Posts filed under “Federal Reserve”

NFP: much ado about very little

The dismal set has gotten all hot and bothered over the preliminary ADP data, thought by some to be an early read on the NFP report. According to  National Employment Report from Automatic Data Processing, the "private sector added a seasonally adjusted 368,000 nonfarm jobs in June."

It turns out that the ADP data is compiled, seasonally adjusted, and massaged in a very different manner than BLS does.

Regardless, its actually much ado about very little. Although NFP is eagerly awaited each month by wonks of all stripes (present company included) today’s number is unlikely to represent a significant departure from the well established trend that has developed since the 2001 recession ended.

One point does not a trend make. And even if today is a killer number, we have seen what’s been in place for nearly 5 years — and it has been none too encouraging.

Why? The simple fact is that this recession recovery cycle has been historically very weak in terms of private sector job creation. Indeed, depending upon how you measure it, this is the first or second worst cycle since WWII.

The present cycle is overly dependent on government jobs. Its seen a hugely disproportionate number of private sector employment overly Real Estate reliant. These positions are more the product of government stimulus — i.e., ultra low rates — than they have been of an organic nature. Further, many of the remaining non real estate jobs have been disproportionately of the lower paying / weaker benefit variety than the jobs they are replacing.

And as the recent spate of layoffs in construction, mortgages, and real estate brokerage reveals, as rates rise the new jobs turn out to be somewhat more temporary in nature than originally believed.

So regardless of the outcome of today’s report, it is but one number in an ongoing series. And the prior series has been rather disappointing from a macro perspective.

~~~
Prior to the ADP report’s release, the consensus was for 170,000 nonfarm jobs; that’s now been bumped up to 200k.

I’m sticking with the under.

Category: Employment, Federal Reserve, Real Estate, Wages & Income

Ignore Inverted/Flat Yield Curve at Your Own Risk

Category: Data Analysis, Economy, Federal Reserve, Fixed Income/Interest Rates, Markets

1/4 point, or . . . ?

Category: Federal Reserve

CPI Null Set (via The Economist)

Category: Data Analysis, Federal Reserve, Financial Press, Inflation

Call to ARMs

Category: Federal Reserve, Inflation, Markets, Real Estate

The Return of Abelson

Bol_logo_top_page_05"AS WE WERE SAYING BEFORE WE WERE SO rudely interrupted by a man dressed in a white smock and wielding a scalpel (thank heavens he left his box-cutter at home), the stock market looks a bit worse for the wear."

>

So says Barron’s Alan Abelson, usually one of Wall Street’s most visible Bears. Just his luck — or was it the Trading Gods having some fun? — that he managed to be out of service for the most bearish period in 3 years. Traders, being a superstitious lot, will soon be begging Abelson to "let us know the next time you go in for a procedure" – so they can get short.

Regardless, whatever the  man dressed in a white smock removed, it wasn’t his arch sense of humor or acid tinged tongue:

"The impact of the massive disturbance was global in every sense: Not only were its terrible tremors felt far beyond the narrow canyon of capitalism in lower Manhattan, but they commanded notice in quarters much loftier than trading floors or commodity pits. We’ve not the slightest doubt, for example, that what prompted the famed cosmologist Stephen Hawking early last week to urge earthlings to create settlements in space was, pure and simple, fear of the effect of crashing markets on the human race."

But the key to Abelson’s return is his clear eyed take on inflation, which comports squarely with our own views:

"FOR OPENERS, OUR HUNCH IS THAT MR. BERNANKE’S concerns about inflation, despite his mucking up the message with all that rubbish about inflationary expectations, have more than a modicum of merit. And our conviction on this score is only strengthened, of course, by the fact that so many pundits pooh-pooh inflation as a problem. Indeed, if anything, we fault the chairman for his evident sympathy with the argument that the fearsome upward spiral in the price of crude, so far, anyway, hasn’t been exerting all that much impact in the economy at large.

Apparently, Mr. Bernanke, like his critics, needs to get out more. Oil is a very sneaky commodity. Our old friend and revered Barron’s contributor, Abe Briloff, likes to describe certain stealth accounting practices as comparable to a bikini: what they reveal is interesting, what they conceal is vital. Oil is something like that: Its uses are readily manifest, but it plays a far bigger and more critical role in our lives than is easily perceived.

Read More

Category: Federal Reserve, Financial Press, Inflation, Investing, Markets, Psychology

Much Ado About Nothing

Category: Economy, Federal Reserve, Inflation, Markets

How the Fed Chief Gains Credibility

Category: Federal Reserve

What Happens if Inflation Is Overstated?

Category: Data Analysis, Economy, Federal Reserve, Inflation, Markets, Real Estate

A Consensus is Developing: Blame Greenspan

Category: Economy, Federal Reserve, Fixed Income/Interest Rates, Inflation, Markets, Psychology