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As the man
said below, “it’s a little surprising we’re still relying on faith”. If you are an
owner, you believe; if you are jobless or working part-time you don’t believe –
and neither do the businesses where you haven’t been spending money. We have a crises of credibility, if not
faith, when proposing a manned expedition to Mars and a settlement on the moon
while proposing in a new indentured servant labor force (ie. new immigration
policy). The Bush2
economic plan reminds me of Oral Roberts, that Pentecostal faith-healer who had
a college named after him. He was famous originally for telling people to put
their hands on the radio during his radio sermons and be healed if they
BELIEVED. - KWC Treasuries Romp as Weak Jobs Shackle Fed
@ http://www.nytimes.com/reuters/business/business-markets-bonds.html?pagewanted=print&position=
NEW YORK (Reuters) - Treasuries enjoyed their biggest rally more
than four months on Friday as a shockingly weak U.S. payrolls report was seen
delaying the day when the Federal Reserve might have to raise interest rates. Short-term yields plunged to their
lowest levels in three months and Eurodollar futures soared as the market
slashed the odds of rate hikes this year. Nonfarm payrolls rose
just 1,000 in December, far below forecasts of a 130,000 gain and a world away
from whispers in the market of a 200,000 rise. Furthermore, previous gains
reported in November and October were revised downward. The unemployment rate did dip to 5.7
percent from 5.9 percent, but largely because more people were leaving the
labor force. The workweek also showed a
surprising fall, suggesting either lower production or another huge rise in
productivity. ``The data are a
disaster for the recovery story,'' said Dominic Konstam, head of interest-rate
strategy at CSFB. ``It suggests that once the
stimulus to consumption fades, there won't be the hiring there to replace it. ``The market had been looking for the
Fed to move in March or June, but these figures push that out well into the
second half of the year and maybe into next year,'' he added. That was reflected in
the two-year Treasury note (US2YT-RR),
the most sensitive to thinking on short-term rates. It leapt 9/32 in price and
yields dived to a three-month trough of 1.66 percent from 1.83 percent late on
Thursday. Five-year notes
(US5YT-RR) rose 27/32 for a yield of 3.07 percent, down from 3.25 percent. The
30-year (US30YT-RR) jumped 1-25/32, driving yields to 4.97 percent from 5.09
percent. The benchmark 10-year
note (US10YT-RR) climbed 1-10/32, compressing its yield to 4.10 percent from
4.26 percent, the biggest single-day drop since last September. ``We could easily see the 10-year test
4.00 percent now, and perhaps even lower,'' said CSFB's Konstam. There were also signs
that core inflation, already at a four-decade low, could fall further. Average
hourly earnings rose at their lowest annual rate since 1987, while the ECRI
leading indicator of inflation hit a 16-month trough. Just a few days ago
Fed Governor Ben Bernanke warned that inflation was already too low for comfort
and a further decline would be unacceptable for the central bank. ``The
Fed's not going to move this year,'' declared Drew Matus, senior
financial economist at Lehman
Brothers. ``In
fact, a couple more jobs figures like today's
and we could be talking '06 before they hike.'' THE OTHER CENTRAL
BANK The market was already
supported yet again by expectations of demand from foreign central banks, which
are desperately trying to stem export-damaging gains in their currencies. The
Bank of Japan was believed to have intervened heavily overnight,
buying dollars for yen, just as it did early in the week, and traders assume
much of this money will find its way into Treasuries. Talk is the BOJ spent
1 trillion yen buying dollars on Friday and around 3 trillion early in the
week. If so, that equates to an astonishing $38 billion, and going on past
history, a good chunk of that should end up in Treasury and agency debt. Offshore
central banks, led by the BOJ, snapped up over $170 billion of Treasury debt
last year, taking their holdings to a record $862 billion. >>>>>>>>>>>>>>> Jan 9, 2004 Unemployment
Rate Falls to 5.7 in December but Job Growth Flat
By
Leigh Strope, The Associated Press The 0.2 percentage point
drop in the jobless rate occurred because fewer people were looking for work, the Labor Department said Friday. More than 300,000 people gave
up their search for jobs and dropped out of the pool of available workers. "The rate is going
down, but it is going down for the wrong reasons," said Bill Cheney, chief
economist at John Hancock Financial Services, noting that it fell not because
people were finding work. "That doesn't make you feel really good about
the state of the jobs market." The weak report prompted
investors to sell off stocks in early trading on Wall Street. Weak holiday hiring by
retailers was to blame for holding back job gains. Analysts were surprised by
the anemic job growth because they expecting companies to add 100,000 to
150,000 jobs to their payrolls last month. But the net gain was just 1,000 jobs
- which is "quite shocking," Cheney said. "I would certainly
have not expected anything resembling that." Employment in the
nation's stores, malls and even gas stations dropped by 38,000, the report
said, and manufacturing continued a 41-month slide by losing 26,000 jobs. The nation's factories
have been on life support, and the sector shed about a half million jobs in
2003. The economy has lost
about 2.3 million jobs since President Bush took office, a statistic that
Democrats hope to use against Bush as he seeks re-election. "Rather than
focusing on putting a person on the moon, I think the Bush administration
should focus on putting people back to work," said Rep. Rahm Emanuel,
D-Ill., a former Clinton White House aide, citing Bush's planned announcement
next week of goals of sending Americans to Mars and establishing a permanent
human presence on the moon. The Bush administration
contends that stronger economic growth - helped by the president's three tax
cuts - will eventually lead to more meaningful job creation on a sustained
basis. "The pace of
December job growth reinforces the need to pass all the elements of the
president's plan for job creation," said Commerce Secretary Don Evans.
"President Bush won't be satisfied until every American seeking work finds
a job. Congress should make tax relief permanent and act with urgency on the
rest of President Bush's jobs and growth agenda." For that sustained
growth, analysts are looking for monthly payroll gains of 200,000 to 300,000 -
a mark the economy is far from reaching. December marked the fifth consecutive
month of payroll gains, however slight. Other areas of the
economy are surging, but the jobs market has been a weak link in the recovery.
To remain competitive in the global economy and out of concern that economic
improvements wouldn't last, companies have been hesitant to take on added costs
of hiring new full-time workers. Instead, they have been working their
employees longer and harder. Hence, the productivity of American workers has
been at high levels in recent months. But with all the
positive signs in the rest of the economy, economists have been expecting the
jobs market to improve. "Most people were
expecting it to be a reality by this stage, so it's a little alarming we're
still relying on faith," Cheney said. Friday's report showed
that employers have added just 277,000 new jobs since July, cutting earlier
estimates of growth in October and November. Some areas of the
economy added jobs last month. Employment continued to rise in the services
sector in temporary employment services, education and health care.
Construction companies also added to their payrolls. But the cuts outweighed
any gains. Analysts were concerned about the lack of employment growth for
retailers in their most important month of the year. A rise in Internet shopping could partially explain why fewer
stores were hiring, economists said. The federal and state governments also reduced their payrolls last
month, as did banks and mortgage companies,
reflecting the uptick in mortgage interest rates. |
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