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Thought For The Day:
"Employment figures tomorrow to be skewed higher than should be by seasonal factors"
–www.ShadowStats.com
2nd Thought For The Day (Compliments of CIGA Eric):
Employment data will also be skewed by census hiring in 2010.
Jim Sinclair’s Commentary
New Year or is there a more compelling explanation?
US commercial paper mkt shrinks sharply in wk
January 7, 2010, 11.13 pm (Singapore time)
NEW YORK – The US commercial paper market contracted sharply in the latest week after two weeks of expansion, in the aftermath of the global credit crisis and a protracted recession, Federal Reserve data showed on Thursday.
For the week ended Jan 6, the size of the US commercial paper market, a vital source of short-term funding for companies’ day-to-day operations, fell by US$94.2 billion to US$1.076 trillion outstanding, from US$1.170 trillion outstanding the previous week.
Jim Sinclair’s Commentary
Interesting certainly as compared to tomorrow’s jobs report.
Monster U.S. online jobs index falls in December
NEW YORK, Jan 7 (Reuters) – A monthly barometer of online U.S. employment demand fell in December from November amid a year-end pause in recruitment activity, a private research group said on Thursday.
Monster Worldwide Inc MNST.O, an online careers and recruiting firm, said its employment index fell to 115 points in December, the lowest in five months. The index was 119 in November.
The current month’s reading is 12 percent below the 131 mark a year ago. The year-over-year decline was the smallest in the past 18 months.
"The decline in the Index during December is typical due to end-of-year seasonality. However, the improvement in the annual rate of decline lends evidence to a slight firming in underlying employer demand for workers at the end of the year," said Jesse Harriott, a senior vice president at Monster.
The Monster figures came a day after the ADP National Employment Report that showed a 84,000 loss of private sector jobs in December, the smallest decline since March 2008. For more, see [ID:nN06134559]
Jim Sinclair’s Commentary
Please note that they all settle as these transaction cannot stand the light of day.
Morgan Stanley settles derivatives lawsuit with Chinese company
By Robert Cookson in Hong Kong
Published: January 7 2010 02:00 | Last updated: January 7 2010 02:00
Morgan Stanley has ended a confrontation with a Chinese company over disputed hedging contracts in an out-of-court settlement that may, however, provide a worrying precedent for similar disputes.
The Morgan Stanley dispute with China Haisheng Juice Holdings was the most public of many between foreign investment banks and dozens of mainland Chinese companies over loss-making derivatives deals.
The scale of the losses in the wake of the financial crisis triggered a clampdown on derivatives by regulators in Beijing and criticism of the practices of foreign banks.
The two companies have agreed to end legal proceedings over renminbi-dollar hedges which they had been fighting in courts in the UK and China since last April.
Under the settlement, Haisheng will pay Morgan Stanley $7m, far less than the $26m the investment bank had been fighting for in London’s High Court after the Chinese company ceased payments on the hedges.
Jim Sinclair’s Commentary
QE to infinity. MOPE will continue every day until it morphs into outright fabrication rather than simple spin.
If the Federal Reserve doesn’t remain the largest buyer of home mortgages, the U.S. housing market will collapse.
Some at Fed See a Need to Do More for Housing
By DAVID STREITFELD and JACK HEALY
Published: January 6, 2010
Despite extensive government intervention in the housing market, some policy makers at the Federal Reserve are worried that even more might need to be done.
The minutes of the Federal Open Market Committee’s mid-December meeting, released on Wednesday, reflected a lingering wariness about the strength of the recovery in light of high unemployment and substantial slack in the economy.
At the same time, unease is growing that a tentative comeback in the housing market could fall apart as a tax credit for home buyers expires and the Fed’s program to hold down mortgage rates comes to a close.
Concern over housing deepened Wednesday with the release of new data showing that long-term interest rates were rising rapidly from their historic lows, while mortgage applications to purchase houses were falling. Applications are now at their lowest level in 12 years.
Other signs of stress in real estate have become apparent in the last few weeks, although most economists say any downturn will be relatively mild.
Jim Sinclair’s Commentary
You think the US cannot be in the same position? We are on the road and not that far behind GB in terms of debt to GDP ratio.
Britain’s debt now a ‘riskier proposition’ than Italy’s
Investors now view Britain as a riskier lending proposition than Italy, with its cost of borrowing rising comfortably above the 4pc mark for the first time this year.
The yield on 10-year gilts rose briefly above the 4.1pc level in intraday trading and spent most of the day higher than the yield on benchmark Italian bonds, as fears over Britain’s fiscal credibility continued to haunt markets. The news came as analysts warned that hedge funds and other "smart money" traders had been largely responsible for leading the exodus out of UK government debt.
The Treasury’s cost of borrowing has risen by more than a percentage point since March, despite the Bank of England spending £200bn on gilts through its quantitative easing (QE) programme. Experts put the increase down to worries that this and future governments will either prove incapable of reducing their deficit or will resort to inflation in order to erode it. The combined effect has been to catapult UK government bond yields above those of Italy and Spain in the past few weeks alone.
Notes From Underground: The Importance of Private Equity Stocks
Yra | January 6, 2010 at 10:49 pm
The odor of beggar thy neighbor was wafting through the global financial system as the biggest industry group in Norway voiced its concern regarding the appreciating KRONE. Shipbuilders and other industrial groups are complaining that high oil prices and an aggressive central bank are creating powerful headwinds to the nascent recovery. The Norwegian currency typically rallies as oil prices rise, but the Norge Bank’s efforts to get ahead of possible inflation is proving to be a double whammy in the world of soft global monetary policies. This problem will move to the fore as the flow of hot money continues to seek a better return than 10 basis points on U.S. T-bills and many other short-dated bank notes.
The China story took an interesting turn today as one of the top Chinese think tanks proposed that the YUAN be revalued by 10%. The Chinese Academy of Social Sciences (CASS), and one of its top researchers, Zhang Bin, advised in a published article in a non-official periodical that the YUAN reval should be imposed with a 3% annual cap going forward. Zhang said this is “a good strategy to protect China from the impact of short-term capital inflows.” Mr.Zhang added, “Now is a very good time. Foreign pressure will intensify this year and China should take an active strategy.” There was no official response, but this runs contrary to the public posturing of Premier Wen Jiabao’s view that China will not be pressured. This seems to be a proactive response to Bini Smaghi’s piece in yesterday’s Financial Times. Several Chinese researchers believe that a 10% move at this juncture will not be detrimental to exports and will be seen in a positive light. What will the beneficial tradeoff be for the Chinese? Goodwill and maybe the ability to pursue a global investment strategy unimpeded by false strategic concerns. Some clear-headed policymakers will need to prevent the tit-for-tat tariffs that are currently being enacted. A trade war will bring the fragile global economy to its knees, thus a small voice has been loudly heard today.
Japan presented us with a new finance minister, NAOTO KAN. The currency markets have interpreted this that the YEN will weaken as Mr.Naoto has previously talked about how a strong YEN was causing stress to a potential Japanese recovery. This was at odds with the retired finance minister’s view that the strong yen was not a problem as long as its rise was not too rapid. For the political ramifications of this appointment, we will direct you OBSERVING JAPAN.com, the blog of Tobias Harris, Yra’s son. We believe that Observing Japan is an important source of political Japan and should be referenced for breaking stories on the relations between Japan and the world.
Jim Sinclair’s Commentary
MOPE and skewed seasonal statistics regarding employment figures according to Mr. Williams.
I love the "better than" and "less than expectations" used to MOPE all numbers. Whose expectations were these exactly?
U.S. Stocks Erase Early Drop as Retailers Rise on Sales Data
By Elizabeth Stanton
Jan. 7 (Bloomberg) — U.S. stocks erased early losses as retailers rose following better-than-estimated holiday sales, overshadowing declines in commodity producers as the dollar strengthened.
Sears Holdings Corp. and Bed Bath & Beyond Inc. rallied at least 9.5 percent after forecasting earnings above analysts’ estimates. A gauge of 30 retailers in the Standard & Poor’s 500 Index advanced 1.2 percent following an industry report showing holiday sales increased a better-than-estimated 1.8 percent. Lennar Corp. climbed 9.3 percent, leading gains in homebuilders, after reporting its first quarterly profit since 2007.
“We’re now starting to see a confirmation of what the market’s been telling us,” said Jason Pride, director of investment strategy at Glenmede in Philadelphia, which manages $18 billion. “The thing I worry about as I look out into 2010 is the timing and speed of the stimulus removal, and when the effect of the present stimulus begins to fade.”
The S&P 500, which closed at a 15-month high yesterday, added less than 0.1 percent to 1,137.84 at 11:11 a.m. in New York after earlier slumping as much as 0.5 percent. The Dow Jones Industrial Average increased 5.89 points, or 0.1 percent, to 10,579.57. The Nasdaq Composite Index slipped 0.2 percent to 2,296.61 as Microsoft Corp. and Intel Corp. retreated.
U.S. equities extended a global slide earlier after China moved to curb lending. China’s central bank sold three- month bills at a higher interest rate for the first time in 19 weeks after saying its focus for 2010 is controlling the record expansion in lending and curbing price increases. The world’s third-largest economy grew an estimated 8.5 percent in 2009, leading the recovery from the first global recession since World War II.
Jim Sinclair’s Commentary
They scream at 1.51. They scream at 1.425. They really scream at algorithms and more than likely it has yet to dawn on them.
Sarkozy says world currency disorder unacceptable
PARIS, Jan 7 (Reuters) – Disorder among world currencies has become unacceptable and France intends to make it a major subject of its presidency of the G8 and G20 in 2011, President Nicolas Sarkozy said on Thursday.
France has been at the forefront of European complaints about the strength of the euro against other currencies.
It is the second time in as many days that Sarkozy has called for currency issues to be at the centre of international economic discussions.
"The monetary disorder in the world has become unacceptable," he said in a speech to an economic conference.
"Currency disorder is a major issue that France will bring up when it presides at the G8 and the G20 in 2011. There cannot be financial, economic and social order until we put an end to currency disorder."
Jim Sinclair’s Commentary
When you open the door of the chicken house (bailout) why yell at the fox for feasting once again.
BIS concerned over return of excessive risk.
Top central bankers and financiers are flying out to Switzerland this weekend for a meeting called by the Bank for International Settlements. The BIS, which is known as the central banks’ bank, expressed concern that "financial firms are returning to the aggressive behavior that prevailed during the pre-crisis period," and suggested lowering return-on-equity targets for banks may be one way to discourage "excessive risk-taking." Private sector attendees will include Vikram Pandit of Citigroup (C), John Stumpf of Wells Fargo (WFC) and Larry Fink of BlackRock (BLK)
Jim Sinclair’s Commentary
Judging from the Bank of America/Merrill experience, this is a lot to do about what probably will not turn out NOT to bite back except maybe at AIG.
Fed told AIG to hide swap payoff.
The New York Fed, led at the time by Tim Geithner, told AIG (AIG) to hide details about its payments to banks, e-mails show. In a draft of a regulatory filing, AIG disclosed it paid banks, including Goldman Sachs (GS) and Societe Generale (SCGLY.PK), 100 cents on the dollar for credit-default swaps they bought from the firm. But the New York Fed crossed out the reference, and AIG ultimately excluded the detail from its Dec. 24, 2008 filing. The New York Fed took over AIG’s negotiations with banks in November 2008, and controversially decided to fully repay banks for $62.1B in swaps written by AIG, prompting lawmakers to call the AIG rescue a ‘backdoor bank bailout.’
Jim Sinclair’s Commentary
Today in Pakistan. The more things change, the more they remain the same.
Zardari drops Kashmir-bomb, says ready for ‘1000-yr ideological war’ with India
ANI, 7 January 2010, 01:39am IST
ISLAMABAD: President Asif Ali Zardari has said that Pakistan is ready to wage a thousand-year war with India over the Kashmir dispute.
The Daily Times quoted Zardari as saying that this was a war of ideologies and would last for generations. Addressing a joint session of the Azad Jammu and Kashmir (AJK) Assembly and the Kashmir Council, Zardari said democratic governments had played a key role in moving forward on the Kashmir dispute.
"When Zulfikar had spoken of waging a thousand-year war, he never said he would not do it through talks or negotiations," he said. President Zardari said regional peace was inextricably linked to the settlement of the decades-old dispute over Kashmir.
"We cannot de-link regional peace from peace in Kashmir. we have highlighted this thinking in the world and will keep projecting it," he said. Describing Kashmir as the "jugular vein" of Pakistan, the president said: "soon the time will come when the world will take important decisions regarding Kashmir".
Zardari said Pakistan and India should learn to live in peace.
