We had a very interesting day of PA on Thursday after jobless claims rose by 498k vs the 530k expected. Continuing claims sit at 3.69MM, rising by approx. 400k vs last week's print. According to ZeroHedge, we still have over 16MM Americans on some form of income benefits, so of course, take any jobless claims print with a pinch of salt. Remember, the government is essentially subsidizing labour costs for businesses, while stimulating demand, and when this eventually ends, all of those zombie companies that are contributing to this fake rebound, will perish.
Looking at the day ahead, we just saw the much anticipated April Payrolls report which was whispered to be in the range of a whopping 2MM. However, the report was a complete shock to Wall Street with a measly 266k jobs being added to Nonfarm Payrolls, and 218k added to Nonfarm Private Payrolls.
The Unemployment rate rose to 6.1% from 5.8%, showing a deterioration in the labour market in April. The average work week rose from to 35 hours, from 34.9. Someone call the Fed, we're gonna need more free money!
US Futures rose broadly overnight after a rollercoaster ride yesterday saw every sell program be met with a relentless short squeeze. According to Goldman Sachs, Hedge Funds have been shorting the Nasdaq for the past couple weeks, and so, what we saw yesterday, is potentially profit taking flows from these funds. However, after the ugly payrolls miss moments ago, global markets are experiencing some volatility, with the Dow down 0.06% to 34,422, the S&P up 0.37% to 4,209.62, the Nasdaq up 1.4% to 13,780.38, and the Russell down 0.11% to 2,236.35. In Europe, the Dax is up by 0.58% to 15,345.50, the FTSE 100 is up 0.20% to 7,085, and the SMI is down 0.15% to 11,115. In Asia, The Nikkei 225 is down 0.06% to 29,328, the Hang Seng is up 0.66% to 28,596, the CSI 300 is down by 1.24% to 4,992.60, and the Nifty 50 is up 1% to 14,930.
The rotation into growth is now back, with the Nasdaq being heavily bid, while small caps puke. Clearly the talk of tapering has simmered notably after the obvious weakness in the labour market. It's another win for the speculators, as they assume the Fed now has no choice but to continue to support their risk appetite.
The Vix is sitting at 18.1, showing resilience after yesterday's short squeeze into the close. We're still channeling up, and are sitting just below daily resistance at 18.80. We'll be looking for a breakout above 21, for confirmation of a larger move ahead, and are positioned for bearish PA into the close, and next week. The US10Y yield is puking, and is back to 1.51% after losing the 50DMA earlier on in the week. We have downside to 1.35% where the 100DMA is sitting. Needless to say, the knee jerk reaction to flock into bonds is warranted after the ugly payrolls report, and interestingly the dollar is puking after the report to 90.45, which could lead us to believe that the Fed's debasement scheme has spooked dollar bulls. Should be a doozy of an open, so stay tuned.
* I am/ we are currently holding positions in UVXY, HUV, HQD, QID.
Never been more ashamed of this country or government since a couple years ago. And as a small business owner who has received nothing while big companies have had an endless amount of money handed to them it’s truly all just disgusting. Who’s expected to pay for all of this as well. The small guy. Truly disgusting on all levels.
Hedge_Of_The_World
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@CJS04, Comepletely agree, and same here. Losers are being rewarded, and that seems to be the new game plan. The more you speculate, and the worse you run your business, the better the central banks and government treat you. It's nuts. Up is down and down is up.
LionShiir
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@CJS04, same here in the EU, the printing machine goes brrrrrr... but regular people barely see anything of it. That is basically stealing from the regular guy while the elite just keeps making record profits.
Im about to become a small businessowner too, but i do not want to pay taxes anymore, it's not fair to pay 45% of my profits to the government, i worked hard for this!! sick of it
Hedge_Of_The_World
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@LionShiir, Amen! Zero need for taxes in this MMT hell.
CJS04
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@LionShiir, sooooo true! and you shouldnt! Take every write off you can.. find a good accountant who you can have a relationship with.. a small guy who will stand up for you and guide you. Its disgusting! Good luck with the business by the way.. I hope you do well with it!
ibtrd
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is it not your fault fir not following through on PPP?
CJS04
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@ibtrd, that was a total joke. TOTAL JOKE. Know what small companies got. Like mom and pop businesses? It's laughable! Not even worth ones time.
ibtrd
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@CJS04, Yes, and most didn't get anything because Millionaire football players dipped in.
Peterson
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@CJS04, It was sickening to hear the Fed call a program they implemented to help companies that employed 500 or more employees only , Their MAIN STREET LENDING PROGRAM . Could they possibly be more tone deaf ? they should have been upfront and call it , Hard Working small Business guy Take a Hike no need to apply Lending Program . As a side note still searching for that 500+ employee company in small Town Main Street .
Hedge_Of_The_World
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@Peterson, Well said. Main Street Lending Program. Lol.