05Mar2015 Pre-Market Open Commentary:

Here is the European Market Open from CNN Money

European markets are higher today with shares in France leading the region. The CAC 40 is up 0.79% while Germany’s DAX is up 0.58% and London’s FTSE 100 is up 0.30%.

Watchdog’s Hunt Is Short on ‘Wolves’ of Wall Street

Finra’s “High Risk Broker” program targets individuals with large numbers of disciplinary red flags, but the initiative hasn’t barred any of the brokers associated with Stratton Oakmont, the firm depicted in the film ‘The Wolf of Wall Street.’

Mario Draghi’s “Q€ Unleashed” ECB Press Conference – Live Feed

After what feels like years of anticipation and promises, we found out last month that Q€ will happen. Today we find out exactly how Mario Draghi’s magic trillion euro spending spree will occur (or not). Despite all the ‘facts’ surrounding a lack of liquidity, willing sellers, and available securities we are sure Draghi will have an answer for how he will fit 10lbs of ‘stuff’ into a 5lb bag. We also expect him to exuberasntly forecast higher inflation (less deflation) and stronger growth – because if he doesn’t, what does that say about his optimism that Q€ is anything but more wealth transfers?

* * *

As a reminder, here’s what the distribution of asset purchases looks like across the eurozone:

2015 Job Cuts Surge 19%, Energy Sector Cuts 38% Of Total: “Falling Oil Hasn’t Resulted In Higher Retail Spending”

A month ago we asked if, perchance, the BLS had simply forgotten to add any of the job losses in the energy sector in January, when it reported a drop of just 1900 jobs in the entire Oil and Gas Extraction space, compared to 18K actual announcements, and 21,300 job cuts in the sector as reported by Challenger. Moments ago, the latest Challenger data is out, and we really hope the BLS finally reads it because things in the energy sector are getting worse by the day, if only for its well-paid workers.

According to Challenger, the February total planned job cut were over 50,000 for the second month in a row, or a total of 103,620 in the first two months of 2015, up 19% from the same period last year, with a 38% of the total, or 39,621 of these job cuts, due to plunging oil prices and about to take place in the highest paid oil extraction space.

From the press release:

Employers announced 103,620 planned layoffs through the first two months of 2015, which is up 19 percent from the 86,942 job cuts recorded during the same period in 2014.

China signals ‘new normal’ with higher spending, lower growth target

BEIJING (Reuters) – China plans to run its biggest budget deficit in 2015 since the global financial crisis, stepping up spending as Premier Li Keqiang signaled that the lowest rate of growth in a quarter of a century is the “new normal” for the world’s No.2 economy.

Take Out A 7 Year Car Loan To Buy Stocks, CNBC Experts Advise

In what can only be described as a wanton display of absurdity, CNBC dedicated not one, not two, but three segments (and those are just the ones we noticed) to subprime auto lending on Wednesday producing, in the process, three of the most hilarious clips in recent memory.

There was Phil Lebeau with the latest numbers from Experian which show that average monthly payments hit a record high in Q4 at nearly $500 and the average amount being financed is up 4% Y/Y to nearly $24,000. It gets worse. Fully a quarter of new car loans carry terms of at least 73 months. That may sound bad, but Experian’s director of automotive finance Melinda Zabritski — the same Melinda Zabritski who last month said we are looking at a “remarkably stable automotive-loan market” — isn’t ready to pass judgement quite yet. “I haven’t quite made up my mind on 84 month loans,” she noted, although she did say she is “concerned.”

We also got a classic interview with AutoNation CEO Mike Jackson who notes that if you include leasing (which is of course different from buying, but why quibble over the details), loan terms are actually only 56 months. The rest of the clip can be summed up in three words: “Trucks, trucks, trucks.”

We saved the best for last. Watch below as Bill Griffeth and Kelly Evans host WSJ’s Jonathan Clements and Premier Financial Advisors’ Mark Martiak for a discussion on what we’re calling the car-stock arbitrage wherein you are (literally) encouraged to take out a 7 year loan with a rapidly amortizing asset as collateral in order to buy stocks.

Enjoy.

ECB Keeps Rates Unchanged, QE Details To Come Shortly

As is normally the case, the ECB did not provide any details aside from its headline rates decision in the monetary policy decision press release, which as was expected by virtually everyone, were unchanged across the board.

At today’s meeting, which was held in Nicosia, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today

In other words, in most places across New Paranormal Europe, borrowers will continue to get paid and savers will continue to get punished.

What other tricks does Draghi have up his sleeve? Tune in in 45 minutes for the press conference straight from Nicosia to find out.

Futures climb after two-day fall; initial claims on tap

NEW YORK (Reuters) – U.S. stock index futures edged up on Thursday, after two days of declines on the S&P 500, ahead of data on the labor market and factory orders.

Frontrunning: March 5

China Lowers Growth Target to About 7% (WSJ)

Obesity Is Hurting the U.S. Economy in Surprising Ways (BBG)

Citigroup Loses $800 Million as It Exits Turkey’s Akbank (BBG)

Justice Who Once Tried to Kill Obamacare Now Potential Savior (BBG)

Buyers of Espírito Santo Debt Face Financial Uncertainty (WSJ)

Shadow Banks Could Take $11 Billion Annual Profit, Goldman Says (

Falling Oil Prices Continue to Drive Job Cuts 38% of All Cuts Due to Oil Prices – But Jobs Cuts Down from Last Month

from Challenger Gray and Christmas

Planned job cuts declined slightly in February, as US-based employers announced workforce reductions totaling 50,579, five percent fewer than the 53,041 in January.

Brent tops $61 as Iraq, Libya offset U.S. stockpile jump

LONDON (Reuters) – Brent crude future prices rose above $61 a barrel on Thursday, as investors brushed aside bearish U.S. inventories data to focus on tensions in Iraq and Libya.

Euro Slides, Futures Flat Ahead Of Mario Draghi’s Press Conference And Q€ Cheat Sheet

It has been a while since we have seen the USDJPY rampathon push US equities higher, so in a day dominated by central banks (first the BOE momentarily), and then the ECB’s much anticipated announcement of the actual QE launch at the Draghi press conference at 1:30pm CET (taking place, ironically enough, in the place that was the blueprint for the Eurozone’s capital controls, Cyprus), it only makes sense that after weeks of stage fright, the USDJPY algos reminded the world they are alive and well, and proceeded to ramp the key FX pair above 120, even though the currency that everyone will be talking about today is the Euro, hugging 1.10 as of this moment, but the real question is what happens after Draghi gives the asset buying green light: has all of Q€ been priced in already in FX, and will the EURUSD resume its surge higher, or is parity next stop?

In any event, the ECB is widely expected to hold rates, with the deposit rate solidly in negative territory, as it unveils details about its asset-buying program, and just where it hopes to buy all those hundreds of billions in bonds from, including on the timeline for purchases and the legal details around them. Separately.

But before the main event, a quick recap of last night’s drama out of China, where we learned that Premier Li Keqiang has set the economic growth target at ‘around 7%’ from ‘around 7.5%’ last year. As DB summarizes, Li struck something of a downbeat tone in his report, saying that ‘the difficulties we are to encounter in the year ahead may be even more formidable than those of last year’ and that ‘China’s economic growth model remains inefficient; our capacity for innovation is insufficient, overcapacity is a pronounced problem and the foundation of agriculture is weak’. China’s the CPI target has been lowered to 3% (from 3.5%), the M2 growth target cut with the fiscal deficit largely unchanged as a percentage of GDP. DB adds that there is risk of a mini-hardland …

Euro hits 11-year low before ECB, stocks edge higher

LONDON (Reuters) – The euro hit an 11-year low against the dollar and the region’s stocks nudged higher on Thursday, as the European Central Bank prepared to provide the finer details of its soon-to-be-launched 1 trillion euro stimulus plan.

Costco’s quarterly profit tops estimates on tax benefit

(Reuters) – Costco Wholesale Corp reported a better-than-expected quarterly profit, helped by a tax benefit related to its special cash dividend last month.

The Silence of the Lambs

Posted with permission by Gary Christenson – The Deviant Investor

One interpretation is that we are living in the best of all possible worlds. Another is that we are being led to financial slaughter.

A few thoughts:

1913: The Federal Reserve was created and dollars have been devalued ever since. (more paper, less gold)

1933: President Roosevelt confiscated gold owned by American citizens. (no more citizen held gold in the US)

1971: President Nixon terminated the convertibility of dollars into gold. (much more paper, less gold)

2000: The NASDAQ crashed along with the retirement dreams for many Americans. (paper assets crashed)

2001: The Patriot Act and the War on Terror…… (more paper)

2008: Financial crash, crisis, and bailout for Wall Street….. (much more paper)

2008: Quantitative Easing, bond monetization, printing currency, and effectively zero interest rates are used to recapitalize banks at the expense of savers, pension funds, insurance companies and the productive economy. (more paper)

2010: QE2 (much more paper)

2012: QE3 (much much more paper)

Apple delays larger iPad production till September: reports

(Reuters) – Apple Inc will delay the start of production on a larger, 12.9-inch iPad until around September because of delays involving the supply of display panels, according to two media reports.

AbbVie to Pay $21 Billion for Pharmacyclics, Maker of a Promising Cancer Drug

AbbVie announced that it has agreed to buy Pharmacyclics, a maker of a cancer drug that some analysts predict will eventually become one of the best-selling treatments.

Banks brace for Fed capital buffers inspection

WASHINGTON (Reuters) – The largest U.S. banks and their foreign rivals are facing a tough two-step check-up of their financial health by the Federal Reserve, forcing the firms to get a far better grip on how they measure risk.

Target to cut thousands of jobs as seeks to cut costs by $2 billion

(This March 4 story corrects job cuts at corporate locations to 16,000 from 26,000, in fifth paragraph)