Tag: news

While jobless claims look rosy, Philly Fed's employment index plunged by the most since May 2013 as the headline survey extended its period of sub-50 contraction to six straight months – the longest streak outside of a recesssion in history. Across the board the underlying components were weak with current all tumbling led a collapse in average workweek, employment, and new orders. Worse still, the "hope" index plunged to its lowest since Nov 2012.

6 straight months of contraction flash red for recession…

 

The underlying components were a disaster…

 

As hope plunged…

The diffusion index for future general activity fell from a reading of 19.1 in January to 17.3 this month. The index has trended down since last summer and is now at its lowest reading since November 2012 (see Chart 1). The largest share of firms expects an increase in activity over the next six months (42 percent), but 25 percent expect declines. The future indexes for new orders and shipments also edged down slightly this month. Firms’ forecasts for future employment have been moderating the past few months. The future employment index fell from 5.5 to 2.3 this month, the third consecutive decline. The future workweek index also declined into negative territory for the first time in six months.

Charts: Bloomberg

via Zero Hedge http://ift.tt/1OhUs9j Tyler Durden

After a dismal start to the year, pushing initial jobless claims to six-month highs, it appears 'everything is awesome' again as despite surging layoffs (Challenger, Grey and headline after headline in the press), initial claims tumbled to 262k this week – just above the 43 year lows of last fall. It's not all ponnies and unicorns of course as continuing claims rise once again to 2.273mm – just shy of the highest levels in 7 months.

Initial claims tumble sback towards 43 years lows…

 

But Continuinmg Claims surges to 7 month highs…

 

We are sure as long as The Dow keeps falling that The Fed wil lstay on hold but this "good" data is clearly not helping the dives case.

 

Charts: Bloomberg

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

For all the euphoria about the proposed OPEC oil production freeze deal, the reality is that nothing has been actually decided. As readers will recall, the only “decisions” agreed to between the Saudi and Russian oil ministers were to cap production at already record high levels of output, however contingent on everyone else voluntarily joining said production cap.

Then yesterday, as part of its own meeting, Iran made it clear that while it supports efforts to push the price of oil higher, it would certainly not limit its output at current levels, and instead requires an explicit loophole granting it a production limit from the pre-sanctions period. This put OPEC in a bind: if it grants Iran special treatment, then who else will have a similar request.

The answer was revealed just hours later when Iraq earlier today stopped short of saying it would curb production of oil to prop up sagging prices, saying negotiations are still ongoing between members of the Organization of the Petroleum Exporting Countries.

According to the WSJ, Iraq oil minister Adel Abdul Mahdi said his country supports any decision that will serve producers, prop up prices and achieve balance in the crude markets. However, just like Iran he didn’t explicitly say whether Iraq would curb its own output but said any rapprochement between all sides to restrict crude output is a step in the right direction.

As the WSJ summarizes, his comments “came a day after Iran’s oil minister didn’t commit to limiting production, throwing into question the future of a plan brokered by Saudi Arabia and Russia this week for major oil producing countries to limit their output to last month’s levels.”

“The deterioration of the oil prices has directly impacted the global economy and the historical responsibly of the producers requires great speed in finding positive solutions that will help prices return to the normal [levels],” Mr. Abdul Mahdi said in a statement.

In other words, more of the same, or as we summarized it with a brief tweet one week ago:

Everyone wants higher oil prices; nobody wants to cut production

— zerohedge (@zerohedge) February 11, 2016

Only it’s even worse, because while OPEC may have the luxury of cutting, even if its members do the unthinkable and decide to trust each other to comply (which they won’t), they still have to contend with the distressed US shale sector, which courtesy of several hundred billion in debt, has no such luxury, and must keep pumping just to repay the interest and maturities on its debt or face a wave of mass defaults, one which according to Deloitte could bankrupt as much as a third of the oil space.

And then, what’s worst for OPEC, is that even in bankruptcy (and after) US producers will still keep pumping especially with a debt-free balance sheet where the all-in production costs tumble; the same is true in the case of distressed M&A because any acquiror will i) have a far stronger balance sheet and ii) a motive to keep generating cash even if it means a modest loss; because shutting down production completely means foregoing on billions in revenue (regardless of margin) while mothballing costs are so prohibitive that most would rather just keep producing in hopes that “someone else” will cut production first.

The only problem is that no one else will be the first to cut.

For now, the market has ignored the nuances and is hoping that just the tentative indications of an OPEC deal are enough, pushing oil to the highest level in weeks. We don’t expect these prices to hold.

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

If we learned anything last September it’s that Janet Yellen’s reaction function now includes domestic and global financial markets.

Well that, and we learned that Hungarian PM Viktor Orban isn’t playing around when it comes to Europe’s worsening refugee crisis. While everyone else in Europe was busy trying to figure out how to accommodate the millions of asylum seekers fleeing the war-torn Mid-East, Orban simply built a razor wire border fence.

And then he built another one.

And then, when migrants tried to breach his barriers, he met them with water cannons and tear gas. This was the scene:

“Problem” solved. 

So clearly, Hungary isn’t playing around when it comes to security, but as it turns out, migrant-be-gone fences and tear gas aren’t sufficient in today’s dangerous security environment and so, the Hungarian central bank is stockpiling guns and ammo.

No, really.

“Hungary’s central bank, already facing criticism for a spending spree ranging from real estate to fine art, is now beefing up its security force, citing Europe’s migrant crisis and potential bomb threats among the reasons,” Bloomberg writes. “The National Bank of Hungary bought 200,000 rounds of live ammunition and 112 handguns for its security company, according to documents posted on a website for public procurements.”

Why, you might fairly ask, does the central bank need 200,000 bullets and hundreds of guns? Because of “international security risks,” central bank Governor Gyorgy Matolcsy says.

As Bloomberg goes on to note, “the security measures added to public scrutiny of the running of the bank, which under Matolcsy – an Orban ally – earmarked 200 billion forint ($718 million) to set up foundations to teach alternatives to what he called ‘outdated neoliberal’ economics.”

Well, the central bank could be championing worse things. They could be teaching Keynes and stockpiling fiat money. Instead, they’re doing away with neoliberalism and hoarding guns and ammo. 

We close with a quote from PM Orban who met with Vladimir Putin on Thursday: “Europe’s largest nations now believe that the flow of migrants is mostly positive. Our view is that it’s bad.”

And there’s nothing like 200,000 bullets to combat “bad” things.

via Zero Hedge http://ift.tt/1QnX8DN Tyler Durden

Moments after a massive explosion rocked Ankara on Wednesday, we said the following: “Expect this to be pinned on either ISIS or the PKK. If it’s the latter, Ankara will once again claim that the group is working in concert with the YPG and that will be all the evidence Erdogan needs to march across the border.”

In short, we wondered whether the bombing – which apparently targeted military barracks – would be just the excuse President Recep Tayyip Erdogan needed to launch an all-out ground invasion in Syria. Turkey has been shelling YPG positions for nearly a week in an effort to keep the group (which Ankara equates with the “terrorist” PKK) from cutting the Azaz corridor – the last lifeline between Turkey and the rebels fighting to oust Bashar al-Assad. It’s unlikely that cross-border fire will ultimately halt the YPG advance and so, Erdogan needs an excuse to send in the ground troops.

Sure enough, Ankara has blamed the YPG for the attack and is vowing to retaliate. “Turkish Prime Minister Ahmet Davutoglu blamed a Syrian Kurdish militia fighter working with Kurdish militants inside Turkey for a suicide car bombing that killed 28 people in the capital Ankara, and he vowed retaliation in both Syria and Iraq,” Reuters reports, on Thursday. “Davutoglu said the attack was clear evidence that the YPG, a Syrian Kurdish militia that has been supported by the United States in the fight against Islamic State in northern Syria, was a terrorist organization and that Turkey, a NATO member, expected cooperation from its allies in combating the group.”

Right. It’s “clear evidence” of something alright, but “clear evidence” of what we’re not sure.

“The assailants have all been identified. It was Syrian national Salih Necar who was born in the northern Syrian city Amuda in 1992,” Prime Minister Ahmet Davutoglu said on Thursday. “YPG is a pawn of the Syrian regime and the regime is directly responsible for the Ankara attack. Turkey reserves the right to take any measure against the Syrian regime,” he added.

Obviously, that’s utter nonsense. Assad is fighting for his life. Both figuratively and literally. The idea that he spends his days plotting Ankara car bombs with the Kurds (who do not, by the way, wholeheartedly support the regime) is patently absurd.

For their part, the YPG says this is nonsense and also says Turkey’s self defense claim (used as an excuse to justify the shelling at Azaz) is equally absurd. “We are completely refuting that,” Saleh Muslim, co-chair of the PYD, told Reuters. “I can assure you that not even one bullet is fired by YPG into Turkey [because YPG doesn’t] consider Turkey as an enemy.”

Needless to say, this “terror attack” is exceptionally suspicious. Turkey is one of the countries with the most to lose if the effort to usurp Assad fails. And as you’re likely aware, the rebellion is on the ropes. Aleppo is surrounded by Russia and Hezbollah and it will fall in a matter of weeks. Once it’s recaptured by Assad, the rebel cause is lost. The rebellion will be over. 

Sending supplies to the hodgepodge of Sunni rebels operating in and around the city is no longer sufficient and even if it were, the YPG is about to cut the last supply line. As we said last week, it’s do or die time for Ankara and Riyadh. Either go to war on behalf of the rebels orconcede defeat to Moscow and Tehran. The question, we said, is how Ankara will ultimately be able to pitch an intervention at Aleppo as a fight against terror when the ISIS presence there is relatively minimal. 

Well, now we know. 

Turkey will use the Ankara bombing – which killed 28 people – to justify a ground incursion to punish the YPG which, you’re reminded, are not only backed by Russia, but the US as well. “All necessary measures will be taken against [YPG and PKK] anywhere and under any circumstances. No attack against Turkey has been left unanswered,” Davutoglu promised. “All those who intend to use terror pawns against Turkey must know that [playing] this game of terror will hit them like a boomerang,” he added.

So there you have it: the excuse for Turkey to invade Syria and it’s the same as it ever was. Ankara is just “fighting terror,” like everyone else in the world. 

For those unfamiliar, the YPG have been the most effective on-the-ground force when it comes to fighting Islamic State. They’ve managed to secure nearly the entire border with the Turks and are seeking to unite their territory east of the Euphrates with the towns they control west of the river, and that means capturing key border cities. For Turkey, that’s an unacceptable outcome, as it would effectively mean establishing a Kurdish proto-state on the border, a move that would likely embolden Turkish Kurds who are already seeking greater autonomy. 

So invading Syria serves two purposes for Ankara: 1) it checks the Kurdish advance, and 2) it shores up the rebels fighting to overthrow Bashar al-Assad. 

But while the Turks are known for being exceptionally capable on the battlefield, it isn’t clear they know what they’re getting into here. Hezbollah practically invented urban warfare and their fighters view martyrdom as an honor and a privilege (and not in the perverse way that ISIS conceptualizes death). Additionally, Hassan Nasrallah’s forces are backed by what is perhaps the most capable air force on the planet. 

We close with a rather inauspicious quote from Davutoglu: “I repeat my warning to Russia – which lately gives air support for YPG to advance into Azaz and conducts heavy shelling on Syrian people – not to use the terrorist organization against innocent Syrian people and Turkey.”

Those who live in glass houses Mr. Davutoglu, should most assuredly not throw stones.

via Zero Hedge http://ift.tt/1Ua2lVU Tyler Durden

• Oil extends rally towards $35 after Iran welcomes output freeze (Reuters)
• Overproduction Swamps Smaller Chinese Cities, Revealing Depth of Crisis (WSJ)
• House Flipping Is Making a Comeback in Las Vegas (BBG)
• Trump leads Republican field nationally by more than 20 points (Reuters)
• Turkey blames Kurdish militants for Ankara bomb, vows response in Syria and Iraq (Reuters)
• Brexit nerves knock FTSE as oil rally cools (Reuters)
• Fed’s Kashkari: 25% Capital Requirement May Be Right for Banks (WSJ)
• Russia Sues Ukraine in London Court Over $3 Billion Default (BBG)
• China’s Banks May Be Getting Creative About Hiding Their Losses (BBG)
• Chinese Money Keeps Coal Mines Humming (WSJ)
• Anglo Cut to Junk for Third Time This Week as S&P Downgrades (BBG)
• The People’s Bank of China Moves to Daily Open-Market Operations (BBG)
• Hungary Central Bank Stockpiles Guns, Bullets Citing Terror Risk (BBG)
• Obama Said to Plan Historic Trip to Cuba Next Month (BBG)
• Iraq Follows Iran by Avoiding Commitment to Oil Freeze (WSJ)
• Hedge Funds Will Pay for You to Own Small-Cap ETFs (BBG)
• China’s Subprime Crisis Is Here (BBG)

 

Overnight Media Digest

WSJ

– President Barack Obama will travel to Cuba next month, according to a U.S. official, in the first such visit by a sitting American president in 88 years. (http://on.wsj.com/1VoVc2h)

– The legal fight around the locked iPhone of one of the San Bernardino shooters highlights the growing role of encryption in digital life. (http://on.wsj.com/1VoV6rs)

– China had hoped small cities like Suizhou would help drive the expansion of the middle class and sustain economic growth. But overproduction is clouding the country’s path to prosperity and jolting the global economy. (http://on.wsj.com/1VoVbeK)

– Iran dented the efforts of other big oil exporters to limit production Wednesday by refusing to curb its own output, demonstrating the limits of OPEC’s power to boost prices amid rising tensions among its members. (http://on.wsj.com/1VoVeqP)

– China’s deployment of missiles on a disputed South China Sea island exacerbated tensions between China and the U.S., prompting Secretary of State John Kerry to suggest President Xi Jinping had abandoned a pledge not to militarize the strategically important region. (http://on.wsj.com/1VoVfv6)

 

FT

Most managers at HSBC’s UK retail and wealth unit will not be getting a pay rise this year, the lender told the affected employees at the end of last week, even though the bank struck an agreement with employees last year.

Britain’s National Health Service(NHS) could end up with a 2.3 billion pounds ($3.29 billion) deficit by the end of the financial year and is at risk of breaching parliamentary protocol by overspending its budget, according to a report by think-tank King’s Fund.

Arla Foods, one of Europe’s biggest dairy companies, said on Wednesday the global milk market was in crisis due to oversupply, but it expected demand, particularly from China, to pick up at the end of the year.

 

NYT

– Tim Cook, Apple Inc’s chief, said the government’s request to bypass security on the phone used by Syed Rizwan Farook had “chilling” implications. This is not the first time a technology company has been ordered to effectively decrypt its own product. (http://nyti.ms/1R7PKzy)

– Yahoo Inc told dozens of employees at 15 digital publications that they were losing their jobs, part of a larger plan to cut the work force by 15 percent. (http://nyti.ms/1QlInaI)

– Delta Air lines Inc is seeking an edge in the battle for premium-class passengers by serving food intended to be as good as what is served in Meyer’s restaurants. The company has struck an alliance with Union Square Hospitality Group, the food service empire behind Shake Shack and restaurants like Union Square Cafe, Blue Smoke and Gramercy Tavern. (http://nyti.ms/219RPQi)

– A long-running internal battle among ABC Corp executives over creative control and future strategy led to the ouster on Wednesday of the network’s entertainment president and the elevation of a pair of his lieutenants. Channing Dungey, previously ABC’s drama chief, will take over the prime-time part of his job. (http://nyti.ms/1TrLBtI)

 

Canada

 

THE GLOBE AND MAIL

** The Liberal government plans to launch a full-scale review of the controversial temporary foreign workers program, which limits foreign workers to 10 percent of a company’s work force in low-paying jobs, and prohibits employers from hiring them in regions of high unemployment. (bit.ly/1R9u71K)

** Air Canada, the country’s largest airline, has signed a letter of intent to buy as many as 75 of Bombardier’s new C Series planes, giving the troubled Montreal-based transportation giant the first order it has landed since September, 2014. (bit.ly/1mJpDUJ)

** Jean-Pierre Blais, chairman of Canada’s telecom and broadcast regulator, is calling on the federal government to take quick action to resolve an outstanding appeal over small competitors’ access to the highest-speed Internet services.(bit.ly/1PHK277)

NATIONAL POST

** Canada Jetlines Inc said on Wednesday that it plans to list on the TSX Venture Exchange in a reverse takeover of Jet Metal Corp, a junior uranium explorer, with the IPO expected sometime in May. (bit.ly/1Qmt3uv)

** Barrick Gold Corp has set aggressive new targets for debt and cost reduction as it looks to continue momentum after a largely successful 2015. (bit.ly/1Q33lJH)

** In the latest caustic outbreak in an ongoing cultural war, the Friends of the Simon Wiesenthal Centre for Holocaust Studies (FSWC) accused the York University’s faculty association of endorsing “a campaign of censorship against Israel and the Jewish People”. (bit.ly/20FXBXV)

 

Britain

The Times

– Nearly 1,400 UK engineering jobs are to go after Bombardier Inc announced it was cutting its global workforce by 10 percent. The Canadian group is to shed 1,080 jobs from its Belfast aircraft plant and three other locations over the next two years, representing more than a fifth of its workforce. (http://thetim.es/219sExi)

– Rolls-Royce Holdings Plc has entered into talks with an American activist investor seeking a seat on the struggling engineer’s board. The group said it had not yet decided whether to give ValueAct, a San Francisco hedge fund, a place on its board. (http://thetim.es/219tgTE)

The Guardian

– British workers’ rights to paid holiday, maternity leave and fair treatment at work would be at risk if the UK voted to leave the European Union, the head of the Trades Union Congress has warned. Frances O’Grady, general secretary of the body representing British trade unions, said the EU debate had been too dominated by business interests, with not enough focus on the potential costs for ordinary workers. (http://bit.ly/219tyKg)

– The number of properties in Britain worth 1 million pounds ($1.43 million) or more is set to more than triple by 2030, widening the gap between the housing haves and have-nots, according to a report. Less than half a million homes in the UK are currently valued at over 1 million pounds, but a study by high street lender Santander claims this number will rise to more than 1.6 million in the next 15 years.

The Telegraph

– Britain’s job rich recovery pushed employment to a record high at the end of 2015, though a “marked” decline in wage growth since last summer suggests the Bank of England remains a long way from raising interest rates. The number of people in work rose by 205,000 to 31.42 million in the final quarter of last year, according to the Office for National Statistics (ONS). (http://bit.ly/219u0Z1)

– BT Group Plc is facing fresh calls to split with Openreach, its broadband infrastructure division, ahead of a landmark review into the telecoms industry. Ofcom is set to unveil next week a widely anticipated set of proposals for the next decade of the telecoms sector, including BT’s arm’s length control of Openreach, after almost a year of fierce debate in the industry. (http://bit.ly/219u234)

Sky News

– Trinity Mirror Plc, publisher of the Daily Mirror, will unveil a weekday newspaper called New Day. New Day is expected to launch on 29 February, according to people close to the plans, and will initially be priced at 25p – compared to the 40p cover price of the I newspaper, with which it is expected to compete. (http://bit.ly/219uWfI)

The Independent

– UK households have kicked fears of an interest rate rise this year into the long grass, despite official figures showing unemployment at its lowest for a decade. The number of households expecting the Bank of England to raise its record-low interest rates over the next 12 months has fallen to its lowest in more than two years amid near-zero inflation and growth fears, according to Markit, the financial data firm. (http://ind.pn/219v8M5)

 

via Zero Hedge http://ift.tt/1otjf62 Tyler Durden

Moments ago the world’s largest retailer by workers (if not by market cap any more courtesy of AMZN), reported non-GAAP earnings which at $1.49/share in Q4 beat expectations of $1.46 (GAAP missed at $1.43 but let’s ignore that). The company also announced that comp sales at Walmart U.S. were positive for the fifth consecutive quarter, up 1.5% with traffic increasing 1.7%.

That was the good news: the bad news for the company which many thought had “kitchen sinked” all near-term disappointment three months ago was that same-store sales at US locations were up only 0.6%, below the 1.0% forecast, that SSS at Sam’s Club declined by -0.5% ex gas below the +1% expected, that revenue of $129.7 billion missed expectations by $900 million, that Free Cash Flow declined notably to $15.9 billion for the full year compared to $16.4 billion the year before, that Operating Income continues to drop far faster than revenues, either with or without FX suggesting costs increases are far greater than the offsetting topline…

… and that it slashed guidance on the top-line saying that net sales growth is now “expected to be relatively flat, which compares to the previous estimate for growth of 3 to 4 percent on a constant currency basis.” The reason: rising wages and strong USD headwinds, precisely the two things which the Fed is desperately wants more of, which means that as long as Yellen keeps getting her way, stocks like WMT will suffer.

The full guidance.

• The impact from incremental investments in wages and training in the U.S. is projected to be approximately $0.30 per share for the full year. As a result of the timing of wage investments, the company expects the first quarter will be impacted somewhat more on a year-over-year basis than in subsequent quarters.
• Currency exchange rate fluctuations, based on current exchange rates, are expected to negatively impact net sales by approximately $12 billion for fiscal year 2017. Additionally, currency is expected to impact EPS by approximately $0.10 per share for the year, including approximately $0.03 in the first quarter.
• The company is updating its estimate for net sales growth for fiscal year 2017. Net sales growth is now expected to be relatively flat, which compares to the previous estimate for growth of 3 to 4 percent on a constant currency basis. This change reflects the impact from recently announced store closures globally, as well as the continued strengthening of the U.S. dollar. Excluding the impact of currency and store closures, our net sales growth guidance would have remained in the 3 to 4 percent growth range.

Finally, in n attempt to cushion the blow from its results, WMT announced it would boost its annual dividend from $1.96 to $2.00/share. Judging by the more than 4% plunge in WMT’s $210BN market cap (which accounts for more than 2% of the Dow Jones) after the earnings report few care.

via Zero Hedge http://ift.tt/1SU6vls Tyler Durden