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Great Start To QE2: Goldman Reduces NFP Forecast To +25K From +50K
An auspicious start to today's melt up in... cue Tepper... EVERYTHING.
From Goldman:
Claims Disappoint; Productivity Better; Reducing Oct Payrolls to +25k; Private Still at +75k
BOTTOM LINE: Initial claims reverse the previous week's decline while continuing claims keep trending lower. Claims for extended benefits rise sharply. Revising total nonfarm payrolls to +25k from +50k; private stays at +75k. Productivity firmer than expected as increases in hours worked are smaller than implied by monthly data.
US-MAP
Initial claims -2 (2, -1)
Continuing claims +1 (1, +1)
KEY NUMBERS:
Initial claims up 20k to 457k in week ended Oct 30 vs. median forecast 442k.
Continuing claims down 42k to 4.34 million in week ended Oct 23 vs. median forecast 4.378 million.
Nonfarm productivity +1.9% in Q3 (qoq, annualized, +2.5% yoy) vs. GS and median forecast +1.0%.
Unit labor costs -0.1% in Q3 (mom, -1.9% yoy) vs. GS -0.5%, median forecast +0.6%.
MAIN POINTS:
1. Following last week's surprise decline, initial claims increase by 20k to 457k in the week ended Oct 30. (Initial claims in the prior week were revised up by 3k). Continuing claims declined by 42k to 4.34m million in the week ended Oct 23, but from an upward revised level. (Continuing claims in the previous week were revised up by 26k.) Extended benefits-which are not seasonally adjusted-rise by 357k in the week ended Oct 16.
2. With all the data now in hand, we are reducing slightly our call on total nonfarm payrolls in October to +25k from +50k. Our estimate of the private-sector change remains at +75k. Most of the 50k difference is due to an expected additional loss of state and local jobs.
3. Productivity was firmer than expected in Q3 as hours worked rose less than indicated by the monthly data. The firm year-to-year trend, at 2.5%, illustrates why job growth is so sluggish in an economy that has grown only slightly more over the past year (3.1% overall, though 4.1% in the private nonfarm sector). Meanwhile, unit labor costs edged down in Q3 as total compensation was about in line with the 3% annualized growth rate in nonfarm output reported for Q3. Once upon a time, flat to falling unit labor costs were regarded as a good thing….
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A bit off topic, but I just read this via Max Keiser
http://news.yahoo.com/s/ap/20101103/ap_on_re_as/as_afghan_us_embassy_1
Half a billion dollars. That's OK then...
DavidC
Yeah, I guess the "election" temp jobs are all gone now.
Not too worry. QE a la infinitum will take care of it all.
yipee.
Goldman is there to keep everyone off balance, any information that comes out of that firm should be taken with a grain of salt.
Goldman's job is that of keeper of the public economic myth. The myth is flexible and always front run.
So labor costs fall (ie layoffs, no raises), while essential costs go up....is a good thing?!? I'm at a loss here for how that creates a sustainable economy. At least I know that if this continues, Q1 earnings will be a disaster with the continued top line decline along with nothing left to cut on the bottom line.
<ot>Anyone see that bounce on the DXY? Quite magical IMHO</ot>
That's my theory of biflation in a nutshell. The Fed thinks it can "Reflate" housing, incomes and retirement benefits but it's only raising the cost structure of all these and of the entire economy. The structural issues are unaddressed so they will continue to drift without a correction and, yes, more jobs and capital will leave the US.
I'm not convinced the Fed has any interest in the economy. Seems like they are primarily interested in banks and the equity markets. If a strong economy should result from their intervention to prop up these entities, fine. If not, who cares?
I would say you are correct that the Fed has no concern for the economy as they are not elected as opposed to placed in power by TPTB. As long as they are helping TPTB enhance their wealth, they have no real concern for their consituents, and will not look for sustainability. The problem though comes into timing exiting the US and jumping into the next economic powerhouse that allows foreign investment.
Goldman could be utilizing/springboarding off Meredith Whitney data.
like the census, these are all temp jobs to get thru the xmas season. wait until stores are empty as people are even less willing to spend at a time that food and energy prices soar.
this is the year the fed stole christmas.
Anyone else notice here in the USA that Christmas "stuff" is already showing up everywhere?
Talk about premature ejac.....err.....celebration.
TYLER / We are hearing from our various desks that "margin calls" are going out all over the street. We thus are looking for some sort of capitulation trade within the next few days. 10 years ago, if an announcement was made that the FED was purposely inflating, and propping up stock prices, S&P's would be locked limit down -50 handles. Today, newbie money managers celebrate this, as if this intervention Fed action is good. We predict, a currency crisis is in the near future. This ought to be an interesting next couple of months. Manage risk. Good luck everyone...
Well the great economist Glen Beck did emote on his show yesterday that the Fed announcement means 15 days from now the US economy will be completely collapsed...so we bears got that going for us.
Slightly? They cut it in half.
Minor detail.
Get with the celebration -Michelle- or you're gonna be left behind. Only xx more days until Christmas.
BTW isn't it time for pictures of the first ZH baby. You post a link (or I can give you my email to use) and I will post them. :>)
I'm not one to foist pics of my kids on people, but since you asked...
This was her announcement picture: http://tinypic.com/r/28mfybm/7
I have been granted the distinct pleasure of announcing to the ZH herd that our first newborn has graced the tribe.
Congratulations to all of us. It was a difficult labor, but well worth it. :>)
Michelle's little bundle of joy!
Congratulations on the birth of the heir to your family fortunes,CD!
Why would anyone think QE x.x will repair/repatriate jobs to the US? In fact I believe it's just the opposite: QE is simply encouraging capital flight and the jobs are going with it.
Pretty soon the US will morph into a tourist fly-trap for wealthy foreigners: tell new graduates to open a "real American" burger stand with a menu in 12 languages, or a souvenir shop with printed T-shirts.
I would say that anyone with half a brain knows that QE does nothing for jobs. Trickle down economics is the biggest lie ever sold to America, next to the need for a CB. I will need to re-research it, but there are quite a few papers out there that are able to prove that trickle down was closer to getting pee-ed on than having money rain down.
Agree. Trickle-dow was a useful myth when it started, but it's morphed into the Fed's nightmare. The marginal utility of extra tax cuts for upper income Americans is probably negative by now. That's because the extra money doesn't get "reinvested in the economy" as they would have you believe. Instead it gets hoarded, sent offshore, or converted into things that are net negative to the productive economy: art collections, villas in St Bart's, imported wines, jewelry, ski trips to the Alps, and imported designer clothes, gadgets and cars.
The only way trickle-down would help the US is if there's a surge in demand for chauffeurs, parlor maids, butlers and valets. If that happens we should push for more redundant servantry like footmen, personal library curators and bee keepers. Oh and concubines too.
I've been stating that emplyment will improve in the first and second quarters of 2011. This is because year over year earnings began in earnest five quarters prior, which has a direct correlation to hiring.
The Fed will take credit for the improvement with this QE2 despite the fact that it has had nothing to do with it.
The only numbers you need to watch to determine if and when hiring will occur is line 17 of the GDP report.
And that means the only thing you need to do to spur employment is to improve the profit s for business.
Get government out of business and that occurs naturally.
Which is why government does not use line 17 of the GDP report as their primary indicator as to what needs to be done with the economy.
In fact, they rarely mention the "P" word.
But in the end, in a capitalist society, it is about Profit.
Dollar in the crapper.
All markets up.
This can not end well.
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