Bernanke!
At 9:30 am, right when the market opens, we will get a copy of Uncle Ben's prepared statement and then we have 3 hours of grilling, including another episode of "When Ron Paul Attacks" as the Fed Chair will be grilled on the BSC bail-out and whether or not we're in a recession.
On the bright side, we have some indication by Paulson that the administration may bend on a proper housing bail-out and Bernanke has already backed Barney Frank (and me) on the idea of a true mortgage reduction program that will preserve the integrity of the housing market (and the dollar) rather than just repackage debt for the umpteenth time.
So far, in pre-market trading, things are looking very good, we got a mild ADP payroll report (non-farm payrolls UP 8,000)and the market seems still willing to interpret anything that is not very bad as good and the futures shot positive on the release. I'm baffled by this as I will point out that the report shows a loss of 58,000 manufacturing jobs, the 19th consecutive monthly decline, a loss of 77,000 total "goods producing jobs" (Ford) that were replaced by 85,000 "service sector" jobs (McDonald's). One job does not equal another and we need to come up with a better measure of jobs performance than one that treats all forms of employment equally.
Also interesting in the report is that large businesses (over 500 employees, the kinds that have health care and 401Ks and opportunities for advancement) dropped 52,000 workers while businesses with fewer than 50 workers hired 55,000 people. Again, these are not really good trade-offs! Not only that, but New York is already bracing for massive lay-offs in the financial industry so we can look forward to the next jobs report in which 50,000 white-collar financial professionals become $8 per hour Wal-Mart greeters and are treated like they are fully employed by our Government, who we hire to lie to us like this.
I mentioned yesterday that Europeans are betting heavily on Obama and I'm starting to think they may be right, Hillary is starting to look desperate and is starting to get downright weird, challenging Obama to a "bowl-off, a bowling night, right here in Pennsylvania, winner take all, I'll even spot him 2 frames. It's time for his campaign to get out of the gutter and allow all of the pins to be counted…" I can't even go on because she pushed the metaphor to embarrassing levels. Of course this was under the guise of "April Fools" but there is no such thing as a joke in political speech and really this just comes across as pathetic and VERY un-Presidential – and that is from a Hillary supporter!
As expected, Asia had a good morning but not the Shanghai Composite, which looked like it finished flat but decliners led advancing financials and energy stocks 804 to 90! The Shanghai is off 20% for the month of March and down 40% from their highs as China's growth is slowing pretty fast. So fast, in fact, that the World Bank cut it's Asia growth forecast by more than 10%, from 8.2% to 7.3% – something that would make a rational investor sell commodities but you can't accuse a person who buys oil for $100 a barrel in a slowing economy of having been rational in the first place can you?
The Nikkei, who only care about customer #1, rose 4.2%, flying back over 13,000 while the Hang Seng added 734 points but were rejected at 24,000, which will be a very bad sign if they can't retake it tomorrow as it's 25% off their November highs and 20% of their nominal top of 30,000. From a selfish perspective, we want to Asian markets to flatline under those levels as it gives global investors an added incentive to look West.
European markets are continuing higher, still led by financials but you can see from this chart of the FTSE and the DAX that they still have a long way to go before we can put on our party hats. $100 oil is still holding the world markets down, hopefully today we can break that trend as the 4% decline in US fuel demand starts creeping into the inventory reports as refiners run out of excusese to keep their plants off-line and the ships rushed in last week, dumping as many $108 barrels of oil as possible as Bush topped off the SPR with another 600,000 barrel purchase at list price.
We are expecting a 2.3Mb build in oil and a 2Mb draw in gasoline and a 1.7Mb draw in distillates in today's energy report. Refinery utilization has been under 83%, lower than it was when hurricane Katrina knocked a dozen refineries off-line 3 years ago as the industry learned then that an artificial catastrophe works even better than a real one and they've kept us begging for oil ever since.
It's interesting that Bush is visiting the Ukranian President who went to "war" with Russia's Gazprom over the energy trade and is attempting to root out corruption in the energy industry (which is where she herself became very wealthy).
Our Congressional leaders met with their campaign contributors (oil companies) yesterday and, sadly, it was the same old, same old – with the oil companies once again rolling out the charts that show their profit margins are in-line with other industries. Yes, it's still a 10% margin but now they are charging 400% more for the product – THIS IS NOT LIKE OTHER INDUSTRIES!!! Oooh, this makes me so darn angry! Obviously if you have a near-monopoly of a vital service at a fixed profit margin the best thing you can do to increase your 10% profits by $1Bn is to charge the consumer an extra $10Bn. It's a very inefficient way of stealing money but as long as you get your $1Bn, what do you care? THIS IS WHY WE REGULATE UTILITIES PEOPLE!
We don't know what will happen today but holding 75% of yesterday's gains would be just great and anything else will be a bonus for the day, it's all up to Bernanke this morning and we'll have to stay light on our feet but there is not much market moving news this morning other than a strong quarter from BBY, which should be a nice boost for the electronics sector and, hopefully the semis.
