Recap 1-6-12

Main Items:

  • Payrolls in Dec increased to 200k in Dec vs 155k exp and 120k prev. This was roughly in line with the whisper number. This took unemployment down to 8.5% vs 8.7% exp and 8.6% prev. The participation rate was unchanged.
  • Average Weekly Hours also increased to 34.4 in Dec vs 34.3 exp and prev. This is now back at the early 2011 highs.
  • US ICSC Chain Store Sales Growth rose 3.5% YoY in Dec vs 4.0% exp. The November print was revised to 2.8% from 3.2% prev.
  • Canadian Employment increased 17.5k in Dec vs 20k exp and -18.6k prev.
  • Dudley Comments:
  1. Outlook for Unemployment is ‘unacceptably high’
  2. calls for ‘additional housing policy interventions
  3. ‘appropriate ‘ to consider more monetary easing


  • EU Industrial Confidence improved to -7.1 in Dec vs -7.5 exp and -7.3 prev
  • Swiss CPI declined -0.7% YoY in Dec vs -0.6% exp and -0.5% prev.
  • S&P and Fitch cut Hungary to Junk.


All in all, the payrolls report was pretty decent. And it followed a string of exceptionally good US data this week, starting with the ISM beat. But the market reaction does not suggest a market that is ready to rally. Given the data, we expected to see the S&P blow through the local highs from 4Q. Instead, we’ve been stuck. This brings to mind the old adage – if the market can’t go up on good news, how can it go up?


One other piece of worrisome news is that temporary hires growth (red, LHS), which has historically done a good job of leading total payrolls growth (blue), has now fallen back below 5% on a YoY basis. Historically, these instances have been coincident with slowdowns (94/95) or recessions.


One caveat, however, is that absolute comparisons may not be as helpful given the decline in labor force participation rates. However, at the very least, it’s probably safe to argue that the post-recession recovery surge is now over.

WSJ: In 2011, private-equity firms paid acquisition prices averaging nearly nine times the earnings before interest, taxes, depreciation and amortization, or Ebitda, of target companies. That is up from seven times Ebitda earlier this decade and near the record 9.7 level in 2007, a year where many deals eventually proved disappointments.


2 thoughts on “Recap 1-6-12

  1. Long time lurker but just wanted to say thanks for your daily commentary and sharing such great insight.

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