Thursday, December 1, 2011

4 Positives

Positive One
ADP Employment  report

The ADP Employment Report  for Nov 2011 has continued to trend up.

U.S. Nonfarm Private Employment Highlights – November 2011 Report: Total employment: +206,000
 Small businesses:* +110,000
 Medium businesses:** + 84,000
 Large businesses:*** + 12,000
 Goods-producing sector: + 28,000
 Service-providing sector: +178,000
 Manufacturing industry: + 7,000

As with previous mths, the Service Producing Sector  and Small and Medium Bizs continues to be the star performers.
The surprise is that manufaturing carved out a 7K gain; giving the previously moribund Goods-producing sector aboost to 28K jobs added.

This set of data which correlates well with BLS data bodes well for the Friday release.

Postive Two
CBs Act


Central Banks (CBs) take co-ordinated actions by providing liquidity swaps.
Mainly, involves ECB and the FED; to ease the credit crunch in Europe.
There is apparently a  credit crunch in the USD wholesale market and the FED is opening swap lines for the ECB to ease that crunch.
The participation of the CBs from Canada, England, Japan and Switzerland helps to boost the Bazooka effect  and shows that the CBs are united in helping the ECB , if  indeed it needs the help.
It shows  that ECB's head Mario Draghi, may be stepping up--- now  that it is clear that the politicos (Merkel & Sarkozy)  have agreed that the path to fiscal union is the way to go.

Positive Three
US NAR Pending Home Sales

Pending Home Sales Index for Oct 2011; which is a leading indicator of EHS ( Existing Home Sales) jumped 10.4%

Positive Four
China cuts RRR

In my last post on this topic, Reuters suggest that the cuts in RRR will happen, only next year .
As in the past, the PBoC wrong footed them again.
The RRR will be  cut by 50 basis pts from Dec 5.
This suggests that the policymakers are ready to ease the tightening measures that have made credit difficult to get for many SMEs .

1 comment:

qiaofeng said...

There is much misunderstanding regarding the dollar-swap facilities arrangements between the CBs.

NY Fed Bill Dudley have to go before Congress on Fri 16/12/2011to explain the rationale.

The Fed had put in place dollar swap lines with other central banks to help protect the US economy from the potential risk of a big selloff in dollar assets.

'If the access to dollar funding were severely impaired, this would necessitate the abrupt forced sales of dollar assets by these banks, which could seriously disrupt US markets and adversely affect US businesses, consumers and jobs,' Mr Dudley said in remarks prepared for a hearing scheduled for Friday.

The swap facilities have drawn criticism from US lawmakers who say they could hand US taxpayers the bill for a European financial bailout, according to Reuters.

The swap arrangements are safe for the Fed and US taxpayers, Fed Division of International Finance Director Steven Kamin said in testimony prepared for delivery to the same panel.

The announcement of the swap arrangement changes has already had a beneficial effect on dollar funding markets, Mr Kamin said.

Mr Dudley said while US financial institutions are not directly exposed to the sovereign debt of European countries in the most trouble, they are deeply entwined with other 'core' European countries and the European banking system as a whole.

'This means that if the crisis were to broaden further and intensify, this could put greater pressure on US banks' capital and liquidity buffers,' he said.

The US economy is on a moderate growth path and but faces a significant risk from the euro area crisis, Mr Dudley said.

If conditions were to worsen, the US central bank is prepared to put any number of tools to use to provide a liquidity backstop for any US banks facing a credit freeze, he said.

'Although at this time, I do not anticipate further efforts by the Federal Reserve to address the potential spillover effects of Europe on the United States, we will continue to monitor the situation closely,' he said. according to REUTERS.

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