by Calculated Risk on 5/06/2010 11:59:00 PM

The BLS will release the April Employment situation report tomorrow (Friday) morning at 8:30 AM ET. The consensus is around 200K payroll jobs and the unemployment rate declining slightly to 9.6%.

The estimates for temporary Census 2010 hiring are around 100K, so the market expectation is for about 100K payroll jobs ex-Census. That is the key number (the underlying job creation). Note: the largest increase in Census 2010 hiring will happen in May - perhaps 500K payroll jobs - and then all of those jobs will be unwound over the next 6 months.

The earlier data this week has been somewhat mixed. ADP reported 32K private sector jobs in April, the largest monthly increase since January 2008.

The ISM manufacturing report suggested fairly robust hiring in the manufacturing sector:

ISM's Employment Index registered 58.5 percent in April, which is 3.4 percentage points higher than the 55.1 percent reported in March. This is the fifth consecutive month of growth in manufacturing employment.

Of course the manufacturing sector is relatively small.

And the ISM non-manufacturing report suggested job losses in the much larger service sector:

Employment activity in the non-manufacturing sector contracted in April for the 28th consecutive month. ISM's Non-Manufacturing Employment Index for April registered 49.5 percent. This reflects a decrease of 0.3 percentage point when compared to the 49.8 percent registered in March.

The weekly initial unemployment claims was elevated throughout April suggesting continuing weakness in employment, but the Monster employment index was strong.

The Monster Employment Index rose eight points in April as a number of industries initiated springtime recruitment efforts. The annual growth rate further accelerated, rising by 11 percent, the highest rate of increase since July 2007.

Anything above 100K ex-Census will be viewed as a solid report. As far as the unemployment rate, it usually drops 0.1% to 0.2% during the peak of the Census hiring (April and May) - however the participation rate fell so far during the recession, it is possible that the unemployment rate will tick up as more people reenter the workforce. We will know in a few hours ...

by Calculated Risk on 5/06/2010 09:20:00 PM

From Graham Bowley at the NY Times: Markets Plunge, Then Stage a Rebound

[I]n Washington a team of Treasury officials began combing through market tapes trying to figure out what was going on. By the evening they still had not gotten to the bottom of it, but they discovered some aberrations — market blips — in trading coming out of Chicago.
...
As of about 6 p.m., all the officials knew was that there had been what one official called “a huge, anomalous, unexplained surge in selling, it looks like in Chicago, at about 2:45.” The source remained unknown, but it had apparently set off algorithmic trading strategies, which in turn rippled across everything, pushing trading out of whack and feeding on itself — until it started to reverse.

Federal officials fielded rumors ... But they did not know the truth.

What happens to the day’s market losers will depend on what the cause was and whether it can be identified. That is a question for the S.E.C.

And from Scott Patterson at the WSJ: Did Shutdowns Make Plunge Worse?

A number of high-frequency firms stopped trading Thursday in the midst of the market plunge, possibly adding to the market's unprecedented selloff.

Tradebot Systems Inc., a large high-frequency firm based in Kansas City, Mo., closed down its computer trading systems when the Dow Jones Industrial Average had dropped about 500 points ... Tradeworx Inc., a N.J. firm that operates a high-frequency fund, also stopped trading during the market turmoil ...

No answers yet - just rumors.

by Calculated Risk on 5/06/2010 06:53:00 PM

Usually I focus more on economics, but ...

Via Reuters:

Nasdaq Operations said it will cancel all trades executed between 2:40 p.m. to 3 p.m. showing a rise or fall of more than 60 percent from the last trade in that security at 2:40 p.m or immediately prior.

This needs an explanation ...

by Calculated Risk on 5/06/2010 04:00:00 PM

There are two rumors: The first is that there was a trading error (fat finger of a E-mini SP future order), the second is that Euro banks are having a liquidity problem of some sort. Neither is confirmed.

Click on graph for larger image in new window.

The first graph shows the S&P 500 since 1990 (this excludes dividends).

The dashed line is the closing price today. The S&P 500 was first at this level in April 1998; over 12 years ago.


The second graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

by Calculated Risk on 5/06/2010 02:43:00 PM

Dow off 800

Free fall ...