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JPM: "Smells A Little Like Tapering"

Tyler Durden's picture


JPM's chief US economist Michael Feroli smells the November jobs report, smells the Fed's balance sheet, and concludes "smells a little like tapering."

From JPM:

Jobs report smells a little like tapering


The labor market had another solid month, generating a net 203,000 jobs last month. The big story for November, however, was the unemployment rate, which dropped 0.3%-point to 7.0%. That decline occurred as the participation rate only partly reversed October's huge drop, and at 63.0% the participation rate is 0.2%-point below the September level. The continuing disappointment in labor supply will prompt some soul-searching at the Fed, where the house view has been that the participation rate would bounce back once job creation picked up. Over the past two years the labor market has created almost 4-1/2 million jobs, yet the participation rate has continued to decline. At some point the Fed will have to accept that the labor supply is trending lower, and hence that the decline in the unemployment rate truly represents progress toward their full employment mandate. In the meantime, we still think December is a close call but that the FOMC will hold off on tapering until January. While fiscal issues appear less ominous and employment prospects look favorable, we still think that before pulling back on asset purchases the Fed would like to see more evidence that housing is stabilizing and that inflation is finding a floor.


The details of the establishment survey were generally pretty solid and relatively close to expectations. Private employers added 196,000 jobs, with goods-producers adding a decent 44,000 positions, led by a 27,000 gain at manufacturers. Private service employment growth moderated a touch to 152,000. Delivery drones aren't stealing human jobs yet, as service employment was led by a 31,000 increase in transportation and warehousing jobs. Overall the breadth of job growth has improved in recent months, and last month 63.5% of industries increased employment. As expected the workweek increased a tick in both the production worker and all-worker measures, recouping an earlier decline. Average hourly earnings increased another 0.2%, and show no evidence of accelerating or decelerating from their recent trend of growth around 2-2.25%.


Unlike in the establishment survey, workers laid off in the government shutdown would be counted as without a job, hence October and November exhibited some volatile swings in the household survey. Employment jumped 818,000 in November after declining 735,000 in October, and the employment-to-population ratio recovered to 58.6% last month, the same as in September. Unemployment fell 365,000, a decline probably also driven by government employees returning to work. The number of persons not in the labor force but who want a job has plunged by over a million in the past four months (this is reported nsa, but the sa number has also plummeted). The unemployment rate was 7.6% when Bernanke laid out the 7.0% terminal condition for asset purchases in June. One could argue that all of the decline since then has been due to falling participation, but all of the fall in participation over that period can be accounted for non-participants who do not want a job.


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Fri, 12/06/2013 - 12:54 | Link to Comment toe
toe's picture

doubt it. and even if they did taper, the market would prolly rally 20 sp points off the news

Fri, 12/06/2013 - 13:05 | Link to Comment Obchelli
Obchelli's picture

Smells like shit to me...

Fri, 12/06/2013 - 13:07 | Link to Comment Lukacko
Lukacko's picture

Feels like shit... smells like shit... tastes like shit... must be shit.  Good thing we didn't step in it!

Fri, 12/06/2013 - 14:05 | Link to Comment SilverIsKing
SilverIsKing's picture

Michael Feroli can smell Jamie's perineum after two dumps and a game of basketball.  This jerk should put his money where his mouth is.  Resign from JPM if they don't taper.  Or better yet, take a whiff of my perineum after a few dumps and a couple of games of hoops if no taper.

Fri, 12/06/2013 - 14:08 | Link to Comment Manthong
Manthong's picture

It's beginning to smell a lot like taper
Everywhere you go
Take a look in the Five and Ten
Bustling once again
With low paid workers all in a row

It's beginning to smell a lot like taper
Toys in every store
But the ugliest sight to see
Is the S&P that will be
Falling through the freakin’ floor.

A dot gov jackboot and a middle class loot
Is the wish of Janet and Ben
Overpriced art and bullion in a cart
For the vault of Blankstein and Dimen.  (poetic license on Dimon)
And Barry and Val can hardly wait
For the Fourth Reich to start again

It's beginning to smell a lot like taper
Everywhere right now
There's a tree in the Congressional zoo
One in the White House too.
With ornaments featuring Chairman Mao.

It's beginning to smell a lot like taper
Soon the taper will start
And the thing that will make it sting
Is the heartburn  it will bring
Right within your heart, as your 401 departs.

Fri, 12/06/2013 - 13:37 | Link to Comment Canadian Dirtlump
Canadian Dirtlump's picture

 that smell is blythe's crotch aka an open grave.

Fri, 12/06/2013 - 13:15 | Link to Comment whatsinaname
whatsinaname's picture

I dont even bother reading tapering articles.

Fri, 12/06/2013 - 13:58 | Link to Comment Lost My Shorts
Lost My Shorts's picture

I bet you are more right than you realize.  Whenever an event is so universally expected, like the taper, it cannot possibly produce the movement everyone expects.  It must produce the opposite, because everyone will have over-prepared for the known event.  Everyone expects the taper to crater the markets, so the market will undoubtedly pop on the taper announcement.  Those guys at the Fed are lucky and good.

Fri, 12/06/2013 - 12:54 | Link to Comment FieldingMellish
FieldingMellish's picture

"Could be you, Doc."

Fri, 12/06/2013 - 12:57 | Link to Comment Hunter S. Thompson
Hunter S. Thompson's picture

“I'm givin' her all she's got, Captain!” - Ben Bernake to Jamie Dimon

Fri, 12/06/2013 - 12:54 | Link to Comment Stoploss
Stoploss's picture

Smells like Bullshit, is what it smells like.

Fri, 12/06/2013 - 13:03 | Link to Comment moonman
moonman's picture

good thing we didn't step in it

Fri, 12/06/2013 - 13:03 | Link to Comment Grande Tetons
Grande Tetons's picture

Smells like Fed spirit. 


Come as you are, Janet.

Fri, 12/06/2013 - 13:16 | Link to Comment Cthonic
Cthonic's picture

Yellen has that old man smell

Fri, 12/06/2013 - 13:19 | Link to Comment Grande Tetons
Grande Tetons's picture

She makes Courtney Love look hot.  Apparently, Mr. Yellen must be a misunderstood genius. 

Fri, 12/06/2013 - 12:56 | Link to Comment LawsofPhysics
Fri, 12/06/2013 - 12:55 | Link to Comment tradewithdave
tradewithdave's picture

That's why Kurt Cobain is cooler than you (Jamie).

Fri, 12/06/2013 - 13:07 | Link to Comment frankTHE COIN
frankTHE COIN's picture

Teen Spirit.... Animal Spirits...

Fri, 12/06/2013 - 12:58 | Link to Comment tradewithdave
tradewithdave's picture

That's why Mike Mayo is cooler than you.

Fri, 12/06/2013 - 12:59 | Link to Comment Quinvarius
Quinvarius's picture

Smells like a whale trade bet against bonds is going bad again.

Fri, 12/06/2013 - 12:59 | Link to Comment ThisIsBob
ThisIsBob's picture

I don't know about the Dude's sense of smell, but he sure can't see a chart worth a damn.

Fri, 12/06/2013 - 13:00 | Link to Comment bearish1
bearish1's picture

More bullshit we can believe in! 

Fri, 12/06/2013 - 13:00 | Link to Comment coastalwn
coastalwn's picture

if you like your taper ... well you can keeps your taper...

Fri, 12/06/2013 - 13:02 | Link to Comment Charles Nelson ...
Charles Nelson Reilly's picture

they might cut $10-$20 billion.... then reverse course shortly thereafter when market panics.  QE will be over $100 billion a month by March 14'.


Fri, 12/06/2013 - 13:30 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Correct, and what the Fed is doing will become a "national security" issue and therfore made secret (as it really is now).  Isn't  The Fed's contract up this month?  Hhmmm...

Fri, 12/06/2013 - 13:03 | Link to Comment No Euros please...
No Euros please we're British's picture

What's that article I see a link to above?

JPM: Tapering still coming in September.


Fri, 12/06/2013 - 13:14 | Link to Comment dbTX
dbTX's picture

To taper, or not to taper, that is the question, and the Fed...? well is clueless.

Fri, 12/06/2013 - 13:14 | Link to Comment lasvegaspersona
lasvegaspersona's picture

The 10 year was 2.87% yesterday. Everyone knows if it hits 3% the economy tanks because the derivative market shits the bed.

This was the most popular song in September, like the Makarena and Gangnam Style it is not going to chart again. Bernacke cannot taper because Morgan Stanley will tank with it's 70 trillion in derivative bets. When MS goes so goes every other TBTF. Nope, Ben will have to keep or increase the QE and this will cause the talking heads to have to dig deep to explain why, in an economy nearing unemployment perfection, we still need to add a trillion a year to the base money supply....and listening to them explain that will be really interesting.

Fri, 12/06/2013 - 13:17 | Link to Comment coastalwn
coastalwn's picture

taper.. taper.. taper...  now thats a mouthful of chit!

Fri, 12/06/2013 - 13:21 | Link to Comment Chief Falling Knife
Chief Falling Knife's picture

Someone help me out.

USD is essentially now flat from before the jobs number(Yen weakness offset by Euro strength), Bonds are also now essentially flat. 

Why are stocks up 1+%? 

If perceived Yen weakness/USD strength is now a catalyst for triple full retard skyrocketing stocks, and the 'wealth effect' is all the Fed cares about, then Bernanke shouldn't just taper, he should announce QE is over effective immediately.  Instant Yen weakness/USD strength, and apparently an instant 5+% higher on all equity markets.

All I took away from the price action this morning is:  Either no one now believes there will ever be a taper(which makes me wonder why they believed in it in May), OR a taper doesn't matter to equities anyway. 

Onward full retard.


Fri, 12/06/2013 - 13:20 | Link to Comment lasvegaspersona
lasvegaspersona's picture

The real employment issue is that if you don't have enough taxpayers you can't collect enough taxes. It doesn't matter if the unemployment is defined as being 1% if there are only 50 million employed. Taxes don't come from percentages, they come from the absolute number of employed. That is why we must never discuss things using that number....we might see our horrible future.

Fri, 12/06/2013 - 13:26 | Link to Comment MFLTucson
MFLTucson's picture

I do not believe anything that has James Dimon attached to it.  This report is a disgrace, 41% of all new jobs ARE IN GOVERMENT, which is not growth when you are printing money to pay them.

Fri, 12/06/2013 - 14:17 | Link to Comment TheFreeLance
TheFreeLance's picture

As they said in Christmas Story, I triple dog dare you.

Fri, 12/06/2013 - 14:28 | Link to Comment RealityCheque
RealityCheque's picture

If "tapering" smells like a curry & cider shit covered in burnt hair. Then yes, the Feds balance sheet certainly smells like tapering.

Fri, 12/06/2013 - 14:49 | Link to Comment Crash Overide
Crash Overide's picture


If Michael Feroli thinks that today's numbers indicate a taper it could only mean one thing... someones hand is up his ass.

The comedy continues.

Fri, 12/06/2013 - 14:50 | Link to Comment The worst trader
The worst trader's picture

Total JOKE! they will never taper. It took five down days to have a rally to kill the bears. so over this shit

Fri, 12/06/2013 - 14:59 | Link to Comment HardlyZero
HardlyZero's picture

Michael Feroli sniffing hopium glue, but we are not sure it will stick to the FED or Yellen.

Must be Hopium Madness.

Fri, 12/06/2013 - 17:12 | Link to Comment U4 eee aaa
U4 eee aaa's picture

This is just like I have said. The only thing that makes the Fed bring the hammer down is when the working man starts to see pay raises. Everyone is allowed to participate EXCEPT the common laborer.

THIS, is evil

Fri, 12/06/2013 - 17:53 | Link to Comment jmcadg
jmcadg's picture

This guy doesn't work for JPM, he works for Goldman. I think he's Tom Stolper's bum chum.

Do NOT follow this link or you will be banned from the site!