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The granddaddy of monthly economic reports is the federal reading on the employment situation. To call this a single report is deceptive. It actually has a bunch of moving parts that, on their own or as a group, can move stock and bond markets.
It's easy to think of the report in four parts. The first is non-farm payrolls, which tracks the month-over-month change in the number of jobs in the U.S. that don't involve milking cows or picking lettuce. Then comes the unemployment rate, which is the percentage of unemployed people as it relates to the total workforce.
The third component is the average hourly earnings change, which tracks how much more or less money U.S. workers are making. Finally, there's the average work week, which counts the number of hours non-farmers work.
Like most data reports, the unemployment one has its flaws. For one thing, it tracks non-farm payrolls, which means that a lot of folks who work off the land -- or, more to the point, are not currently working off the land -- are excluded. Also, if you¿re a consultant or small-business owner (a big part of the current economy), you¿re not counted. On the flip side, you can be double-counted if you hold down two jobs. That's one of the reasons why it's common to see non-farm payrolls drop (suggesting higher unemployment) but the unemployment rate shrinking (suggesting higher employment).
The impact of the Employment Situation report often depends on the mood of the markets. Take the wage component. If stock and bond traders are worried about inflation, an unexpected rise in hourly earnings suggests wage inflation and, ergo, can scare people. But, that same spike could be welcome if traders are more worried about a slowdown in consumer spending. Higher earnings mean more spending power.
Look for the employment report on the first Friday of every month at 8:30 a.m. EST.
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Friday, March 28, 2008
Bear Stearns' Cayne Dumps Stock at Price Higher Than JPMorgan Offer
Ray Hennessey
FOXBusiness
Cayne, who was criticized for playing cards in bridge tournaments as his company was crumbling last summer and earlier this month, sold 5.66 million shares at $10.84 each, according to filings with the Securities and Exchange Commission. His wife also sold shares.
That Cayne would sell shares prior to the deal closing took many on Wall Street by surprise. Typically, company executives do not sell in advance, choosing to tender their shares for a deal along with other shareholders at the price offered. The market didn’t seem to like the move, with Bear Stearns shares slumping more than 5% in after-hours trading after the news was announced.
Bear Stearns suffered one of the largest collapses in Wall Street history earlier this month after fears of a liquidity crunch caused the shares to drop precipitously and left Bear’s management with a choice of filing for bankruptcy or taking a takeover offer from JPMorgan of just $2 a share. As part of that deal, the Federal Reserve stepped in to guarantee losses of up to $30 billion on Bear Stearns’ books.
Earlier this week, JPMorgan – under intense pressure from Bear Stearns shareholders – raised its offer price to $10 a share assumed the first $1 billion of risk the Fed had offered to guarantee.
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