Can someone “do the math” as President Obama urged Congress? How do you re create the ten million jobs lost in the USA since 2007 with $447 billion of dollars? How do you pull these rabbits out of hats whilst keeping the debt ceiling under the radar, (which may be breached on Monday), the deficit reduced without taxing the ultra wealthy (many of whom sat in Congress last night air clapping) until the pips squeak? How do you justify the fact that the USA has already been through two rounds of punishing asset purchase schemes (quantitative easing) and huge bailouts that have so far left the USA economy completely hollowed out and at the point where no new jobs have been created in August, this in an economy that needs to create 250,000 a month to stand still? Finally, was a slight of hand conducted last night; will this jobs act be the next QE, or will it be QE 3.5 after the next round of asset purchase creates zilch, other than breathing space for the banking and political elite?
Moving aside the choreography and poise of the neuro linguistic programming, the Obama jobs act speech was everything many had expected, high on tub thumping rhetoric low on detail. The noble statement that armed service personnel should not have to “fight for jobs” once they return with post traumatic stress disorder from “fighting for their country” won applause. However, those who’ve spent two years in the unemployment queues in the USA may see things differently; ” hey man, at least you’ve been getting paid for the past two years on our illegal crusades, get to the back of the queue, we’re all out of sympathy in Hooverville..”
The “markets”, in particular the USA, will (in due time) soak up the emotional speech and its implications, the irony that the President wants to see ‘made in USA’ Chevrolets and Fords driving on the streets of Beijing is not lost given the only way to achieve such ambitions would be to pay USA car workers the equivalent salary. In 2010 the average annual salary in Beijing was 50,415 yuan, or about 4201 yuan per month, according to statistics from Beijing’s municipal statistics bureau. That equates to less than $700 a month. Yes Mr. Obama, you go away and “do the math”..
Asian markets were flat or subdued in overnight early morning trade, the Nikkei falling by 0.63%, the Hang Seng by 0.23% and the Shanghai was down 0.03%. The Australian index, the ASX, has fallen by circa 8.46% year on year. The unemployment rate has increased month on month and accelerated to 9,600 new unemployment claims last month, taking the unemployment rate up to 5.2%. The commodities and mining boom, due to Asian demand, that has kept Australia out of the global eye of the financial storm since 2008-2009, is being brought into question. The Aussie, the world’s fifth-most traded currency, recently traded at $1.0611, heading for its first weekly decline in a month.
Turning to European markets the Euro STOXX 50 is currently down 1.6%, down 22.88% for the year. The DAX is down 1.69% as is France’s CAC index. The UK ftse is down 0.6%. Looking towards the USA open the SPX daily future is suggesting a flat opening. Gold is up $12 an ounce and Brent Crude is down $7 a barrel. The Swiss franc has fallen versus many majors this morning, particularly the yen, dollar and sterling. However, looking at a three hour chart of the EUR/CHF chart is still a challenge, how to make a play or take a trade still remains a matrix style puzzle.
It’s a relatively ‘lite’ day for economic data releases today, the USA wholesale inventories is published which rates low in terms of market impact. The G7 meeting is taking place today and Saturday in Marseilles, France, the impact of any policy may be made clear over the weekend or Monday.