Bulls show no signs of trepidation ahead of tomorrow’s October jobs report, charging to strong gains, led by consumer discretionary stocks, financials, industrials and materials.
Interesting dimension to today’s rally is the US dollar index — it actually inched a bit higher, and was mostly in positive terrain throughout the session. We’d noted a loosening in the USD’s inverse correlation to stocks in the past couple days, but today it was more pronounced. Treasurys, too, actually held up better than one might expect amid such a solid equities rally.
So have stocks already priced in a good jobs report? Tune in tomorrow. As usual we’ll be most interested to see the length of the work week, the broader U-6 unemployment measure and durations of unemployment.
DJIA rises 203.82 to 10005.96, and Nasdaq Comp adds 49.80 — or 2.4% — to 2105.32. S&P 500 ends 20.13 higher at 1066.63.
There's two of us, OK, which probably means, like 10 jobs saved, right?
To begin with, pretending it’s possible to count “jobs saved or created” by wads of federal stimulus money is an exercise in intellectual dishonesty.
And now we’re beginning to see just how kooky it really is as news outlets take a closer look at the numbers released last week, and just how they were derived.
Carnegie Mellon professor Allan Meltzer put it best in a WSJ op-ed last week, as he assailed the $780 billion stimulus as “wasteful and ineffective.”
The Council of Economic Advisers was so pressed to justify the spending spree that it shamefully invented a number called “jobs saved” that has never been seen before, has no agreed meaning, and no academic standing.
This week, both the WSJ and Chicago Tribune have independently analyzed the “saved or created” data, and found in many instances, more jobs were reported as saved than actually existed in the first place. Continue reading…
In today’s edition of Tomorrow’s News Today (say that five times fast): That productivity surge sure sounds good, unless you were one of the workers who got fired, and whose costs the company was able to excise, thus allowing the remaining workers to appear to be “more productive.” October’s retail sales rose again, but were a bit disappointing, and central bankers overseas are talking, in banker-speak, about laying off the stimulus.
We’ve mentioned deflation once or twice, and that it’s the Fed’s worst nightmare. It’s the boogieman, the Headless Horseman, the Candyman (the scary one, not Willy Wonka*,) don’t dare speak its name, because to speak its name is to give it life, and once it comes, there’s hell to pay.
Ever notice how badly the Fed contorts its words to avoid saying deflation? Check out this chestnut from the minutes of the September FOMC meeting:
…the expected policy path shifted down further, on net, as investors apparently interpreted weak labor market conditions and generally quiescent inflation as consistent with an outlook that would lead the FOMC to maintain low policy rates over the medium term.
The Fed has pumped more money into the system than ever in its history, combined (the image of a fire hose often comes to mind,) and inflation is “generally quiescent?” Dropping interest rates to zero and keeping them there is absolutely unprecedented in the Fed’s history. Inflation should be out of control at this point (and measured the right way, by, say, stock or commodity prices, it is.) But it isn’t. It isn’t, and if it isn’t, it has to be because there is a large counterweight somewhere.
This is total speculation on my part, but looking at what the Fed’s doing, rather than what they’re saying, I’d say they’re terrified of deflation. And deflation’s in the air because of what is still a very weak labor market, much weaker than the stock market is accounting for.
Stocks were generally weaker in Asia overnight, and European markets are lower. With a non-event FOMC meeting now in the rear-view mirror, focus turns back to economic data.
There’s clearly been some improvements, though the better readings seem well priced in to the market by now. Weekly jobless claims, 3Q productivity & unit labor costs due at 8:30am ET. October chain-store sales reports flow out all morning. On jobless claims, initial and continuing claims numbers have been coming down, certainly a positive, but the number of folks collecting unemployment benefits, including emergency and extended payments, hasn’t abated yet.
US dollar index a little higher. Incidentally, USD’s inverse tracking to stocks has loosened a little in the past two sessions. S&P futures up a 1.10; DJ futures up 7. Ten-year higher, yield at 3.52%.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
