). There is $6 trillion in foreign exchange holdings around the world at any given time, on average and the US Dollar represents almost two-thirds of that.

The fact that Brazil and China have also just signed a currency-swap deal worth something to the tune of $30 billion stands as living proof that the dollar may be further on the wane. China will exceed all expectations in the future as the world’s largest economy. The US will be overtaken. The Chinese currency will one day overtake the Dollar too. Has to be!

Although, it’s not quite there for the moment. China is not near being the world’s reserve currency yet. In order to be the world’s reserve currency there would be the need to produce enormous quantities of what the world wants. China has got that one off pat already. Then, countries holding the reserve currency would need to be able to spend that currency elsewhere in other countries or find a place to put it while waiting to do so. World capital markets are currently in dollars (40%), which means that there would be no possibility of using the Chinese currency. But, that’s only a matter of time. Some are predicting this will happen pretty soon.

The Federal Reserve has come in for some strong criticism over the unconventional Quantitative Easing methods that have resulted in 3 trillion spanking new dollars rolling off the printing presses. This has certainly brought about some degree of worry around the world that the dollar is not quite as safe as it might have been thought to be in the past. Is the world worrying that the dollar is not as safe a bet as it used to be in world domination. Are central banks worried that it will shrink in the wash and the colors will run?

Some are predicting that the dollar will shrink rapidly over the next two years and it will lose its top place as the world’s reserve currency by 2015. In the 1950s the dollar was 90% of total foreign currency holdings around the world. The dollar has definitely lost out to other currencies that are stronger. If there is a continued move and the dollar shrinks, then the resulting catastrophe that will ensue will have a spiral effect on the already enormous US budget deficit (over $1 trillion a year on average).

The only reason the Federal Reserve has been in a position to print more money recently is simply because they are in the strong position to be able to do so as the world’s leading reserve currency. If that changes, then the Americans won’t have the possibility of just hitting the button and setting the printing presses rolling. That means the US will be in no other position than to end up having to pay their debt back.

The US economy and the market are starting to show signs of recovery. Signs. It’s not sustained, hope as they might. If the dollar loses its attraction, then it won’t be used as the international reserve currency. Businesses will start using another currency and the dollar will lose out further still.

Some experts are saying that the problems of the dollar are like a time-bomb ready to explode. Ultimately, it will bring about the death of the dollar. As we stand on and watch, huddled around the coffin as it is lowered into the ground, we know it’s all too late. The flowers have been sent and the Stars and Stripes has been played in recognition of loyal service for the nation.

The QE methods are nothing more than aiding and abetting the already problematic situation of the greenback. We might look back in years to come and reminisce over whether it was the right (long-term) solution to use QE, whether printing bucks sent the greenback to an early grave, or whether it just reached the end of its life and croaked peacefully without making too much noise.

But, criticism of and worry over the dollar and its longevity have been hot topics for years now. The US dollar is a fiat currency that can easily lose status, deriving its value from government regulation and law. But, then again, so is the Euro. So, people living in Europe shouldn’t start throwing stones…they live in glass houses too…and that’s before they start.

Originally posted: Death of the Dollar

You might also enjoy: You’re Miserable USA! | Emerging Markets: Lock, Stock and Barrel | End of the Financial World 2014 |  Kristallnacht on Wall Street? Bull! | China’s Credit Crunch | Working for the Few | USA:The Land of the Not-So-Free  

 

via Zero Hedge http://ift.tt/1ipJuRR Pivotfarm

A funny thing was found when scouring through the provided ADP excel source data (excel link here) which is used to backfill into the jobs data: nothing less than proof that ADP is goalseeking their final payrolls number.

Exhibit A:

As can be seen in screenshot of the ADP excel sheet, cell J157, which is supposed to represent the 160K service workers added in January, is in reality 159.561397994999, or somehow ADP, which is supposed to be able to poll specific workers with granularity to the individual worker level, saw the added “benefit” of 159,561 round number workers, and an additional .397994999 worker. This amounts to about one arm and half a leg.

The same can be seen in the next door neighbor cell, which indicates that 15,832 “round number” goods workers were added, and then added an additional 0.756476997 worker, or roughly two legs and one arm.

What does this mean? Simple – instead of actually using definitive numbers, ADP is goalseeking the final result based on a predetermined final outcome it wants to hit, and then varies for the growth rate or the monthly addition variable.

Our question is: why does ADP do this if it has any hopes of being credible (when we already know is merely mimics the NFP data with a one month lag), and in order to salvage some credibility, when will ADP finally start providing not seasonally adjusted data like the BLS’ Nonfarm payrolls report?

via Zero Hedge http://ift.tt/1jfrGwf Tyler Durden