Monthly Unemployment Rate

Octobers Unemployment Rate was released and remained at 9.6% for U3 and 19% for U6 unemployment. The labor force contracted 254,000 and the number of employed contracted 330,000 as well.  Marginally attached and Discouraged workers increased by 64,000, but the number of Part time for Economic reasons contracted by 318,000.

Overall I would say this report was nothing to write home about.  The unemployment rate is running sideways for now, which is not good.  Unemployment benefits for thousands of people expire at the end of the month.

POMO Purchase

The Fed started up the POMO (Permanent Open Market Operations) Purchases again.  Today the Fed purchased $4.765 billion in Treasuries.  This brings the total purchases, since Aug 17th of 2010, to $69.225 billion.

OPERATION 1 - RESULTS
Operation Date:	11/04/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	11/05/2010
Maturity/Call Date Range:	10/31/2014 - 09/30/2016
Total Par Amt Accepted (mlns) :	$4,765
Total Par Amt Submitted (mlns) :	$18,578

Weekly Initial Unemployment Claims

This weeks initial claims was released with a worse than expected result.  Initial claims are the number of persons filing for unemployment in the previous week for the first time.  Generally viewed as a lagging indicator, it shows us the most up to date situation with unemployment, but needs to be viewed over a few weeks for trends.  The forecasted number called for 437k, but the actual headline number was 457k.  This exceeded the previous weeks revised number of 437k.

Fed to Print up to $900 Billion

The federal reserve announced today that it intends to purchase $600 billion in longer-term treasuries by the end of the 2nd quarter of 2011.  It also intends to reinvest principal payments from agency debt and agency mortgage-backed securities into longer-term treasuries over that same period of time.  The Fed makes the following statement to sum this activity up:

Taken together, the Desk anticipates conducting $850 billion to $900 billion of purchases of longer-term Treasury securities through the end of the second quarter. This would result in an average purchase pace of roughly $110 billion per month, representing about $75 billion per month associated with additional purchases and roughly $35 billion per month associated with reinvestment purchases.

Now most articles today only ran the $600 billion and the fact that it was only $75 billion per month and said they were disappointed that it was under $100 billion per month, well I guess they can cheer up they got $110 billion per month. Yah, now our money is worth less (again).

Dylan Ratigan on Investigations & Transparency

Lets hope these investigations do take place and whomever is guilty of wrong doing is prosecuted regardless of whom they are.

ISM Non-Manufacturing Report

Octobers ISM NMI (Non-Manufacturing Index) report showed positive movements for the most part with one disturbing one (seen in the ISM PMI as well) which was prices.  The ISM NMI measures the level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry and is considered a leading indicator of economic health.  The forecast for October called for an index reading of 54.5, but the actual headline number was 54.3 (slightly up).  Though this wasn't as strong as the Manufacturing index it is still an improvement.

New orders and business activity were much stronger and inventories were declining which was a positive sign.

What worries me the most is the spike in prices we are seeing over the past few months.  This cost gets passed on to the consumer in an already tough economy.  If passed on, this could weigh on the consumer going forward producing a weaker Christmas season and economy overall.

ADP Employment Report

The ADP report for the month of October showed a positive growth of 43,000 jobs and Septembers employment numbers were revised from -39,000 to -2,000.  The employment breakdown is as follows:

Service-providing	+77,000
Goods-producing	-34,000
Manufacturing*	-12,000

Manufacturing was not counted in the number as it was an addendum, if you calculate in manufacturing the gain was only 31,000.  The comments made in the release are what are more significant.

Since employment began rising in February, the monthly gain has averaged 34,000 with a range of -2,000 to +65,000 during the period. October’s figure is within this recent range and is consistent with the deceleration of economic growth that occurred in the spring. Employment gains of this magnitude are not sufficient to lower the unemployment rate. Given modest GDP growth in the second and thirds quarters, and the usual lag of employment behind GDP, it would not be surprising to see several more months of lethargic employment gains, even if the economic recovery gathers momentum.

Therefore, I don't expect this to change the unemployment rate whatsoever.

Yesterday's POMO Activity

Yesterday the Fed performed another POMO (Permanent Open Market Operation) purchase for $2.489 billion dollars, bringing the total to $64.460 billion dollars since August 17th 2010.

OPERATION 1 - RESULTS

Operation Date:	11/01/2010
Operation Type:	Outright Coupon Purchase
Release Time:	10:15 AM
Close Time:	11:00 AM
Settlement Date:	11/02/2010
Maturity/Call Date Range:	04/15/2013 - 09/30/2014
Total Par Amt Accepted (mlns) :	$2,489
Total Par Amt Submitted (mlns) :	$18,545

Monthly ISM Manufacturers Index

The October ISM Manufacturer PMI was released today with some positive results.  The index measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry, which surveys about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. It is considered a leading indicator of economic health and an indicator above 50.0 indicates economic expansion, although it has been above 50 since September 2009 or may be even longer and look where we are at.  Octobers PMI was forecasted to be 54.2 and the actual headline number was 56.9 beating Septembers number of 54.4.

On the indicators that should be pointing up and to the right, we see positive news for new orders, production and exports.

For the indicators that should be pointing down inventories and imports were looking better, but prices continue to rise which may impact the bottom line or consumption of products due to the consumers inability to digest these higher prices.

Personal Spending, Income and Savings

The Personal Income, Spending and Savings report came out for the month of September 2010.  Personal Income and Disposable Income were both down ( -.1% and -2% respectively), but Personal Spending was up .2%.  Even though Personal Spending was up .2% this was still less than the increase from the prior month.  More odd is the fact that people are getting less in income/disposable income yet they are spending more.

Personal Spending was down from August, which lines up with the the personal spending increase.

Unofficial Problem Bank List Update

CalculatedRisk came out with an updated Unofficial Problem Bank List for last week.   The FDIC posted not failed banks in the past week, but three banks were removed from the list due to action termination.  There were 26 additions to the list, bringing the total on the list to 894 institutions with $410.7 billion in assets at risk.  [ Read More ... ]

60 Minutes Segment on the Unemployed

Since we have had people unemployed for so long, they are about to lose their benefits.  This 60 Minutes video gives a glimpse into that reality for those that never expected to be where they are today.  Soup kitchens are now giving out food in amounts they haven't seen before.

Call to Action:  Donate food to your local soup kitchen whenever you can or if you just see a great sale at the store which makes it easier for you to do so.  Volunteer at a soup kitchen whenever you get the chance.   Lets help those in need.