Recap 11-14-13


Note that state and local YoY payroll growth has turned positive for the first time since the recession. Chart below from GS:


  • Yellen Confirmation Testimony didn’t surprise too much.
  • US Jobless Claims rose to 339k vs 220k exp and 336k prev
  • US Unit Labor Costs declined -0.6% in 3Q vs -0.1% exp and 0% prev
  • Japan 3Q Nominal GDP rose 0.4% QoQ as exp.
  • France GDP rose 0.2% YoY vs 0.3% exp
  • UK Retail Sales rose 1.8% YoY in Oct vs 3.1% exp and 2.2% prev
  • Fed officials are debating whether to “strengthen” their forward guidance language around ZIRP; some Fed officials would like to trim the UR threshold associated w/ZIRP although it isn’t clear when such a move would come (if one comes at all). Not everyone wants to cut the UR trigger though and Bernanke could have difficulty in forging a consensus around the issue. The inflation threshold may be adjusted rather than UR. Hilsenrath in the WSJ
  • FT: More than $225bn of “covenant-lite” loans, or loans that come with fewer protections for lenders, have been sold so far this year, according to S&P Capital IQ. That figure eclipses the $100bn issued in 2007 and means a majority of new leveraged loans – 55 per cent – are “cov-lite”.
  • Wal-Mart cut profit forecasts to $5.01-$5.11 for the year from $5.10-$5.30. Expectations were $5.19 from the street. “Wal-Mart continues to lose share to smaller-format retailers, including the dollar stores. We have also seen more aggressive pricing and marketing around price by the grocery stores.”
  • QE hasn’t boosted stocks according to a McKinsey study – a study released Wed by McKinsey said there is no evidence to suggest QE has boosted stocks. Instead, the big impact was on lowering the cost of government debt (“since 2007, bond-buying programs in the United States, the UK and the euro zone have reduced costs for governments by a total of $1.6 trillion”). Reuters
  • comments from Aso spark yen weakness – the Japanese fin min said the country isn’t facing int’l criticism any more over Abenomics and added that Tokyo needed to ensure it retains FX intervention as a policy took and be ready to take action when markets become excessively volatile – Reuters
  • Japan’s top 3 banks all raised their profit forecasts; Mitsubishi UFJ, Mizuho, and Sumitomo Mitsui all reported earnings and each boosted their outlooks – WSJ

Upcoming Data:

  • Fri: US Empire Mfg
  • Mon: NAHB Housing Market Index, RBA Minutes
  • Tue: German ZEW, Bernanke Speaks
  • Wed: BoE Minutes, US Retail Sales, Dudley Speaks, US Existing Home Sales, FOMC minutes, China Flash Mfg PMI, BoJ
  • Thu: EU PMI, RBA Governor Stevens speaks, US Jobless Claims, US Markit Preliminary PMI, US Philly Fed, EU Consumer Confidence