Thursday, March 04, 2010

• Jobs – Monster Employment Index surges – the index grew to 124 from 114, the highest reading
since December 2008 and the largest month-over-month increase since the company compiled began
the index in 2003. WSJ
Monster Worldwide Employment Index

• BLK has ramped up its holdings of TSYs in recent weeks in response to the uncertain outlook for
growth, sovereign worries, and contained inflation risks; the firm’s CIO for FI said in an interview that he
has recently been "more constructive" on the Treasury market, moving the firm's Treasury holdings
toward neutral levels from last year's underweight position; the firm has reduced "meaningfully" its
overweight positions in other fixed-income assets, such as corporate bonds and mortgage-backed
securities. – WSJ – If he is ‘more constructive’ on the treasury market that most likely implies he is less
constructive on the economic outlook.
• Greece is in the market w/a debt sale today; according to wire reports, Greece is looking to price
EU5B worth of 10yr paper at swaps + 3.00; apparently the book has commitments of ~EU14.5B (CNBC
says there are “real money bids” for the Greek auction today). France and Spain sold 12.6 billion euros
of bonds on Thursday, also finding solid demand (Reuters)
• Washington worries back as a risk for equities – it had been assumed that DC was off the table as a
risk to stocks in the wake of the Brown election, although developments in recent days proves this may
not be the case. Various reports have signaled that Congressional Dem leaders plan on moving forward
on HC via reconciliation despite the Brown victory. Also – the White House sent its “Volcker Rules”
proposal officially to Congress Fri and the WSJ says they may be expanded beyond just banks (keep in

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mind that several members of Congress have expressed reservations about the “Volcker Rules” and
their passage is by no means assured, but the intra-day publicity didn’t help financial stocks yesterday).
• Volcker Rule draft from the White House submitted to Congress on Wed (these headlines started
crossing on Bloomberg at 12:45pmET); the rules are similar to the original press conf by Volcker and
Obama a few weeks back.
• Fed outlook in the WSJ – the Journal says that given that the nation’s money supply is barely
growing, the Fed shouldn’t concern itself so much w/inflation risks. WSJ
• M&A activity highs since ’08; more deals predicted going forward - Mergers and acquisitions of U.S.
companies reached $106 billion in February, the highest monthly level since July 2008. So far this year,
M&A volume has totaled $144 billion, up 46 percent from the same period last year. CNBC/Reuters

M&A volume (in dollars) and the Average Premium (Orange Line)

• Beige Book takeaways – from A Reinhart - Nine of the twelve Federal Reserve Districts reported
modest economic growth in the latest Fed Beige Book, which covered the period from the start of
January to February 22. Ten Districts reported an improvement in the last report. The Atlanta and St
Louis Districts said conditions were mixed, while Richmond said that activity slackened or remained soft,
in part because of the February snowstorms. The snowstorms were mentioned in a number of places in
the report, and we expect that certain February economic numbers will be affected by the storms. Price
pressures for finished goods were described as limited despite increases in raw material prices. Some
Districts “reported an uptick in hiring or a slowdown in layoffs,” but wage pressures were still minimal.
For the first time there were comments indicating that the long commercial real estate downturn might
be moderating, as “some Districts noted slight stabilization and a few signs of modest improvement” in
commercial real estate and construction. Nonetheless, most Districts were still reporting weak or
declining activity, suggesting any stabilization is a ways off.

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