Euro Area Services Manufacturing Falls for a 15th Month Providing Weakness to Equities

“Euro-area services and manufacturing output shrank for a 15th straight month in April and retail sales fell in March as the 17-nation economy struggled to emerge from recession.

A composite index based on a survey of purchasing managers in the manufacturing and services industries increased to 46.9 last month from 46.5 in March, London-based Markit Economics said in a report today. While above an initial estimate of 46.5 published on April 23, it was still below 50, indicating contraction. Retail sales declined for a second month in March, another report showed.

The euro-area economy will shrink more than previously estimated in 2013 as part of a two-year slump that has pushed unemployment to a record high, the European Commission said on May 3. The European Central Bank last week reduced its key interest rate to an all-time low after confidence was shaken by political turmoil in Italy and a bailout of Cyprus.

“The financial markets appear to have survived the government debt crisis, but the leading economic indicators have recently declined,” said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt. There is “a significant risk that, contrary to analysts’ expectations, the economy will not pick up in the spring,” he said.

Stocks Decline…”

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“Emerging-market stocks rose to a seven-week high as Malaysian shares rallied to a record after Prime Minister Najib Razak won elections, U.S. jobs growth bolstered confidence in the global economy and higher oil prices lifted producers.

UEM Land Holdings Bhd. (ULHB) jumped 13 percent in Kuala Lumpur, while CIMB Group Holdings Bhd. (CIMB), Malaysia’s second-largest lender by assets, had its steepest gain since July 2003. The ringgit strengthened the most since 2010. OAO Rosneft, Russia’s largest oil company, advanced to a three-week high. Turk Hava Yollari AO (THYAO), Turkey’s flagship airline, headed for an all-time high.

The MSCI Emerging Markets Index gained 0.5 percent to 1,047.42 at 12:05 p.m. in London, the highest since March 14 on a closing basis. Najib’s coalition extended its 55-year rule, which may allow him to proceed with plans to narrow the budget deficit and boost investments. U.S. payrolls grew by 165,000 last month, more than economists estimated, the Labor Department said May 3.

“The election results in Malaysia were a positive surprise for investors,” Aldo Perkasa, who helps manage about $2 billion at PT Mandiri Manajemen Investasi, said by phone from Jakarta. “The U.S. employment data drove the overall macroeconomic sentiment higher.”

The FTSE Bursa Malaysia KLCI Index rose 3.4 percent, its steepest increase since November 2008 and the highest level on record. Russia’s Micex advanced for a second day, rising 0.3 percent and benchmark gauges in Turkey, Poland and South Africa added at least 0.5 percent….”

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“The yen fell for a third day, approaching 100 per dollar, as a decline in the U.S. jobless rate to a four-year low fueled optimism that growth is gathering pace, reducing demand for Japan’s currency as a haven.

The euro strengthened against the yen as data showed the region’s services and manufacturing industries shrank less in April than initially estimated. Australia’s currency slid after a report today showed retail sales shrank. The Malaysian ringgit rose to the highest in 1 1/2 years against the dollar after Prime Minister Najib Razak’s coalition was re-elected. Sweden’s krona weakened as a report showed the slump in the nation’s services eased less than economists predicted…”

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“Australia’s dollar fell after data showed retail sales unexpectedly contracted in March, adding to speculation a weakening economy will prompt the central bank to cut interest rates to a record low.

The so-called Aussie dropped to its weakest since October 2009 versus New Zealand’s dollar amid prospects monetary policy will diverge in the two nations over the coming year. There is a 53 percent chance that the Reserve Bank will lower its 3 benchmark rate tomorrow, according to Bloomberg calculations based on overnight-index swap rates.

“The Aussie will remain heavy and probably gravitate toward the downside following the retail sales number,” said Jim Vrondas, the Sydney-based chief currency and payment strategist at OzForex Ltd. “The RBA is unlikely to cut tomorrow, though they’ll probably maintain an easing bias. That should give the Aussie some support.”

The Australian dollar declined 0.5 percent to $1.0271 as of 5:4 p.m. in Sydney. It fell 0.1 percent to 102.03 yen. The Aussie slid to as low as NZ$1.2016, the weakest since October 2009, before buying NZ$1.2034, 0.5 percent lower than the May 3 close. New Zealand’s dollar rose 0.1 percent to 85.41 U.S. cents. The currency advanced 0.5 percent to 84.85 yen.

Policy Rates…”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

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Given it is a few days away from the third anniversary of the Flash Crash i thought it might be interesting to delve into the subject matter.

What is really interesting about this documentary is that  pumping and dumping is explained in a nonchalant way…as if it were not illegal. Insane indeud!

Cheers on your weekend!

[youtube://http://www.youtube.com/ watch?v=NYWrtvSCziQ 450 300]

Didn’t get enough, here is another video to chew on:

[youtube://http://www.youtube.com/watch?v=aq1Ln1UCoEU 450 300]

 

 

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“The EU continues its chainsaw juggling act. The austerity pledge from France is holding about as well as its Maginot Line, while Greece has sworn to meet its fiscal targets in 2014 2015 2016soon, and the Italians promise they’re going to kick some serious fiscal butt as soon as the country returns from holiday.

Spain reassures that it will squarely confront its need to raise worker productivity whenever the unions call an end to protests against austerity. And the Portuguese high court ruled it is unconstitutional for civil servants to work for less than twice the wages of their private-sector counterparts.

This chronic “the sky is falling” in the EU had induced investor news-cycle fatigue and rendered last year’s black-swan threat level from red to this year’s collective yawn…

… until Cyprus tossed another chainsaw into the act. The Cyprus looting of private wealth was a cold-shower reminder of the tenuous security of assets that are concentrated within reach of a single government – doubly true of nations in a desperate fiscal situation whose financial sector is about to topple.

Depositor Creditor

The blatant theft of depositor money in Cypriot banks was at first peddled as a one-off emergency measure. Then a Freudian slip by the head of the Eurogroup finance ministers, Mr. Dijsselbloem, suggested this would be the new pattern for similar future events. Much back-pedaling and “clarification” ensued.

But don’t bother squinting as you try to read the lips of mumbling bureaucrats. Just follow what they’re doing and you won’t get blindsided.

What have they been up to? In October 2011, the Financial Stability Board (FSB) – a tentacle of the Bank for International Settlements, the central bank for central bankers – released a report that proposed a new regime to resolve financial-institution instability.

In the report, the FSB calls for solvency support for banks without taxpayer exposure and the allocation of losses to shareholders and unsecured and uninsured creditors. Deposits at a bank are considered a loan, and if a bank fails, its depositors become unsecured creditors for amounts that exceed the insurable limit.

It gets worse. To protect the integrity of the financial system, controls on both endogenous (the bank itself) and exogenous (other firms and cross-border cooperation) capital movement can be implemented. This is exactly what happened in Cyprus. To prevent capital flight out of the banking system, the movement of money out of or between banks was restricted, as well as capital sent outside the country.

The G20 has fully endorsed the plan, and its implementation is complete or under way in member jurisdictions. The US is a G20 member, so don’t kid yourself into believing it can’t happen in America. It can and will. The Cyprus event has been carefully framed as an anomaly when in fact it is part of a well-orchestrated script.

In the Year of Our Overlord 1 AF

January 1, 2014, will mark the start of Year 1 AF – “after FATCA.” In the run-up to the US reporting regime’s full implementation, many foreign banks have opted not to accept US persons as clients, and we can see why. FATCA is a huge burden on foreign financial institutions in terms of time and resources needed to identify, track, and report on their US clients….”

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“Stocks rose to new highs Friday following the upbeat jobs report, with the Dow Jones Industrial Average briefly touching 15,000 and the S&P 500 moving above 1600.

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“A lawsuit against Bitcoin’s main trading exchange Mt. Gox was filed this week regarding rights to the North American market. And no, the plaintiff is not seeking damages in Bitcoins.

CoinLab, backed by venture capitalist Peter Vessenes, said it entered into anagreement with Mt. Gox in November that gave CoinLab access to Mt. Gox’s technology – its computer servers and the “exclusive right to certain intellectual property” –  so that CoinLab could provide exchange services to North American customers as Mt. Gox’s exclusive partner in the region. Mt. Gox is based in Japan.

Transactions in the U.S. and Canada through Mt. Gox were switched to CoinLab as of March 29, according to a press release from CoinLab.

The suit alleges that Mt. Gox beached its contract with CoinLab by conducting business with North American customers and failing to provide necessary data,  according to a complaint filed by CoinLab in federal court.

CoinLab is seeking at least $75 million in damages.

“Defendants have, in email and other written exchanges, and in public statements to the press acknowledged that they have directly serviced customers in the United States and Canada since entering the Agreement. This conduct constitutes a breach of the Agreement, including the exclusivity provisions in the Agreement,” the filing states.

CoinLab’s Vessenes said in the statement: ” What tipped us into filing was our complete inability to get Mt. Gox to deliver on the few simple things left that were needed for customers to move over en-masse” …”

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“If copper’s a good indicator for economic trends and equity markets, then it may be sending investors a warning of bad things to come.

Prices for copper futures saw a big rally on Friday, but that doesn’t make up for its year-to-date loss. The July copper contract  HGN3 +6.43% settled at $3.315 a pound on Comex, up 21 cents, or 6.8%, for the session. It’s still trading down roughly 10% for the year.

Copper, which is also known as “Dr. Copper” because of its ability to serve as an indicator, is “leading the way downward,” Albert Edwards, a strategist at Societe Generale, told clients in a research note dated Thursday.

“Copper is acting exactly as it did when I wrote about the impotence of liquidity in the face of the (then imminent) 2007 recession,” said Edwards. “It is giving us an early warning that liquidity will not save risk assets: time to get out of equities.” …”

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Factory orders: Prior 3%, Market Expects -2.5%, Actual -4%

ISM: Prior 54.4, Market expects 54, Actual 53.1

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“When Oklahoma energy billionaire George Kaiser opened the Northeast Gateway liquid natural gas terminal in 2008, the floating depot’s first delivery was shipped on the Excellence, a 909-foot supertanker that holds 138,000 cubic meters of LNG — enough gas to meet more than 4 percent of daily U.S. demand.

The Excellence is owned by the George Kaiser Family Foundation, a charitable organization that also owned a 36 percent stake in Solyndra LLC, the Fremont, California-based solar system maker that went bankrupt in 2011 after receiving a $535 million U.S. Energy Department loan.

The nonprofit organization paid $110 million for the tanker in 2003. It later gave control of the vessel to Woodlands, Texas-based Excelerate Energy LP, a for-profit gas delivery company Kaiser owns with publicly traded German electric utility RWE AG, according to RWE’s 2012 annual report.

“It is an excellent investment,” Frederic Dorwart, a trustee of the foundation and longtime attorney for Kaiser’s various banking and energy companies, said in a telephone interview. “It pays out this year and we’ll still own the vessel.”

The Excellence is also an example of how federal laws and U.S. Internal Revenue Service regulations forbid forms of self- dealing in one kind of tax-exempt organization while creating loophopes that allow them in another.

‘Anything Goes’….”

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“April rail trends finished with a whimper as intermodal rail traffic came in at 1.6% on a year over year basis.  This continues a series of weakening data points as the Q2 period begins.  After a very healthy 3 month average reading of 5.3% in Q1, the second quarter is off to a very sluggish start with a 0.38% average reading.  The most recent reading brings the 12 week trailing average to 3.54% which is the weakest reading since January.

Here’s more from AAR…”

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Upgrades  – ALL, AUXL, BEAM, BZH, BDBD, CHEF, CARB, CEO, SCOR, CBST, MMP, WNR,

 

Downgrades  – AU, NLY, BBBY, HFC, LULU, MBI, MELI, PETM, SYY, VLO, VRSK

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SOURCE 
NYSE

NASDAQ

AMEX

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In Play ,

On the Wires 

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“Entrepreneurs start businesses that create lots of jobs and inject innovation into the US economy. Start-up America is our difference maker. Our edge.

But something seems to be going wrong. In another great note, “Where have all of the entrepreneurs gone?,” JPMorgan economist Mike Feroli highlights some disturbing trends with our entrepreneurial culture.

1. Net job growth is driven by new businesses. Existing establishments tend to shed jobs. But according to the Labor Department’s new Business Employment Dynamics report, “the trend has clearly shifted. In 12Q3 opening establishments added 1.27 million jobs. In the last cycle this figure averaged closer to 1.5 million jobs per quarter, and in the 1990s the figure averaged 1.75 million per quarter.” Down, down, down.

2. Feroli notes that employment “births” — a subset of openings not including reopenings of seasonal businesses — are also weak. Employment births in 12Q3 as a percent of all employment held at 0.7% in 12Q3 for the fourteenth consecutive quarter. In contrast, this figure stood between 1.1% and 1.3% during the 1990s.

And some charts highlight the problem…”

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“SAN FRANCISCO (AP) — LinkedIn’s rapidly rising stock got demoted late Thursday after the online professional networking service released a forecast calling for its earnings growth to slow later this year as the company hires more workers, invests in data centers and tweaks the way that it shows online ads.

The predicted deceleration overshadowed another stellar performance during the first three months of the year. As has been the case in every reporting period since LinkedIn Corp. went public two years ago, both the company’s first-quarter earnings and revenue topped the analyst estimates that steer Wall Street expectations.

But management’s projections for both the current quarter ending in June and the full year came in below analyst projections, rattling investors who have become accustomed to LinkedIn delivering nothing but pleasant surprises.

The letdown dampened the feverish interest in LinkedIn’s stock, which surpassed $200 for the first time Thursday. After closing at $201.67, LinkedIn’s shares tumbled $20.45, or more than 10 percent, to $181.22 in extended trading.

Even if the sell-off carries through into Friday’s regular trading session, LinkedIn’s stock still will have more than quadrupled from its initial public offering price of $45. As of Thursday’s close, the shares had surged by 76 percent so far this year compared to a 12 percent gain for the Standard & Poor’s 500 index.

LinkedIn has thrived by establishing itself as the go-to place for employers to find talented workers and for people to get job tips and other advice to manage their careers. It doesn’t cost anything for people to set up a professional profile on the site. The Mountain View, Calif., company makes most of its money by charging employers and headhunters for analytical tools and additional access to LinkedIn profiles and the site, such as the ability to send messages to users.

The service now has 225 million members, up from 202 million members at the end of last year.

LinkedIn is now adding more content, giving its audience more reasons to return to its website more frequently and to stay for longer periods. The company hopes that will lead to more advertising to supplement its revenue. As part of that process, LinkedIn plans to place more ads within the stream of the personal updates appearing in the middle of its members’ individual pages rather displaying them on the sides….”

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“Billionaire investor Warren Buffett told CNBC that if the Federal Reserve were to increase its massive bond-buying program that would be “pretty extraordinary.”

In an interview that aired on “Squawk Box” Friday, the Berkshire Hathawaychairman and CEO said, “Basically [the Fed] is buying the debt we’re creating and to go beyond that is an awfully big number.”

After their latest meeting, Fed policymakers said Wednesday that interest rates will remain at historically low levels, while the central bank will not alter its $85 billion a month asset-purchasing program known as quantitative easing.

There was one notable change in the language used in the statement from the Fed—a declaration that it would increase or decrease the pace of its asset purchases depending on economic conditions.

Buffett said he thought that Fed Chairman Ben Bernanke “feels he needs a little help from elsewhere.” In the past, Bernanke has urged Washington to reach a deal to reduce the nation’s debt burden.

“But the economy is improving,” Buffett stressed, “not [at] a very rapid clip, but this country has done well since 2008, certainly compared to much of the world.”…”

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