Easy Street: The Commodities Crash, Goldman's Shareholder Kisses
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Unemployment Report: A mystery wrapped in an enigma wrapped in fictionalized optimism. On the surface, it looks good: we added 244K new jobs. The private sector added 268K jobs, which I think marks one of the first times it has outpaced government hires. And in April, there were 989,000 "discouraged workers," down 208,000 from one year ago.
Yet there are inconsistencies, and skeptics find it hard to believe such a sunny report. For instance, as Dave Kansas and Matt Phillips smartly note on WSJ's MarketBeat blog: We know that the unemployed are not entering the workforce. We know that because the unemployment rate is up to 9%, (the U6, or "real" unemployment, is up to 15.9%). The average work week is not ticking up, and it usually increases before a big jump in hiring. In addition, the report showed 43.4% of unemployed Americans - nearly 6 million people - were out of work for more than six months in April. Also, the Household Survey showed a loss of 190,000 jobs in April - indicating the opposite of what the Labor Department is claiming in its establishment report. All of this highlights the unreliability of the statistics we're using to measure our recovery.
Related: My first stop for all economic data is the WSJ's great Real Time Economics blog. It should be yours too.
Related: Weekly Wrapper Cardiff Garcia has a nice post on the April employment report.
The commodities crash: It's happening. The FT's Lex column called it the biggest sell-off in the commodities markets since the fall of Lehman Brothers.
Related: Oil is below $100 a barrel: http://money.cnn.com/2011/05/05/markets/oil_prices/index.htm
Municipal bonds: Meredith Whitney stands by her call on a coming crisis.
Related: But no one knows why. FT Alphaville has a list of reasons that markets experts are basically throwing against the wall to see what sticks. Everything from inflation to QE2.
Related: The more scared investors are of commodities, the likelier they are to rush to Treasury bonds. Between Bin Laden and this, a good week for Treasuries.
Wall Street and Banks
Insider trading's big fish: Prosecutors have hedge fund giant Steve Cohen, of SAC Capital, in their sights. If they really have something on him, that would be immense, along the lines of capturing former Wall Street cultural heroes like Michael Milken or Ivan Boesky. Steve Cohen may actually be more important as a figurehead for hedgies than either of those guys. However, the investigation seems to have just started, insider trading is hard to prove, and just asking questions doesn't mean that someone is guilty. Reserve judgment until you see the proof.
Goldman Sachs shareholder meeting: Today. In New Jersey, of all places. More questions about bonuses and such.
Related: The New York Times DealBook is live-blogging the highlights.
More in self-flagellation: RBS announced a big loss.
Related: Now RBS is asking people to comment about those losses on its Web site. Really, isn't this asking for trouble? It may be a big step, however, for the banking industry's sense of penance. http://bit.ly/lLTE3C
AIG: Profit fell 85%, partly because of the Japan earthquake. Is there anything in the world that doesn't cause a loss at AIG?
Can the Federal Reserve regulate banks : Felix Salmon doubts it.
The income of strippers: (There's a mortgage angle.)
In Other Countries
The Chinese yuan: Why are we micromanaging China's currency? It's not like we don't have more pressing problems. This has been a side project of Treasury Secretary Tim Geithner's - he's convinced it's dragging U.S. exports down. But because of the weak dollar,our manufacturing sector is pretty strong. In any case, China seems to be coming around to his way of thinking on the yuan.
Mother Courage and her children: Russia has set a schedule for its $30bn privatization of state industries: its largest bank and its largest shipping company. It will be selling off stakes soon.
Portuguese for 'bubble': Of Note: U.S. private equity firm General Atlantic and Tiger Management invested in Peixe Urbano, which is the Groupon of Brazil. No dollar value (the investment is probably small) - but it's more proof that the "daily deals" phenomenon is global.
Wearing sneakers with everything: Vindicated.
The Arab Spring continues, in the arts: Egyptian musician Baligh Homody wrote the song Khosara, Khosara, sung by Egyptian legend Abdel Halim Hafez. You would not have heard except that it basically makes up the entirety of Jay-Z's 'hood anthem, Big Pimpin'", a judge ruled. Jay-Z apparently had not acquired the "moral rights." Fun trivia: "khosara, khosara" means "too bad, too bad" or "what a terrible loss," or loosely, "isn't that a shame?" in Arabic. Apropos.
SafeHouse with wide-open windows: The Wall Street Journal is trying to lure whistleblowers by starting its own Wikileaks-like site, SafeHouse. But Gawker complains it has privacy flaws - like, for instance, the Journal reserves the right to reveal the identities of whistleblowers to law enforcement authorities.
Philosophy of Capitalism: Last night, Easy Street checked out the Big Bold Benefit for a nonprofit called Echoing Green, which was founded by partners at private equity firm General Atlantic, including Dave Hodgson. Echoing Green has nothing to do with cleantech or sustainability - its name actually comes from this joyous William Blake poem.
Echoing Green's mission, it seems, is to combine capitalism's focus on numbers and results with do-gooders' ideas to change the world. They call it "social entrepeneurship." One of their early projects was Teach for America.
Last night, 20 finalists all had one minute each to pitch their ideas, including a software system that would allow teachers to track their students' performance, a program that would train native villagers to be health caretakers so that their neighbors don't have to walk 17 miles to a hospital, and a young man who gives South Africans the tools to start their own businesses and spur their local economy without relying on foreign aid.
Overall, it was an interesting exploration of a kind of hybrid capitalism -whether we can use money not just to make more money, but also as a tool for justice, to change things we don't like in the world. It's a concept we can all think about.