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NFP Market Reaction Summary

Tyler Durden's picture





 

Summary market reaction to NFP data from Knight Capital:

NFP 192K v 196KE, prior 36K revised to 63K Private 222K v 200KE, prior 50K revised to 68K Manufacturing 33K v 49KE, prior 49K revised to 53K Unemployment Rate 8.9% v 9.1%E, prior 9.0%

Unemployment rate down to 8.922% from 9.050% as the participation rate held steady at 64.2% after dropping in Jan.  Household employment up 250K during the month, while the not in labor force category rose 87K.  Big gains occurred in construction and nondurable goods manufacturing as well as services, transportation and warehouse, information services, financial services, education and health services, and leisure and hospitality.  The government shed jobs during the period.  New businesses were assumed to have added 112K jobs per the birth/death adjustment.  The diffusion index for private employment rose to 68.2, indicating widespread job gains.

The front end of the curve rallied on the news, but still reflects a sizable chance (~28%) of a rate hike by year end.  The job gains look to be on track, sustainable, and reflective of a population makeup where the assumptions of 150K-200K gains for a “steady state” of unemployment might no longer ring true (as a wise client pointed out to us recently).  We would like to see further gains in the participation rate, which is about 200bp lower than the pre-crisis era, before we officially think that QE2 will be the end of the process.  For now, the possibility of a QE2 extension or QE3 introduction post June appears to be lowered.  The Fed will want that participation rate up too – as you cannot engender wage price inflation without it in all likelihood.  And we will eventually need wage price inflation to match the commodity price inflation we have already engineered.  For now, the Fed appears to finally be winning (however slightly) the game of chicken it is playing with the twin inflations.

And Goldman's permabullish take:

KEY NUMBERS:
Nonfarm payrolls +192k in Feb vs. GS +200k, median forecast +196k.
Unemployment rate falls 0.1 point to 8.9% in Feb vs. GS and median forecast 9.1%.
Average hourly earnings flat in Feb vs. GS +0.1%, median forecast +0.2%.

MAIN POINTS:
1. Nonfarm payrolls rose 192,000 in February, basically in line with expectations. Moreover, payroll growth in December and January was revised up by a cumulative 58,000. As anticipated, the February increase appears to have received a boost from bad weather in January, as construction payrolls increased by 33,000 (versus a loss of 22,000 in January). At 33,000 the gain in manufacturing was weaker than the strength in recent manufacturing surveys would have suggested. Government employment fell 30,000, due to weakness in the state and local sector.

2. The household survey, however, was stronger than expected. In particular, the unemployment rate dropped another tenth (to 8.922%) due to a firm gain in employment (+250,000) and unchanged labor force participation (at 64.2%). The employment gain was also strong on a "payroll-adjusted" basis, up 342,000 on the month. The employment/population ratio remained unchanged at 58.4%. The decline in unemployment was broad based across different measures of unemployment; for example, the U6 unemployment rate, which counts marginally attached workers and those working part-time for economic reasons, declined by two tenths to 15.9%.

3. Back in the survey of establishments, the nonfarm workweek and average hourly earnings both remained unchanged, pushing the year-to-year trend in wages down to 1.7%.

 


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Fri, 03/04/2011 - 10:21 | Link to Comment NOTW777
NOTW777's picture

obama news wire responds by call it a "surge" and speaks of the expansionary cycle

http://finance.yahoo.com/news/February-payrolls-surge-rb-1838430983.html...

Fri, 03/04/2011 - 10:25 | Link to Comment Ray1968
Ray1968's picture

unfuckingbelievable

Fri, 03/04/2011 - 10:35 | Link to Comment NOTW777
NOTW777's picture

LOL look at this celebration on cnbc - GHOULsbee - best in 2 yrs; unequivocably bullish

wonderful

Fri, 03/04/2011 - 11:34 | Link to Comment SheepDog-One
SheepDog-One's picture

There were NO freakin hirings its all LIES!

Fri, 03/04/2011 - 10:22 | Link to Comment NOTW777
Fri, 03/04/2011 - 10:36 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I nominate Gross for the understatement ("obvious" sub category) of the year.

Let's stop the year right here and just vote.

Fri, 03/04/2011 - 10:23 | Link to Comment John Law Lives
John Law Lives's picture

<<<  And we will eventually need wage price inflation to match the commodity price inflation we have already engineered  >>>

As an engineer, I take great exception to your use of the word "engineered" when referring to the practice of printing money.  It is not "engineering".  It is rigging.

 

Fri, 03/04/2011 - 10:25 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

New businesses were assumed to have added 112K jobs per the birth/death adjustment. 

It's not even an assumption any more considering the once a year "adjustments " to the adjustment. It's a bald faced lie.

The spade has been called.

Fri, 03/04/2011 - 11:34 | Link to Comment SheepDog-One
SheepDog-One's picture

CD- Martial Law since 2001 !!

Fri, 03/04/2011 - 10:24 | Link to Comment unwashedmass
unwashedmass's picture

 

you have to wonder how much of the "low wage pressure" is being subsidized by food stamps -- the stamps giving small business a little breathing room on the pressure to raise employee wages to cope with the skyrocketing cost of living.

Soon, Ben will be subsidizing the entire world. I just wish I knew where the line was forming for people like me.

Fri, 03/04/2011 - 11:07 | Link to Comment MachoMan
MachoMan's picture

I like to call it the "walmart veil" of standard of living decreases...  In the end, ridiculously cheap/low cost leader mega stores have made it possible to get by with virtually nothing...  now, even the stores are having a hard time finding margin and not passing on rising costs to consumers...  it cannot continue for very long as there are no consumer savings upon which to rely.

The low wage pressure has been subsidized by imported labor, mega low cost leader retailers (walmart, et al, for consumer necessities), e-tailers (low overhead/no sales tax for consumer discretionary), you name it.  Eventually, you run out of people able or willing to continue subsidizing...  we may be there.

Fri, 03/04/2011 - 10:25 | Link to Comment Robslob
Robslob's picture

Then clearly payroll tax should "surge" as well.

The word that comes to mind is "trapped" when one thinks of the Fed...on the other hand more people earning less valuable dollars has and will always be their desire.

Maybe it is us who are trapped?

Fri, 03/04/2011 - 10:28 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

Cheer up, assholes:

"These number can be sustained and built on," economist Joel Naroff at Naroff Economic Advisors. "The economy is recovering, there is no question about it. Businesses are finally taking some of those profits they are earning and putting them back into the work force."

Fri, 03/04/2011 - 10:30 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Then end the Fed POMO (taxpayer rape).

Fri, 03/04/2011 - 10:34 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

I'm in the process of sending out market commentary to my clients, and it has to go through compliance first.  I've included a section about how banks are flipping newly-issued Treasuries over to the Federal Reserve.  Naturally, compliance keeps coming back to me telling me to revise that section.

Fri, 03/04/2011 - 10:55 | Link to Comment iinthesky
iinthesky's picture

And they don't tell you why? Ask them to revise it for you however they like. They seem to think they know better than you do anyhow. Tell them to f*k off!

Fri, 03/04/2011 - 11:23 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

It's a terrible industry, my friend.  ZHers complain about what's going on at the highest levels of the banks, but the shit that goes on at the financial advisory level is also absurb.

Fri, 03/04/2011 - 10:30 | Link to Comment pendragon
pendragon's picture

eurodollars rallied 10 ticks...when stocks are basically flat? the whole market is broken

Fri, 03/04/2011 - 10:38 | Link to Comment TruthInSunshine
TruthInSunshine's picture

..

Fri, 03/04/2011 - 10:34 | Link to Comment Eric Cartman
Eric Cartman's picture

200,000... wow, what a "surge." Obama is a true politician.

Fri, 03/04/2011 - 10:36 | Link to Comment alien-IQ
alien-IQ's picture

the only market reaction that really matters: USD tanking. Silver heading over 35 and gold parabolic as well.

Fri, 03/04/2011 - 10:37 | Link to Comment MiningJunkie
MiningJunkie's picture

Who gives a shit? The stock market is in the hands of the Fed, the U.S. Treasury and Wall Street so it literally CANNOT go down. Greenspan's remarks about how the "Wealth Effect" is being scuppered by government actions means government will not dare allow a change in policy. The U.S. currency will continue to track lower against hard assets such that the tax on the U.S. middle and working classes will grow to be unpalatable. At that point, policy will shift and all risk assets will crash.

Until then, BTFD.

Fri, 03/04/2011 - 10:39 | Link to Comment TruthInSunshine
TruthInSunshine's picture
Fed Policy Makers Signal Abrupt End to Bond Purchases in June

Alleged 'green shoots' have killed QE3.

This almost makes me believe it's possible that good statistics are being spun to allow Bernanke an exit, since the heat was becoming too great.

Fri, 03/04/2011 - 10:47 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

But , but , but .....

 

Turd has promised QE 3, QE 4, QE 7 ...... His entire pitch is centered on this. All the bugs have been spouting the same ....

 

What happens to gold • silver with no QE ???? I guess this is not Japan, Lol

Fri, 03/04/2011 - 11:07 | Link to Comment earnyermoney
earnyermoney's picture

Fed BS.

With BB and the Obama administration equating the stock market and ecomony, no way in hell QE is ended risking an equity crash prior to November of 2012.

Fri, 03/04/2011 - 11:19 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Have you seen the blowout earnings by most businesses over the last 8 quarters. Every quarter is getting better.

 

All BS ? So QE and Pomo are driving the numbers in a • 14 Trillion GDP  economy • Cat, Boeing, Halliburton, Merck , Coke, Pepsi, Chipotle, Macy's .....

 

Association of American Railroads

“The Association of American Railroads (AAR) today reported rail traffic for the week ending Feb. 26, 2011, saw gains with U.S. railroads originating 296,252 carloads, up 2.4 percent compared with the same week last year. Intermodal volume for the week was also up, totaling 220,589 trailers and containers, up 7.2 percent compared with the same week in 2010.Fourteen of the 20 carload commodity groups posted increases from the comparable week in 2010. Those groups posting significant increases included: metallic ores, up 78.2; nonmetallic minerals, up 12.4 percent; and stone, clay and glass products, up 10.4 percent. Those commodity groups reporting a significant drop in weekly traffic included: waste and nonferrous scrap, down 17.2 percent; grain mill products, down 16 percent; farm products except grain, down 15.4 percent, and primary forest products, down 10.8 percent.For the first eight weeks of 2011, U.S. railroads reported cumulative volume of 2,277,689 carloads, up 6.1 percent from last year, and 1,744,929 trailers and containers, up 8.9 percent from the same point"

 

 

Fri, 03/04/2011 - 12:37 | Link to Comment william the bastard
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Whwn QE ends gold/silver will drop by 1/3-1/2

Fri, 03/04/2011 - 10:44 | Link to Comment Cursive
Cursive's picture

Fed is winning the game of chicken? Surely Knight capital jests.

Fri, 03/04/2011 - 10:47 | Link to Comment EscapeKey
EscapeKey's picture

Silver @ 35.11

Fri, 03/04/2011 - 11:32 | Link to Comment Urban Roman
Urban Roman's picture

35.35 now and it has a woodie. Max's silver clamor perhaps?

http://maxkeiser.com/2011/03/04/maxs-silver-clamor/

Fri, 03/04/2011 - 10:47 | Link to Comment SWRichmond
SWRichmond's picture

Dollar just took a dive.  What now?

:)

Fri, 03/04/2011 - 10:47 | Link to Comment mynhair
mynhair's picture

Market reaction?  What Market?

More zippo volume, I see.

Fri, 03/04/2011 - 10:49 | Link to Comment ciscokid1
ciscokid1's picture

Since U6 is unchanged and U3 declined, how do we know if enough people dropped out of U6 to reflect a decline in U3?  Maybe something on shadowstats?

Fri, 03/04/2011 - 10:50 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

http://i51.tinypic.com/1h9zio.png

Chart I did using BLS data combining total full time wage and salary workers * average weekly earnings.  CPI adjusted to 1982-1984 chained dollars.  From the 2007 peak, the total basket of people in full-time jobs are making exactly $100 billion dollars less, in real terms, than in 2007.  They are making $20 billion less than last year.

http://manifestdeconstruction.blogspot.com/2011/03/full-time-workers-were-100-billion.html

Fri, 03/04/2011 - 10:50 | Link to Comment lieutenantjohnchard
lieutenantjohnchard's picture

nfp was very bullish for jpm as some of zh's perma bulls might say. as more folks drop out of the labor pool and jump into the welfare stamp program jpm can monetize them next year to the tune of $7b net vs yoy of $5.5 billion.

so the guy who said goldman could find a way to monetize a circulating drain of poop at the end of times in america really wasn't too far off with these guys.

Fri, 03/04/2011 - 11:07 | Link to Comment Cursive
Cursive's picture

That sums it up well, lieutenant.

Fri, 03/04/2011 - 11:12 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Goldman Sach's new motto:

Be The Drain

Fri, 03/04/2011 - 11:19 | Link to Comment lieutenantjohnchard
lieutenantjohnchard's picture

as ty would say: nanananana.

Fri, 03/04/2011 - 10:53 | Link to Comment Josh Randall
Josh Randall's picture

I knew these jobs would show up once it stopped snowing

Fri, 03/04/2011 - 10:54 | Link to Comment bankonzhongguo
bankonzhongguo's picture

I stumble into local Chamber and Rotary meetings for the last 2 years.  In that time, I am the only guy that started a business and hired people and not that many either and certainly not at wages that could support a family.

If you want to hitch your wagon to wall street and the BLS BS then go ahead.  Eventaully, you'll be walking down main street soon enough at night. Alone.

Fri, 03/04/2011 - 11:17 | Link to Comment PicassoInActions
PicassoInActions's picture

OK, since the majority of people here are smarter than me, may be some1 can answer my Q

If they were expecting 200k NFP how come that unemployment rate was expected to be higher?

I understand that they are using diff formula, but considering that numbers from jan and feb were OK, more people were kicked off from unemployment and we had at 9.0 - how the fuck that did they come up with 9.1 expectation?

It seems that more people they add to NFP , less people apply for unemployment and they expect the unemployment rate to go up.

May be i am wrong, but may be those predictors jsut bought their diplomas on the black market.

 

 

 

Fri, 03/04/2011 - 11:26 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

You need to do some research on exactly what NFP is and how it's calculated.

Fri, 03/04/2011 - 11:36 | Link to Comment SheepDog-One
SheepDog-One's picture

CD- Like you said long ago, never forget people we're in an economic martial law and they report whatever they want! Its all BS theyre keeping the sheeple lulled until its slaughterhouse time! Which I sense is VERY near!

Fri, 03/04/2011 - 12:48 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

...never forget people we're in an economic martial law...

Since 09/11/2001

http://www.zerohedge.com/article/american-coup-d%E2%80%99%C3%A9tat-%E2%80%93-first-world-nation-style

Fri, 03/04/2011 - 14:10 | Link to Comment robobbob
robobbob's picture

another excellant piece CD

I'm sorry I missed it first time around

thanks for posting the link

Fri, 03/04/2011 - 11:29 | Link to Comment Eally Ucked
Eally Ucked's picture

who cares about numbers, workweek declined from 34.3 to 34.2. 140 mln workers that means 14 mln hours decline. 14 mln hours devided by 40 hr week is is about 350 k jobs lost or shared. Why not to go 25 hr week and get rid of unemployment?

Fri, 03/04/2011 - 11:34 | Link to Comment SheepDog-One
SheepDog-One's picture

Its a controlled demolition people!

Fri, 03/04/2011 - 12:42 | Link to Comment Roi
Roi's picture

Social Engineering - The act of mistaking people for machines...

Fri, 03/04/2011 - 12:54 | Link to Comment Fearless Rick
Fearless Rick's picture

Classic buy the rumor (yesterday, probably released to insiders) and sell the news, especially since ZH's NFP cheat sheet exposed the trade yesterday.

Now that Wall Street has sold the news and WTI is over $103, and gas is up to $3.50 or more on average, you all know what time it is...

Time to BUY THE FUCKING DIP YOU FUCKING IDIOT (BTFDYFI)

Fri, 03/04/2011 - 12:54 | Link to Comment glenlloyd
glenlloyd's picture

How can people even remotely buy into that tripe? Beyond belief

Fri, 03/04/2011 - 13:04 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Who in their right fucking mind is betting on a rate hike this year?

That is essentially the equivalent of betting Bernanke will no longer be Fed chairman - as long as he is in, there will be no rate hikes, maybe forever.

If QE stops, rates are going to drop, as are stocks, PMs, etc.  I am long PMs, and am a firm believer - as long as the money printing continues.  If/when it stops, FRNs become scarcer by the day.

I don't believe QE will stop for a long time, if ever, so why the fuck would Bernanke raise rates?

Fri, 03/04/2011 - 14:47 | Link to Comment Waterfallsparkles
Waterfallsparkles's picture

Bernanke reminds me of the game many teenagers played in the 60's.

It is called Chicken.  2 Guys would gun their cars toward the edge of the cliff and the one that stopped first was Chicken.

Bernanke is Gunning the Car toward the end of the Cliff a 150 miles per hour.  The edge is getting near but he does not want to lose and be called Chicken.  At this point we all wonder if he can put on the breaks soon enough not to go over the cliff.

Problem is if he runs of the cliff that means that he takes all Americans with him and it will not only be his Death (not in reality, hypothetically) but the Death of the Country.

Mon, 03/07/2011 - 20:40 | Link to Comment lsjcma
lsjcma's picture

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