Financial Futures in Rebound After Jobs Report
By blackhedd Posted in Economy — Comments (21) / Email this page » / Leave a comment »
The Labor Department reports strong employment numbers for October. Financial futures, which had been trending lower this morning following sharp losses overnight in Asia, have reversed as I write (8:45am EDT).
Strong job gains were reported in service industries and government. Retail, manufacturing, and homebuilding all lost jobs. (Will someone please tell me why government is such a growth industry in the US? This sector added 36,000 jobs in October, on top of nearly as many in September.)
Keep in mind that these are preliminary figures, and will be revised next month. That said, about 80,000 more jobs were added in October than was anticipated by consensus estimates.
It's good news, folks. The first good economic news all week. As expected, the bond market is falling on the news, and stocks ought to stage at least an attempt at a recovery this morning. Gold and oil were higher ahead of the news, and I would expect them to retreat.
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...and it also was for Q3, so it probably didn't reflect most of the fallout from the August financial crisis. The jobs number is for October (after sharp falls in homebuilding, sales of homes, and housing values ought to have given everyone a reason to think a few things over).
I still cannot believe this isn't being questioned. The deflator (ie the inflation adjustment) was only .8%, the lowest since 1998. This seems to be quite off considering all the price increases we are seeing (and that the average deflator over the past 3 years is 2.98% with none less than 1.7%). I really question the GDP number for this quarter.
...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...
---Thomas Paine---
We'll be alright if the following things happen: The Fed stops cutting the interest rate, the Fed stops pouring billions of dollars into the market(they will soon be up against inflationary pressures if they keep this up), Congress and Bush stop cutting spending, Congress and Bush Stay OUT of the subprime mortgage issue and not bail people out, if we bail them out for this we might as well bail out everyone who never pays their bills.
I'll say this, I find it absolutely amazing that there are some in Congress who call us regular folks rich and greedy, meanwhile Congress and The President racked up HUGE deficits by rubber stamping pork spending.
Their statement Wednesday contains language intended to strongly suggest to the market that they may raise rates again if inflation flares, and not to expect further cuts.
Pouring money into the markets: I just went up to the New York Fed's data site to check on this. The $40B they injected yesterday (presuming you're reacting to news stories about it) was in the form of a 1-day repurchase agreement. In other words, the $40B is already out of the market as of today. The Fed was basically trying to keep a bad day in the stock market from becoming a really bad day.
Hmm. That better not have been a Freudian slip on my part. Maybe early Alzheimer's.
From what I have seen, at least federally, many of the military jobs (those done by soldiers, sailors, airmen, marines) are being turned into civilian jobs to 'free up' those individuals to go to Iraq or Afghanistan.
Although on the state level (at least here in the people's republic of Washington), many state bureaucracies are growing through the democratic governor and legislature (they've added over 6,000 jobs in the last 3 years).
'mispellers of the world, untie!'
A billion here, a billion there, we dole it out like candy to children..Why does the Fed need to keep trying to prop up the market? If we follow a strict capitalist economy it will go down but, on the condition we change our habits on spending and printing money like crazy, we'll be stronger.
The Fed didn't exactly "print money like crazy", they gave out a few overnight loans which are already out of the system.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
The reason the Federal Reserve exists is to serve as a lender of last resort, and that role has nothing to do with "printing money like crazy." (The Fed came into being during a strict gold-standard period.)
The Fed "injects liquidity" on days like yesterday because when financial markets are stressed, the normal sources of liquidity dry up like snowflakes in sunshine. That has a tendency to turn stress into disaster.
You're free to respond as long as don't mention the name of a certain Presidential candidate. I've got work to do, so I won't be responding back to you.
though my statements aren't nearly as accurate or authoritative as yours.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I'm for Gov. Romney in all disclosure here. No, I just don't think the Fed. needs to be injecting any kind of liquidity into the market, I mean why can't we just the market run its course, we're a strong country, if we take a hit over this it won't kill us, we'll be back.
to keep markets liquid when short term issues cause other sources of liquidity to dry up.
Why take a hit for an overnight liquidity issue? Yes, we'd recover, but it would be weeks and months instead of a day.
If you are arguing against actually bailing out lenders and borrowers that made bad loans, I agree. They took on the risk when they invested in the loans/property/bonds/SIVs etc. and there is no reason for risk gone bad to be shifted to the tax payer. But the Fed injecting temporary liquidity is not a bailout and is not taking on the risks of those bad investments.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
Let's say you were going to undergo a major surgery. You're strong (otherwise you wouldn't be a candidate for surgery). You can take a hit and it won't kill you.
So how about you have your surgery without blood transfusions? Well of course that's stupid, because the cost savings don't outweigh the incremental risk.
This is a site about conservatism and about Republican politics. We discuss economic and financial issues as they relate to public policy.
You're asking a question ("why can't we let the market run its course") that ignores essential technical features of financial markets, but still sheds little light on larger policy issues of interest here.
To put it another way, I'm a business and finance guy. You wouldn't want me doing surgery on you. By the same token, I wouldn't want a surgeon making decisions about the structure of financial markets.
What billions? Are you referring to loans which get paid back and thus taken back out of the economy, or what?
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Let's nominate the Nash Equilibrium for President.
"Moby" keep flashing in my head when I read your posts?
I wonder what the BLS means with the statement "1.4 million workers were marginally attached to the workforce in October.". It reminds me of one the few funny things Ostengropenfuhrer Obermann ever had to say. "He's day-to-day. We're all day-to-day."
“The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men."
they're not employed and not actively looking for work. This includes discouraged people along with people who just choose not to work.
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
[Spammer tossed on pile, spam sliced up and fried.] -- rah
grew 3.9 % last quarter to, both very good and somewhat surprising news.