Easy Street: Our Ugly Economy, the Flash Crash and Bond Vigilantes
Easy Street is Marketplace's daily roundup of the most interesting news stories and commentary about Wall Street, Washington and the curious world of finance. You can see more of what we think are the biggest stories of the day on our News in Brief page. Every day, you can download Marketplace's daily show on iTunes and follow us for more headlines at twitter.com/mktplaceradio. If you want to listen to Marketplace on the radio, find out which stations and what time the show runs]().
The planets are now aligned -literally - which may help a budget deal, speculates Politico's Morning Money.
Initial jobless claims: They're ugly today. But they also don't jibe with other factors like sales receipts that might indicate a recovery. Why are we getting such mixed messages? Peter Boockvar, an equity strategist for Miller Tabak, writes today, "According to the Labor Dept, a spring break holiday in NY, a new emergency benefit program in Oregon and auto related disruptions because of the supply issues out of Japan all combined for the spike in Initial Jobless Claims. They totaled 474k vs expectations of 410k and up from 431k last week. The analyst at the Labor Dept is saying that the one time factors were solely responsible for the 474k print and said "I don't think it's economic factors." Hopefully they are right but claims are above 400k for a 4th straight week."
Employment report: The April employment report is coming out tomorrow. We may have some actual surprises. Research note from MKM Partners (an arbitrage trading firm): "The April employment report will be released tomorrow morning, and we foresee the possibility that actual private nonfarm payrolls diverge from expectations due to a number of factors.....over the last 12 months, nonfarm payrolls have beaten expectations five times and missed seven times."
Related: Neil Irwin asks, What's with all the shaky economic reports? Marketplace senior reporter Alisa Roth tallies the bad news here.
The Flash Crash: We're not closer to understanding what caused it, and the markets didn't change very much, so we're a lot more insecure, experts tell me.
Related: The markets didn't change enough, so we're a lot more insecure, experts tell Reuters.
Treasury Rates: Yahoo! Finance's Daniel Gross has a nice witticism today about the investors who protest U.S. policies by taking it out on bonds: "U.S. 10-year bond at 3.18%. I guess those Navy SEALs took out the bond vigilantes, too."
Glencore is a giant firm that trades commodities and makes an enormous amount of money doing so. Now that Glencore is planning an IPO this month, banks like Morgan Stanley and Goldman Sachs have to deal with something they haven't had to think about for a long time: a large, impressive rival.
Related: Glencore IPO produces Europe's richest man: Ivan Glasberg now has $10 billion. That's impressive, but given all those Russians, wouldn't one think that Europe has richer men? Has the financial crisis hurt the number of European oligarchs, aristrocratic gadabouts and zillionaires?
Foreclosure is just another way of saying 'we love you.' Jamie Dimon, the generally adored CEO of JP Morgan, got caught up in his words a few months ago when he claimed that foreclosures are a way for banks to wipe out your debt and let you start clean.
Related: Bank of America is tripling the number of its foreclosure help centers to 40 by this summer.
Related: From our email today: "For the fifth consecutive quarter, U.S. consumers are less of a credit risk, according to TransUnion's Credit Risk Index... TransUnion's Total Inquiry Index revealed demand for credit continued its decline, but at its slowest rate in three years. These key findings are evidence that U.S. consumers are leveraging their debt more carefully, relying more on existing credit, cash or debit cards. However, they are seeking new credit for larger, specific purchases rather than using it to make ends meet."
Money and You
College graduates' pay rises - more than inflation: Do these numbers seem incredibly high? According to our friends at FINS (the finance-careers site of the Wall Street Journal): "The average offer for those getting bachelor's degrees this spring rose to $50,462 a year from $47,673 a year ago, a 5.9% increase, according to an annual survey by the National Association of Colleges and Employers. And the market is particularly hot for economics majors, who are drawing salaries almost 10% higher than the average this spring, $54,634."
Curveball on Justice Department's antitrust beat: The Justice Department, usually focused on things like mergers and the increasing evils of Google, is now examining whether the Bowl Championship series complies with US laws. John Majoras, a partner with law firm Jones Day and "a practicing sports fan," says this in an email: "Americans should be very heartened that the threat of real antitrust issues must be so remote that the DOJ can waste time on this. I sincerely hope that they are merely throwing a bone to some politician who has been pressuring them so that he or she can run for reelection having done his/her all to be sure that State U. can play more football. Do we really want a bunch of antitrust lawyers designing a play-off system for college football? What's next, a challenge to the way MLB chooses wildcard teams? DOJ lawyers or State AG's monitoring your kids little league championships? Get serious. Seriously."
Japan: As the nuclear crisis deepens, it also emerges that the economic impact of the quake was far worse than feared. It will also be harder to pay for reconstruction because of Japan's heavy debt burden. What are we looking at, exactly? Well, per Reuters, "The government estimates the material damage alone could top $300 billion, making it by far the world's costliest natural disaster."
Egyptian gas: Dana gas has discovered a new gas pocket in the Nile Delta. This comes on the heel of the discovery of natural gas in Israel. Per Dana, "Egypt is a country whose gas reserves have doubled in the past 5 years to over 70 trillion cubic feet, and now produces more gas than oil and is already among the world's top ten exporters of LNG." Will these newly discovered natural resources help stabilize the economic and political situations in these countries, or make it worse?
The Washington Matrix
Dodd-Frank: expect delays.
Timothy Roemer, Commerce Secretary? The latest Washington scuttlebutt is that the former U.S. envoy to India might enter the Washington fray in a big way]().
How much did the search for Osama Bin Laden cost the United States? A whopping $2 trillion, according to the Financial Times.
Six words about your mother: A nice interactive, creative feature from the New York Times.