It's The Economy Stupid: Payrolls, Hourly Earnings, Underemployment

Best Statistic of the Day:  More people have walked on the moon (12) than have scored an earned run on Mariano Rivera (11) in the playoffs (141 innings).

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Change in Nonfarm Payrolls	FEB	165K	236K	157K	119K
Change in Private Payrolls	FEB	170K	246K	166K	140K
Change in Manufact. Payrolls	FEB	9K	14K	4K	12K
Unemployment Rate	FEB	7.9%	7.7%	7.9%
Avg Hourly Earning MoM All Empl	FEB	0.2%	0.2%	0.2%	0.1%
Avg Hourly Earning YoY All Empl	FEB	2.1%	2.1%	2.1%
Avg Weekly Earning YoY All Empl	FEB	34.4	34.5	34.4
Change in Household Employment	FEB		170	17
Uderemployment Rate (U6)	FEB		14.3%	14.4%

 

Wow!  There is just no way around these numbers, they are stronger than moonshine!  It’s a great report and confirmation of improvement in the economy.  It’s a confirmation of the upward move in the market. 

 

Payrolls increased more than forecast in February and the jobless rate unexpectedly fell to a five-year low of 7.7 percent.

 

Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped from 7.9 percent.  Hiring in construction jumped by the most in almost six years.

 

 

 

 

 

 

 

It's The Economy Stupid: Sneak Peek At Employment

Mortgage Applications pop, Employment number higher than expected

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
ADP Employment Change	FEG	170K	198K	192K	215K
MBA Mortgage Applications	MAR 1		14.8%	-3.8%

 

Companies added 198,000 workers in February, according to a private report based on payrolls.   The increase in employment followed a revised 215,000 gain the prior month, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 41 economists surveyed by Bloomberg called for an advance of

170,000. Estimates ranged from gains of 125,000 to 210,000. The prior month’s figure was revised from a previously reported increase of 192,000.  Small businesses led all private employers by adding 77,000 jobs, Medium businesses added 65,000, while Large businesses added 57,000.

 

Economists estimate that the Labor Department report this week may show private payrolls rose by 167,000 last month, according to the Bloomberg survey median.

 

MBA Mortgage Applications jumped up after three weeks of declines.  MBA mortgage applications index jumped 14.8% week ended March 1 after dropping 3.8% prior week. 

  * Refis rose 14.8% after falling 3.3% prior week

  * Purchases up 15% after prior 5.2% decline

  * Avg. 30-yr fixed rate 3.70% after prior 3.77%

  * Refis 76.5% of loans after 76.9%

  * NOTE: Prior week had included Presidents Day holiday

 

 

 

 

 

 

 

 

 

Zervos quoting the Swedish House Mafia: Don't you worry, don't you worry now

Swedish House Mafia: ♪♫Don't you worry, don't you worry now…♪♫

-----Original Message-----
From: DAVID ZERVOS (JEFFERIES LLC) [mailto:dzervos2@bloomberg.net]
Sent: Tuesday, March 05, 2013 11:18 AM
To: John Broussard
Subject: Don't you worry, don't you worry now

In the last week, there was an unusually clear message from the core of the FOMC. Ben spent hours answering questions in front of Congress last Tuesday and Wednesday - and then gave a strongly worded speech on Friday in San Francisco. On Monday, his number one sidekick Janet then delivered a even more powerful message in DC. Sifting through all the transcripts, the following takeaways are worth highlighting:

1. QE works - Asset purchases "have been reasonably efficacious in stimulating spending" by lowering long term nominal rates.

2. Jeremy Stein and Esther George should stop complaining - Monetary policy should not be considered as a tool to address financial stability issues. Rather, supervision and regulation of systemically important institutions should be used to "ensure that financial institutions are sufficiently resilient to weather losses and periods of market turmoil arising from any source".

3. Households have been jammed but at least their 401k's are up - The interest rate channel of transmission of monetary policy "has been partially blocked." However, "even if the interest rate channel is less powerful now than it was before the crisis, asset purchases still work to support economic growth through other channels, including boosting stock prices and house values."

4. We are not Japan - "Long term interest rates are low for good reason: Inflation is low and stable and, given expectations of weak growth, expected real short rates are low. Premature rate increases would carry a high risk of short circuiting the recovery, possibly leading -- ironically enough -- to an even longer period of low long term rates."

5. We will not create a 1994 event in fixed income markets as we exit - "...long term interest rates will rise as the recovery progresses and expected short-term real rates and term premiums return to more normal levels"; and the Federal Reserve has "new tools that could potentially be used to mitigate the risk of sharp increases in interest rates"

6. Seth Carpenter helped us create a "magic" new asset on the balance sheet called future remittances, hence we don't really care about short term NIM losses on the balance sheet during the exit process - "The Federal Reserve's purchase programs will very likely prove to have been a net plus for cumulative income and remittances to the Treasury over the period from 2008 through 2025, by which time it is assumed the balance sheet has been normalized"

And yes, Janet did say that "unusual" monetary policy will be with us until 2025!!!!! The results from the Ben/Janet tag team showcase over the last week should put to rest any worries about hawkish minutes, financial stability costs associated with doing more QE or a lack of commitment to keep the accommodative juices flowing. If we add the comments from Kuroda and Draghi over the last week, it should become painfully clear why risk assets are ripping globally.

In essence there are 3 guys with checkbooks which matter in this world - and they all will have hand cramps in the coming quarters/years as they furiously accumulate TRILLIONS in securities. Of course as the asset side of their balance sheets expands, so too does the liability side. And the only "safe" asset, as these fiat cash and reserve liabilities explode higher, is the one that has at least a chance of generating positive real returns - equity capital! So buy some more spoos and crank up the Swedish House Mafia - "Don't you worry, don't you worry now". Our 3 DJs are going to keep this party rocking for a LONG LONG LONG time!! We are going straight through the highs and then some! We can worry about the long term side effects from all this "chemical enhancement" another day! Good luck trading.

Upcoming travel schedule:

Mar 5 Boston
Mar 8 Geneva
Mar 25 Milwaukee
Mar 26-27 Chicago
Apr 8-10 Atlanta
Apr 24-26 Puerto Rico
Apr 29-May 1 LA
May 8-10 Bermuda



Jefferies archives and monitors outgoing and incoming e-mail. The contents of this email, including any attachments, are confidential to the ordinary user of the email address to which it was addressed. If you are not the addressee of this email you may not copy, forward, disclose or otherwise use it or any part of it in any form whatsoever. This email may be produced at the request of regulators or in connection with civil litigation. Jefferies accepts no liability for any errors or omissions arising as a result of transmission. Use by other than intended recipients is prohibited. In the United Kingdom, Jefferies operates as Jefferies International Limited; registered in England: no. 1978621; registered office: Vintners Place, 68 Upper Thames Street, London EC4V 3BJ. Jefferies International Limited is authorised and regulated by the Financial Services Authority.



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It's The Economy Stupid: The Dow Then And Now

The Dow Jones Industrial Average has passed its previous all-time high set in 2007.  Where were we then and where are we now?  Here is a sample for comparison.

 

•Dow Jones Industrial Average: Then 14164.5; Now 14164.5

•Regular Gas Price: Then $2.75; Now $3.73

•GDP Growth: Then +2.5%; Now +1.6%

•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million

•Americans On Food Stamps: Then 26.9 million; Now 47.69 million

•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion

•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%

•US Deficit (LTM): Then $97 billion; Now $975.6 billion

•Total US Debt Outstanding: Then $9.008 trillion; Now $16.43 trillion

•US Household Debt: Then $13.5 trillion; Now 12.87 trillion

•Labor Force Participation Rate: Then 65.8%; Now 63.6%•Consumer Confidence: Then 99.5; Now 69.6

•S&P Rating of the US: Then AAA; Now AA+

•VIX: Then 17.5%; Now 14%

•10 Year Treasury Yield: Then 4.64%; Now 1.89%

•EURUSD: Then 1.4145; Now 1.3050

•Gold: Then $748; Now $1583

•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

 

 

It's The Economy Stupid: Minimum Wage Increase

Something to Think About 

 

Dr. Walter E. Williams is  a professor of economics at George Mason University.

www.walterewilliams.com

 

 

Higher Minimum Wages

By Dr. Walter E. Williams

 

            In his State of the Union address, President Barack Obama proposed raising the minimum wage from $7.25 an hour to $9 an hour. That would be almost a 25 percent increase. Let’s look at the president’s proposal, but before doing so, let’s ask some other economic questions.

 

            Are people responsive to changes in price? For example, if the price of cars rose by 25 percent, would people purchase as many cars? Supposing housing prices rose by 25 percent, what would happen to sales? Those are big-ticket items, but what about smaller-priced items? If a supermarket raised its prices by 25 percent, would people purchase as much? It’s not rocket science to conclude that when prices rise, people adjust their behavior by purchasing less.

 

            It’s almost childish to do so, but I’m going to ask questions about 25 percent price changes in the other way. What responses would people have if the price of cars or housing fell by 25 percent? What would happen to supermarket sales if prices fell by 25 percent? Again, it doesn’t require deep thinking to guess that people would purchase more.

 

            This behavior in economics is known as the first fundamental law of demand. It holds that the higher the price of something the less people will take and that the lower the price the more people will take. There are no known exceptions to the law of demand. Any economist who could prove a real-world exception would probably be a candidate for the Nobel Memorial Prize in Economic Sciences and other honors.

 

            Dr. Alan Krueger, an economist, is chairman of the president's Council of Economic Advisers. I wonder whether he advised the president that though people surely would be responsive to 25 percent increases in the prices of other goods and services, they would not be responsive to a 25 percent wage increase. I’d bet the rent money that you couldn’t get Krueger to answer the following statement by saying either true or false: A 25 percent increase in the price of labor would not affect employment. If anything, his evasive response would be that found in a White House memo, reported in The Wall Street Journal's article titled “The Minority Youth Unemployment Act” (Feb. 15), namely that "a range of economic studies show that modestly raising the minimum wage increases earnings and reduces poverty without measurably reducing employment." The WSJ article questions that statement: “Note the shifty adverbs, ‘modestly’ and ‘measurably,’ which can paper over a lot of economic damage.” My interpretation of the phrase “without measurably reducing employment” is that only youngsters, mostly black youngsters, would be affected by an increase.

 

            University of California, Irvine economist David Neumark has examined more than 100 major academic studies on the minimum wage. He states that the White House claim “grossly misstates the weight of the evidence." About 85 percent of the studies "find a negative employment effect on low-skilled workers." A 1976 American Economic Association survey found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. A 1990 survey found that 80 percent of economists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. If you’re looking for a consensus in most fields of study, examine the introductory and intermediate college textbooks in the field. Economics textbooks that mention the minimum wage say that it increases unemployment for the least skilled worker.

 

            As detailed in my recent book “Race and Economics” (2012), during times of gross racial discrimination, black unemployment was lower than white unemployment and blacks were more active in the labor market. For example, in 1948, black teen unemployment was less than white teen unemployment, and black teens were more active in the labor market. Today black teen unemployment is about 40 percent; for whites, it is about 20 percent. The minimum wage law weighs heavily in this devastating picture. Supporters of higher minimum wages want to index it to inflation so as to avoid its periodic examination.

 

FW: You want answers?

-----Original Message-----
From: DAVID ZERVOS (JEFFERIES & CO., INC) [mailto:dzervos2@bloomberg.net]
Sent: Thursday, February 28, 2013 9:49 AM
To: John Broussard
Subject: You want answers?

As our beloved colonel/chairman took the stand this week, nerves in the market were frayed. News of Italian election chaos and the sequester were splashed across the screens. Spoos had been pounded, the Yen was rallying and you could hear the screams of pain from levered traders across the globe (many of whom sent me agitated bloomberg messages).

Markets needed some soothing words from the man who sits on that wall and guards us against deflation. Markets needed their fix. Not more QE per se, but a statement from our chief dealer that the pain medication will be there for a good long while. And like clockwork, he delivered. He sat on that chair both as a military leader and a psychologist. He soothed our nerves. He told us it was going to be ok - he had our backs. The meds are working he said - just look at housing and stock prices. And don't worry about when I take you off the meds - ill do it slowly, I have a plan, trust me I'm your colonel, and your doctor.

And as we all heard the joyous message that the meds will continue in ample supply, and that our doctor has the tools to wean us off them when the time comes, we went back out to the markets and bought every dip in sight - spoos, nikkei, estoxx...bring em on! We went back to that wonderful cocktail party with the luxury of not knowing what our colonel knows. After all we cannot handle the truth.

Of course we always have to worry when he takes the stand. It could be that some punk Congressman (aka Kaffee) forces him to admit he ordered a code red. Forces him to say - "look, I'm just printing dollars, killing savers, bailing out debtors, redistributing wealth and debasing our currency. Yes, I admit it, I ordered the code red on the USD". But Corker, Duffy and Hensarling are no Kaffee. Their questions were pedestrian, no match for our colonel who shot them down with sniper like precision. It was a performance to remember from Ben. And the markets celebrated!! Spoos and blues 4EVA baby!! Good luck trading.

Upcoming travel schedule:

Mar 5 Boston
Mar 25 Milwaukee
Mar 26-27 Chicago
Apr 8-10 Atlanta
Apr 24-26 Puerto Rico
Apr 29-May 1 LA
May 8-10 Bermuda

Jefferies archives and monitors outgoing and incoming e-mail. The contents of this email, including any attachments, are confidential to the ordinary user of the email address to which it was addressed. If you are not the addressee of this email you may not copy, forward, disclose or otherwise use it or any part of it in any form whatsoever. This email may be produced at the request of regulators or in connection with civil litigation. Jefferies accepts no liability for any errors or omissions arising as a result of transmission. Use by other than intended recipients is prohibited. In the United Kingdom, Jefferies operates as Jefferies International Limited; registered in England: no. 1978621; registered office: Vintners Place, 68 Upper Thames Street, London EC4V 3BJ. Jefferies International Limited is authorised and regulated by the Financial Services Authority.



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Dow Jones 73 points away from all time high

Dow Jones 73 points away from all time high

 

Description	Ticker	Last	CHANGE	% Chg Today	Pct Chg 1Yr
STOCK MARKETS
Dow Jones Industrial Average	INDU Index	14091.210	191.0800	1.3747	8.5261
S&P 500 Index	SPX Index	1518.330	21.3900	1.4289	11.0277
NASDAQ Composite Index	CCMP Index	3175.401	45.7540	1.4620	7.0391
Russell 3000 Index	RAY Index	903.980	13.2300	1.4853	11.1401
Russell 2000 Index (Small)	RTY Index	913.000	12.9500	1.4388	10.4166
S&P 400 Mid Cap Index	MID Index	1105.850	17.7000	1.6266	12.2326
S&P 600 Small Cap Index	SML Index	466.570	-2.3100	-0.4900	9.6866
TREASURIES	% Yield
3 Month Treasury	0.1065		-0.0050	-4.5455
6 Month Treasury	0.1319		-0.0050	-3.8462
2 Year Treasury	0.2422	100.016	0.0000	0.0000
5 Year Treasury	0.7787	99.867	0.0156	0.0156
10 Year Treasury	1.9014	100.898	-0.1797	-0.1778
30 Year Treasury	3.1064	100.406	-0.5000	-0.4955
ENERGY
Crude Oil, Brent Index	Brent Crude	111.990	-0.7200	-0.6388	-3.3489
Crude Oil, Louisiana Lt. Sweet	LA Lt Sweet	113.000	-0.3300	-0.2912	-9.7900
Natural Gas, Henry Hub Index	Nat Gas	3.421	-0.0350	-1.0127	-3.6891
PRECIOUS METALS
Spot Gold $/oz	GOLD	1595.300	-18.5500	-1.1494	-9.7314
Spot Silver $/oz	SILVER	28.945	-0.4550	-1.5476	-18.2197
CURRENCIES
Euro	EUR Curncy	1.314	0.0074	0.5666	-1.9631
Japanese Yen	JPY Curncy	92.210	0.2300	0.2501	-12.6003
British Pound	GBP Curncy	1.516	0.0032	0.2116	-4.2214
Swiss Franc	CHF Curncy	0.931	-0.0011	-0.1181	-3.3634
Canadian Dollar	CAD Curncy	1.023	-0.0031	-0.3021	-2.3556
Chinese Yuan	CNY Curncy	6.227	-0.0029	-0.0465	1.1980
FOREIGN INDICIES
FTSE 100 INDEX	UK	6325.880	55.4400	0.8841	6.9365
CAC 40 INDEX	FRANCE	3691.490	69.5700	1.9208	7.2655
DAX INDEX	GERMANY	7675.830	78.7200	1.0362	12.0625
NIKKEI 225 INDEX	JAPAN	11253.970	-144.8400	-1.2707	15.7430
HANG SENG INDEX	HONG KONG	22577.010	57.3200	0.2545	4.1371