Succinct summation of week’s events:

Positives:

1) The Sept unemployment rate falls to 7.8%, the lowest since Jan ’09 as 873k jobs are added according to the household survey, exceeding the labor force increase of 418k. Avg hourly earnings up .3% m/o/m and avg work week up .1.
2) Initial Claims total 367k, below 370k for 2nd week after two previous above 380k.
3) Vehicle sales in Sept rise to best since Mar ’08.
4) ISM mfr’g and services both surprisingly rise from Aug.
5) Greek stocks end week up 12% and bond maturing 2/24/23 at .30 on euro, the highest since the debt exchange, due to growing sense Greece will get cut some slack and possible bank merger.
6) Spanish 2 yr falls almost 40 bps, are we getting closer to official help as Draghi is ready to spend some money?
7) Our largest trading partner Canada reports blowout payroll jump of 52.1k vs est of 10k.
8) RBA cuts rates 25 bps as they have flexibility to move.

Negatives:

1) Private sector adds only 104k jobs in Sept according to establishment survey, 26k below estimates and the U6 unemployment rate remains unchanged at 14.7%, reflecting the influence of part timers on the 7.8% print.
2) Sept retail comps very mixed.
3) China’s mfr’g PMI rises to 49.8 from 49.2 but below 50 for 2nd month.
4) China’s PMI services index falls to 53.7 from 56.3, the lowest in its short 19 month history.
5) South Korea’s mfr’g PMI falls to early ’09 low at 45.7 from 47.5.
6) India’s mfr’g PMI holds at 52.8 but at 9 month low.
7) Taiwan’s mfr’g PMI drops to lowest since Nov at 45.6 v 46.1.
8) Japan’s Tankan mfr’g index falls to -3 from -1,
9) UK PMI below 50 for 5th month at 48.4 v 49.6.
10) Euro zone PMI holds at 46.1, below 50 for a 14th straight month.
11) Australia’s trade deficit widens to most since Mar ’08 with merchandise exports to China falling to 6 month low.

Category: Markets

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2 Responses to “Succinct Summation of Week’s Events (10/5/12)”

  1. Back on Memorial Day, the TRI short-term outlook suggested GDP would dwindle to 0% by the Election. With less than 5 weeks ’til Americans go to the polls, this projection still holds. Adding to the fray, my Debt Wall model projects Congress will again be handcuffed by its $16.4 trillion Debt Limit on Jan 8 2013.

    There is virtually no indication the current downturn reflects a conventional inventory-inspired downturn of the business cycle. TRI finds animal-spirits-plus remain quite high and are in fact increasing. I believed this to be related to anticipation of regime change, but my current Race-for-the-White-House electoral college votes projection still indicates a slim Obama victory on Nov 6th.

    Today’s TRI projection infers BEA will be announcing Q3 GDP of -0.1% eleven days before the Election. Four days prior to voting day, BLS is likely to announce an 7.7% Unemployment Rate. General job creation is finally exceeding the 92k required to offset the monthly rise of the labour force via graduation and immigration. When the UR dips below 7% (2018Q2), the FOMC will commence to normalize its discount rates.

    TRI’s June warning of a horde of revenue misses and slashing of guidance remains remains intact. Last week I suggested this environment will continue thru ’til late February. Today, I’d say mid-February.

    Despite the TRENDLines Recession Indicator being at its worst level since the Great Recession, the mainly left-dominated media appears to have purged “double dip” from its on-air rhetorics albeit they took pleasure in those dire ad nauseum warnings thru 2009, 2010, 2011 & early 2012. It is indeed apparent they’re avoiding to report the collapsing numbers in order to protect “the chosen one”.

    But there may be good news in late November. The Senate’s gang-of-8 is back on the job and readying draft legislation for the lame-duck session to address the source of the uncertainty causing this GDP pause: Sequester, Bush-era tax cuts, payroll holiday, increasing Debt Limit & paring of entitlements. If they don’t just kick-the-can, the S&P will see a new record high in the ensuing days!

    Debt Wall & TRI charts: http://trendlines.ca/free/economics