Archive - Sep 4, 2009

As markets digest the worse, yet somehow better, than expected 9.7% unemployment, the real state of the labor market is much worse, as indicated by the U-6 number, which has hit a recent record of 16.8% on a seasonally adjusted basis. As a reminder, the "U-6 represents total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers." In other words, in reality the U.S. labor market is likely about as bad as Spain in terms of undoctored jobless data.

"This is why the Keynesian central bankers can’t sleep at night: Their eternal demand-stimulation does not work any longer. The pent-up demand is non-existent (by historical standards) and therefore cannot be released, even if rates are aggressively cut. Total bank lending has dropped almost 6% from the top in late October 2008. That has never happened before. The picture is the same in the Eurozone and (of course) in Japan."

• Unemployment rate hits 9.7% (Bloomberg)
• Supertankers may halt oil trading as rates drop on supply glut, Frontline says (Bloomberg)
• HFTs dominate soon to be eliminated DXO ETF (Alphaville, h/t Lizzie)
• Zimbabwe to get $500 million in IMF loans (BBC)
• Milliseconds are focus in algorithmic trades (Reuters, h/t Adam)

• Unemployment rate: 9.7%, higher than the expected 9.5%.
• Asian stock markets were mostly higher Friday, with mining stocks rising.
• Fed’s Fisher says prolonged period of 'sluggish' economy likely.
• Global economy is emerging from its deep slump faster than forecast: OECD.
• ISM non-manufacturing index rises to 48.4, indicating continued contraction.
• Lead surges to 16-month high after China vows to clean up metals industry.
• Mortgage rates for 30-yr fixed US home loans fell this week to 5.08%: Freddie Mac.

"Markets are traded by people, not machines; and a person’s ability to absorb risk and anxiety is limited. This is why ultra volatile markets eventually calm down - traders become exhausted and close out their risky positions. Although it certainly felt as if the world was going to end, the reality was: This too will pass. It is now seeming more and more likely that although Bernanke may not be able to guarantee a good ending, at least he can make the path there less bumpy. As such, both Actual and Realized Volatility should slowly decline."