It Should Be Clear That Financial Markets Are Heading Towards Disaster
The Scary Thing Is That This Bad Jobs Report Wasn’t Even About The Sequester Which Hasn’t Even Kicked In Yet.
The March jobs report has come in very mediocre.
It’d be nice to blame the sequester (the automatic spending cuts that started in March) but it doesn’t even appear to be about that.
A series of tweets from WaPo’s Zachary Goldfarb points out that this really more likely to be about the expiry of the Payroll Tax Holiday (as the job losses fell in the retail sector) rather than the sequester (seeing as there was not a big decline in professional services).
This jobs report is more a story of the impact of the payroll tax hike than the sequester.
U.S. Postal Service employment fell by 12,000 in March. Much more to go here…
Prime earners are losing jobs.
Achuthan, the head of the Economic Cycle Research Institute, has long argued that the U.S. economy is in recession.
He notes that, year-over-year growth in nonfarm payrolls and household jobs have fallen to 19 and 18 month lows, respectively.
“The key issue is the pressure on income: people between 35 and 54, i.e., those in their prime earning years, have actually lost jobs since the start of the so-called jobs recovery,” he continued.
It was the deep of winter… CNBC was talking about “animal spirits”, had just touted “the best January in 14 years“, was quoting Raymond James’ Jeff Saut as saying that “The market “is amazingly resilient, and is no longer overbought” and desperately doing everything it could to get retail back into stocks, and was succeeding: retail inflows into stocks were surging and seemed unstoppable… The Chicago PMI had just printed at its highest level in decades… the VIX was dropping fast… Stocks were soaring… Bonds were sliding… NYSE margin debt had just risen to the highest level since 2008… A few brief months earlier the Fed had unleashed a new, massive round of unsterilized bond buying… Bank of America was blaring about the “great rotation” for stocks, and yes – just shortly prior “global currency warfare” had broken out. Name the year?
If you said 2013, you would be right. And wrong.
Because the right answer is… 2011.
That’s right: with institutional and trader memories so short, everyone has (again) forgotten that it truly is deja vu, all over again.
Stock performance in the winter of 2011 and the winter of 2013:
Bond performance in the winter of 2011 and the winter of 2013:
So much for “open-ended QE driven recovery“. Moments ago the March Non-farm payroll hit and it was a doozy, printing at 88K, below the lowest forecast of 100K, well below the expected number of 190K, and a tragedy compared to the February revised print of 268K (was 236K). This was the biggest miss to expectations since December 2009 and the worst print since June 2012. The unemployment rate declined to 7.6%, but this was due entirely to the collapse in the labor force participation rate, which declined by 20 bps to 63.3%, a new 30 year low.
And now the time to come up with excuses is here.
500,000 people dropped out of the labor force. 500,000!!! 500K people could not find work and gave up. Imagine that. NO ONE wants to hire you when that is another cost due to ObamaCare. Of course the libtards all want to see their glorious leader and say that he dropped the unemplyment number:
The Bank of England’s Financial Policy Committee (BoEFPC) warns there is “evidence of the re-emergence of… behavior in financial markets not seen since before the financial crisis,” citing the increased issuance of synthetic products and added that banks have “little margin for error against a backdrop of low growth in the advanced economies,” despite what we are told about their ‘fortress balance sheets. Bloomberg Businessweek adds that the BoE were careful not to scare the public, they add, events currently“did not appear indicative of widespread exuberance in markets. But developments would need to be monitored closely.” This following the Fed’s warnings of ‘froth’ in the credit markets suggests central bans are considerably more concerned at blowing bubbles than they want to admit in public. ECB’s Weber recently commented that he feared, “the recent rally in financial markets could be a misleading signal,” which appears confirmed by the BoEFPC noting that equity performance since mid-2012, “in part reflected exceptionally accommodative monetary policies by many central banks… But market sentiment may be taking too rosy a view of the underlying stresses.”
Wall Street’s Core Culture Means We’ll See More Collapses Like MF Global
After months of speculation, we’ll soon learn the specifics of President Barack Obama’s proposed “modest” and “sensible reforms” to social insurance plans. As Michael Kitchen reports in a Market Pulse this morning, Obama’s budget proposal, expected out next Wednesday, will feature cuts to Social Security and Medicare, including backing for so-called “chained CPI,” according to a New York Times report Friday, citing unnamed administration officials. The chained consumer price index, which uses more modest price adjustments to shrink cost-of-living increases to the programs, is backed by Republicans but opposed by many in Obama’s own party, though the report said the White House budget would include protections for low-income and very old beneficiaries….