Friday, November 05, 2010

Change in Private Payrolls: Survey 80 Actual 159 Prior 64 Revised 107

Private Payrolls - Estimates vs Actual

Avg Estimate from UBS, Goldman & JPM Actual

180
159
160
140
120
100
80
80
60
40
20
0
August September October

Avg Weekly Hours All Employees Survey 34.2 Actual 34.3 Prior 34.2
Unemployment Rate Survey 9.6% Actual 9.6 Prior 9.6

Backlash rising against QE – countries inc. China, Brazil, Germany all were critical of the Fed’s
actions; some Asian countries said they were preparing measures to defend their economies. A front-page
editorial in a Chinese paper today said that the PBOC needs to hike rates again in response to QE2. China
demand an explanation from the Fed on the second round of asset purchases. FT/Reuters
From MCHP’s earnings release out Thurs night: “In light of the expected tax law changes coming
in January 2011, the highest federal tax rate on dividends is likely to go from 15% currently to 39.6% on
January 1, 2011. While we do not know what the current congress or the newly elected congress and
President Obama may decide on the expiration of President Bush’s tax cuts, we believe that our investors
deserve to pay the lowest tax rate on dividends paid by Microchip. Therefore, Microchip will accelerate
its dividend payment from March 2011 into late December 2010”
Ireland, CDS spreads rose to fresh wides (+23bps to 599.8) after the FT reported that London
clearing house LCH.Clearnet has told members that they may have to deposit more cash in order to trade
Irish sov debt. The Bank of Spain said that Q3 GDP was flat, decelerating from the 20bps growth seen in
the prior quarter as austerity measures are implemented. – Europe jumps back to the top of the list of tail
risks.

Ten Year Yields on Irish Sovereign Debt

The Fed will soon grant approval to a group of large healthy banks to raise their dividend
payouts; new guidelines could be handed down as soon as next week; the Fed will take a conservative
approach and ensure that banks can achieve new Basel capital standards. The Fed will prob. approve
dividend increases in “batches” so as to avoid placing any institution at a competitive disadvantage.
Regulators want healthy banks to “get credit” from the markets for increasing their capital levels. – WSJ