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Morning Buzz Recap

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Editor's note: For those Minyans not on the Buzz and Banter, below is a recap of this morning's buzz pertaining to the economic data released.

Greg Collins (8:30)

Beeks...

Unemployment rate for March came in at 5.2% vs 5.3% exp.

Average hourly earnings m/m for March came in at 0.3% vs 0.2% exp; Average hourly earnings y/y for March came in at 2.6% vs 2.5% exp.

Change in non-farm payrolls for March came in at 110k vs 220k exp; Change in manufacturing payrolls for March came in at -8k vs 8k exp.

Average weekly hours for March came in at 33.7vs 33.7 exp.

John Succo (8:43)

A prominant "financial journalist" just called the employment numbers "very healthy" on TV. This should be a comedy show if it weren't so sad.
Last month's employment number was adjusted downward, manufacturing jobs were low, and this month's employment number was simply a big miss. This month's birth/death model adjustment was a high +179,000, so the actual number could have been negative.
The economy is "muddling" along at best. To call these numbers "very healthy" is pure fiction.

Scott Reamer (8:45)

110k? Zoiks. Wasn't it the omnipotent Fed that was worried on March 22nd about inflation. Given how important wage inflation is to overall inflation, I can't help but wonder aloud what they were thinking. Perhaps they are as erroneously worried about inflation now as they were in Q1 and Q2 of 2000 when CPI peaked and declined 270 basis points (a 70% decline) into 2002. Deflation?

John Succo (8:49)

Scott, the Fed should be worried about inflation. Inflation in commodity prices, ala a weaker and weaker dollar. But they need to worry about deflation too? Yes, deflation in wages and income growth. How do you battle this? Any ideas, write the Fed.

Scott Reamer (8:55)

I imagine all the carry trade addicts are simply salivating as Fed Funds futures decline after this AM's NFP number. Heck if we can't produce enough jobs, why don't we just give every unemployed person a tax rebate and let them use the money to play the carry trade? Almost certainly one of the reasons stock futures spiked up so violently was the increased probability that liquidity - Fed supplied - can once again save the day.

John Succo (9:17)

Risk is rising...

Japan and Europe are teetering on recession, if they haven't already slipped. Both are experiening wage-consumption based deflationary pressures. This is reflected in the U.S.'s weak employment numbers as well.

The markets this morning are bidding up bond and stock prices as it sees less need for the Fed to tighten in the future.

But the Fed has been easy all along, but as Scott points out, may have to take that to another level to battle these deflationary pressures. But that will drive commodity prices higher and the dollar lower.

As the Fed struggles with this "box" they will drive risk higher: current imbalances will be exacerbated.

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