Monthly Archives: May 2009

2009-05-07 USER

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Nonfarm Productivity QoQ (1Q P)

Survey 0.6%
Actual 0.8%
Prior -0.4%
Revised -0.6%

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Nonfarm Productivity TABLE 1 (1Q P)

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Nonfarm Productivity TABLE 2 (1Q P)

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Unit Labor Costs QoQ (1Q P)

Survey 2.7%
Actual 3.3%
Prior 5.7%
Revised n/a

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Unit Labor Costs ALLX (1Q P)

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Initial Jobless Claims (May 2)

Survey 635K
Actual 601K
Prior 631K
Revised 635K

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Continuing Claims (Apr 25)

Survey 6350K
Actual 6351K
Prior 6271K
Revised 6295K

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Jobless Claims ALLX (May 2)


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2009-05-06 USER

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MBA Mortgage Applications (May 1)

Survey n/a
Actual 2.0%
Prior -18.1%
Revised n/a

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MBA Purchasing Applications (May 1)

Survey n/a
Actual 264.30
Prior 251.60
Revised n/a

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MBA Refinancing Applications (May 1)

Survey n/a
Actual 5169.30
Prior 5108.20
Revised n/a

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Challenger Job Cuts YoY (Apr)

Survey n/a
Actual 47.0%
Prior 180.7%
Revised n/a

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Challenger Job Cuts TABLE 1 (Apr)

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Challenger Job Cuts TABLE 2 (Apr)

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Challenger Job Cuts TABLE 3 (Apr)

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Challenger Job Cuts TABLE 4 (Apr)

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ADP Employment Change (Apr)

Survey -645K
Actual -491K
Prior -742K
Revised -708K

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ADP ALLX (Apr)


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Bernanke

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Karim writes:

Bernanke Testimony (All quotes in italics)

  • We are likely to see further sizable job losses and increased unemployment in coming months
  • Recent data also suggest that the pace of contraction may be slowing, and they include some tentative signs that final demand, especially demand by households, may be stabilizing. In coming months, households’ spending power will be boosted by the fiscal stimulus program, and we have seen some improvement in consumer sentiment. Nonetheless, a number of factors are likely to continue to weigh on consumer spending, among them the weak labor market and the declines in equity and housing wealth that households have experienced over the past two years. In addition, credit conditions for consumers remain tight.
  • The housing market, which has been in decline for three years, has also shown some signs of bottoming
  • The available indicators of business investment remain extremely weak.
  • Conditions in the commercial real estate sector are poor.
  • We continue to expect economic activity to bottom out, then to turn up later this year.
  • The supply of mortgage credit is still relatively tight, and mortgage activity remains heavily dependent on the support of government programs or the government-sponsored enterprises.
  • Investors seemed to adopt a more positive outlook on the condition of financial institutions after several large banks reported profits in the first quarter, but readings from the credit default swap market and other indicators show that substantial concerns about the banking industry remain.

The section below appears to warn about the impact of rising rates, wider credit spreads, and weaker equities. i.e., the Fed wont be looking to snuff out any rallies. Also, slack to expand even after recovery takes hold, meaning disinflation continues, with ‘expectations’ being main factor preventing deflation.

  • An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall.
  • Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while, implying that the current slack in resource utilization will increase further. We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly. In particular, businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes.
  • In this environment, we anticipate that inflation will remain low. Indeed, given the sizable margin of slack in resource utilization and diminished cost pressures from oil and other commodities, inflation is likely to move down some over the next year relative to its pace in 2008. However, inflation expectations, as measured by various household and business surveys, appear to have remained relatively stable, which should limit further declines in inflation.


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South Africa’s Unemployment Rate Increases to 23.5%

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Good place for the federal government to fund minimum wage jobs for anyone willing and able to work and turn the nation into a model of prosperity overnight.

South Africa’s Unemployment Rate Increases to 23.5%

by Nasreen Seria and Mike Cohen

May 5 (Bloomberg) — South Africa’s unemployment rate, the highest of 62 countries tracked by Bloomberg, rose in the first quarter as the economy probably entered a recession for the first time in 17 years.

The jobless rate increased to 23.5 percent from 21.9 percent in the previous three months, Statistics South Africa said in a report released in Pretoria today. The number of people out of work rose to 4.18 million from 3.87 million.

“Manufacturing and mining are under strain, and we can expect these numbers to worsen,” said Fanie Joubert, an economist at Efficient Group in Pretoria. “We’re unlikely to see a recovery until the fourth quarter.”

The ruling African National Congress, which won a fourth consecutive five-year mandate in April 22 elections, has pledged to make “decent work opportunities” the focus of its economic policy. The government is aiming to cut the unemployment rate to 14 percent by 2014.


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Latest on Obama and Chrysler

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Not to bore you with this, but it’s a no win situation in that if the secured creditors lose, the entire credit structure becomes uncertain, and if the secured creditors win, the deal breaks down and Obama, an all star law graduate, loses credibility and political power as the deal falls apart and Chrysler folds unless there is additional public funding.

And with GM next, there’s no telling what might happen to both the automakers and the entire supply chain and distribution network.

Chrysler Non-TARP Lenders Object to Auction Plan

by Christopher Scinta and Tiffany Kary

May 4 (Bloomberg) — A group of Chrysler LLC’s secured lenders is seeking to block the bankrupt company’s plan to sell its business at auction this month, arguing that the U.S. government is violating federal law to preserve the automaker.

The group, calling itself Chrysler’s non-TARP lenders, in reference to the Troubled Assets Relief Program, seeks to block the proposed sale to an alliance led by Fiat SpA, as well as a request by the U.S. automaker for approval of a $4.5 billion Treasury loan to finance the reorganization.

Secured lenders that agreed to the Fiat deal, including JPMorgan Chase & Co.,Citigroup Inc. and Goldman Sachs Group Inc., had conflicts of interest because they had also accepted TARP funds, the group said.

The process is “tainted” because it was dominated by the government, the lenders argued in papers filed today in U.S. Bankruptcy Court in Manhattan. The group also said the short period of time given to evaluate the sale was improper and the hearing on bid procedures that began today should be delayed. The judge delayed the hearing until 2:30 p.m. tomorrow, ordering the members of the lender group to reveal their identities.

‘Improperly Attempts’

The sale “improperly attempts to extinguish their property rights without their comment,” attorneys for the objecting lenders wrote in court papers.

“The sale motion should be denied because it seeks approval of a sale that cannot be approved under the bankruptcy code,” they argued. “The court should not permit a patently illegal sales process to go forward.”

Chrysler’s planned alliance with Turin, Italy-based Fiat, would create the world’s sixth-largest carmaker. Chrysler, based in Auburn Hills, Michigan, wasn’t able to pursue the merger outside bankruptcy because of opposition by the objecting lenders.

Under bankruptcy law, offers for bankrupt companies or their assets are generally subject to the possibility of higher bids at a court-supervised auction.

The Fiat offer, to be made from an as-yet unnamed entity formed by the Italian automaker, Chrysler employees and other parties, will be the lead bid in an auction, which is typically required for assets sold in bankruptcy. Chrysler is asking U.S. Bankruptcy Judge Arthur Gonzalez to approve bidding rules for an auction that would require creditor objections to the sale be submitted by May 11, followed by a May 15 deadline for competing bids. The bankrupt company seeks a May 21 hearing to approve the winning bid, according to the court filing.

Listed Assets

Chrysler, in its April 30 filings, listed assets of $39.3 billion and liabilities of $55.2 billion, making it the fifth-largest bankruptcy in U.S. history, according to data compiled by Bloomberg News.

Chrysler’s proposed sale favors junior creditors over senior creditors and would improperly channel the proceeds to specific creditor groups, the objecting lender group said in the court filing.
In court today, Thomas Lauria, a lawyer for the secured lender group, said some of its members have received death threats. In response to the judge’s demand that the members of his group be revealed, Lauria said the identities of more lenders would be revealed “promptly.”


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2009-05-05 USER

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ICSC UBS Store Sales YoY (May 5)

Survey n/a
Actual -0.8%
Prior -1.7%
Revised n/a

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ICSC UBS Store Sales WoW (May 5)

Survey n/a
Actual 0.7%
Prior -0.7%
Revised n/a

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Redbook Store Sales Weekly YoY (May 5)

Survey n/a
Actual 0.3%
Prior 0.7%
Revised n/a

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Redbook Store Sales MoM (May 5)

Survey n/a
Actual 1.5%
Prior 1.6%
Revised n/a

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ICSC UBS Redbook Comparison TABLE (May 5)

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ISM Non Manufacturing Composite (Apr)

Survey 42.2
Actual 43.7
Prior 40.8
Revised n/a


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Redefining full employment

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Not good.

As suspected way back on this website:

‘Great Recession’ Will Redefine Full Employment as Jobs Vanish

by Matthew Benjamin and Rich Miller

May 4 (Bloomberg) — Post-recession America may be saddled with high unemployment even after good times finally return.

Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump.

This restructuring — in what former Federal Reserve Chairman Paul Volckercalls “the Great Recession” — is causing some economists to reconsider what might be the “natural” rate of unemployment: a level that neither accelerates nor decelerates inflation. This state of equilibrium is often described as “full” employment.

Fallout from the recession implies a “markedly higher” natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. “It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent.”


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Follow up to the radio interview

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Thanks!

This supplements the tape previously emailed.

White House Claims Head of White&Case Restructuring Group Lied

by Tyler Durden

May 3 (ZeroHedge) — In a story becoming more bizarre by the minute, ABCNews has now picked up on the Perella Weinberg scent with some new twists. According to ABC, White House deputy press secretary Bill Burton claims that the allegations by Tom Lauria, global head of the Financial Restructuring and Insolvency at White & Case are “completely untrue”. As Zero Hedge already disclosed, Perella Weinberg was previously a client of White & Case, however, the firm run by former head of M&A at Morgan Stanley Joe Perella (where incidentally Steve Rattner was head of the Communications group until 1989), decided to fire the law firm after developments unknown, and in a radio show, Tom Lauria had this to say about the White House’s alleged strongarming tactics:

“One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight…That was Perella Weinberg.”

The White House has now stepped in and claims that this story is patently false:

“The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there’s obviously no evidence to suggest that this happened in any way.”

What is more strange is that now Perella Weinberg itself is claiming Lauria’s story misrepresented the facts:

“A Perella Weinberg Partners spokesperson told ABC News on Sunday that “The firm denies Mr. Lauria’s account of events.” The spokesperson would not elaborate.”

What is strangest is that Lauria would stake his career and reputation on the line by stating on the record the facts previously disclosed. As such his downside is much bigger than that of Mr. Burton or of the PW’s spokesperson, as they effectively side with the Obama’s side of the story.

Granted there could be even more to this story than meets the eye, thanks to some keen observations by our friends at Finem Respice.

Ultimately, this will be a very interesting development, because without factual backing, Tom Lauria’s career is now on the line, as he has taken on not just the administration but his very own, former client. The bottom line here is that someone is lying, and if any further facts emerge to substantiate White & Case’s position, it could prove to be a massive PR blow to both the White House and the FDIC’s advisor, Perella Weinberg.

The full statement by Perella Weinberg is presented below:

Suggestions have been made that the Perella Weinberg Partners Xerion Fund changed its stance on the Chrysler restructuring due to pressure from White House officials. This is incorrect. The decision to accept and support the proposed deal was made by the Xerion Fund after reflecting carefully on the statement of the President when announcing Chrysler’s bankruptcy filing. In considering the President’s words and exercising our best investment judgment, we concluded that the risks of potentially severe capital loss that could arise from fighting this in bankruptcy court far outweighed any realistic potential upside.

We have a very specific mandate from our investors, and that is to carefully weigh investment risks and rewards. It is not our investment mandate to pursue political or risky legal campaigns with our investors’ money. This was our assessment of investment risk and reward, nothing else.



While we did and still do believe that the lenders would be justified in pressing their objections under conventional bankruptcy law principles, we believe a settlement would now be in the best interests of all parties in the context of avoiding a drawn out contested bankruptcy litigation proceeding, and we encourage our colleagues in the loan syndicate to pursue this immediately.”


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