The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:
Change in Nonfarm Payrolls: Survey -5K Actual -95 Prior -54 Revised -57
Change in Private Payrolls: Survey 75K Actual 64 Prior 67 Revised 93
Unemployment Rate: Survey: 9.7% Actual 9.6 Prior 9.6
While extremely unlikely, if equities were to rally today on this report, then they truly are bullet proof.
- Earnings – AA first Dow component to report earnings (Thurs night); results beat and managemet commentary on the call positive; JPMorgan is upgrading AA to OW this morning. – JPM
- “We hope this experiment in re-inflating the economy works better this time, but mark us down as skeptical. There is no such thing as free money, and a second round of Quantitative Easing (QE) carries enormous risks for what looks to us like far too little benefit. We’re told the Fed’s own internal models suggest that a purchase of $500 billion in Treasurys would only reduce the 10-year bond by something like 15 basis points. (The 10-year yield is now 2.38%.) This in turn would increase GDP by 0.2% a year and cut the jobless rate by 0.2%. That’s not much bang for a lot of bucks” – WSJ
- Fed – Bullard remarks on CNBC this morning – he says the Nov 2-3 meeting will be a “tough call” b/c “QE2” is such an extraordinary measure and the economy doesn’t seem to be weakening so much. Bullard says nothing is set in stone ahead of the meeting, although it would take a series of very strong eco numbers to really change opinions.
- White House will make overtures once the mid-term elections are over. Democrats close to the Administration say the White House wants to make amends and will make its relationship with business a priority after the midterm elections….changes could include Obama’s backing of proposals to cut payroll taxes temporarily, which could save companies billions. Obama may also name corporate execs to his cabinet. – Bloomberg Business Week
- Larry Summers calls for an increase in infrastructure spending - called it a “short-term and long-term macroeconomic imperative” that the US government increase infrastructure investment – FT
- Bank failures – FDIC to outline new rules on bank seizures – the FDIC is expected to say that all creditors of large, nonbank financial firms should expect losses in a failure. The rule will make clear that “all equity shareholders and unsecured creditors are at risk for loss and … that their claims will be processed in accordance with the priorities established under the bankruptcy code.” However, the FDIC may add that some short-term creditors could receive additional payments in certain instances. WSJ
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