News You Can Use From Phil’s Stock World

Financial Markets and Economy

U.S. Unemployment Falls to Lowest Level Since May 2008 (Bloomberg)

Payrolls rebounded in April following an even bigger setback a month earlier than previously estimated, a sign companies are confident the U.S. economy will reboot after stagnating early this year. The unemployment rate dropped to 5.4 percent.
The 223,000 net increase in employment followed an 85,000 gain in March that was the smallest since June 2012, figures from the Labor Department showed Friday in Washington. The jobless rate fell to the lowest since May 2008 as more Americans entered the labor force and found work. Average hourly earnings climbed less than forecast.

Do diverging monetary policies dictate a new market view? (QZ)

Lately, it seems, it’s every central bank for itself.

In embarking on an asset purchase program that will add more than €1 trillion ($1.13 trillion) to its balance sheet through September 2016, the European Central Bank (ECB) has committed to fighting deflation.

Jobless Claims in U.S. Hover Near Lowest Levels in 15 Years (Bloomberg)

Fewer Americans than forecast filed applications for unemployment benefits last week, dropping the average over the past month to the lowest in 15 years, indicating companies are holding on to workers.

Rosenberg: The number one issue in markets right now can be summed up in 2 words (Business Insider)

There is a "number one issue" that markets are worried about, says David Rosenberg.

"In two words: market liquidity."

In a note to clients, Rosenberg, chief economist and strategist at Gluskin Sheff, echoes a top concern of Allianz's Mohamed El-Erian, who said market liquidity is "one of the most under-appreciated risk factors facing most investors today."

China's Very High Mountain of Debt (Bloomberg)

China's debt mountain is casting a shadow over the world's second-largest economy.

Total debt has reached 282 percent of GDP, according to the McKinsey Global Institute. While other big economies aren't far behind, it's the pace of China's credit expansion that's worrying policy makers, spurring targeted stimulus strikes while trying to avoid a debt sugar hit.

Don't Buy Alibaba's Success Story (Bloomberg)

From Tokyo to Mumbai, there's been plenty of anxious chatter recently about how China's bull market — which turned 883 days old this week — may have finally run its course. At the end of Asian trading on Thursday, the Shanghai Composite Index had fallen 8.2 percent in three days, its worst performance since mid-2013.

That was before Jack Ma, chairman of China's e-commerce giant Alibaba, had his say. After the close of trading on Thursday, the company reported a 45 percent jump in fourth-quarter revenue, handily beating Wall Street estimates. To anyone who wondered whether the 105 percent rally in Shanghai shares over the past year was over, Alibaba's success seemed to offer a sharp rejoinder.

Why are stock prices so high? Follow the borrowed money (Market Watch)

Maybe the bears and cynics and general party-poopers are all wrong. Maybe the stock market these days isn’t a giant Ponzi scheme.

Maybe it’s a shell game.

The cheerleaders on the Street of Shame won’t tell you this, but lurking behind the phenomenon of today’s skyrocketing stock prices is a surge in corporate borrowing.

Interview with Sheila Bair (Money and Banking)

Chairman Bair: It has made me more – not less – worried about the considerable power of the Fed. I am more concerned about how extensively their power has been used and could be used in the future, and the way that power has and could disrupt markets now and in the future.

Zero interest rates have gone on for far too long. We had a crisis that was based on solvency problems: banks and households were borrowing too much. They needed to go through a process of deleveraging. Monetary policy cannot address that.

Varoufakis Says Greece Ready to Take EU Impasse Down to the Wire (Bloomberg)

Greek Finance Minister Yanis Varoufakis said his government is prepared to go “down to the wire” in talks with its creditors as policy makers signal they’re losing patience with the country after months of brinkmanship.

Varoufakis, who denies he’s been sidelined by Greek Prime Minister Alexis Tsipras in the negotiations, said he expects an agreement in the next two weeks, though one is unlikely to be announced when euro-area finance chiefs meet on Monday.

Pound jumps above $1.54 after election exit poll puts Conservatives in the lead (Market Watch)

The pound jumped to its highest level in a week on Thursday after a closely watched exit poll from the U.K. general election showed surprisingly strong support for David Cameron’s Conservative Party.

 

Politics

Liberal Britain just got slaughtered (Business Insider)

In 1935, George Dangerfield wrote a book called "The Strange Death of Liberal England," charting the downfall of the UK's once mighty Liberal party in the early 20th century.

We're going to need a sequel.

The Liberal party's successors, the Liberal Democrats, got absolutely thrashed Thursday in Britain's general election. They are a centrist, socially liberal party that prides itself on sitting between the right and left flanks of British politics. One of its MPs described its ideal voter during this election campaign as "posh-ish, upper middle class, but [living] in a small flat".

Cameron Set to Return With U.K. Majority as SNP Sweeps Scotland (Bloomberg)

David Cameron is poised to return as U.K. prime minister after steering his Conservatives to an unexpected majority, helped by a landslide for nationalists in Scotland at Labour’s expense.

The pound jumped as projections of the final tally in the British general election indicated that the Conservatives had defied opinion polls to easily defeat Ed Miliband’s Labour Party. With most seats declared, the BBC forecast the Tories to take 331 of Parliament’s 650 seats to Labour’s 232 seats, a result that would allow Cameron to ditch his Liberal Democrat coalition partner of the past five years and govern alone.

Victory for David Cameron's Conservatives After Labour Gets Wiped Out (Business Insider)

David Cameron looks likely to remain as prime minister after his Conservative party won the most seats in Britain's most closely fought general election in recent history. 

There was a huge unexpected swing away from Labour to the Tories; Labour lost Scotland to the SNP; the Liberal Democrats were wiped out generally; and UKIP took only one seat. 

Technology

Tesla's Battery Grabbed $800 Million in Its First Week (Bloomberg)

Tesla is already building a 5-million-square-foot battery factory. It's not big enough.

That was the message from Tesla Chief Executive Officer Elon Musk this week while discussing, for the first time, the early response to his new product line of storage batteries designed for use in homes and businesses. The numbers are impressive. In the first few days of reservations since the battery announcement late on April 30, Tesla took orders worth roughly $800 million in potential revenue, according to figures compiled by Bloomberg Business.