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Reuters blog archive

from Morning Bid with David Gaffen:

We come to praise QE, not to bury it

So, that’s it. Seven years and $4.4 trillion later, the U.S. Federal Reserve will exit quantitative easing, despite what a few Fedsters have said about the possibility of QE4. Let’s remember that third sequels rarely, if ever, are satisfying, they tend to meet with shrugs from audiences, and don’t often include the original cast of characters. "Alien Resurrection" ring a bell? That’s what QE4 would be. But I digress.

After a few weeks of freaking out - from a toxic stew of weak European and Chinese data, uncertainty over the threat of a big Ebola outbreak, and some calculated, questionable chats from Fed officials that mostly confused people - the panic appears to be over.

The S&P 500 has once again reasserted itself and isn’t far from all-time highs, and Jared Woodard, head of strategy at BGC Partners, says the Fed’s actual bond buying has been “economically unimportant” for some time, while the words from central bankers have been more important.

More pertinent for investors – and this is where others agree – Woodard notes how Eurodollar futures are implying a much lower federal funds rate going into the out years than the Fed itself sees. “The greater the gap, the more chance for market volatility if strong data pull rate hike expectations forward again,” he says.

from MacroScope:

Italian and Greek confidence votes

Greece's PM Samaras addresses the audience during the Economist Conference on "The big rethink for Europe, the big turning point for Greece" in Athens

You wait ages for a no-confidence vote then two come along on the same day. Neither are expected to cause governments to topple.

Greece’s ruling coalition will hold a confidence vote in parliament in an effort to end speculation that the country may be facing snap elections early next year.

from MacroScope:

Brazil set to release long-overdue jobless rate just as election race heats up

Workers at a General Motors vehicle factory listen during a meeting to discuss their reactions to an announcement of plans to put some 1,000 workers on paid leave, in Sao Jose dos CamposBrazil's unemployment rate has been a mystery for months: a strike in the country's statistics agency, ironically enough, disrupted its main job market survey. The numbers will finally come out in a few hours, less than two weeks before a tight presidential election, and will help voters understand just how bad the recently-confirmed recession has been.

IBGE’s August unemployment report is important not only because it can tilt Brazil's election balance in favor of current President Dilma Rousseff or her opponent Marina Silva, but also because it will determine the starting point of the labor market for a much-anticipated adjustment in Brazil’s economic policy. Some kind of shift is expected after the October election regardless of who wins, to keep debt under control and avoid losing the investment grade in coming years.

from Counterparties:

Recovering, with a stutter

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The economy added 142,000 jobs in August. It was a pretty big disappointment, considering the consensus estimate was around 225,000. The unemployment rate ticked down to 6.1% from 6.2% — bad news, since the decline comes from people dropping out of the labor force, rather than people getting jobs. Nick Bunker and Heather Boushey sum it up: “The U.S. economy is steadily if slowly expanding but not enough to spark sustained growth in jobs and wages and a commensurate decline in unemployment.”

Cardiff Garcia writes that “the report is hard to reconcile not only [with] other recent indicators [ISM data was great, auto sales are up, initial jobless claims were unchanged in August] but also with the obviously stronger momentum in prior jobs reports this year.” However, he continues, “if the acceleration in the recovery since the end of the first quarter has slowed, it wouldn’t be the first time that the US economy has head-faked observers.”

from Counterparties:

MORNING BID – Laboring for insights

The unemployment report occupies a unique position as a bit of a lagging indicator (especially when it comes to wage growth) and yet the most important economic figure that markets look at on a monthly basis. Various indicators point to the likelihood of another strong report come Friday that should accelerate recent trends in markets – more gains in the stock market (with a helping of the “this means the Fed is going to cut us off from the punch bowl blah-blah” stuff) and more strength in the dollar, regardless of whatever incipient gains the euro can muster after the European Central Bank meeting.

Underlying indicators to watch suggest that the U.S. economy has started to move more dramatically higher, whether it’s from the Federal Reserve’s Beige Book or Goldman Sachs’ analyst indicator, a composite of analyst commentary that functions as sort of a “corporate Beige Book.”

from Counterparties:

Mr. Cantor Goes to Wall Street

No longer bringing in a government salary, Eric Cantor has decided to try his hand at investment banking. The former House majority leader will become a vice chairman and managing director at the investment banking boutique Moelis. His compensation will be around  $3.4 million through the end of next year (plus “the reasonable cost of a New York City apartment”).

What will Cantor do at an investment bank? Probably not a lot of Excel. Dennis Kelleher, the head of the public-interest group Better Markets (which opposes the banking lobby in Washington), says he’ll likely be lobbying for Wall Street among his former colleagues after his mandatory one-year ban expires next August. Kelleher tells Annie Lowrey, “Wall Street is after what it’s always buying in Washington: access, influence, and unfair advantage.” He also gets into specifics:

from Edward Hadas:

Time to retire unemployment

Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Give Janet Yellen credit. The chair of the U.S. Federal Reserve is keen to use monetary policy to help get more people into good jobs. Her priority – work is more important than finance – is reflected in the subject of this week’s get-together for the world’s central bankers: “Re-Evaluating Labor Market Dynamics.” One item should be on the agenda of the distinguished guests at Jackson Hole, Wyoming: how to replace the concept of unemployment.

from Data Dive:

Lots of available jobs, still no higher wages

Job openings in the US economy are at a 13-year high. The monthly Job Openings and Labor Turnover Summary (JOLTS) report was released by the Bureau of Labor Statistics today. It shows there were  4.67 million job openings in the month of June, up just a tad from the 4.6 million openings reported in May — it’s now the highest the job openings figure has been since February 2001.

St. Louis Fed

The separations rate is unchanged at 3.3 percent. Within that category, quits and discharge rates were also unchanged, at 1.8 percent and 1.2 percent, respectively. Bill McBride at Calculated Risk charts the updated data, breaking out quits and layoffs in addition to hires and job openings:

from Edward Hadas:

Why the global recovery is so slow

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The International Monetary Fund recently engaged in what has become an annual ritual. For the fourth year in a row, it reduced its forecast for world GDP growth. The 0.7 percentage point average decline from the earlier estimate to the new 3.4 percent growth projection is not huge, but the persistent disappointments make many economists uneasy.

from Data Dive:

July jobs report: Stagnant wages

It’s Jobs Friday! This morning, the Bureau of Labor Statistics released data for non-farm payrolls for the month of July. The economy created 209,000 jobs last month and the unemployment rate ticked up to 6.2%. The headline number came in a bit under consensus (a Reuters poll of economists expected growth of 233,000), but was overall not a terrible number. The data today really preserves the status quo.

The Reuters Graphics team has recently debuted some really great jobs-related interactive charts. Here are some highlights:

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