Once again, CNBC pulls out the big guns!
No sooner does the market begin to show signs of life than our favorite financial networks goes to the bench and pulls out interviews with both Dr. Doom, Nouriel Roubini (7:30) and Mr. Gloom, Mohammed El-Erian (8:30) to tell us how awful everything really is – no matter what we may dare to think.
I'm not generally for censorship but, in CNBC's case, I think it's tme we make an exception. At least make them stop pretending to be a news station and make them come out of every break disclosing the fact that their parent company, GE, not only benefits from a poor economy that forces the Government to maintan low interest rates and offer them bailouts, but that they (GE) are also the nation's largest abuser user of "uncertain tax positons," with $8.7Bn of questionable deductions.
Raise taxes?!? Are you joking? CNBC's parent company refuses to pay taxes at the Bush cut rates – there is no way they are going to put up with paying their full share. Just 500 US companies did not pay $200Bn worth of taxes last year in deductions that even their own auditors were forced to list as "questionable accounting strategies." That's 50% more than the entire $138Bn paid by all US corporations last year, which happens to be just 1/14th as much money as their employees had to pay to support the economy, even though the corporations and the top 10% made $9Tn in profits and income last year while the bottom 90% made just $4Tn.
The current corporate rate of 35 percent is higher than that in many other developed countries. But Congress has larded the code with so many deductions and loopholes — including a dollar-for-dollar credit for taxes paid to foreign governments and generous deductions for depreciation and debt financing — that the effective rate paid by most companies is below 22 percent, lower than in most developed countries.
Outrageous or business as usual in America – we report, you decide… Meanwhile, CNBC is going for the gusto this morning wth a string of bears leading up to the unemployment report at 8:30 but, like last week's number, expectations are getting so dire it's going to be hard to shock people. Of course, that won't stop our GE's public relations and lobbying arm from trying.
You will hear all about how bonds are not in a bubble on CNBC (and I pick on them but Murdoch owns FOX an Disney Owns ABC and Redstone owns CBS – Billionaires all) and how we are in danger of deflation yet cattle prices are hitting all-time highs as are grain and sugar so food inflation, in the very least, is on the march for the little people, where silly things like food make up a significant portion of their annual spending. China is also seeing plenty of infaton with a 3.3% rise in CPI, the most in 21 months.
On the bond front, Credit-default swap indexes are signaling caution. In London, the Markit iTraxx Europe index of swaps linked to 125 companies with investment-grade ratings climbed 2.58 basis points to 117.75, the highest since July 20, Markit data show. A basis point on a credit-default swap protecting $10 million of debt from default for five years is equivalent to $1,000 a year. “CDS will continue to play an increasing role because even as people go into the bonds, they’re going to start worrying about default risk increasing,” said Komal Sri-Kumar, of TCW Group, who manages $118Bn.
Meanwhile, while we were chatting, the Unemployment report came in 31,000 lower than last week, with "just" 473,000 citizens losing thier jobs – that's all it took to send the futures up half a point in a relief rally as your chance of being one of the 146M US workers to lose their job in any given week remains at 0.3% (or 16.8% a year if you want to be pessmistic about it).
An optimist could say that the average American worker KEEPS their job for 5.5 years so we'll go with that and call it a good day's news but it don't mean a think until we retake our mid-points at 10,200, 1,070, etc.
Asia was mixed this morning and Europe is up about a point and, if they can hold that through the close (11:30 EST), we can expect the same as we bounce back to set up for a possible re-test of our watch levels. We are not going to get too excited about the jobs data and don't forget we get a GDP revision tomorrow morning, very likely down so we'll be keeping those Disaster Hedges for today thank you and, very likely, over the weekend – just in case!
