Friday, October 08, 2010

Change in Nonfarm Payrolls: Survey -5k Actual -95 Prior -54 Revised -57
Change in Private Payrolls: Survey 75k Actual 64 Prior 67 Revised 93
Unemployment Rate: Survey: 9.7% Actual 9.6 Prior 9.6

Private Payrolls - Estimates vs Actual

120
Avg Estimate from UBS, Goldman & JPM Actual
100

80

60

40

20

0
July August September

While extremely unlikely, if equities were to rally today on this report, then they truly are bullet proof.

Earnings – AA first Dow component w/earnings (Thurs night); results beat and mgmt
commentary on the call positive; JPMorgan is upgrading AA to OW this morning. – JPM
“We hope this experiment in re-inflating the economy works better this time, but mark us down
as skeptical. There is no such thing as free money, and a second round of Quantitative Easing (QE) carries
enormous risks for what looks to us like far too little benefit. We're told the Fed's own internal models
suggest that a purchase of $500 billion in Treasurys would only reduce the 10-year bond by something
like 15 basis points. (The 10-year yield is now 2.38%.) This in turn would increase GDP by 0.2% a year
and cut the jobless rate by 0.2%. That's not much bang for a lot of bucks” – WSJ
Fed – Bullard remarks on CNBC this morning – he says the Nov 2-3 meeting will be a “tough
call” b/c “QE2” is such an extraordinary measure and the economy doesn’t seem to be weakening so
much. Bullard says nothing is set in stone ahead of the meeting, although it would take a series of very
strong eco numbers to really change opinions.
White House will make overtures once the mid-term elections are over. Democrats close to the
Administration say the White House wants to make amends and will make its relationship with business a
priority after the midterm elections….changes could include Obama's backing of proposals to cut payroll
taxes temporarily, which could save companies billions. Obama may also name corporate execs to his
cabinet. – Bloomberg Business Week
Larry Summers calls for an increase in infrastructure spending - called it a “short-term and long-
term macroeconomic imperative” that the US government increase infrastructure investment – FT
Bank failures – FDIC to outline new rules on bank seizures – the FDIC is expected to say that all
creditors of large, nonbank financial firms should expect losses in a failure. The rule will make clear that
"all equity shareholders and unsecured creditors are at risk for loss and ... that their claims will be
processed in accordance with the priorities established under the bankruptcy code." However, the FDIC
may add that some short-term creditors could receive additional payments in certain instances. WSJ