By Tyler Durden
Gold surged back over $1370, USDJPY plunged to 100, Silver broke above $20, and bond yields are tumbling…
click image for large legible version
Leaving bonds, stocks, and gold green post-payrolls…
Source: Gold, Yen, Bonds Soar
By Tyler Durden
In a session where bleary-eyed traders followed the all-night tragic developments out of Dallas and initially sold off risk assets, it is good to see that some normalcy prevailed with the traditional post Europe-open futures ramp, which was further assisted by the successful resolution of the Dallas standoff, which has pushed futures modestly higher ahead of today’s main event for markets, the June payrolls report due in under two hours.
“European markets have done well to open on the green,” said Michael Ingram, a strategist at BGC Partners in London. “Still, feeble volumes belie a real lack of conviction ahead of the U.S. non-farms. I am not sure the NFPs will help to put the market on a more stable footing, as a solid number will put a Fed hike back on the agenda. Ideally, equity markets would like to see evidence of robust growth and somnolent central banks.”
As discussed last night, the payrolls report – especially if a significant outlier to the consensus print of +180,000 – could sway expectations for the timing of the Fed’s next interest-rate hike. Officials at the central bank flagged concern over job creation at their last meeting, which followed data showing employers in May took on the fewest workers since 2010, casting doubts on prospects for a rate increase this year.
The Stoxx Europe 600 Index rose 0.2% in early trading, rebounding for the 2nd straight day, after dropping 2.9% this week. Europe saw some further relief when Italy’s Banco Popolare rallied 7% after saying its own stress tests showed “resilience” to adverse shocks. Banca Popolare dell’Emilia Romagna SC climbed 5%, and Monte Paschi added 3% after reaching a record low despite a 3-month long short selling ban imposed by the Italian regulator. The lender’s chief executive officer said it’s working “intensely” with authorities to quickly resolve its bad-loan burden. European automakers climbed as China’s car sales grew faster in the first half of the year.
S&P 500 futures added 0.2% after being modestly lower overnight. In the U.S., Juno Therapeutics Inc. sank 27 percent in early New York trading after saying that three patients died during its clinical trial for a cancer therapy and that the U.S. Food and Drug Administration has placed the study on hold.
Treasuries headed for a seventh weekly gain as the U.K.’s vote to leave the EU threatens to slow economic growth and drives investors to the relative safety of bonds. Gains in U.S. jobs and wages won’t be enough to get the Fed to move anytime soon as policy makers assess what’s happening in the global economy, PIMCO’s Mark Kiesel told Bloomberg. German bunds also headed for a seventh weekly gain, the longest run since January 2015. Italian bonds gained on Friday, with the yield on the securities falling two basis points to 1.22 percent.
As noted, the only notable macro event on today’s calendar will be the June jobs report, where consensus expects an increase of 180,000 workers following last month’s appalling 38,000 print.
Market Snapshot
By Tyler Durden
In a session where bleary-eyed traders followed the all-night tragic developments out of Dallas and initially sold off risk assets, it is good to see that some normalcy prevailed with the traditional post Europe-open futures ramp, which was further assisted by the successful resolution of the Dallas standoff, which has pushed futures modestly higher ahead of today’s main event for markets, the June payrolls report due in under two hours.
“European markets have done well to open on the green,” said Michael Ingram, a strategist at BGC Partners in London. “Still, feeble volumes belie a real lack of conviction ahead of the U.S. non-farms. I am not sure the NFPs will help to put the market on a more stable footing, as a solid number will put a Fed hike back on the agenda. Ideally, equity markets would like to see evidence of robust growth and somnolent central banks.”
As discussed last night, the payrolls report – especially if a significant outlier to the consensus print of +180,000 – could sway expectations for the timing of the Fed’s next interest-rate hike. Officials at the central bank flagged concern over job creation at their last meeting, which followed data showing employers in May took on the fewest workers since 2010, casting doubts on prospects for a rate increase this year.
The Stoxx Europe 600 Index rose 0.2% in early trading, rebounding for the 2nd straight day, after dropping 2.9% this week. Europe saw some further relief when Italy’s Banco Popolare rallied 7% after saying its own stress tests showed “resilience” to adverse shocks. Banca Popolare dell’Emilia Romagna SC climbed 5%, and Monte Paschi added 3% after reaching a record low despite a 3-month long short selling ban imposed by the Italian regulator. The lender’s chief executive officer said it’s working “intensely” with authorities to quickly resolve its bad-loan burden. European automakers climbed as China’s car sales grew faster in the first half of the year.
S&P 500 futures added 0.2% after being modestly lower overnight. In the U.S., Juno Therapeutics Inc. sank 27 percent in early New York trading after saying that three patients died during its clinical trial for a cancer therapy and that the U.S. Food and Drug Administration has placed the study on hold.
Treasuries headed for a seventh weekly gain as the U.K.’s vote to leave the EU threatens to slow economic growth and drives investors to the relative safety of bonds. Gains in U.S. jobs and wages won’t be enough to get the Fed to move anytime soon as policy makers assess what’s happening in the global economy, PIMCO’s Mark Kiesel told Bloomberg. German bunds also headed for a seventh weekly gain, the longest run since January 2015. Italian bonds gained on Friday, with the yield on the securities falling two basis points to 1.22 percent.
As noted, the only notable macro event on today’s calendar will be the June jobs report, where consensus expects an increase of 180,000 workers following last month’s appalling 38,000 print.
Market Snapshot
By Tyler Durden
In a scene reminiscent of a warzone, eleven Dallas police officers were shot overnight by at least two snipers here Thursday night during a protest over police brutality, leaving five officers dead and wounding six, throwing the city into chaos and turning parts of downtown into a massive crime scene by Friday morning. Dallas Police Chief David Brown said the snipers had opened fire on officers from “elevated positions” during the protests. A civilian was also wounded. The attack was one of the worst mass shootings of police in U.S. history.
Police described Thursday night’s ambush as carefully planned and executed and had taken three people, including a woman, into custody before a fourth died from what Dallas-based media said was a self-inflicted gunshot after a standoff that extended into Friday morning. A fourth suspect exchanged gunfire with police in a tense, hours-long
standoff with police overnight, but that confrontation ended early
Friday morning when he reportedly shot himself.
The suspect in the standoff had told police “the end is coming” and that more police were going to be hurt and killed. Brown said the suspect also told police “there are bombs all over the place in this garage and downtown”.
BREAKING: Suspect holed up in Dallas parking garage reportedly dies from self-inflicted gun shot wound.
— Fox News (@FoxNews) July 8, 2016
NEW: A #Dallas PD detective confirms to me shooting suspect is “dead.” Also, 2 “suspicious devices” have been found pic.twitter.com/8ylwVQZtA5
— Ben Russell (@BenRussellNBC5) July 8, 2016
Police said they were questioning two occupants of a Mercedes they had pulled over after the vehicle sped off on a downtown street with a man who threw a camouflaged bag inside the back of the car. A woman was also taken into custody near the garage where the standoff was taking place.
“We are leaving every motive on the table on why this happened and how this happened,” Brown said.
Police are working on the assumption that all four may have been involved in the attack. It appeared the suspects had knowledge of the protest route, allowing them to take up “triangulated” positions above the march and target officers. Police were still searching for other suspects over night, just hours before thousand of workers would fill offices, restaurants and shops in the downtown.
“We still don’t have a complete comfort level that we have all the suspects,” Chief Brown said, adding a search of the area was continuing. Police and city officials said that large areas of downtown would be closed Friday as police continued their investigation.
Dallas Mayor Mike Rawlings told Dallas residents to check with a city website and their employers to see if they would have access to their workplaces. Parts of the city are “an active crime scene,” Mayor Rawlings said, “and we are asking you to stay away from that area.”
Police didn’t release the identities of the suspects, and said their motives were unclear. The suspects …read more
By Tyler Durden
Yesterday we noted the US Marines decision to relax the requirements attached to the force's physical fitness test. As the US does whatever it takes to boost their enlistment numbers, Ukraine youth squads wearing Russian soldier uniforms are breaking down Kalashnikovs inside 10 seconds, blindfolded.
And in some instances the youth soldiers are 15 year old girls.
The leader of the teens, Sergey Fomchenko, tells GlobalPost “Since Soviet time, the military and patriotic education of school children was a priority…to cultivate love of school, motherland, and city.”
GlobalPost reports the youth squads of the Soviet era are making a comeback in eastern Ukraine. Ukrainian youths seek to embrace the national history that is tied to the Soviet past. The teens yearn to revive the Soviet tradition of youth squads being birthed within cities.
The training of youths in Ukraine is nothing new but in lieu of the new rules being adopted by the US military, it should be concerning for US citizens to see what their forces are up against.
In 2015 VICE News embedded in the Donetsk region and reported that they witnessed schools where children were educated in hand-to-hand combat. As Veronika Silchenko reported in June 2015:
“They [the regional youth of Ukraine] have been trained in fighting with knives, hand-to-hand combat, and how to operate guns at the local school in Amvrosievka for the last five years. And they invited us as to see them participate in a regional competition called 'Future Warrior'.“
On a tangent note, in South Africa the youth military is being used as a deterrent, not an enlistment effort. The organization is sold as a way to prevent a swelling gang membership, increasing drug abuse, and increasing unemployment. As News24 put it:
“The ANC and its allies believe military training will tackle the social alienation of youth, gangsterism, alcohol and drug abuse – and instill discipline, patriotism and volunteerism. Hlagala said it was envisaged that some participants would emerge as professionals including doctors, pilots and engineers, while others would take on technical and artisan jobs.“
We are not military generals but we would advise the American forces to not bring their push-up counts to a teenage Ukrainian Kalashnikov fight.
National defense is a way of thinking. It is not something you merely do by the numbers. The focus needs to begin in the mind, not in making sure some potential servicemen or servicewomen are able to complete an arbitrary fitness test. The children abroad are being trained in school for combat and conditioned to defend the “motherland”. Sadly, the US is focused on whether or not to supplement push-ups with either pull-ups or a fixed-hang.
By Tyler Durden
The housing market in key regions across the United States has been cooling, something that we have covered extensively, especially when it comes to New York, Miami, and California.
Any hopes that foreign buyers would continue to rush into the US tripping over themselves for an opportunity to park money in a “safe” real estate asset have been dashed according to a survey by the National Association of Realtors released Wednesday.
Purchases of US residential real estate by foreigners fell 1.3% y/y from $103.9bn in 2015 to $102.6bn in 2016 (year ended March 2016). As shown below, the main buyer by dollar volume was China, contributing nearly 27% of the total.
Breaking down the data further, purchases by foreigners who aren't residents of the US fell by $10bn y/y to $44bn, the lowest level since 2013.
Even as foreign buyers continued to pay huge premiums, the average purchase price paid by foreign buyers declined substantially y/y as well.
As the WSJ notes, even as foreign buyers make up a small part of the market overall, luxury residential builders in Miami, Manhattan, and parts of California could take a hit if (and when) this trend continues.
Here are the main destinations of foreign real estate purchases:
We have focused quite a bit on China's capital outflows, and it comes as no surprise that the markets we discussed are where the NAR shows China buying, specifically California.
Another interesting point along those lines, is the fact that Chinese buyers pay predominantly in cash – interestingly, so does Canada.
* * *
All of this reiterates what we have been documenting for quite some time now, namely that China capital outflow continues to be directed to the US real estate market, and that the overall trend of foreign buyers purchasing in the US is slowing, thus pulling the rug out from underneath those soaring real estate prices in major markets. The pain will continue as the funds slow, and the supply glut becomes even more of a factor as a result.
Source: The Party Is Over: Foreign Interest In US Real Estate Tumbles To 3 Year Lows
By Tyler Durden
Submitted by Michael Shedlock via MishTalk.com,
Ahead of the vote on Brexit, IMF head Christine Lagarde warned of a prolonged period of uncertainty.
After the vote, Largarde said Brexit provided the EU a better opportunity for reform.
Today Largarde is certain of disastrous consequences if another large county turns protectionist. In doing so, she pointed her finger at Donald Trump.
Lagarde Points Finger at Trump
Please consider Lagarde Warns Trump-Style Protectionism Would Hit World Economy.
Britain’s vote to leave the EU is already casting a shadow over international growth, the International Monetary Fund chief said in an interview, adding that the imposition of new trade barriers in another large economy could have ruinous effects.
“I think it would be quite disastrous, actually. Well I don’t think I should say disastrous because that is an excessive word and I should refrain from excessive words. But it would certainly have a negative impact on global growth,” she told the Financial Times.
[Mish Comment: So is it quite disastrous or simply negative? Her meaning is uncertain]
Any uncertainty surrounding a Trump presidency would probably yield more instability in financial markets, similar to the upheaval in the wake of last month’s UK referendum, she said in response to a question. But the IMF chief took care to avoid singling out any politician or referring to Mr Trump by name.
[Mish comment: Lagarde took care to avoid singling out Trump, while singling out Trump]
Ms Lagarde said “waves of protectionism” in the past had “preceded many wars” and that protectionism “hurts growth, hurts inclusion and hurts people”.
Ms Lagarde said she did not want to get involved in the political debate in the US, the IMF’s biggest shareholder. But she made clear her dim view of the policies of Mr Trump, who has proposed punitive tariffs on goods from China and Mexico and ripping up US trade pacts such as the North American Free Trade Agreement.
[Mish comment: Lagarde does not want to get into the political debate in the US, but hands Hillary campaign talking points on a silver platter]
The IMF’s assessment of the impact of the Brexit vote on the UK economy depends heavily on what sort of trade relationship with the EU a new government would be able to negotiate, she said.
Should a deal preserve access to the single market — such as Norway now enjoys — then the UK economy would be only 1.5 per cent smaller by 2019 than would be the case if Britain remained part of the EU. Were a deal to lead to the UK’s access to the EU’s 27 other economies being subject to tariffs under World Trade Organisation rules, it would cost the UK 4.5 per cent growth.
The IMF had not modelled the economic impact of a scenario in which the UK’s exit from the EU drags on and uncertainty continues for a year or more, Ms Lagarde said, but the political crisis set off by the vote could make such events likely.
[Mish comment: …read more
Source: Lagarde Flip-Flops Again On Brexit, Warns Of "Disastrous" Trump-Style Protectionism
100% Pure Garcinia Cambogia Extract – Appetite Suppressant – Carb Blocker Capsules – 2100 MG – 90 Caps
Looking for something special ? Find The Lowest Price HERE
By Tyler Durden
Remember all those hyperbolic warnings over the years that “this is the most important jobs report” ever? Well, the one due out tomorrow may not be that, but it certainly is one of the most important ones in the past year, and one that will certainly have an impact if not on the Fed’s future actions then certainly on the market’s (once again erroneous) expectations of what Yellen may do, especially if it is a +/- 60,000 outlier from the consensus estimate of 180,000.
Recall last month’s “shocking” jobs print, when only 35,000 new jobs were created, the lowest number since September 2010?
Well, that one print was sufficient to convince the market there would be no more rate hikes in 2016 and most of 2017. A few weeks later, first the capitulatory June Yellen press conference and shortly after the just as “shocking” Brexit, effectively killed the rate hike cycle, with the market now pricing in one full rate hike (that is 0.25bps) all the way in 2018. As LIesman raged, “The Fed Is As Close To Capitulation As I’ve Ever Seen Them.”
But maybe there is some hope still. If so, it will be revealed in tomorrow’s payrolls report. As Bloomberg says, “the June jobs report will take on even more importance than usual. Economists and policy makers will use it to determine whether the strongest part of the economy slowed sharply even before concerns over global growth intensified, or if the labor market was merely hit by a temporary soft patch.” Ignoring that jobs are among the most lagging economic indicators known, the general (confused) consensus about what payrolls indicate suggests an outsized market response may be forthcoming.
“There is a potential for a big reassessment on Friday for the outlook,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York. “Given how much views changed after the last report, I get the sense that the anticipation level going into this one is unusually high.”
Wall Street consensus expects 180,000 jobs to be added in June following the abysmal 35,000 in May. One benefit will come from the return to work of striking employees at Verizon. 35,100 Verizon employees ended their almost seven-week work stoppage on May 31. Once the strikers are factored out, “that does imply some net slowing of the trend,” O’Sullivan said. Still, that rate of hiring “remains more than strong enough to keep the unemployment rate trending down.”
Another “good” datapoint will be unemployment rate, expected to rise to 4.8% after falling to a more than eight-year low of 4.7% in May. This however was due to an exodus of workers from the labor force, as the participation rate resumed its plunge.
Earnings will also be closedly watched, with average hourly earnings expected to rise 0.2% in June from the month before and 2.7% Y/Y. However, if that again comes at the expense of yet another decline in hours worked it will be a clear stagflationary sign for the economy. …read more
Source: What To Expect From Tomorrow’s Jobs Report And One Troubling Chart
By Tyler Durden
Authored by StraightLineLogic's Robert Gore via The Burning Platform blog,
Even small children recognize injustice, especially when they are its victims. “No fair” is the common schoolyard refrain. A sense of justice undoubtedly serves a host of evolutionary purposes. Imagine a world where the unjust, the wrong, always triumphed. Thieves prospered as crime went unpunished, the few stalwarts hewing to honesty and rectitude were marginalized or eliminated, and this social order evoked commendation rather than condemnation. How long would such a society survive? Cynics will say we are there now. That’s overblown, but they have a point.
A desire for political change that becomes an actual movement drip-feeds on perceived injustices. No political movement of consequence fails either to wrap its objectives in the mantle of justice or portray its opponents as evil. The Declaration of Independence is a transcendently important work of political philosophy, but it’s also a laundry list of grievances against King George. The aggrieved, not the political theorists, propel revolutions. The straw that breaks the camel’s back is often relatively minor, even trivial. However, it generally has disproportionate symbolic importance. The tea tax exacted on the colonists was a pittance, but it inspired the Boston Tea Party and the revolutionaries’ “No taxation without representation” slogan.
Eric Hoffer noted that: “What starts out here as a mass movement ends up as a racket, a cult, or a corporation” (The Temper of Our Time, 1967). The government birthed after the revolution has indeed degenerated into a racket, and those not in on it increasing recognize its injustices. It still tries to wrap its objectives in the mantle of justice, but the sole objective of government has become more government.
When the American welfare state got started during the Depression, it was sold as a humanitarian response to that crisis. That sentiment may have animated some of those who paid for the New Deal back then; those who pay now know they’re getting fleeced. The government is a giant redistributive mechanism (with a substantial portion redistributed to the government), and most of those on the receiving end are not “needy.” They are, however, desirable sources of votes and payola.
Between the low-class grifts of phony disability and unemployment and the high-class swindles of government contracting, labor racketeering, influence peddling, subsidies, tax breaks, regulatory machinations, spurious litigation, and all the other ways the denizens of America’s richest metropolitan area line their and their cronies’ pockets, those stout souls who still engage in honest and productive labor know they’re being robbed blind. Beneath the shrugs and resignation, fires of anger burn, and cauldrons of resentment bubble.
Fires and cauldrons dot the landscape. Nobody has forgotten who got bailed out in the last financial crisis—banks, other large financial institutions, and a couple of car companies—and who didn’t—millions of homeowners with underwater homes and foreclosed mortgages. It requires no great perspicacity to recognize who has benefitted from central bank policies since the crisis—leveraged speculators—and who has not—everybody else, with particular harm suffered by savers and those living …read more
Source: What Are You Going To Do About It?
Welcome to Esh Carmel Blog.
