World News!

Afghanistan

• A video purporting to show frontline Taliban fighers has been released, vowing to continue fighting NATO-led and Afghan troops.  "Even if the news of Osama bin Laden's martyrdom is true, it will not change our jihad policy..." the video states, "if it is true that he is dead, it will give us more motivation to continue our jihad."

Bahrain

• Abdulla Mohammed Habib was been sentenced by a military court to at least five years in jail for the attempted murder of policemen and an additional two years for damaging public property[1].

Japan

• Prime Minister Naoto Kan ordered the Chubu electric Power Company to suspend operation of three reactors at the Hamaoka nuclear power plant after seismologists indicated that the region is overdue for an earthquake (87% probability of a magnitude 8.0 in the next 30 years).  The plan will need to implement several safety measures - including construction of sea walls - before resuming operation.

Libya

• Mahmoud Jibril, head of the rebel Transitional National Council, has laid out a political "road map" for after they depose Muammar Gaddafi.  The plan calls for an interim government which would draw up a constitution and put it to a referendum, followed within a few months by parliamentary and presidential elections.  He also indicated that the NTC will need $2 billion to $3 billion in the next few months for military salaries, food, medicine and other basic supplies.

Pakistan

• A Predator drone has killed at least eight people in North Waziristan, increasing tensions between Islamabad and Washington.

Syria

• Syrian tanks and troops have gathered in the suburbs of Damascus, waiting for a planned "Day of Rage" protest so that they will be able to clearly identify their targets.

United States

• The Department of Homeland Security announced that there was some evidence that Osama Bin Laden and/or his associates had engaged in discussions or planning for a possible attack on a train in the US on September 11, 2011.  "We have no information of any imminent terrorist threat to the US rail sector, but wanted to make our partners aware of the alleged plotting," said DHS spokesman Matthew Chandler.
• Two separate US government sources, speaking anonymously, have stated that Osama Bin Laden was not armed and was not threatening his attackers when he was shot.
• Defending the treatment of Bin Laden's corpse, President Obama sais "We took more care on this than obviously, bin Laden took when he killed 3000 people.  He didn't have much regard for how they were treated and desecrated."
• JPMorgan Chase & co has received a subpoena from the SEC over failed mortgages.

World

• A report released by the Arctic Monitoring and Assessment Programme indicates that, if the increased warming trend observed in the Arctic continues, global sea leve could rise between 0.9 meters and 1.6 meters by 2100.  This does conflict with the IPCC report from 2007 (which estimates a 18 cm to 59 cm sea level rise by 2100), and is currently founded on extrapolating 6 years of observational data forward.
• Data from Gravity Probe B indicates that Earth's mass distorts space-time around the planet in precisely the fashion predicted by Einstein's theory of general relativity.
• The United Nations Department of Economic and Social Affairs has released a report predicting that the population of the Earth will reach 10.1 billion by 2100, assuming average fertility.  The high end of the projection indicates we could hit 10.6 billion by 2050 and 15.8 billion by 2100.
• Climate shifts over the past three decades have been linked to a 5.5% decline in global wheat production, according to a study published in the online edition of the journal Science.

[1]  Damaging public property?  The article doesn't really say.  I suspect it's something like "Hey!  My baton is damaged after tying Mr. Habib to a chair and beating him for three hours.  We can charge him!"

Employment Situation

We've been building up to this all week, and now it's finally here!  The Employment Situation report!  Yaaaay!

 

If you recall, last month's report was pretty good.  For February, we had a 216,000 increase in nonfarm payroll employment (beating expectations), an unemployment rate of 8.8% (which beat expectations), and no change in average workweek or average hourly earnings.  There were 13.5 million people out of work (6.1 million of which are long-term unemployed), 8.4 million involuntarily part-time workers, and 2.4 million marginally attached individuals (all of which combines to give an effective unemployment rate of 14.4%).

 

The Econoday-surveyed analysts are not quite as optimistic for April.  They're calling for 185,000 new nonfarm jobs, an unemployment rate of 8.8%, a 0.2% increase in average hourly earnings, and an average workweek of 34.3 hours.

 

We now turn to the Bureau of Labor Statistics for The Employment Situation -- April 2011, which presets with a bit of a mixed bag.  Nonfarm payroll employment has crushed expectations, coming in at an increase of 244,000.  Yay!  On the other hand, the unemployment rate increased to 9.0%, with 13.7 million people unemployed and looking for work (up about 200,000).  Boo!  The average workweek remained steady at 34.3 hours, and average hourly earnings increased by 0.1% to $22.95/hour.

 

The number of long-term unemployed declined by 283,000 to 5.5 million, meaning they now make up 43.4% of the unemployed.  Individuals employed part time for economic reasons increased to 8.6 million (up about 200,000), and the marginally attached individuals increased to 2.5 million (up about 100,000)..  That puts the effective unemployment rate at 16.29%.

Commissioner's Statement on the Employment Situation News Release

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The latest Commissioner's Statement on the Employment Situation (http://www.bls.gov/news.release/pdf/jec.pdf) was issued today by the Bureau of Labor Statistics. The text is below.
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Advance copies of this statement are made available to the press under lock-up conditions with the explicit understanding that the data are embargoed until 8:30 a.m. Eastern Daylight Time.

Statement of

Keith Hall
Commissioner
Bureau of Labor Statistics

before the
Joint Economic Committee
UNITED STATES CONGRESS
Friday, May 6, 2011

Mr. Chairman and Members of the Committee:

Thank you for the opportunity to discuss the employment and unemployment data we released this morning.

Nonfarm payroll employment increased by 244,000 in April, and the unemployment rate edged up to 9.0 percent. Over the last 3 months, payroll employment has risen by an average of 233,000 compared with an average of 104,000 in the prior 3 months. In April, employment increased in several service-providing industries, manufacturing, and mining.

Retail trade added 57,000 jobs in April. This increase followed 2 months in which retail employment changed little. Over the month, job gains occurred in electronics and appliance stores, building and garden supply stores, and automobile dealerships. An employment increase in general merchandise stores (+27,000) offset a decline of similar size in March.

Employment in professional and business services rose by 51,000 in April. Since a low point in September 2009, employment in this industry has increased by 745,000. Several component industries continued to add jobs in April, including management and technical consulting services and computer systems design services. Employment in temporary help services was essentially unchanged in April.

Employment in leisure and hospitality grew by 46,000 over the month and by 151,000 in the last 3 months. Food services and drinking places added 27,000 jobs in April and has accounted for nearly two-thirds of the gain in leisure and hospitality since January.

Health care employment continued to increase in April (+37,000). Job growth occurred in ambulatory health care and in hospitals.

In the goods-producing sector, manufacturing employment rose by 29,000 in April. Since December 2009, manufacturing has added a quarter of a million jobs. Durable-goods manufacturing has been the source of this growth. Over the month, job gains continued in machinery, primary metals, and computer and electronic products.

Employment in mining increased by 11,000 in April, following a gain of similar magnitude in March. Most of the growth occurred in support activities for mining. Since a recent low point in October 2009, mining employment has risen by 107,000. Elsewhere in the goods-producing sector, construction employment was about unchanged over the month. It has shown little net movement since early 2010, after falling sharply during the prior 3 years.

Employment in state government and local government continued to trend down in April. Both have been losing jobs since the second half of 2008.

Average hourly earnings of all employees on private nonfarm payrolls increased by 3 cents in April to $22.95. Over the past 12 months, average hourly earnings have risen by 1.9 percent. From March 2010 to March 2011, the Consumer Price Index for All Urban Consumers (CPI-U) rose by 2.7 percent.

Turning now to measures from the survey of households, the jobless rate edged up from 8.8 to 9.0 percent in April. However, the rate was 0.8 percentage point lower than in November of last year. In April, there were 13.7 million unemployed persons, little changed from the prior month. The number of people unemployed for less than 5 weeks increased by 242,000 in April. The number jobless for 27 weeks and over declined by 283,000 to 5.8 million.

Other household indicators showed little or no change over the month. The labor force participation rate has been 64.2 percent since January. The employment-population ratio was little changed at 58.4 percent in April. Despite increases in household survey employment since late 2009, the ratio has shown little movement. Among the employed, the number of individuals working part time who preferred full-time work was little changed at 8.6 million.

In summary, nonfarm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0 percent.

My colleagues and I now would be glad to answer your questions.

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World News Special Edition: Oil and Gold and Silver

By special request, let's have a look at what's going on with commodities.  And what is going on with commodities, you ask?  Well, according to Bloomberg, Brent Crude Futures dropped 9.4%, WTI Crude Futures dropped 9.39%, the gold 100 oz futures dropped 2.86%, and the silver futures dropped 11.61%.

 

Just about every other commodity was down as well.  Canola, cocoa, corn, rice, copper, cattle, you name it.  The only one that didn't drop was lean hogs, which was up 0.38%.[1]

 

If actual metal prices are more your thing, Kitco is showing gold down 3.02% and silver down 12.92% (as of 15:11 Eastern)

 

So, what happened?  We'll turn to Reuters first for some ideas.  In Oil plummets 8 percent as commodities battered, the article quotes Chris Jarvis, senior analyst for Caprock Risk Management, for some theories.  "Crude oil is selling off sharply for two primary reasons:  QE2 is coming to an end in June and without a QE3 behind it, it will take liquidity out of the market, hurting risky asset classes such as commodities....  With Osama bin Laden dead, the market is adjusting the geopolitical risk premium down accordingly.  Given this, speculative money is being taken off the table."

 

Silver took a beating  because the Chicago Mercantile Exchange Group is raising margin requirements for the 5000-ounce COMEX silver futures, according to Silver deepens dive to 5-week low, gold slips.  The margin requirement was $11,745 per contract.  Starting May 9, it will go to $21,600 per contract.

 

If you don't follow commodities much (and I don't), that's comparable to taking the house requirement for a stock from 30% to 55%.

 

Michael Shaoul, chairman of Marketfield Asset management, chalks it up to panic in Commodities Sink Most Since 2009 as Stocks Fall.  "You have those super crowded trades.  Now you're in liquidation mode.  There's nothing to do with weak US economic data.  It's not a global financial crisis.  It's  a classic liquidation move in a crowded trade."

 

One final piece of the puzzle:  the dollar was up against the euro, the British pound, the yen, and the Australian dollar.  Since commodities are traded in dollars, a strengthening dollar will help push commodity prices down.

 

This probably isn't an exhaustive list, of course.  But it's some data to work with.

 

[1]  Now I'm kind of hoping to be reading about a "pork bubble" in a few months.

World News

Australia

• Claude Choules, the last known World War One combat veteran, died in his sleep last night.  He was 110.

European Union

• The European Central Bank held rates at 1.25%.  Speculation is that rates will be increased again next month.

Japan

• Workers have entered the Fukushima nuclear plant for the first time since March 11, installing ventilation systems in the No. 1 reactor to filter radioactive material from the air.  The 12 engineers will enter the building in groups of four for 10 minute shifts.

Libya

• The White House is looking to get US law changed to allow it to access frozen Libyan assets to"make those funds available to help the Libyan people".  It is unclear if the financial help would be humanitarian, or if it would go to the rebels.

Mexico

• Efforts continue to locate survivors of Tuesday's coal mine explosion, but only five bodies have been recovered so far.

Pakistan

• Pakistani security officials are disputing the official US version of the death of Osama Bin Laden.  "The people inside the house were unarmed.  There was no resistance," stated one of the Pakistani investigators.  They have not yet released their evidence.
• The Pakistani government is warning that any country that tries to raid its territory the way US forces did to kill Osama Bin Laden will face consequences from the Pakistani military.

Portugal

• Finance Minister Fernando Teixeira dos Santos said that the austerity measures required for the bailout deal will put the nation into a recession, causing the economy to shrink by 2% annually for 2011 and 2012.

United States

• The United States reaffirmed its alliance with Pakistan, despite the whole "Osama Bin Laden was apparently living 35 miles from Islamabad for years" controversy.  "It is not always an easy relationship, you know that," said Secretary of State Clinton.  "But, on the other hand,it is a productive one for both our countries and we are going to continue to cooperate between our governments, our militaries, our law-enforcement agencies, but most importantly between the American and Pakistani people."
• Vice President Biden is meeting with a bipartisan group of Congressmen to negotiate a compromise on cutting the federal debt in the long term and raising the debt limit in the short term.  If the $14.3 trillion debt limit is not increased by August 2, this could cause a default on US obligations.
• Tomorrow marks the one year anniversary of the "flash crash".  Many market analysts seem to feel that regulatory response has been rather... mild.
• Contradicting the original report and possibly supporting the Pakistani security officials, US officials are now stating that four of the five people shot to death when Bin Laden was killed were unarmed and never fired a shot.  The Pentagon does still say that the Seal team came under fire, though.
• Sarah Shourd, one of the hikers who was held in prison in Iran on charges of espionage and who was released on bail, stated today that she will not be returning to Iran to stand trial.  "There is a part of me that would like to go back and stand by Shane and Josh at this most difficult time," she said.  "But really I'm afraid it would be too traumatic for me to go back after what I've been through in Iran."  The Iranian court has not yet responded to her refusal to return.

First Time Jobless Claims

The Christmas-like anticipation of tomorrow's Employment Situation report continues, fueled by First Time Jobless Claims.

 

Last week, as you no doubt recall, the jobless claims news was full of crushing despair. Initial claims for the week ending 4/23 were reported at an expectations-missing 429,000, with unadjusted claims coming in at 385,622.  The advance number for seasonally adjusted insured unemployment comes in at 3,641,000, and the total number of people claiming benefits in all programs came in at 8,187,232.

 

For the week ending 4/30, the Econoday-surveyed analysts are going to try for another round of optimism.  They're calling for "only" 410,000 new claims (although the consensus range calls for anywhere from 400k to 450k).  And how did we do?  Let's look at the report.

 

Turning to the US Department of Labor's Unemployment Insurance Weekly Claims Report we see that....

 

....that...

 

...wow.

 

Before I reveal the numbers, let me just say that the information presented is fairly graphic.  Small children and sensitive individuals should probably go on to another metric now.

 

Ready?

 

The initial claims for the week ending 4/23 were revised upwards to 431,000.  For the week ending 4/30, the initial claims figure comes in at 474,000.  Yes, that is correct.  We missed expectations by 64,000.  The unadjusted initial claims come in at 412,873 (up 27,251 from last week), and the total number of people claiming benefits in all programs was 8,014,919 (a decrease of 171,547 from the prior week[1]).

 

So, yeah.  Ouch.

 

In honor of the employment situation report tomorrow, let's step back and have a look at April.  Here's the raw data:

 

Week ending	Adjusted Initial Claims	Unadjusted Initial Claims	Total Number Claiming Benefits
4/30	474,000	412,873	8,041,919
4/23	431,000	385,622	8,187,232
4/16	404,000	380,668	8,229,810
4/9	416,000	443,503	8,517,545

 

For the month, the total number of seasonally adjusted initial claims was 1,725,000 and the total number of unadjusted initial claims was 1,622,666.  During the month, the total number of people claiming benefits in all programs shrank from 8,517,545 to 8,041,919, a decrease of 475,626.  That "total number of people claiming benefits in all programs" category is unadjusted numbers, so we'll be working with the unadjusted initial claims figures for the rest of this.

 

At the start of the month, there were 8,517,545 people claiming benefits in all programs.  Over the course of the month, an additional 1,179,163 people started claiming benefits (we're assuming that the unadjusted initial claims for 4/9 are already factored in to the 4/9 total number).  As a result, if nothing else changed, that would put the total number of people claiming benefits in all programs at 9,696,708 in the week ending 4/30.  Since the actual number of persons claiming benefits in all programs is only 8,041,919, that means that 1,654,789 people stopped claiming benefits.

 

Now,in a teaser for tomorrow, the Econoday-surveyed analysts are expecting to see 185,000 new jobs added to the economy in April.  Assuming that figure is correct, that means that a maximum of 15.7% of the people who stopped claiming unemployment benefits in April did so because they returned to work[2].  The rest?  Well, there are a variety of reasons why they may not be claiming unemployment - returning to school, leaving the country to look for work elsewhere, death, and so on - but the most common reason is probably "exhausting benefits".

 

So, as you can see, there is a reason why the Fed remains concerned about the employment situation.

 

[1]  If you recall the calculations from last week, we estimated that an average week adds roughly 50,000 new jobs.  Using that figure again - and tomorrow will allow us to refine these calculations - only 29% of that decline can be attributed to employment.  That means that roughly 121,000 people ran out of benefits.

[2]  A maximum?  Yes.  Not all new jobs are claimed by people who were drawing unemployment benefits.  They can also be claimed by people entering the work force for the first time (such as immigrants and young adults) or by people returning to the work force who were not drawing unemployment benefits (such as retired people, stay at home parents returning to work, and people who had exhausted their benefits).  The 15.7% figure assumes that every one of those anticipated 185,000 new jobs were claimed by someone who had been drawing unemployment benefits.

FAO Food Price Index

This particular report, which is not even noticed by the average Wall Street analyst, is released each month by the Food and Agriculture Organization of the United Nations.  In it, the FAO looks at monthly average changes in overall food prices and in the prices of cereals, oils and fats, sugar, dairy, and meat.

 

Overall, the FAO Food Price Index was virtually unchanged in April.  The Cereal Price Index was up 5.5% (on bad weather and planting delays), the Oils/Fats Index was virtually unchanged, the Sugar Price Index fell 7%, the Dairy Price Index fell 2.4%, and the Meat Price Index stayed level.

World News

Afghanistan

• Afghanistan has weighed in on the whole "Osama Bin Laden was apparently living 35 miles from Islamabad for years" controversy.  Defence Ministry spokesman Zaher Azimy stated "If Pakistan's spy agency was not aware of the house near the academy, it brings the agency under question.  If I was a security analyst, I would raise these very important questions."  He went on to ask "If the agency was not aware that the biggest terrorist had been living there for six long years, how can it protect its strategic weapons?  How can the world be assured that the strategic and atomic weapons would not be in danger in the future?"

Bahrain

• Bahrain's justice minister has charged 23 doctors and 24 nurses with "acting against the state" by treating pro-democracy protesters wounded by security forces.  Well, that's just the actual reason for the charges.  The official charges include promoting efforts to bring down the government, harming the public by spreading false news, embezzlement of public funds, forcefully occupying a public building, , inciting, participating in illegal protests, and "assault that led to death".  The Saudi-supported Bahraini government has only managed to kill 30 people since the protests began in February, so it is unlikely that the chief prosecutor at the International Criminal Court will consider bringing charges.

Libya

• NATO officers meeting in Brussels rejected assessments of stalemate on the battlefield.  Meanwhile, the Libyan military has begun bombarding Zintan and has blocked aid deliveries to Misrata.
• Temporarily blocked, anyway.  A rescue ship docked at Misrata this morning to help evacuate 1000 African and Asian migrant workers, as well as people injured in the fighting.
• Austrian officials have frozen approximately 1.2 billion euros in funds believed to be linked to Muammar Gaddafi and other Libyan top officials.
• The chief prosecutor at the International Criminal Court has said that there are reasonable grounds for charging loyalist Libyan forces (and Muammar Gaddafi himself) with crimes against humanity - including the alleged killing of some 500 to 600 peaceful protesters.

Mexico

• Four workers have been killed and 10 trapped underground after an explosion in a coal mine in northern Mexico.  Officials are not optimistic that any survivors will be found.

North Korea

• Amnesty International has published satellite images of North Korean political prison camps, which are apparently growing in size.  The North Korean government - which denies the camps exist - did not comment.  Escapees from the non-existent camps have testified that prisoners are used as slave labor and are frequently subjected to torture and other human rights violations.  Former President Carter has not yet weighed in on whether these human rights violations are the fault of the United States...

Pakistan

• In the wake of the "Osama Bin Laden was apparently living 35 miles from Islamabad for years" controversy, and the fact that the Pakistani army wasn't aware the operation was taking place until hours after it was over, Pakistani citizens and politicians are beginning to ask awkward questions like "how did the United States assault a building in a garrison town in our nation without our military noticing?"  Political anchor Kamran Khan probably put it best when he said "The biggest question is where do we stand now?  We had the belief that our defense was impenetrable, but look what has happened.  such a massive intrusion and it went undetected."
• Pakistan, understandable feeling stung by the whole "Osama Bin Laden was apparently living 35 miles from Islamabad for years" controversy, is lashing out.  "We have intelligence failure of the rest of the world including the United States," said Pakistani Prime Minister Yousuf Raza Gilani.  And while that is true, the position of the United States seems to be "Yes, but he wasn't living in a resort fortress in Disneyland, next door to a US Army base.  We think we might have noticed if he had been."

Portugal

• Prime Minister Jose Socrates has reached an agreement for a bail-out from the EU and the International Monetary fund.  The deal has to be endorsed by opposition parties, and will be asking for a three-year loan of 78billion euros.  It will also require Portugal's deficit to be cut to 5.9% of GDP by the end of 2011, to 4.5% of GDP by the end of 2012, and to 3% of GDP by the end of 2013.  There is, as yet, no speculation that they will renege on the deal the same way Greece has.

Syria

• Now that the protests in Deraa has been smashed flat with automatic weapons fire and tanks (killing an estimated 560 people in the process), the Syrian military has surrounded the coastal ity of Baniyas and is preparing to steamroll protesters in that city as well.  The chief prosecutor for the International Criminal Court has yet to make any comments.

United States

• Contradicting an earlier report that Osama Bin Laden "participated" in the firefight on Sunday, US officials have stated that Osama Bin Laden was unarmed when he was killed.  US officials have also backtracked on an earlier statement that Bin Laden's wife had been used as a human shield.
• The announcement that Bin Laden was unarmed, as well as his burial at sea, has provoked quite a bit of international controversy.  Geoffrey Robertson and former West German Chancellor Helmut Schmidt have both stated that the circumstances of his death, as described by the White House, bear all the characteristics of an assassination, something that is a violation of international law.  A number of Islamic religious authorities are more concerned about the burial at sea, stating that the funeral was not conducted in accordance with Islamic requirements and describing what happened as "just like dumping an animal".[1]
• Former President George W. Bush has declined President Obama's invitation to attend a New York ceremony to mark the killing of Osama Bin Laden.
• Representative Barney Frank has introduced legislation that would remove regional Federal Reserve bank presidentsfrom the Federal Open Market Committee, essentially stripping them of their role in setting monetary policy.
• The US government is suing Deutsche Bank AG for more than $1 billion, accusing the company of misleading the Federal Housing Administration into believing that their poor quality loans qualified for federal insurance.
• The US Attorney General is putting together a task force that will look into allegations of energy (particularly gasoline) price gouging and market manipulation.  The group will include representatives from the Commodities Futures Trading Commission, the FTC, the Federal Reserve, The SEC, and the Departments of Agriculture, Energy, Justice, and Treasury.
• In "here's egg on you face news," the USPS has issued a Statue of Liberty stamp along with information sheets about the history of the Statue.  The only problem is that the stamp features not the original Statue of Liberty, but the replica in front of the Las Vegas New York-New York casino.

[1]  I can sympathize if your reaction here is something like "so what?".  We are talking about Osama Bin Laden, after all, and I'm not particularly losing any sleep over the idea that he wasn't given a trial before being executed.  But, do we really want to be alienating our allies and throwing more fuel on the fire?

ADP Employment Report

Waiting for Friday's Employment Situation is kind of like waiting for Christmas when you're young.  The days drag out endlessly and you dream of what that special day will bring.  And then, when the day arrives, you rush to open your presents and sometimes you get exactly what you asked Santa for.

 

And sometimes you get an itchy and ill-fitting sweater.

 

The ADP Employment Report is an advent calendar window to the Employment Situation's Christmas.  It's a little teaser, that both soothes and stimulates the anticipation.  In March, that teasing bit of anticipation came in the form of 201,000 new private-sector non-farm jobs, 75.57% of which came from the service sector and 50.7% of which came from small businesses.

 

The April report is just not as happy.  The March employment figures were revised upwards to 207,000 new jobs (which is good), but April is only showing an additional 179,000 jobs.  77.09% of those jobs came from the service-providing sector, while 22.91% came from the goods-providing sector.  This marks the 16th consecutive month of employment gains for the service-providing sector and the 6th consecutive monthly gain for the goods providing sector.

 

6.14% of the new jobs came from large businesses, 46.92% came from medium-size businesses, and the remaining 49.94% came from small businesses[1].

 

[1]  Definitions:  A large business has 500+ workers.  A medium-size business has 50-499 workers, and a small business has less than 50 workers.

The Challenger Job Cut Report

It's only Wednesday, but we're starting to get some employment data crawling out of the woodwork in preparation for Friday's Employment Situation report.

 

The Challenger Job Cuts report is issued by the outplacement consulting firm Challenger, Gray, and Christmas[1], which works with companies that are laying off employees to assist those employees in finding new jobs.  As a result, they have a lot of insight into current plans to cut jobs, and use that data to release a report about layoff trends.

 

One thing you have to keep in mind about the report.  The job cut figures do not represent layoffs for the month.  Instead, they represent layoffs announced during the month, even if the actual job losses will be in future months.  (That is, if a firm announces in March that it will lay off 30 workers by the end of August, the Challenger report puts that in the March figures instead of the August figures.)

 

The report for March was mixed.  They calculated that employers would cut 41,528 jobs, mostly in the public sector (46%, in fact), which brought the Q1 job cut total to 130,749 - which was the lowest Q1 layoff total since 1995.

 

That's nice and all, but how is April looking?  Well, according to the report, April is looking pretty good.  Employers announced plans to cut 36,490 jobs from their payrolls during the month, bringing the year to date layoff figures to 167,239.  I bring that little factoid up because the report indicates that hiring is on the rise;  year to date, employers have announced plans to add 172,590 new workers - 59,648 in April alone.

 

On the down side with those hiring figures, 50,000 of the 59,648 new hires announced in April were from McDonalds.  And while yes, a job at McDonalds is a paying job, it's not usually considered to be a job with good pay, benefits, or long-term prospects.

 

On the up side, John Challenger (CEO of Challenger, Gray & Christmas) notes that "It is important to realize that our hiring figures represent just a fraction of the job creation that is actually occurring, since most employers do not publicly announce hiring intentions."

 

29.4% of the planned job cuts are government and/or non-profit jobs.  The next largest number of planned layoffs come from the aerospace & defense industry, at 12.37%.  The top reasons for job cuts are cost-cutting (24.94%), business closing (24.73%), and restructuring (20.1%).

 

[1]  Their corporate motto is not "It's Christmas!  You're getting laid off![2]"  But it's fun to pretend that it is.

[2]  Actually, I think that current corporate speak would actually state this as "It's Christmas!  You've been granted the opportunity to participate in a rightsizing opportunity!".

MBA Weekly Applications Survey

If you recall from last week, the Mortgage Bankers Association didn't have a lot of good news.  They reported a 5.6% decline in the Market Composite Index for the week ending 4/22, driven by a mild decline in refinancing (0.6%) and a steep decline in first time applications (13.6%).  Most of the decline was laid at the feet of the FHA, which recently increased premiums.  The average contract interest rate for a 30-year fixed-rate mortgage slipped to 4.80%.

 

Things substantially improved for the week ending 4/29.  The Market Composite Index increased 4.0%, with the Refinance Index increasing 6.0% and the Purchase Index increasing 0.3%.  Refinancing accounted for 62.7% of total applications (up 110 bps from last week) and adjustable-rate mortgages accounted for 6.7% of mortgage activity (up 20 bps).  And the average contract interest rate for 30-year fixed-rate mortgages?  That fell to 4.75%.

Fight of the Century

World News

Osama Bin Laden

(Yes, I'm perfectly aware that he isn't a country.  But he is the single biggest news item today.)

• Old news at this point, but Osama Bin Laden was killed in a a gun battle with US forces in his three-story resort fortress 35 miles north of Islamabad.  One of his adult sons, two other men, and an unidentified woman were also killed in the fight.
• The reaction of the Islamic to the news of Bin Laden's death has been mixed.  The Palestinian Authority has called his death "good for the cause of peace", Hamas is calling it "the assassination and the killing of an Arab holy warrior," and Human Rights Watch is saying "Bin Laden Is just a bad memory.  The Region has moved way beyond that, with massive broad-based upheavals that are game-changers."  These may be taken as typical of the responses:  "yay!", "boo!", or "so what?"
• Osama Bin Laden was been buried at sea[1] at 2 AM EST.  Reports from the US Department of Defense are that "The deceased's body was washed and then placed in a white sheet. The body was placed in a weighted bag. a military officer read prepared religious remarks which were translated into Arabic by a native speaker. After the words were complete, the body was place on a prepared flat board, tipped up, whereupon the deceased's body eased into the sea,"
• Secretary of State Clinton took the opportunity of Osama Bin Laden's death to declare to the Taliban that "you cannot wait us out, you cannot defeat us but you can make the choice to abandon al Qaeda and participate in a peaceful political process."

Afghanistan

• The Taliban has announced the start of its spring offensive by warning civilians to stay away from public gatherings, military bases, government buildings and convoys, and stating that it will target foreign troops, Afghan security forces, and Afghan officials.

China

• China Marine Surveillance is adding 1000 new personnel and new equipment "to sthrengthen law enforcement in Chinese-related waters".  The enhanced surveillance is aimed at disputed maritime claims between China and neighboring nations.

Iran

• President Mahmoud Ahmadinejad has ended a week-long boycott of his official duties, begun after a dispute between himself and Ayatollah Khamenei over the dismissal of Intelligence Minister Heidar Moslehi last month.

India

• Godrej and Boyce, the last company on earth manufacturing manual typewriters, has officially closed up shop.

Israel

• In the wake of the reconciliation between Hamas and Fatah, Egyptian Foreign Minister Nabil al-Araby has called on the United States to support the declaration of an independent Palestinian state.
• Following the reconciliation of Hamas and Fatah, Israel has suspended tax transfers to the Palestinian Authority.

Japan

• Japan's parliament has passed a 4 trillion yen (that's about $49 billion) emergency budget to help fund reconstruction and support businesses.

Libya

• Around 2000 people carrying flags and pictures of Muammar Gaddafi turned out for the funeral of his son Saif al-Arab, who was killed in a NATO missile strike on Gaddafi's home in Tripoli on Saturday.  NATO leaders continue to insist that the three separate missile strikes on Gaddafi's home over the course of the last week were not assassination attempts on the Libyan leader.
• Turkey is evacuating staff from it's Libyan embassy in the wake of attacks on the British and Italian embassies in Tripoli, which appear to be driven by Libyan rage over the Saturday missile strike that killed Saif al-Arab and three of Gaddafi's grandchildren.
• The United Nations has also withdrawn its international staff following the mob looting and burning of the UK embassy.

North Korea

• Former President Jimmy Carter has stated that the starvation of the North Korean people is a human rights violation, and has laid the blame for that starvation squarely on the United States.[2]

United States

• In an appearance on the Oprah show today, President Obama announced that he is looking for ways to provide "immediate relief" for high US gasoline prices, and called for an end to tax breaks for oil companies.
• Six US tobacco companies have won a lawsuit brought by 37 hospitals seeking reimbursement for treating uninsured smokers who had not paid for care.

 

[1]  I guess that sounds better than "the US military tossed Bin Laden's body overboard".

[2]  And not on the North Korean government, which ordered US humanitarian aid workers to leave the country in 2009.  Or the use of cereals to produce luxury export products.  Or the preferential allocation of food to Korean Workers Party members and governmnet officials.  Or the stockpiling of food by the North Korean military.

Report on Foreign Holdings of U.S. Securities at End - June 2010

Report on Foreign Holdings of U.S. Securities at End - June 2010

The final results from the survey of foreign portfolio holdings of U.S. securities at end-June 2010 are released today on the U.S. Treasury web site at (http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/fpis.aspx).  A revised table on Major Foreign Holders of Treasury Securities, where estimates through end-February 2011 are based in part on survey data, is also released at (http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt ). 

This annual survey was undertaken jointly by the U.S. Treasury, the Federal Reserve Bank of New York, and the Board of Governors of the Federal Reserve System.  The next survey will be for end-June 2011 and preliminary data are expected to be released by February 28, 2012.   

Complementary surveys measuring U.S. holdings of foreign securities are also carried out annually.  Data from the most recent survey, reporting on securities held on year-end 2010, are currently being processed.  Preliminary results are expected to be reported by August 31, 2011.

Overall Results

The survey measured foreign holdings of U.S. securities as of June 30, 2010, to be $10,691 billion, with $2,814 billion held in U.S. equities, $6,921 billion in U.S. long-term debt securities1 (of which $1,159 billion are holdings of asset-backed securities (ABS) 2 and $5,763 billion are holdings of non-ABS securities), and $956 billion held in U.S. short-term debt securities.  The previous survey, conducted as of June 30, 2009, measured total foreign holdings of U.S. securities at $9,641 billion, with holdings of $2,252 billion in U.S. equities, $6,240 billion in U.S. long-term debt securities, and $1,149 billion in U.S. short-term debt securities (see Table 1). 

1.  Long-term debt securities have an original term-to-maturity of over one year.
2.  Asset-backed securities are backed by pools of assets, such as pools of residential home mortgages or credit card receivables, which give the security owners claims against the cash flows generated by the underlying assets.  Unlike most other debt securities, these securities generally repay both principal and interest on a regular basis, reducing the principal outstanding with each payment cycle.

Table 1.  Foreign holdings of U.S. securities, by type of security, as of recent survey dates
(Billions of dollars)

Type of Security	June 30, 2009	June 30, 2010
Long-term Securities	8,492	9,736
Equity	2,252	2,814
Long-term debt	6,240	6,921
Asset-backed	1,260	1,159
Other	4,979	5,763
Short-term debt securities	1,149	956
Total	9,641	10,691
Of which: Official	3,880	4,346

Table 2.  Foreign holdings of U.S. securities, by country and type of security, for the major investing countries into the U.S., as of June 30, 2010
(Billions of dollars)

	Country or category	Total	Equities	Long-term debt		Short-term
				ABS	Other	debt
1	China (Mainland)1	1,611	127	299	1,180	5
2	Japan	1,393	224	121	979	69
3	United Kingdom	798	324	48	404	22
4	Cayman Islands	743	290	122	249	82
5	Luxembourg	622	172	45	323	82
6	Canada	424	298	9	105	12
7	Belgium	408	19	42	341	6
8	Switzerland	397	162	22	189	25
9	Ireland	356	77	62	118	99
10	Middle East Oil Exporters2	350	128	17	132	73
11	Hong Kong	293	33	84	88	88
12	Bermuda	249	44	48	129	28
13	Netherlands	247	152	22	67	5
14	Taiwan	228	12	32	181	3
15	Germany	195	57	38	92	8
16	France	194	115	19	50	10
17	Singapore	176	91	4	73	8
18	Russia	170	*	*	122	48
19	Brazil	169	2	*	135	33
20	Norway	136	90	13	32	1
21	Korea, South	122	13	35	68	6
22	Australia	118	74	4	34	6
23	British Virgin Islands	85	42	3	24	16
24	Mexico	84	17	2	60	5
25	Sweden	81	49	1	26	5
	Country Unknown	138	1	*	135	2
	Rest of the World	904	201	67	427	209
	Total	10,691	2,814	1,159	5,763	956
	of which: Foreign Official	4,346	426	466	2,970	484

*   Greater than zero but less than $500 million.
1.  Excludes Hong Kong, Macau, and Taiwan, which are reported separately.
2.  Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates.

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