Friday, May 4, 2012
Wednesday, May 2, 2012
Factory Orders Drop 1.5%
from Zero Hedge:
That March factory orders declined 1.5% was not very surprising: the market was expecting a decline of 1.6%. However, this is not good news as the prior February increase of 1.3% was revised lower to 1.1%, netting out as a negative two month change. Where this number was troubling is that this 2.6% swing brought the index to its biggest decline since March 2009 when the pumping of trillions started.
That March factory orders declined 1.5% was not very surprising: the market was expecting a decline of 1.6%. However, this is not good news as the prior February increase of 1.3% was revised lower to 1.1%, netting out as a negative two month change. Where this number was troubling is that this 2.6% swing brought the index to its biggest decline since March 2009 when the pumping of trillions started.
US Treasury: "Not Yet" On Floating Rate Notes
from WSJ:
WASHINGTON—The U.S. Treasury Wednesday said it has not yet decided whether to start issuing floating-rate notes and will take more time to weigh the latest feedback on the potential new product.
"Treasury is in the process of analyzing the feedback, and we continue to study the benefits and optimal terms of a Treasury [floating rate note]," Under Secretary for Domestic Finance Mary Miller said in a statement.
WASHINGTON—The U.S. Treasury Wednesday said it has not yet decided whether to start issuing floating-rate notes and will take more time to weigh the latest feedback on the potential new product.
"Treasury is in the process of analyzing the feedback, and we continue to study the benefits and optimal terms of a Treasury [floating rate note]," Under Secretary for Domestic Finance Mary Miller said in a statement.
CME Expands Hours for Ag Futures
from Farm Futures:
CME Group announced Tuesday it would expand electronic trading hours in its CBOT grain and oilseed futures and options beginning Monday, May 14. The expansion will give the market access to CBOT corn, soybeans, wheat, soybean meal, soybean oil, oats and rough rice futures and options on CME Globex for 22 hours per day.
In a press statement, Tim Andriessen, managing director, agricultural commodities and alternative investments, CME Group says: "As we've grown our customer base in agricultural commodities around the globe, we've received increased interest in expanding market access by providing longer trading hours. In particular, customers are looking to manage their price risk in our deep, liquid markets during market moving events like USDA crop reports. In response to customer feedback, we're expanding trading hours for our grain and oilseed products to ensure customers have even greater access to these effective price discovery tools."
Sunday to Monday - 5 p.m. to 4 p.m.
Monday to Friday - 6 p.m. to 4 p.m.
Open outcry trading hours will continue to operate from 9:30 a.m. to 1:15 p.m. Central time Monday to Friday.
CME Group announced Tuesday it would expand electronic trading hours in its CBOT grain and oilseed futures and options beginning Monday, May 14. The expansion will give the market access to CBOT corn, soybeans, wheat, soybean meal, soybean oil, oats and rough rice futures and options on CME Globex for 22 hours per day.
In a press statement, Tim Andriessen, managing director, agricultural commodities and alternative investments, CME Group says: "As we've grown our customer base in agricultural commodities around the globe, we've received increased interest in expanding market access by providing longer trading hours. In particular, customers are looking to manage their price risk in our deep, liquid markets during market moving events like USDA crop reports. In response to customer feedback, we're expanding trading hours for our grain and oilseed products to ensure customers have even greater access to these effective price discovery tools."
Market Rumors True, Longer Hours Ahead
Part
of this move could be in reaction to a new electronic trading platform
that fires up May 14 too. Intercontinental Exchange Inc., will begin
trading grain futures contracts on the same day, pending regulatory
review. That platform will also have a 22-hour trading day, but will use
CBOT numbers for settlement.
CME says that beginning May 13 for
trade date May 14, customers will have expanded access to CBOT corn,
soybeans, wheat, soybean meal and soybean oil futures as follows:Sunday to Monday - 5 p.m. to 4 p.m.
Monday to Friday - 6 p.m. to 4 p.m.
Open outcry trading hours will continue to operate from 9:30 a.m. to 1:15 p.m. Central time Monday to Friday.
Global PMI: Disastrous Data
No need for much commentary here, suffice to say that those who
thought Italy's massive drop in PMI from 47.9 to 43.9 in April was bad,
apparently have not seen Hungary, Australia, Norway or Switzerland. The
good news? Turkey is doing well to quite well... which likely explains
why they are trying to confiscate the people's gold.
Italian Banks Get Mauled, Trading Halted
from Business Insider:
Italian banks are getting mauled today. A look at the latest carnage (via Bloomberg):
Not only have we seen some disastrous data from around the world today—Italian PMI dropped to a disastrous 43.8 (indicating an ever-sharper contraction in economic activity)—but now there are rumors that Moody's is about to downgrade 17 Italian banks.
The ratings agency has said that it will start releasing decisions on European banks with Italy in early May, and investors are betting that these announcements will all produce numerous downgrades.
Unicredit: -5.79%
Banca Popolare Milano: -6.04%
Banca MPS: -6.26%
Intesa Sanpaolo: -4.20%
Evidently, shares of both Unicredit and Banca Popular Milano have been halted.Banca Popolare Milano: -6.04%
Banca MPS: -6.26%
Intesa Sanpaolo: -4.20%
Not only have we seen some disastrous data from around the world today—Italian PMI dropped to a disastrous 43.8 (indicating an ever-sharper contraction in economic activity)—but now there are rumors that Moody's is about to downgrade 17 Italian banks.
The ratings agency has said that it will start releasing decisions on European banks with Italy in early May, and investors are betting that these announcements will all produce numerous downgrades.
ADP Disappoints, Only 119,000 Jobs
from Tyler Durden tweet from Zero Hedge:
Whisper number of 10 million people leaving the labor force in April, Unemployment rate to finally turn negative
Update: Goldman commentary which mirrors ours:
Those hoping Goldman's NFP forecast of 125,000, well below consensus, is wrong, may have to reassess their thesis following the just released ADP number which came as a big disappointment to consensus of 170,000, instead printing at only +119,000, to 110,590. (The previous improvement was also downward revised from +209K to +201K). This was the lowest sequential change since September 2011, and confirms once again, the declining trends last seen in... 2011. It was also the biggest miss in 11 months. Luckily, as the scatterplot below shows, ADP is completely meaningless when predicting NFP so our gut reaction would be to expect a beat in NFP based on this print considering the whole Schrodinger economy and what not (see China). However, on an apples to apples basis, one thing is certain: record warm winter payback is a bitch. And finally, that whole Obama export renaissance is not doing all too hot: goods producing sector: -4,000 in April, while manufacturing jobs declined by -5,000. But, but, the soaring ISM..... oh forget it.
From the press release, where we find Hopium is back. How shocking that even ADP has been exposed to have a subjective, upward bias.
Biggest miss since May 2011:
Finally, courtesy of John Lohman, here is why this number is completely meaningless when predicting NFP:
Whisper number of 10 million people leaving the labor force in April, Unemployment rate to finally turn negative
Update: Goldman commentary which mirrors ours:
- The ADP estimate of private employment growth was +119k for April, below the consensus expectation for a 170k gain (growth in February and March was also revised down slightly). As with the official BLS count of employment, we believe that a “payback” from warm weather earlier in the year could explain some of the slowing in the ADP measure in both March and April.
- Results from the ADP report were mixed across industries. Employment at goods producing firms declined by 4k, with declines of 5k in both manufacturing and construction employment. The decline in manufacturing employment looks at odds with other information on the sector, such as yesterday’s ISM report. The drop in construction employment may be partly weather-related. Service sector employment rose by +123k, down from +158k in March and +184k in February.
Those hoping Goldman's NFP forecast of 125,000, well below consensus, is wrong, may have to reassess their thesis following the just released ADP number which came as a big disappointment to consensus of 170,000, instead printing at only +119,000, to 110,590. (The previous improvement was also downward revised from +209K to +201K). This was the lowest sequential change since September 2011, and confirms once again, the declining trends last seen in... 2011. It was also the biggest miss in 11 months. Luckily, as the scatterplot below shows, ADP is completely meaningless when predicting NFP so our gut reaction would be to expect a beat in NFP based on this print considering the whole Schrodinger economy and what not (see China). However, on an apples to apples basis, one thing is certain: record warm winter payback is a bitch. And finally, that whole Obama export renaissance is not doing all too hot: goods producing sector: -4,000 in April, while manufacturing jobs declined by -5,000. But, but, the soaring ISM..... oh forget it.
From the press release, where we find Hopium is back. How shocking that even ADP has been exposed to have a subjective, upward bias.
From the report:“According to data shown in the ADP National Employment Report, monthly employment gains averaged just over 200,000 during the first quarter of this year,” said Carlos Rodriguez, President and CEO of ADP. “This month’s modest increase of 119,000 jobs appears consistent with the first-quarter Gross Domestic Product growth of 2.2 percent.
We hope future rates of job creation will be more aggressive and sustained,” Rodriguez added.
According to Joel Prakken, Chairman of Macroeconomic Advisers, LLC, “While April’s increase was the twenty-seventh consecutive monthly advance, it nonetheless reflected a deceleration in the recent pace of hiring. This deceleration seems consistent with other incoming data, including a disappointingly weak report on first-quarter Gross Domestic Product, a recent back-up in initial unemployment claims, and last month’s relatively weak reading on establishment employment reported by the Bureau of Labor Statistics.”
Prakken added: “There is some evidence that unusually warm weather boosted employment during the winter months, with a “payback” now coming due. The modest rise in private employment suggests that the national unemployment rate probably did not decline in April unless there was a notable decline in the labor force.”
Visually:Employment in the U.S. nonfarm private business sector increased by 119,000 from March to April on a seasonally adjusted basis. The estimated gain from February to March was revised down modestly, from the initial estimate of 209,000 to a revised estimate of 201,000.
Employment in the private, service-providing sector increased 123,000 in April, after rising 158,000 in March. Employment in the private, goods-producing sector declined 4,000 jobs in April. Manufacturing employment dropped 5,000 jobs, the first loss since September of last year.
Employment on large payrolls—those with 500 or more workers—increased 4,000 and employment on medium payrolls—those with 50 to 499 workers—rose 57,000 in April.
Employment on small payrolls—those with up to 49 workers—rose 58,000 that same period. Of the 57,000 jobs created by medium- sized businesses, 8,000 jobs were created by the goods-producing sector and 49,000 jobs were created by the service-providing sector.
Construction employment also fell by 5,000, the first decline in seven months and following healthy gains during the unusually warm winter months. Employment in the financial services sector increased 13,000 in April, marking nine consecutive monthly gains there.
Biggest miss since May 2011:
Finally, courtesy of John Lohman, here is why this number is completely meaningless when predicting NFP:
Stocks Sink Overnight As Europe Slides Toward the Abyss
Tuesday, May 1, 2012
Stocks Rise, Then Fall Back
A very good ISM report today didn't convince -- for long. After the initial rise, stocks began to sink again very quickly.
