Monthly Archives: January 2013

Unemployment Preview

The 14 month average payroll figure is tracking around the immigration B/E.  The consensus has firmed around this level accordingly. Econoday shows an interesting chart of "as reported" payrolls and they have tracked the 0 to 200 window over the same period. This comparison to the revised data shows the silliness of the conspiracy theorists. The reality is the number must now begin to track a 200 handle. With an average miss of close to 98k the heavily hyped data set remains the least exciting of the macro inputs.

Only a slight boost is needed to get to the threshold that would allow the focus to move to more forward looking data, despite the Fed's "targets". At this stage of the cycle, monetary aggregates, C&I loan reports, ISMs and retail sales should far outshine Employment for attention.

2013 has kicked off with some encouraging signs of normalization in term structures. Serious economic atrophy in Europe has been masked by much improved governmental funding rates. MENA remains a mess and could slip into chaos. Where have we heard this before? Oh ya, at this time LAST year. Since the statistical window for the number is 82k to to 275k and the last few sessions have seen moderate liquidation...we recommend a strategy for 8:32et from our Pit days- its called You First.

Hooper

Here's a few things Hooper just completed in Jan.-

1/11..Bullish Corn from 711.25 to 706.25 sell 743.75. Hit last night

1/24 Bullish SPmini from 1492.1489. sell 1505.75. Hit Yesterday

1/25 Bullish of Euros 134..36 to 134.77. Sell 135.67. Hit Yesterday

There's plenty more action covered with many Futures, 150 Stocks and ETFs, Spot Currencies, and Tons of Technicals. A great addition to any trader discipline.

On Euros

EuroFx - Dollar futures rate hit 135.50 this morning.

 

For several weeks we have watched the Euribor future fall out of bed to the - we found out - astonishment of no one but ourselves. The LTRO payback has been the universally accepted cause in the drive by macro media. In reality, the adjustment has been in the term structure of Euribor (and is effecting Dollar terms) and not in the near forward future. The price for March Euribor is 99.66+ only slightly below Dollars and equal to Dollars for June. (Note these are interest rate risk not FX) Rates for 2014 and 2015 are roughly 20bp higher for Euros but in parallel shift, so interbank bank intra-ccy spreads are close to parity. (June14-June 15 both around 34bp)

We continue to monitor this action as we believe the adjustment is more than the LTRO and should not be dismissed as technical. Money measures in Europe could contract again and lending standards are tighter. Peripheral nations are rolling over at much better rates but the populace remains heavily constrained. The Eurodollar Strip has been normalizing as we predicted in The New Hope post from early Jan. The Euribor adjustment could cause repercussions and/or the Euro Ccy is now the most over valued fiat in the developed world. In a global monetary (quantitative) regime, that is called being caught with the Monetary Old Maid -shorter: You Lose.