At least that's what the implied probability on fed funds futures options are telling us....a 90% chance that Fed stays put in May, 80% in June and 60% in August. On the other hand, it is interesting to see the 12-month average of the trimmed PCE hovering at the top of its 10-yr range. A move above the top of this range and all hell breaks lose...
It hurts that 16,000 more manufacturing jobs were lost, especially when you consider that the number included 6,000 that they added assuming new manufacturing companies opened, which given the level of global competition, I find hard to believe. Also, 27,000 of the 53,000 construction jobs were "assumed" created by new businesses net of companies going out of business. Again, I find that hard to believe. http://www.bls.gov/web/cesbd.htm You'll notice preliminary estimates for march of each year they usually add between 27,000 and 31,000 construction jobs. I guess its easiest just to add the same number each time. http://www.bls.gov/ces/cesbdhst.htm It will be good for a bounce in the dollar for a few days until people figure out the truth. Why are retail sales soft if all these people are getting jobs and everyone is getting higher wages, and nobody is saving?
what do you try to say? That the report overstates job creation? Well the history is not on your side - in the past 2 years every report was ultimatelly revised up (and each one several times!) Add average Jobless Claims and Challenger report to today's report and you look foolish when trying to spin it down....
I think the real wild card is this coming Hurricane season. With so much potential volatility in crude and unleaded gas futures, as we have seen lately, the Fed may not have a choice. Let's not forget the rumor that the US may attack Iran this summer. These 2 factors could send inflation sky high and would force the Fed's hand IMO.
To be honest, I don't believe the revised numbers anymore than the preliminary ones. As a matter of fact, I think that was a desperate attempt by the administration to improve the numbers that had been so lousy all year. I believe they should track employment, unemployment, number retired, and in school, etc statistics by individual person, instead of playing games with statistics. Each person with a social security number is either employed, unemployed, in school, retired, deceased, or not looking for work, and it would be pretty easy to distinguish. Go ahead, tell me why is neither retail spending nor savings increasing much if more and more people are becoming employed and wages are rising as we are told? Better yet, if they are increasing the money supply at a 10%+ clip, why aren't the numbers rising? Why do they get 25,000 applicants when they open a WalMart that only is going to hire 350 people, mostly part time, and with notorious low wages and benefits? Its not the figures that lie, its the liars that figure. Until they use honest methods, the numbers are suspect, IMO.
Come on guys. The Fed doesn't have the luxury of being able to do the right thing at the right time. They can merely do the right thing when there is no other alternative. Should they be raising rates to try to slow down uncomfortably persisitent inflation. Sure! But their main job is to calm the markets and keep them moving steadily upward. Their ultimate goals will prevent them from raising rates again until it is critical that they do. Unfortunately by the time that situation presents itself inlfation is hardly controllable. So we will just kick back and ride it out as rates continue to climb to try and calm a wild beast. Besides, they asked for a bad situation by dropping the rate to 1% in the first place. Hey, I've got an idea! Let's go around to all the consumers and corporations and ask them to over-leverage their resources by offering them essentially free borrowing terms.
How cares if they raise it a stinking quarter point? It wont have much of an effect on the average ameircan. If you're a trend trader and all your **** gets dumped cause the sellers selloff the indicies thats your fault. Buy and hold will get you through a .25% rate hike. Thats the smart way to play it. The fed might as well do it just to get it out of the way. And once the markets selloff it will present some good buying opportunities
This reminds me of the April '04 jobs report, expectations were for 120k non farm while the number came in at 308k. 10 year popped but fizzled for the next 2 years. <IMG SRC=http://chart.finance.yahoo.com/c/5y/_/_tnx> One report doesn't make a year.
They just needed something to make the crybabies wanting a rate cuts to quiet down for a while, IMO so they could bounce the dollar a bit. Raising them at all would have too many real world ramifications that couldn't be as easily fudged, and that's the only other way to make the dollar go up.