ADP Report Shows Weak Employment Market

From the FT:US companies added a modest 13,000 jobs in June, as private-sector job growth stalled amid a wobbly economic recovery. June hiring slowed dramatically from the previous month, when private companies added 57,000 workers, according to ADP Employer Services, signalling that private companies held back ahead of summer. The gain was much smaller...

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Consumer Confidence Decreases

From the Conference Board:The Conference Board Consumer Confidence Index® which had been on the rise for three consecutive months, declined sharply in June. The Index now stands at 52.9 (1985=100), down from 62.7 in May. The Present Situation Index decreased to 25.5 from 29.8. The Expectations Index declined to 71.2 from 84.6 last month......Consumers’...

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The Price of Austerity

From the NY Times: In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts. On Tuesday and Wednesday, pessimism seemed the better bet. Stocks fell around the world, with more steep drops in Asia Wednesday morning over...

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Yesterday's Market

Let's start with the Treasury market, as it shows that concern is high.While the short end of the Treasury curve has been higher, it is still very high, rallying and showing concern among traders. People are parking money in short-term securities out of concern for the economy.The 7-10 year part of the curve is also showing a deep level of concern...

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Prat

"It was 7.45am on June 30 2009 when Steve Perkins a senior, longstanding broker for PVM Oil Futures was contacted by an admin clerk querying why he'd bought 7m barrels of crude in the middle of the night. The 34-year old broker at first claimed he had spent the night trading alongside a client. But the story began to fall apart when he refused to put the customer in touch with his desk for official approval of the trades. By 10am it emerged that Mr Perkins had single-handedly moved the global price of oil to an eight-month high during a "drunken...

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Household Savings and Debt Service

- by New Deal democratIn expansions, households are confident and are willing to take on more risk. As they lose confidence and retrench, a recession occurs. Typically this retrenchment goes on until the recovery is definitively established.The Federal Reserve releases this information on a very lagged basis. On Friday they released household...

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Case Shiller Up

From Bloomberg:Home prices in 20 U.S. cities rose in April from a year earlier as sales got a boost from a tax credit aimed at reviving the industry that triggered the worst recession since the 1930s. The S&P/Case-Shiller index of property values climbed 3.8 percent from April 2009, the biggest year-over-year gain since September 2006, the group...

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PCEs and Income Up

From the BEA:Personal income increased $53.7 billion, or 0.4 percent, and disposable personal income (DPI) increased $49.0 billion, or 0.4 percent, in May, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $24.4 billion, or 0.2 percent. In April, personal income increased $59.4 billion, or 0.5 percent,...

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Banks on Life Support

The Bank for International Settlements (BIS) has warned that European banks are still "on life support", and that they need to "come clean" about their bad loans.The Telegraph quotes the BIS annual report:"Losses on European bank balance sheets are expected to mount over the next few years. Some banks are rolling over existing loans rather than inducing foreclosures, thus delaying loss recognition." Rather bizarrely BIS then state that low interest rates and fiscal stimuli by governments is exacerbating matters, causing "moral hazard".I would venture...

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Yesterday's Market

From a macro-perspective, notice how all the averages prices are consolidating around the 200 day EMAs. This indicates that the markets are seriously conflicted about future movements -- are we in a bull or a bear market.From an EMA picture, notice that short-term EMAs are clearly bearish -- all of them are moving lower and the shorter are below the...

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Oh My God -- Sense From Washington

From the AP:Hoyer warned in a speech prepared for delivery to the Center for Strategic and International Studies that "unsustainable debt has a long history of toppling world powers" and that China, as a major holder of US debt, could challenge US leadership. Hoyer called for a "budget compromise" that would "restore our fiscal balance and health" and cited measures enacted by former presidents George Bush and Bill Clinton -- who both raised taxes to get US debt under control. "And an agreement like that,...

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Chinese Window Dressing

From the Financial Times:The Chinese central bank announced it would abandon its two-year peg to the US dollar a week ahead of Saturday’s G20 summit in Canada where the value of the renminbi had threatened to become one of the major issues.Since then, the Chinese currency has risen by 0.5 per cent against the US dollar, a large movement in the context of the usually tightly controlled currency regime, but still only equivalent to the daily 0.5 per cent trading limit that has been in place for five years.As a result, the Chinese delegation...

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Maufacturing hours and Nonfarm Payrolls

- by New Deal democrat Here we are at Jobs Week again, with June nonfarm payrolls to be reported on Friday. As I noted at the end of last week, while the housing market, a big long leading indicator, is of great concern, payrolls are a coincident indicator, and I wouldn't expect them to turn simultaneously with leading indicators (although deflationary...

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The Danger of Austerity

Last week, I noted that the lack of passage of the unemployment bill was, well, incredibly stupid. Today, Paul Krugman notes this stupidity as well.In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments...

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G20 Flexibility

The low key G20 meeting in Canada produced a communique that took negotiators 45 hours to draft.The final communique endorsed a flexible timeline for each country to build up higher levels of banking capital and liquidity.The result may well be favourable to some countries. However, as the banks are now global players they will simply use this flexibility in their own interests and simply pick and choose their best options and best countries in which to operate fr...

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Yesterday's Market

Let's start with the dollar. Note that prices have moved through key support (a) and that prices have also moved through the 50 day EMA (b). The 10 day EMA has moved below the 20 and both the 10 and 20 are heading lower (c).While momentum has dropped (d), there hasn't been a huge move out of the market yet (e and f).With a drop in the dollar, we've...

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Weekend Mashup: Blondie and Jim Morrison

- by New Deal democratWhen I was a kid, I was a big fan of the Doors. I recently came across this mashup of Blondie's "Rhapsody" and Jim Morrison's vocals from "Riders on the Storm". So help me, this mix of the 1980s and 1960s actually works! Give it a listen:See you on Mond...

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Weekly Indicators: Good News and Really Bad News edition

- by New Deal democratFirst, the Really Bad News: the NAR reported that new home sales cratered, falling from 450K to 300K on an annualized basis. Meanwhile, existing home sales fell slightly from 5.79M to 5.66M on an annualized basis. They will crater in turn next month.This bad news is only augmented by the MBA mortgage indexes for the week ending June 18. The Market Composite Index declined 5.9%, the Refinance Index declined 7.3% and the seasonally adjusted Purchase Index declined 1.2%, all compared with the previous week. by 1.0 percent. This...

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Let the Double Dip Begin and The Costs of Austerity

From the WSJ:Spooked by concern about deficits, the Senate shelved a spending bill that included an extension of unemployment benefits, suddenly cutting off a federal cash spigot opened by President Barack Obama when he took office 18 months ago.The collapse of the wide-ranging legislation means that a total of 1.3 million unemployed Americans will have lost their assistance by the end of this week. It will also leave a number of states with large budget holes they had expected to fill with federal cash to help with Medicaid costs.This is...

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Business Investment Picking Up

From the WSJ:Companies are stepping up spending on equipment as the recovery that first took hold in manufacturing broadens to other areas of the economy......A Commerce Department report Thursday showed that orders for durable goods—items expected to last at least three years—fell 1.1% in May from April, a drop that was driven by a decline in often-choppy...

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Yesterday's Market

For the entire week, the market has been in a clear downtrend (a). When it has moved though key technical support (b, c and d) it has broken support and continued to move lower.On the daily chart, first note that prices are gravitating around the 200 day EMA (in box f) and have been for the last month. This means that bulls and bears are evenly matched....

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