PrimeRates Market Talk: Jobs, The Fed And France

Written by: Jack Boylan

About that government shutdown… Jobs surprised on the upside in a big way this morning with the October number beating the estimates by a whopping 100,000. Additionally, the last two months’ numbers were revised upward fairly handsomely. Of course, Wall Street’s reaction to this news was to immediately send futures lower as The Fed is continually on their brain. The thinking among these people is that now the “tapering” can begin. That would be problematic for this market as the consensus seems to be that stocks are only up due to the endless QE (quantitative easing) programs. Still, the government shutdown had almost zero effect on the jobs numbers despite all of those “experts” telling us it would. All in all, a positive report for the economy, though and its hard not to look at it as good news. The only fly in the ointment was that the labor participation rate hit a 35 year low. That’s nothing to ignore or minimize, but for now, the jobs report is generally a sunny one. We’ll see how it plays out with investors.

In Europe the U.K. grew slower than expected, and the markets are initially acting as if it is a surprise, although one wonders how many years it takes before a downside “surprise” fails to surprise anyone. The S&P downgraded France to AA, citing its lack of growth prospects. Another surprise! OK no, even the Europeans know France is a basket case. The good news? S&P had boldly stated that more downgrades may not happen soon:

…it believes the French government’s reforms to taxation, as well to labor and other markets, won’t substantially raise the country’s medium-term growth prospects. S&P also said ongoing high unemployment is hurting support for further fiscal and structural policy measures. “Furthermore, we believe lower economic growth is constraining the government’s ability to consolidate public finances,” S&P said in a statement.

The agency’s outlook on France is stable, reflecting its view that the probability it will raise or lower France’s rating over the next two years “is less than one-in-three.”

So, only about a 30% chance then? Uh, awesome? And the S&P helpfully declares them “stable”, by which they mean the country is an idiotic waste, but for now their idiotic tendencies don’t appear to be increasing. YAY!

Wondering how The Fed bigwigs feel about the October jobs report? Well, in a stroke of luck for you there are going to be plenty of opportunities for those famous Fed “signals” The highlight might be the Bernake talk later on this afternoon:

Bernanke is participating in an all-star discussion of the 2008 financial crisis alongside former Israeli central bank governor Stanley Fisher; Larry Summers, who was in the race to replace Bernanke as head of the Fed; and prominent Harvard University economist Kenneth Rogoff. The panel, sponsored by the IMF, starts at 3:30 p.m. Eastern. Bernanke’s prepared remarks are entitled ‘The Crisis as a Classic Financial Panic.” He will be taking questions from the audience.

How’s that for a way to kick off your weekend? The strange thing is that lots and lots of people will be watching closely for any hint they can derive. For the rest of us, it may be best to not get too caught up in the babbling. After all, the markets will be closed and no action can happen until Monday. It might be best to just wait for the post game report, and not get all tense about it now. Enjoy your weekend before you get all tense about it! See you on Monday!


PrimeRates Market Talk: Jobs, The Fed And France

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