Morning Report – mixed jobs report 1/10/14

Vital Statistics:

S&P Futures  1837.4 4.4 0.24%
Eurostoxx Index 3111.5 21.2 0.69%
Oil (WTI) 92.63 1.0 1.06%
LIBOR 0.242 0.000 0.00%
US Dollar Index (DXY) 80.8 -0.207 -0.26%
10 Year Govt Bond Yield 2.90% -0.07%  
Current Coupon Ginnie Mae TBA 104.7 0.2  
Current Coupon Fannie Mae TBA 103.4 0.5  
RPX Composite Real Estate Index 200.7 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.54    
Markets are stronger after a mixed jobs report. Payrolls expanded at an anemic 74k in December (versus the Street expectation of 197k, and the unemployment rate came in lower than expected, falling to 6.7%. Alcoa kicked off 4Q earnings season with a miss. Bonds and MS are rallying on the news.
Headline statistics from the report:
  • Payrolls + 74k vs 197k expected
  • Unemployment rate 6.7% vs 7% expected
  • average hourly earnings + .1% MOM, + 1.8% YOY
  • Average workweek 34.4 hours, down .1 hour
  • Labor force participation rate 62.8% down from 63%.
The low payroll number was blamed on weather, which may explain the moves in the market. Stocks initially sold off hard and then rallied back. That said, even if you exclude the weather related effects, payroll growth was still sluggish. The labor force participation rate moved right back to its lows. The participation rate is back to levels we haven’t seen since the late 70s. To put that in perspective, roughly half of the gains in the labor force participation rate that began in the 1960s with women entering the labor force have been given back. We still have a lot of wood to chop before we get back to a semblance of normalcy. One other observation – ADP has been lousy at predicting the jobs number lately. They had the number at 238k. 
Chart: Labor Force Participation Rate 1950 – Present

The jobs report probably does not change the stance of the Fed, and I would expect another $10 billion reduction in QE at the Jan FOMC meeting. 
The Mortgage Bankers Association is forecasting $1.2 trillion in origination for 2014, the lowest level in 14 years. Banks will continue to fire people and there is still overcapacity in the system. I wonder what assumptions about cash purchase percentages they are using…

24 Responses

  1. Wait, are they now saying Political Correctness does not lead to open debate?

    Knock me over with a feather.

    I assumed that anybody to the right of me re immigration was a racist.

    Don’t tell the assholes at PL.


  2. Even the NY Times concedes it at this point:

    “Reid’s Uncompromising Power Play in Senate Rankles Republicans


    WASHINGTON — With his strong-armed change to the filibuster rule and an iron-fisted control of the Senate floor, Senator Harry Reid has engaged in the greatest consolidation of congressional power since Newt Gingrich ruled the House, unleashing a bitterness that may derail efforts to extend unemployment insurance.

    Mr. Reid of Nevada, the majority leader, on Thursday dismissed all proposed Republican amendments to the unemployment extension, even those drafted by Republicans who had handed Democrats a victory on Tuesday by voting to take up the bill.

    “We get nowhere with dueling amendments,” Mr. Reid declared.”

    If you have the votes then you vote. If you don’t then you obstruct.


  3. Meh, get rid of it. Process arguments never fly.


  4. This would be great if only for the reinforcement that the Executive is responsible for his appointees.

    Plus Christie expanded Medicaid and was in favor of the disastrous Senate Immigration bill. He also supported the contemptible Sandy relief bill. That sucker was loaded with pork.

    Fuck him. He’s dead to me.


  5. Drip drip drip.

    ” If You Can’t Go to Cedars-Sinai Anymore, Is It Obamacare’s Fault? Consumer choices, cachet, and health care reform



  6. “And they are available to everybody, even people with preexisting medical conditions. But those upgrades cost money.”

    I was told they would save money.


  7. well, i guess it’s true. if you don’t know who the mark it. it’s you.


    • McWing:

      But the core argument is already there: Insurers don’t think it’s fair to penalize them for expenses they incurred solely because of the government’s broken website or the administration’s last-minute policy changes.

      You climb into bed with Obama, you deserve to get screwed.


  8. ha. i used to work in that building. it’s uglier on the inside if you can believe it.


  9. Repealing the Risk Corridors” is the right and moral thing to do, which is why it won’t happen.

    This will never see the light of day while Boehner and Cantor are in the House leadership.


  10. Scott, especially if they were stupid enough not to pad their premiums in expectation of governemnt fuckups. Not accounting for governemnt fuckups is negligence is it not?


  11. Interesting. Final budget deficit for FY2013 was higher than CBO estimates.


  12. But there’s a big difference between a taxpayer-funded bailout for a company that has been incompetent—like General Motors—and a bailout for companies that are losing money because the government is forcing them to, as with Obamacare.

    Bullshit. This Abomination was written by these douchebags! They’re all in favor of using the power of the state to institute a Poll tax on us and be the beneficiary there of.

    Hey Insurance companies, FUCK OFF AND DIE!


  13. Kevin Williamson kicks Teh Krugman in the nuts.

    The real question is whether we are going to think of poor people as pets. If we do not think that they are dogs begging for scraps — if we believe them to be fully human – then we have to account for the choices people make. Much of what I saw in Appalachia I have seen in rural Texas and interior California, or looking out my window in the South Bronx. But the intellectual isolation of the ruling class can on occasion approach the absolute, which is why we have all these morally titillating debates about affirmative action at top-tier law schools while barely a third of black and Hispanic boys in New York graduate from high school in four years. The objects of public policy are an abstraction, which is why in the case of poor Appalachia our friend Professor Krugman, charts and all, sees less than he imagines himself to have seen.


  14. “Whitaker. Motherfucking. Chambers, on January 11, 2014 at 10:18 am said:

    But there’s a big difference between a taxpayer-funded bailout for a company that has been incompetent—like General Motors—and a bailout for companies that are losing money because the government is forcing them to, as with Obamacare.”

    One of the reasons GM needed a bailout was because of the CAFE standards that forced them to build cars that Americans didn’t want to buy, rather than what they were good at, so the analogy is flawed to begin with.


  15. Don’t forget import restrictions that the big 3 lobbied for as well.


  16. “But you also harbor a discomfort at possessing plenty while legions haven’t nearly enough.”

    I find that to be incredibly pathetic. It helps nobody but does what people like this are best at: turning any situation into something about them.


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