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 -105K Actual -54 Prior -131 Revised -54
- Change in Private Payrolls: Survey 40K Actual 67 Prior 71 Revised 107
Private Payroll Formation coming off the trough of the recession
- This recession is actually tracking previous recessions in terms of adding Private Payrolls. Total Payroll formation lags a bit, but is also tracking fairly close. Overall, today’s payroll report is a good one, although the manufacturing payrolls are a bit of a conundrum (particularly in light of the ISM numbers earlier this week). Ten year yields immediately jumped ~11 basis points as the bond market priced in higher growth.
- Change in Manufacturing Payrolls: Survey 10k Actual -27 Prior 36 Revised 34
- Unemployment Rate: Survey 9.6% Actual 9.6 Prior 9.5
- Avg Hourly Earnings: Survey 0.1% Actual 0.3 Prior 0.2
- Avg Weekly Hours: Survey 34.2 Actual 34.2 Prior 34.2
- The Coast Guard is investigating the cause of a fire on an oil platform in the Gulf yesterday. The fire started in or near the living quarters, according to a Coast Guard spokesman, which means it may not have been related to the platform’s operation. Yesterday, the news of an explosion and fire drew parallels to the BP disaster. It turns out there was no explosion, however. Still, Bloomberg News says industry watchers fear the accident may end the industry’s hopes for an early end of the deep-water drilling moratorium. The WSJ says Mariner Energy has a history of fires and violations, which reinforces the Administration’s argument for a thorough reexamination of regulations and procedures.
- The WSJ says Afghan President Karzai’s brother, the largest shareholder in Kabul Bank, is in the US to back the bank to stop a run which has already depleted a third of the bank’s deposits. A spokesman for the Obama Administration says a team of experts has been dispatched to advise the Afghan central bank, but there are no plans to support the Kabul Bank itself. – WSJ
- The Administration is considering a permanent extension of the research and development tax credit, according to Bloomberg News, in addition to a payroll tax holiday, a small business tax cut and additional infrastructure spending as part of a second stimulus package expected to be proposed in the fall. – FTN Financial
- US equity technicals (from M. Krauss) - Two strong days have now entered 1091-1108 near term resistance, after Wednesday’s 1040 two-week base breakout above 1065. Bears if below 1065/1055. Holding 1040 into early-October would generate a 1150-1200 Christmas present for the bulls. To us, Aug’s 1129 to 1040 decline was a corrective ABC, not an impulse of a new bear market.
- BP oil spill – BP has said that its costs to date due to the Gulf spill amount to ~$8B. Bloomberg
- European Central Bank President Jean-Claude Trichet adopted a more hawkish tone at yesterday’s monthly press conference than last month. The head of the Governing Council said, “Risks to the outlook for price developments are slightly tilted to the upside.” In August, the ECB wrote that “Risks to the outlook for price developments are broadly balanced.” – Bloomberg
US Unemployment Rate – 1980 to present
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