US jobs and confidence rise; Trump reverses himself; jobs grow in OECD; Aussies tackle large company payment terms abuse; Aussies install solar faster; UST 10yr 2.23%; oil lower, gold up again; NZ$1 = 69.9 USc, TWI = 75.1

First up, the number of Americans filing for jobless benefits unexpectedly fell last week. At the same time, a closely watched survey of consumer sentiment moved higher mainly through continued optimism over household finances. All this suggests the sharp slowdown in job growth in March may well have been an aberration.

The UST10s &30s say otherwise.

Someday there may indeed be a pick-up in global growth, though we will probably need all our fingers (and some toes) to count how many “unexpected” occurrences disrupted that “pick-up” over the years to come. And when it does come, there will be no need at all for vagueness about its features, as it will be obvious and unmistakable. Until then, these poor attempts at rational expectations manipulation should have been curtailed by now by even a modestly curious media that is sick of writing the same lines over and over. In other words, when global growth actually does happen it won’t be much talked about, and certainly not to the unceasing degree of the past seven years. Read more

Their (RBA) main concern is the lift in mortgage debt and slower growth of household incomes. If unemployment were to rise and/or interest rates were to lift markedly, that would create challenges for some families who basically have not built up any buffers for a bumpy ride. But it is just a risk at present – interest rates look to remain stable and the job market is still healthy. (my emphasis)

Exactly - one that prevents economic lift off and causes banks to seek liquidity rather than finance growth opportunities.

Witness JP Morgan.

Just this week, however, Mr. Dimon declares he is no longer so bullish. The events of these past few years have apparently been enough to, like policymakers, disabuse all notions of recovery. In his 45-page annual letter to JPM shareholders, the bank’s CEO now says, “there is something wrong with the US economy.” Outside of Economics, banking, and politics, his summation was met with a resounding “you just figured that out?”

What’s perhaps most important about his sudden reckoning is that he looks everywhere else for its cause. This is much the same problem as with Federal Reserve and indeed all global central bank authorities who do the very same, a tradition that started in Congress on March 28, 2007. The last place any of them will look for answers is within.

For JP Morgan, there are any number of balance sheet figures that show the bank’s part in all of this, from 2007 to the “rising dollar.” For one, there are its liquidity preferences as defined in the most traditional way – “cash due” and “deposits with others”, a category that includes JPM’s reserve account at the Fed. In 2007, only 3% of the bank’s assets were in cash, down just slightly from an average of 4.1% over the prior six years. It jumped to 7.6% in 2008, which only makes sense, but then fell back to 2.3% in 2010 despite QE1 – or actually because of it.

In other words, it seems very likely JPM was confident enough in the effects of QE toward establishing recovery and a return to pre-crisis conditions so as to hold so little cash so close to panic. That was maintained only to 2011 and resumption of the same monetary problems that have never been resolved. The proportion of cash hit 6.4% in 2011, then 7.4% in 2012, nearly the same relative balance as during the worst of the crisis. Rather than remove this idle liquidity in response to the third and fourth QE’s, JPM’s balance sheet at the end of 2014 would be 19.9% cash (only some due to regulatory changes). The proportion has declined somewhat due to efforts in early 2015 to restrict institutions holding their cash balances at the bank. As of the end of last year, JPM still shows 15.6% of its assets as cash. Read more