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TODAY WAS A GOOD DAY
If non-farm payrolls for December were the Harlem Globetrotters, payroll estimates were the Washington Generals. The US added 312k payrolls vs. an estimated 176k.
But the payroll figure wasn’t the only economic number with no regard for human life. The unemployment rate hit 3.9% in December. This, of course, was higher than November’s 3.7% but it’s all gravy: 419k new workers entered the workforce, thus increasing the denominator of the calculation.
And economists prayers were answered: average hourly earnings jumped 3.2% vs. last year, the fastest pace since ’09. This is a BFD as there were concerns about low unemployment and stagnant wages.
The job’s report got markets all hot and bothered in the AM, but it was Fed Chairman Jerome Powell’s comments that poured gasoline on the fire. Jay sat down with Janet Yellen and Ben Bernanke at the American Economic Association.
The key takeaway? Proceed with caution. As expected, Jerry Interest Rates indicated that 2019 rate hikes will be dependent on economic data and market volatility. He also made it crystal clear that he could pause the wind down of the Feds balance sheet, which is also a mechanism for tightening monetary policy.
And Powell didn’t mince words when indicating that he would not step down as Fed Chair if asked to do so by President Trump.
So what’s the bottom line?
Investors really, really liked what they heard. The Dow rose nearly 400 points on the jobs report and another 400 following the Fed Chair’s comments, closing up nearly 750 points.
WHOMST FRAUDULENT MD?
Three former Credit Suisse bankers have been charged in a multi-billion-dollar fraudulent loan scheme in Mozambique and face extradition to the US. *Looks at globe* “Where the f*ck is Mozambique?”
Former MDs Andrew Pearse and Surjan Singh, and former VP Detelina Subeva were indicted in NY for arranging over $2B in loans guaranteed by the Mozambique government for an alleged maritime project (ironically enough, “stopping pirates”). It turns out that at least $200M was earmarked for bribes and kickbacks for the bankers, politicians, and contractors. Can you say “1MDB Jr.?”
The bank, doing its best Goldman Sachs impression, still approved the loan, despite red flags. For what it’s worth, the bank might’ve been working with cooked books as the “rogue bankers” failed to report critical information to the compliance staff and removed specific loan details without any approval.
Thus far, CS has not been named as a culprit.
A game of “chicken”
Arguably the best parts of the entire debacle are the comically incriminating emails straight out of a rejected sub-plot for ‘Homeland.’ One co-conspirator referred to bribes as chickens … as in “Fine brother. I have consulted and please put 50 million chickens.” You can’t make this sh*t up.
UP IN FLAMES
California’s largest utility company, PG&E, is threatening to file for bankruptcy. CA’s recent fires may have been caused by PG&E equipment, and whether or not the company is found negligent, they may still be required to carry some of the financial burdens due to California law.
Lawmakers in California may be able to create a rescue package for the company, including extending the legislation that PG&E can issue bonds with which to pay back debts related to natural disasters stemming from 2017 natural disasters. Because this is far from PG&E’s first rodeo.
In the meantime, the California Public Utilities Commission is exploring whether to break up or take over the Pacific Gas & Electric arm of PG&E Corp, which the company is looking to sell.
So why not just help?
Not all lawmakers in California are willing to be strong-armed into helping. For what it’s worth, this is the same state which elected Kindergarten Cop as its governor.
Senator Jerry Hill argued that PG&E had threatened to file for bankruptcy back in 2017 when it was held liable for a previous round of forest fires, and was bailed out by legislation. Burn.
IN OTHER NEWS
- Are we done here? The U.S Supreme Court agreed to hear an appeal over Broadcom’s acquisition of data center equipment maker Emulex Corp, saying that shareholders were misled in approving the 2015 deal.
- Elon is asking investors who are suing Tesla to leave his former girlfriend, Grimes, out of the ongoing investigation over his infamous “funding secured” tweet. The prosecution claims that she may have additional information relating to the tweet and insight into whether Elon was trying to mislead investors. It seems pretty clear to the rest of us that he was just really high.
- Stop following me! LA county is suing IBM claiming its Weather Channel app was tracking user’s locations without permission and selling it for ad retargeting and identifying customer trends. Watson’s people claim their actions were in line with user agreements and the data was used to help develop the super computer’s algorithm.
- No Huawei. Employees of the Chinese telecom giant were disciplined for “accidentally” tweeting on the company account from an iPhone. According to Reuters, the people responsible had their salaries reduced by 5k Yuan ($730). Thanks for adding “Tweet Source,” @Jack.
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