Reports » US

US stock market, economy and companies update (October 05, 2012)

Contributed by Trade The News

- US and European indices gained ground after the release of the US September jobs report this morning, although strength in equities peaked in the first hour of cash trading and indices are turning south in mid-morning trade. Before turning around, the DJIA hit five-year highs. The non-farm payrolls report more or less met expectations and the August nonfarm payrolls were revised higher. Both the private and manufacturing payrolls numbers were subpar and the August numbers were revised a bit lower. None of these outcomes are particularly surprising, given recent trends, although the same cannot be said about the decline in the unemployment rate to 7.8% from 8.1% in August, to its lowest level since January 2009. FX levels trading told different stories - the euro immediately strengthened on the US jobs news, with EUR/USD jumping from around 1.3000 to 1.3070 while the yen weakened and USD/JPY pair tested above the 78.80 area. Spot gold fell around half of one percent in the wake of the news, while WTI crude also fell, with the front-month contract down around a buck since the data. Meanwhile in Greece, there are signs that the government and the Troika are still unable to work out a deal. Chancellor Merkel will visit Athens next week for the first time since the crisis began to lend her support to the process.

- A minor media firestorm broke out regarding the surprising decline in the overall unemployment rate, which is dictated by the BLS's household survey. The latter showed an 873K increase in employed individuals and this surprisingly large gain was primarily due to a surge in part-time employment plus big declines in unemployed individuals looking for work (individuals employed part-time rose by 582K following a 215K decline in August while the number of unemployed job-seekers fell by 456K). As unemployment benefits run out, more individuals are being forced into part-time work, and in fact some believe the decline in the official unemployment rate could actually be seen as a sign of greater economic slack. In any case, many analysts see month-to-month volatility in the household series as noise, and rightly point out that it makes the overall unemployment rate a very poor benchmark for the duration of the Fed's QE3 program. Regardless, Nomura wrote that according to their model, today's data could reduce the term of QE3 buying by 3-4 months. Some commentators on the right condemned the statistics as inflated or manipulated, drawing an outraged response from Labor Secretary Solis.

- Online games firm Zynga cut its FY12 forecast for a second time yesterday evening due to challenging conditions. The firm greatly reduced its adj EBITDA outlook range and cut its outlook for overall bookings - recall that it also slashed its FY12 outlook with its Q2 earnings back in July. Shares of ZNGA fell 19% to their lowest levels ever. Shares of Facebook are also in the red this morning on the news. Aerospace manufacturing name Curtiss-Wright slashed its FY12 outlook due to an ongoing strike and declining orders among oil and gas industry customers. Note that Curtiss had also already cut its outlook once, back in June ahead of its Q2 report. Shares of CW are flat on the day.

***Looking Ahead***
- 12:00 (IT) Italy PM Monti with France President Hollande and Spain PM Rajoy in Malta
- 13:00 (DE) German Chancellor Merkel
- 13:00 (US) Feds Duke
- 13:30 (IT) Italy PM Monti press conference in Malta
- 15:00 (US) Aug Consumer Credit: +$7.3Be v -$3.3B prior
- 20:00 (CO) Colombia Sept Consumer Price Index M/M: 0.2%e v 0.0% prior; Y/Y: 3.0%e v 3.1% prior

***Sunday***
- 07:00 (BR) Brazil Municipal Elections

***Economic Data***
- (CL) Chile Aug Economic Activity Index M/M: 0.2% v 0.4%e; Y/Y: 6.2% v 6.0%e
- (IN) India Forex Reserves w/e Sept 28th $294.8B v $294.0B prior- 08:00 (BR) Brazil Sept IBGE Inflation M/M: 0.6% v 0.6%e; Y/Y: 5.3% v 5.2%e
- (PL) Poland Sept Official Reserves: $105.8B v $103.5B prior
- (US) Sept Change in Nonfarm Payrolls: +114K v +115Ke; Change in Private Payrolls: 103K v +130Ke; Change in Manufacturing Payrolls: -16K v 0.0Ke
- (US) Sept Unemployment Rate: 7.8% v 8.2%e; Underemployment Rate: 14.7% v 14.7% prior
- (US) Sept Avg Hourly Earning M/M: 0.3% v 0.2%e ; Y/Y: 1.8% v 1.8%e; Avg Weekly Hours: 34.5v 34.4e v
- (CA) Canada Sept Net Change in Employment: +52.1K v +10.0Ke; Unemployment Rate: 7.4% v 7.3%e; Full Time Employment: +44.1K v -12.5K prior; Part Time Employment Change: +8.0K v +46.7 prior; Participation Rate: 66.8% v 66.6% prior
- (CA) Canada Aug Building Permits M/M: 66.8% v -1.3%e