Chart of the Week: NYSE Seats versus S&P500

The current prices that are being paid for NYSE seats are much higher
than they have been relative to the S&P500.

If the historical
relationship remains relatively stable, than one of two outcomes is
implied:  either the S&P500 is very undervalued relative to the
seats – or the seats are being overpaid for.

NYSE Seat Exchange Prices vs SPX


Source: Michael Panzner


Will the historical pattern hold up, or does the recent merger alter the relationship? It is possible that the NYSE/Archipelago deal is skewing the value of NYSE seats.

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Economists React to Jobs Data

The WSJ reports that "hiring recovered in November from a hurricane-induced slowdown
in the previous two months, as employers added 215,000 jobs to U.S. nonfarm
payrolls, suggested that employers were more willing to take on new workers as
the economic effects of a destructive hurricane season faded. Energy prices,
which soared as powerful storms roiled oil and natural-gas production, have
declined recently, and headaches caused by disruptions to transportation have
eased. The unemployment rate held at 5%.

What’s ahead for the jobs market?
Economists weigh in:

* * *

Katrina came. Katrina went. Except in parts of the Gulf
Coast, it is time to move on and that is what is happening in the economy. Job
gains rebounded to what I consider to be normal levels in November. And, despite
the massive losses in the Gulf, the revised data indicate we never did see
payrolls decline. The September drop is now a small gain. But what is impressive
is the broad based nature of the increases. Over 62% of the industries reported
payroll gains, the highest since hiring
began to rebound sharply in spring of

– Joel L. Naroff, Naroff Economic Advisors

* * * * *

The one indicator that may prove most troubling to some
bond market participants will be average hourly earnings. We are long-time
skeptics of this series, but it still garners the most attention of the various
wage measures. Hourly pay rose 0.2% in November, and both September and
October’s advances were bumped up upon revision. As a result, the year-over-year
increase accelerated to 3.2%, highest since March 2003. … That makes me more
inclined to believe that something real is happening on the wage front, which
confirms our suspicion that the economy is operating fairly close to full

– Stephen Stanley, RBS Greenwich Capital

* * * * *

Today’s data suggest labor market recovery remains on
track following the hurricane hits in September/October.  Still, increases in
labor input are mild given current growth rates. Mildly diminishing labor market
slack isn’t too threatening if these trends persist.

– Steven Wieting,

* * * * *

This report is about as close to consensus expectations as
an employment report can be. The report shows solid employment growth and hints
that tightness in the labor market may be pushing wage increases higher. If this
latter trend continues, it will be of concern to policymakers at the

– John Ryding,Conrad DeQuadros, Elena Volovelsky, of Bear

* * * * *

The most interesting feature of this month’s report is the
information from some special questions in the household survey on persons
displaced by Hurricane Katrina. There are nearly 900,000 persons 16 and over
evacuated for Katrina, split evenly between those now in the same residence as
in August and those in a different residence than in August. The
employment-to-population ratios are 46.1 and 41.6 percent for the two groups,
respectively, compared to a national figure (not seasonally adjusted) of 62.9
percent. If the national figure is a reasonable proxy for what the Gulf Coast
might be experiencing absent the hurricanes, that suggest continued unused labor
capacity of about 30 percent among those people evacuated.

– Andrew
Samwick, Dartmouth College

* * * * *

Job growth was well distributed in November, suggesting
that much of the earlier weakness was temporary in nature and most likely due to
the disruptive influence of the hurricanes and the temporary spike in oil and
gasoline prices. There is nothing in this report that changes our basic view of
Fed policy (25-basis-point tightening moves at the next four meetings) nor of
underlying economic activity.

– Joshua Shapiro, Maria Fiorini Ramirez

* * * * *

While the gain is encouraging, there is still a matter of
lost jobs in September and October that have not been recovered. Without a
hurricane, we would have expected job growth to average about 200,000 per month
over the past three months (or 600,000 jobs total), but instead, Non-farm
payrolls increased by only 92,000 jobs on average over the past three months.
The recovery process may be stretched out over a long time period.

Stephen Gallagher, SG Cowen

* * * * *

The slow tightening in the labor market is gradually
boosting hourly earnings but the absence of any bargaining power is keeping that
gain relatively modest, especially after adjusting for inflation. The flat
workweek indicates that businesses remain very cautious. As interest rates rise
and it becomes more difficult to extract home equity to sustain consumer
spending, gains in hourly earnings will become increasingly important.

Steven Wood, Insight Economics

* * * * *

Nominal wages have grown at a 3.5 percent annual rate over
the last quarter. This is up from just a 2.5 percent annual rate in the first
half of the year. This suggests that workers are taking advantage of a tighter
labor market to secure wage gains. Wages had lost considerable purchasing power
over the last year and a half due to higher energy prices, but with gas prices
plunging in the last month, and wage growth accelerating, workers may finally be
poised to get a share of the gains from the recovery.

– Dean Baker,
Center for Economic and Policy Research

* * * * *

The BLS has not offered any estimates of the ex-storms
number, presumably because the flow of people making unemployment claims as a
result of the storms — which can be measured — is being offset as people who
had been laid off return to work or find new jobs, which cannot be captured by
the survey.

– Ian Shepherdson, High Frequency Economics

* * * * *

There was evidence of some recovery of jobs that had been
lost due to the hurricanes but the pace of rehiring appears to have been slower
than we had assumed. For example, the leisure & hospitality category (which
includes restaurants, hotels, etc) showed average monthly job gains of 30,000
during the first eight months of the year, followed by hurricane-related
declines totaling 82,000 during September and October. In November, this sector
showed a rise of 29,000. So, we are back to trend but there still appears to be
be about 140,000 lost jobs in the leisure and hospitality industry that should
be recovered at some point in the months ahead.

– David Greenlaw and Ted
Wieseman, Morgan Stanley

* * * * *

Normally, a figure greater than 200,000 is considered very
good but coming after two months of tepid jobs growth, thanks to hurricanes
Katrina and Rita, the November gain should be viewed as adequate. Over the last
three months, jobs growth has averaged 92,000. Economic growth appears to be
moderating from the red hot numbers posted in the third quarter, and it the Fed
does not push interest rates too much higher, the economy will grow at a 3.5%
pace the first half of 2006.

– Peter Morici, Robert H.Smith School of
Business, University of Maryland

* * * * *

As an indication of things to come, the construction
industry added 37,000 worker in November and 35,000 in October. This above
trend strength is likely to continue as workers normally laid off in the winter
find plenty of jobs in the South where  reconstruction from the storms will
intensify in the months ahead.  We also expect overall job growth to continue
running above trend  until all the workers displaced by the hurricanes have
returned to work.

– David H. Resler and Gerald Zukowski, Nomura
Securities International

* * * * *

Economists React
December 2, 2005 11:09 a.m.

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