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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Sometimes, The Marketplace is a Pack of Jackals

By now, you've probably seen the headlines and heart the news that Osama Bin Laden is dead. He was apparently found in a summer resort town about 35 miles north of Islamabad, in what is being described as a "million dollar compound"[1].

"Justice has been done," the President said about Bin Laden's death. You can probably debate whether or not killing a man in a 40 minute shootout is justice, but it's not as if things would have been any different had he been brought back to the United States to stand trial. I suspect that an unbiased jury of his peers would have been hard to come by. But I guess that we could have at least paraded him in chains in a triumphal procession, for the amusement of the mob.

But, and here is where I find it a little embarrassing to be in the securities industry, here is one of the first headlines I saw when I went to Reuters: "Stock futures gain after U.S. kills bin Laden". The dollar is up, crude oil is down, stocks are up, all on the death of one man.

Not the destruction of Al Quaeda. Not genuine victory in Afghanistan or Iraq. Not an end to terrorism conducted by religious fanatics.

The death of one man.

Hooray.

[1] Incidentally, why are they always called "compounds"? Why not "villas", or "estates"? I mean, Camp David doesn't get called a compound.