After wanting to hire Eric Rosengren this morning as Chair of the Federal Reserve I now want him fired after hearing him say today that “We should allow the central bank to purchase a broader range of securities or assets. Such a policy, however, would require a change in the Federal Reserve Act.” This coming from someone who has expressed worry last year …
Succinct Summation of the Week’s Events – 3/6
Positives 1)Business activity in China is slowly coming back. In a BN story, online travel company Tongcheng-Elong Holdings said “Hotel bookings in the week to March 1 surged 40% from the previous week, while peak daily bookings for domestic flights soared 230% from the lowest level recorded in February…Bookings for domestic flights in June jumped 250% in the …
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Payrolls
Payrolls in February grew by 273k, well above the estimate of 175k and there were net upward revisions of 85k. A lot of this came from the government as the private sector exceeded expectations by a more modest but good 68k to 228k and the prior two months were revised up by 33k combined. The government jump in hiring was census related and due to a jump in …
Eric Rosengren for next Fed Chairman
As we see what is unfolding here both in markets and the economy due to the virus spread and the Fed's response function, it is really important to fully have context here as I highlight AGAIN the mistakes (I know, which I've talked about a million times to my readers annoyance) the Fed has made that has left us so vulnerable to external shocks. I have to give a …
Claims/Sentiment/Gold, silver
Initial jobless claims totaled 216k, about as expected and down from 219k last week. As a print of 203k dropped out, the 4 week average rose to 213k from 210k last week. Continuing claims, delayed by a week, rose by 7k after falling by 11k in the week prior. Bottom line, because this data point is high frequency, it will be quick to reflect any firing's that would …
Dr. Feelgood goes north
Dr. Feelgood has made its way to Canada as the Bank of Canada cut interest rates by 50 bps to 1.25%. In their statement they said “While Canada’s economy has been operating close to potential with inflation on target, the COVID-19 virus is a material negative shock to the Canadian and global outlooks, and monetary and fiscal authorities are responding.” And for those …
ISM & Markit go their separate ways
The February ISM services index unexpectedly rose to 57.3 from 55.5. The estimate was for a decline of 54.8. The internals were strange. Business activity fell by 3.1 pts but new orders jumped by 6.9 pts to 63.1 while backlogs spiked by 7.7 pts to 53.2. We also saw a jump in inventories. Employment was higher by 2.5 pts to the highest since July. Export orders jumped …
ADP jobs
ADP said they saw 183k private sector net payroll gains in February, just above the estimate of 170k but we saw a sharp downward revision to January of 82k to 209k which initially seemed out of left field. Most of the job gains in February came from large businesses with employees above 1000 where more modest gains were seen elsewhere. In terms of breakdown, thanks …
The day after
As rate cuts aren't free, it's important to assess the cost and benefits. Just as we saw with the destruction of profitability with European and Japanese banks, I'm afraid of what a disappearing yield curve will do to US bank profits. While the Fed's idea of 'financial conditions' really only includes the S&P 500 and high yield credit spreads, almost all small and …
A few thoughts post Powell presser
Listening to Jay Powell and it’s evident that the key goal of sharply cutting rates was to ease financial conditions due to the acknowledgment that rate cuts are not a vaccine to the virus. He also mentioned that this was going to generate higher confidence on the part of households and businesses. My comments to this: financial conditions only ease if market …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.