Morning Reading – January 7, 2011

The Big Picture: What Does Today’s NFP Mean to Markets?

From an economic perspective, this month’s data should show a continuation of the gradual improvement we have seen the past 6 months. There will be some seasonal anomalies due to the Holidays, but overall, an increased number of private sector jobs should have been added last month. Bloomberg consensus is for a gain 150,000 gain in payrolls, with the unemployment rate slipping to 9.7%. The past month revisions have mostly been positive; look to see what they reveal as well.

The Big Picture: Would a Time Machine Help Investors?

Next week I will look back at the predictions I made for 2010 and hazard some guesses about what 2011 might hold in store for investors, but for now let me just say that forecasting is a pretty tough business. There are myriad variables to consider, all of which change with time and can interact with one another to produce surprising outcomes. Even when one has access to the equivalent of a time machine (i.e. knowing — with certainty — how some variables will move over time), there can be no guarantee one will make money. Perhaps an example will make this concept more tangible.

Calculated Risk: Employment Report Preview

The BLS will release the December Employment Report at 8:30 AM tomorrow. The consensus is for an increase of 140,000 payroll jobs in December, and for the unemployment rate to decline to 9.7% (from 9.8% in November).

Calculated Risk: Survey: Small Business Hiring Likely to Improve in 2011

“Reports of net job creation continued to oscillate around the “0” line in December. Asked about changes in total employment over the last three months, 13 percent of owners reported increasing employment at their firms by an average of 3.5 workers while 14 percent reported (down two points from November) reducing total employment an average of 2.9 workers per firm. Clearly, December showed no surge in small business hiring. … Still, the percentage of owners reporting higher employment levels is the second highest reading since December 2007…

FT Alphaville: Happy new year from the Eurozone

… the government bond market…

… and finally the CDS market…

… with some comment from Markit…

FT Alphaville: Ashes to Ashes for the UK stock market?

It’s 24 years since England last tasted cricketing success in the Ashes down under and to mark this historic event we present some spurious stock market correlation via Shore Capital strategist Gerard Lane.

FT Alphaville: The uncertainty premium in Spanish, Portuguese banks = 12 ratings notches

Here’s a point of interest del dia. Or even do dia.

The average CDS spreads for Spanish and Portuguese banks are now in line with the spreads of banks rated 10 and 12 notches below the banks’ average Moody’s ratings, according to Moody’s Analytics.

FT Alphaville: The Fed in 2011

This is essentially just following the predetermined script: stump for more short-term fiscal stimulus to help get the economy out of its slump while pushing for medium-term deficit reduction to maintain confidence in the country’s finances.



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