Hedgeye's Take On Today's Financial News
Below is a collection of interesting links and insights from today's news with analysis filtered through our macro lens. This installment discusses last Friday's Jobs Report, Deutsche Bank's chief economist begs for a bailout, central planning nonsense, and the latest country to fall prey to negative interest rate.
"Over the past year, job growth is up 1.7%, which is a touch below the average expansion of 1.8% witnessed over the past four years," WSJ economics correspondent Nick Timiraos wrote following Friday's jobs report. Timiraos tacitly admitted the jobs report slowdown in a tweet showing "hiring, change from year ago" that has slowed from 2.14% in June 2015 to 1.72% this June.
OUR TAKE: As we've noted many times before (most recently in "Don't Believe the June Jobs Report Hype"), the peak in year-over-year non-farm payroll growth was February 2015. Take a look at the chart below. We reiterate our call... #EmploymentSlowing.
"Begging For Bailouts"
"Deutsche Bank's chief economist urged the European Union to set up a 150 billion euro ($165.39 billion) rescue fund to recapitalize European banks," German newspaper Die Welt reported on Monday.
OUR TAKE: "Old Wall is begging for another round of bailouts," Hedgeye CEO Keith McCullough wrote this morning. Just sad.
Central Planning 101
"Japanese Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending after a crushing election victory over the weekend as evidence mounted the corporate sector is floundering due to weak demand," Reuters reported over the weekend. Before the election, "ruling party sources" told Reuters, the government was ready to spend more than 10 trillion yen ($100 billion).
OUR TAKE: Central planners are stepping up efforts to prop up equity markets and their slowing economies. And while the currency war continues to heat up, don't bet on the whims of bureaucrats.
"The Bank of England mulls property fund shake up to stop panic sales," the Sunday Telegraph newspaper said late on Saturday. The BoE is apparently considering curbs on property investment fund withdrawals.
OUR TAKE: "Central-market planning remains the socialist rage," Hedgeye CEO Keith McCullough wrote today. Question: Can central bankers fix the underlying reality that caused the outflows to begin with? No. The central planning #BeliefSystem is breaking down.
The NIRP Effect: dutch 10-Yr Goes NEgative
"The Netherlands has joined a select group of countries able to boast of negative borrowing rates on 10-year debt. For the first time, yields on benchmark Dutch government bonds dipped below zero – hitting minus 0.0001 per cent on Friday afternoon," the Financial Times reports. The Netherlands joins the likes of Germany, Switzerland, Japan, and Denmark in global negative-yielding debt (which now amounts to $13 trillion).
OUR TAKE: As #GrowthSlowing continues to ravage economies across the globe, bond yields will continue to fall.