( zero hedge)

ii)USA rig counts tumble to a 41 yr low

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  37.42  and Brent: 39.30

3f Gold DOWN  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES  to 0.151%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 8.53%/: 

3j Greek 10 year bond yield FALL to  : 8.77%   (YIELD CURVE NOW FLAT)

3k Gold at $1229.90/silver $15.35 (7:15 am est) 

3l USA vs Russian rouble; (Russian rouble DOWN 1 AND 06/100 in  roubles/dollar) 67.96

3m oil into the 37 dollar handle for WTI and 39 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9595 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0939 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .151%

/German 8 year rate negative%!!!

3s The Greece ELA NOW at  71.4 billion euros,

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.79% early this morning. Thirty year rate  at 2.62% /POLICY ERROR)

5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.

For Japan, the post “Shanghai Summit” world is turning ugly, fast, because as a result of the sliding dollar, a key demand of China which has been delighted by the recent dovish words and actions of Janet Yellen, both Japan’s and Europe’s stock markets have been sacrificed at the whims of their suddenly soaring currencies. Which is why when Japanese stocks tumbled the most in 7 weeks, sinking 3.5%, to a one month low of 16,164 (after the Yen continued strengthening and the Tankan confidence index plunged to a 3 year low) it was anything but an April fool’s joke to both local traders.

It wasn’t just Japan: as Bloomberg put it beautifully, “Europe’s equity benchmark was set to erase all of its gains for March in a single day”, while crude oil plunged after Saudi Arabia’s deputy crown prince said the kingdom will only freeze its oil output if Iran and other major producers do so. Copper rose after a gauge of Chinese manufacturing unexpectedly expanded, while shares in Shanghai were little changed.

And speaking of April fools jokes, the Chinese stock market was a tale of two halves: one public selling in the morning session which took the index as much as 2% lower, and central bank buying in the afternoon which closed the SHCOMP modestly in the green.  Curiously, it was China’s unexpectedly strong PMI manufacturing surveys which may have led to the early selloff, because if China is finally getting better (it isn’t, it is merely enjoy the effects of the massive January $500+ billion credit impulse; the hangover comes later) then there will be no need for either more stimulus, or more accommodation by the Fed, which as everyone now knows is mostly concerned with China’s economy.

A quick look at global markets this morning reveals that much of the late March euphoria may be over: the MSCI All-Country World Index dropped 0.8 percent at 6:07 a.m. in New York. The Stoxx Europe 600 Index retreated 1.7 percent after wrapping up its third quarterly decline in four on Thursday with a 1.1 percent drop as banks weighed heaviest on the index.  Japan’s Topix index tumbled 3.4 percent as the country’s Tankan surveys of business conditions indicated sentiment among large manufacturers was the weakest since mid-2013. Standard & Poor’s 500 Index futures fell 0.4 percent, after U.S. equities ended the first quarter near where they began following a whipsaw ride that saw them rally from the worst-ever start to a year.

But all of that can change in a heartbeat after today’s main event, the March payrolls hits, expected at 205K, but with a well higher whisper number. The question there, as Goldman posited last night, is whether the good news will be good, and a beat will lead to a rally, or it will be “bad” again, and a big beat results in a selloff – the answer will set the mood for market trading and reactions to economic news over the next month.

For now, this is where we stand:

• S&P 500 futures down 0.4% to 2044
• Stoxx 600 down 1.6% to 334
• FTSE 100 down 0.9% to 6119
• DAX down 1.3% to 9839
• German 10Yr yield up less than 1bp to 0.16%
• Italian 10Yr yield up less than 1bp to 1.23%
• Spanish 10Yr yield up 1bp to 1.45%
• S&P GSCI Index down less than 0.1% to 323.3
• MSCI Asia Pacific down 2.3% to 126
• Nikkei 225 down 3.5% to 16164
• Hang Seng down 1.3% to 20499
• Shanghai Composite up 0.2% to 3010
• S&P/ASX 200 down 1.6% to 4999
• 10-yr yield up 3bps to 1.8%
• Dollar Index up 0.02% to 94.6
• WTI Crude futures down 2.3% to $37.60
• Brent Futures down 0.1% to $40.28
• Gold spot up less than 0.1% to $1,233
• Silver spot down 0.2% to $15.40

Top Global News

• Asian markets fall. Japan’s stocks sink most in 7 weeks; Tankan index of confidence among manufacturers at 3-year low
• China’s official manufacturing purchasing managers index rose unexpectedly in March; highest level since Nov. 2014
• Oil trades lower after Saudis announce they will freeze production only if Iran joins
• Musk Unveils Tesla’s $35,000 Model 3 in Push for Mass Market: Battery-powered Model 3 will be rated about 215 miles range. Tesla collects more than 115,000 orders within 24 hours
• Einhorn’s Greenlight Fund Flat in March, Halting ’16 Rebound: Firm is seeking to bounce back from 2015 loss of more than 20%. Average hedge fund is down this year amid stock-market swings
• Anbang Abruptly Pulls Starwood Offer, Clearing Marriott Path: Group cites ‘various market considerations’ for withdrawal. Shareholder vote on Marriott takeover set for April 8
• Yahoo Losing Another Senior Manager Amid Turnaround Effort: Sandy Gould departing after joining Web portal three years ago. Exit follows resignations of several other executives in 2015
• JPMorgan, Wells Fargo Asked by U.S. to Save Records Tied to 1MDB: Requests add to ranks of banks cooperating in global probes. Banks, which include Deutsche Bank, aren’t seen as targets

Looking at regional markets, we find Asia stocks traded lower as participants remained tentative ahead of today’s key NFP jobs data, while Chinese PMI figures also failed to inspire. Nikkei 225 (-3.4%) underperformed following a discouraging BoJ Tankan survey in which Large Manufacturing Index fell to its lowest since Q2 2013, with Panasonic leading the declines after a weak profit outlook. Shanghai Comp (-0.8%) is also negative despite better than expected official and Caixin Manufacturing PMI figures, which lessens the need for further stimulus measures, while the PBoC’s net weekly injection dropped significantly. 10yr JGBs reversed early weakness amid the widespread cautious tone as some analysts noting participants shifting funds into the long-end, while the BoJ’s were also in the market under its massive bond purchase program.

Asian Top News

• China Factory Gauge Unexpectedly Jumps as Stimulus Kicks In: March manufacturing PMI 50.2 vs est. 49.4
• Corporate Sentiment in Japan Slumps to Near Three-Year Low: March large manufacturer Tankan falls to 6 vs est. 8
• Ratan Tata, Unbridled at 78, Meets His Young Self in Startups: Former Tata Group chairman has invested in >25 ventures
• Indonesia to Deploy F-16s to Guard South China Sea Territory: Defense minister Ryacudu comments after incident with China

European equities kick-start the new quarter with losses following the overnight slump in Japanese equities in which the latest Tankan Survey fell to a 3-year low. On a stock specific basis, Zurich Insurance (-8.2%) underperforms this morning after going ex-div, while the iTraxx sub financial index has been showing signs of distress amid weakness in Italian banks throughout much of the week. Gilts have underperformed this morning with participants noting yesterday’s record high deficit the UK could be vulnerable to certain external shocks, such as a Brexit. Elsewhere, bunds have held steady following quarter-end balance sheet adjustments and ahead of the US NFP report, with peripheral yields wider.

European Top News

• BHP Facing Billions in Disaster Payouts Boosts Brazil Staffing: Senior executives deployed to speed settlement, restart mine. Staff increased to 30 from 8, and moved closer to dam site
• Hollande in Search of a Strategy as Plans to Fix France Unravel: President dumps two key policies in a month as party rebels. Polls close to record low as Socialist base deserts Hollande
• Rajoy Struggles for Credibility as Spanish Deficit Misses Target: Shortfall hit 5.2% in 2015 against EU-set target of 4.2%. Commission reiterates concerns about Spanish fiscal record
• Javid to Meet Welsh Steel Workers as U.K. Seeks to Save Plant: UK business secretary cuts short Australia trip due to crisis. About 6,500 jobs threatened in Wales with votes looming

In commodities, oil headed for the first weekly decline since February as OPEC output rose and expanding U.S. stockpiles kept inventories at the highest level in more than eight decades. The Organization of Petroleum Exporting Countries increased supply by 64,000 barrels to 33.09 million a day in March as Iraqi output gained and Iran pumped at the highest level in almost four years, according to a Bloomberg survey of oil companies, producers and analysts.

The warning by Mohammed bin Salman, 30, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.

Crude futures dropped 1.8 percent to $37.66 a barrel in New York on Friday. Copper for three-month delivery in London rebounded from the lowest in almost a month, gaining 0.6 percent, while aluminum and lead rose more than 1 percent. Nickel and tin declined.

In FX, the yen, which typically moves at odds with Japanese shares, gained 0.2 percent to 112.40 per dollar. The currency was the second-best performer in Asia in the first quarter, climbing 6.8 percent. The euro gained 0.2 percent $1.1400. The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, was little changed near its lowest level since the end of June.

A Bloomberg gauge tracking 20 developing-nation currencies fell less than 0.1 percent after surging more than 6 percent last month in a record gain.

South Korea’s won led declines on Friday after reaching the strongest in four months on Thursday, when it completed its biggest monthly advance since 2009. The Mexican peso, Turkish lira and Russian ruble slipped at least 0.2 percent. Indonesia’s rupiah and South Africa’s rand bucked the trend, rising 0.6 percent and 0.3 percent.

It’s a busy day in the US where the March employment report will be the headline news, but there is also other important data in the form of the ISM manufacturing for last month which, given the improvement in recent regional readings, is expected to nudge up 1.5pts to 51.5. As well as this we’ll also see construction spending data, the final manufacturing March PMI and the last revision to the March University of Michigan consumer sentiment reading. Finally the latest US vehicles sales numbers get released tonight.

Bulletin Headline Summary from RanSquawk and Bloomberg

• Overnight slump in Japanese equities following lacklustre Tankan data provides the impetus for weakness across EU bourses.
• WTI and Brent crude futures slipped following comments from Saudi Arabia’s Deputy Crown Prince who stated that they will only freeze oil output if Iran joins
• Looking ahead, Highlights include US Change in Nonfarm Payrolls, Manufacturing PMI, U. of Mich. Sentiment and Fed’s Mester (Voter, Soft Hawk)
• Treasuries sell off, global equity markets lower, oil drops in overnight trading; today brings nonfarm payrolls report (est. 205k) and unemployment rate est. 4.9%).
• China’s official factory gauge showed improving conditions for the first time in eight months, suggesting the government’s fiscal and monetary stimulus is kicking in
• Negative interest rates will make next year a difficult one for Japanese lenders and the central bank should examine the impact of the policy before pushing them further below zero, the new head of the country’s banking lobby said
• Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil; Saudi Arabia will only freeze its oil output if Iran and other major producers do so
• The $3.7 trillion U.S. municipal market earned about 0.3% in March, building on gains of 1.1% and 0.1% in January and February. It’s just the second time since 2002 that the debt has posted three straight positive months to start the year
• U.K. manufacturing grew less than forecast in March, underscoring the uneven nature of the economy as the global slowdown takes its toll on exports
• U.K. house prices increased for a ninth month in March as rental investors rushed to purchase property before a tax increase, Nationwide Building Society said
• Italy’s unemployment rate rose in February as a discount on social contributions for businesses hiring more workers was being phased out, stripping job creation of a key boost with economic growth failing to accelerate
• The Republican National Committee’s biggest challenge is beginning to take shape: how to navigate a scenario in which Trump leads his challengers in votes and delegates heading into the convention, but loses the nomination
• $3.45b IG credit priced yesterday, weekly volume to $19.25b, March $164.055b, YTD $458.305b; $550m HY priced yesterday, WTD 7 deals $8.35b, MTD 29 deals for $22.21b, YTD 54 deals for $37.07b
• Sovereign 10Y bond yields mixed; European and Asian equity markets lower; U.S. equity-index futures drop. WTI crude oil and copper drop, gold moves higher

DB’s Jim Reid concludes the overnight wrap

Welcome to April and the first day of the new quarter. The last three months will be hard to beat for the sheer turbulence, volatility and huge swings in asset prices which swept through markets. The good news is that the positive momentum which started around midway through February continued through much of March and as you’ll see in our performance review at the end, there was a big rebound for the vast majority of risk assets. As usual see the PDF for all the associated charts and tables.

The first day of this month is also a big one for markets with the US employment report for March the highlight this afternoon. Current market expectations for nonfarm payrolls are sitting at 205k which compares to the 242k number we got back in February. The unemployment rate is expected to hold steady at 4.9% and average hourly earnings are expected to rise +0.2% mom during the month. With all the chatter from recent Fed speakers and also Yellen on the importance of evidence of further signs in wage inflation it will be the key to keep an eye on the latter in particular. Our US economists are a little more cautious ahead of today’s release and despite the trend like ADP reading, have a below consensus 175k forecast for payrolls. They note that this would have the effect of lifting the unemployment rate back to 5.0%, while they are also slightly less optimistic with regards to the earnings data (expect average hourly earnings growth of +0.1% mom). They note that their forecast for below-trend employment is consistent with their meagre Q1 real GDP growth projection of 0.5%. Another interesting point they make is that they have noticed a recent tendency for the median consensus forecast for March to overestimate the initially-reported March payroll gain. In fact, they highlight that the median forecast for March has over-predicted the initial payroll figure in five out of the last six years. All this to look forward to this afternoon.

Before we get there though, glancing at our screens this morning bourses in Asia have kicked off April and the second quarter on a down note with Japanese equity markets in particular tumbling sharply lower following a disappointing Q1 Tankan Survey. The Nikkei and Topix are currently -3.06% and -2.94% respectively. Losses have come after the Tankan survey of large manufacturers fell 6pts to 6 last quarter (vs. 8 expected). The outlook index was similarly disappointing (-4pts to 3; 7 expected) while there were softer than expected results for small manufacturers also. The latest figures reflect the difficulty for the industry following the recent strengthening in the Yen and underscore the challenges the BoJ faces.

Bourses are also lower in China this morning with the Shanghai Comp currently -1.42%. That’s despite better news from the latest PMI numbers there. The manufacturing PMI rebounded 1.2pts last month to a better than expected 50.2 (vs. 49.4 expected) which is the first reading above 50 since July last year. The non-manufacturing PMI also improved in March, rising 1.1pts to 53.8. The data has helped boost metals and emerging market currencies in Asia this morning. Elsewhere in Asia we’re also seeing legs lower for the Hang Seng (-1.32%), Kospi (-0.80%) and ASX (-1.64%). Asia and Australia credit indices have generally outperformed this morning.

It was hard to get too excited about much of the price action in markets yesterday with pre-payrolls lethargy and some quarter end positioning seemingly dominating much of the activity. The strong run for US equities this week stumbled into last night’s close with the S&P 500 eventually finishing the day -0.20%. Prior to this European equities posted bigger losses (Stoxx 600 -1.07%) with much of the commentary attributing this to a poor day for Italian banks. An early tumble for WTI also seemingly didn’t help price action there although by the close of play Oil was back to pretty much unchanged on the day and hovering just north of $38/bbl. The USD continues to weaken in the wake of Yellen after closing another -0.27% yesterday meaning it has fallen every day this week. Some of the sharper moves yesterday came in the rates space and specifically for Treasuries where we saw the curve flatten. Much of the reports suggested that this was month/quarter end rebalancing more than anything else but we did however see 10y yields fall over 5bps to 1.770% which means they are back at the lowest level since the end of February.

In terms of yesterday’s economic data, the main takeaway was yet more evidence for further improvement in the US manufacturing data. The March Chicago PMI reading was reported as increasing 6pts last month to a better than expected 53.6 (vs. 50.7 expected) and the second highest reading since last July. Also supportive was the lesser followed ISM Milwaukee which rose 2.5pts to 57.8 in March, meaning it has trended higher for four consecutive months now. Both data points supportive ahead of today’s ISM manufacturing print. Also out yesterday was the latest initial jobless claims data which showed claims rising 11k last week to 276k (vs. 265k expected). Claims have now risen for four consecutive weeks although have now been below 300k for more than a year, the best run since 1973.

Datawise in Europe yesterday, the main focus was on the Euro area CPI data which saw the headline rise one-tenth as expected to -0.1% yoy in March. The core print nudged up two-tenths to +1.0% (vs. +0.9% expected). Away from this and in the UK we got final confirmation of the Q4 GDP reading which was actually revised up one-tenth at the final read to +0.6% qoq. This had the effect of lifting the YoY rate to +2.1% from +1.9%. UK mortgage approvals were also reported as beating (73.9k vs. 73.5k expected) while net lending and consumer credit numbers met market expectations. The only other data to note was some surprisingly soft retail sales numbers out of Germany in February (-0.4% mom vs. +0.4% expected).

Elsewhere, there was yet more Fedspeak for us to digest yesterday with the latest comments coming from NY Fed President Dudley after the closing bell in the US last night. The Fed official echoed Yellen’s comments in so far as the Fed should look to proceed cautiously, while also speaking positively about the progress the US economy has made on employment and inflation objectives. Dudley made few comments with regards to his outlook for further tightening but did note that, should the US economy stay on the current trajectory, then ‘gradual normalization’ is most likely. Prior to this we also heard from Atlanta Fed President Lockhart and Chicago Fed President Evans again. Lockhart said that there is scope for three rate increases this year, but that he doesn’t see a lot of risk of a policy error from a patient and deliberate approach. Meanwhile Evans reiterated his call for two rate hikes this year.

Taking a look at the day ahead now. Kicking off the proceedings this morning in Europe will be the final revisions to the manufacturing PMI’s in Europe (no change expected for the Euro area at 51.4) as well as the first reads for the likes of Spain and Italy. We’ll also get some house price data out of the UK and the latest unemployment rate figure for the Euro area (expected at 10.3%). In the US this afternoon the primary focus will of course be on the aforementioned March employment report however there’s also more important data in the form of the ISM manufacturing for last month which, given the improvement in recent regional readings, is expected to nudge up 1.5pts to 51.5. As well as this we’ll also see construction spending data, the final manufacturing March PMI and the last revision to the March University of Michigan consumer sentiment reading. Finally the latest US vehicles sales numbers get released tonight. Away from the data the latest Fedspeak comes in the form of Mester (due 5.00pm BST) who is due to provide her economic outlook in NY.

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

REPORT ON MANUFACTURING FROM THE THREE AREAS:

AsiaPac Data Deluge: China Good, South Korea Bad, Japan Ugly

(courtesy zero hedge)

“Good” News Is Bad Again? Commodity Carnage Continues Post-Payrolls

On the surface, the March jobs reported was better than expected… except for manufacturing workers. As shown in the chart below, in the past month, a disturbing 29,000 manufacturing jobs were lost. This was the single biggest monthly drop in the series going back to December 2009.

But not all is lost: as has been the case for virtually every month during the “recovery”, virtually every laid off manufacturing worker could find a job as a waiter: in March, the workers in the “Food services and drinking places” category, aka waiters, bartenders and minimum wage line cooks, rose again to a new record high of 11,307,000 workers, an increase of 25K in the month, offsetting virtually all lost manufacturing jobs.

This is how the two job series have looked since the start of 2015.

And here is the longer-term, going back to the start of the crisis in December 2007: please do not “peddle fiction” upon seeing this chart.

When documenting Gartman’s latest flip-flop yesterday just after 12 pm, in which the “world renowned” CNBC contributor and newsletter writer finally threw in the bearish towel, a position he had stuck withsince March 16. This is what he said:

We may not agree with what Dr. Yellen is proposing… and what she will pursue… or why she is proposing and pursuing it… but it is not our duty to argue and then to take positions openly at odds with her, for as the great, departed and greatly missed Mr. Marty Zweig always said, “Don’t fight the Fed.”  We have no actual net long or short position in equities, however.”

We then warned that “the rally may be on its last legs“, and at that exact moment, the S&P topticked its intraday high of the day.

Fast forward to today, when – with condolences to the bears – it appears the downside following today’s “good news is bad news” report may be limited because Gartman has, once again flipped. To wit:

The fact that all ten markets comprising our International Index have fallen is of interest for it is exceedingly rare when such unanimity of direction takes place. However, when it does and especially when it does after sustained moves previously it is usually all the more consequential. The few times that we’ve seen all ten markets move lower have almost always been followed by further and material weakness. Coupling that history with the fact that the CNN Fear & Greed Index had reached 78 at one point late last week and has turned  lower, and further given that a goodly portion of the buying this week has been of the short-covering kind following Dr. Yellen’s speech to the Economics Club of New York, and coupling those notions with the fact that the margin levels on the NYSE have turned lower, we arrive at the possibility that a major turning point to the downside is hard upon us.

So… fight the Fed after all? Under other conditions we would speculate that this is just another April fools joke report, but then again, this is Gartman.

Joking aside, we may be in for a range-bound market once again, at least until Dennis goes bullish again, and we would not be at all surprised to see the market levitate (on no volume of course) back to green by the end of the day.