Morning Report: The jobs report and the Fed 8/6/15

Stocks are flattish on no real news. Bonds and MBS are up small.

Initial Jobless Claims came in at 270k, a decent number. Challenger and Gray announced job cuts increased 125%. The drop in energy prices is forcing job cuts in the oil patch.These are not actual firings, just company announcements that they will cut X number of jobs. Often these job cuts don’t ever happen.

Consumer comfort slipped again last week to 40.3 from 40.5. 50 is considered normalcy.

Mohammed El-Arian has a good column summing up the state of the labor market and the Fed’s thinking. “With concerns lurking behind the scenes that the Fed has gone too far in decoupling financial markets from the economy’s fundamentals, just a slight strengthening of labor market conditions (particularly on the wage front) would be enough to increase the probability of a September rate hike.” This is the case even if the economy is not strong enough that people feel the economy is better. The thinking is also that the low labor force participation rate has more to do with structural issues in the economy, which means monetary policy is simply not an effective tool to change it.

President Obama gave a long speech yesterday defending his Iran deal. Polls continue to show the public is skeptical about it. He accused people who have reservations of making common cause with the hardliners in Iran. Note that there are numerous side deals with the agreement that no one has seen yet.

The SEC passed a rule on a 3-2 basis yesterday mandating that companies disclose the ratio of CEO pay to worker pay. This is pretty much a sop to the unions and liberal activists and it is a pretty game-able number. Stock compensation doesn’t count, and the unintended effect will probably be to increase share buybacks.

17 Responses

  1. Frist!

    “He accused people who have reservations of making common cause with the hardliners in Iran.”

    Given that the hardliners on both sides want entirely different things, I’m not sure he’s using the term “common cause” right.


  2. He just wanted to compare Republicans to Islamic leaders and terrorists and get in a slam about Bush and Iraq.

    I am sure the peanut gallery at TPM loved it…


  3. Is there any difference in the mentality that trusted, say, Walter Cronkite as a news source vs one that trusts John Stewart? I say no.


    • McWing:

      Is there any difference in the mentality that trusted, say, Walter Cronkite as a news source vs one that trusts John Stewart?

      I think so. It is one thing to get duped into believing someone who is actively trying to get you to trust them. It is quite another to dupe oneself into believing an obviously satirical show that self-advertises as “fake”.

      People who trusted that Cronkite was telling them the truth, the whole truth, and nothing but the truth were naive. People who trust that Stewart is doing so are, as I said earlier, f’n morons.


  4. Interesting article… I still have no idea what obama’s actual goals are here aside from wanting to look good.


  5. Well, a stopped clock…


  6. If a Republican had said that, he would have been pilloried for supporting slavery…


    • A good indication of why, as Brent said, I can’t stomach watching Obama talk anymore. From his speech yesterday:

      It’s those hardliners [in Iran] chanting “Death to America” who have been most opposed to the deal. They’re making common cause with the Republican Caucus.

      There is seemingly no rhetorical depth to which this despicable man won’t sink.


  7. Who knew Chuck Schumer would also side with the Mullahs?


  8. Scott, I’d change that to:

    “Blame Republicans First: The Real Goal of the Kerry-Obama Iran Deal”


  9. “I still have no idea what obama’s actual goals are here aside from wanting to look good.”

    He believes his on BS on “arc of history” and engagement changing regimes. He believes that the Iranians should naturally want what he would want if he was them. Same problem he has negotiating with Republicans.

    The interview with Thomas Friedman was telling in that Obama see little to no risk in lifting sanctions:

    “We are powerful enough to be able to test these propositions without putting ourselves at risk. And that’s the thing … people don’t seem to understand,” the president said. “You take a country like Cuba. For us to test the possibility that engagement leads to a better outcome for the Cuban people, there aren’t that many risks for us. It’s a tiny little country. It’s not one that threatens our core security interests, and so [there’s no reason not] to test the proposition. And if it turns out that it doesn’t lead to better outcomes, we can adjust our policies. The same is true with respect to Iran, a larger country, a dangerous country, one that has engaged in activities that resulted in the death of U.S. citizens, but the truth of the matter is: Iran’s defense budget is $30 billion. Our defense budget is closer to $600 billion. Iran understands that they cannot fight us. … You asked about an Obama doctrine. The doctrine is: We will engage, but we preserve all our capabilities.”

    David Brooks has a better take:

    “The president concluded early on that Iran would simply not budge on fundamental things. As he argued in his highhanded and counterproductive speech Wednesday, Iran was never going to compromise its sovereignty (which is the whole point of military or economic warfare).

    The president hoped that a deal would change the moral nature of the regime, so he had an extra incentive to reach a deal. And the Western, Russian and Chinese sanctions regime was fragile while the Iranians were able to hang together.

    This administration has given us a choice between two terrible options: accept the partial-surrender agreement that was negotiated or reject it and slide immediately into what is in effect our total surrender — a collapsed sanctions regime and a booming Iranian nuclear program.”


  10. Some of the same people justifying the Iraq invasion due to the sanction regime deteriorating believe that the Iranian sanctions regime is and will continue to be rock solid in perpetuity.

    After ’06 or so there was never going to be US military action against Iran and they knew it.


  11. They can do this because he won’t be Majority/Minority leader before their Admin is up.


  12. @McWing: “The Jon Stewart dissonance: Brilliantly exposed the absurdity, mendacity of politicians . . . while advocating that we give them more power.”

    I say yes. Cronkite (and Brokaw, Jennings, Rather) were on news networks with, by that point, a pedigree of something resembling television journalism, acting the role of news anchors reporting news stories. There were all the trappings of a news reporter reporting factual news, and it was generally asserted that the news program was just that: a programming objectively reporting the important news of the day.

    Just as one might get caught up in a phishing scam because a fake website looks exactly like Paypal but is not, so can one be forgiven for believing Cronkite or Rather are dispassionate newsmen reporting the facts neutrally so that we, the viewing public, might decide.

    If one instead goes to a site called “Not Paypal” with numerous warnings that you will lose your money if you enter your credit card information, but you do it anyway because you think it’s just a clever and meta thing that’s all modern and designed to appeal to your generation but is otherwise exactly like Paypal, then you lose your money (as promised) then that’s more on you.

    Jon Stewart’s show is a political comedy program with a highly editorial/opinion based point of view. Not a news show. It’s on Comedy Central. It’s genesis (a show of the same name hosted by Craig Kilborn) was nothing but jokes and snark, for the most part. If a person is confused and takes Jon Stewart’s show as “news” then that’s on the viewer. If someone is confused as to the general bias demonstrated, then they are also going to be confused as to the bias presented by MSNBC so . . . not much help for them.

    Like Rush Limbaugh, Stewart gets singled out because he was popular and a lot of people found his confirmation bias just right for them. Yet, ultimately, the main difference between Stewart and Glenn Beck is that no one will be writing paeans to Glenn Beck about how Glenn Beck was this generations Edward R. Murrow. Also, fewer conspiracy theories and no serious effort to sell people gold as a hedge against the upcoming economic collapse. But otherwise . . .


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