Thursday, January 5, 2012

The First Black Swan Of 2012?

Steven Jonson of Reuters reports, Private hiring surges, jobless claims dip:

Private-sector hiring surged in December as employers added 325,000 new workers while claims for jobless benefits fell, raising hope that recent labor market improvement would continue in 2012.

The ADP National Employment Report's December job tally surprised economists who had expected a 178,000 gain. It was also well above the 204,000 private jobs added in November.

"The number is stunning," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "This is another data point that shows our economy is healing. It fits in well with improvements we've seen in consumer sentiment, and obviously that's because there are more people getting paychecks, which is making everyone happier."

Joel Prakken of Macroeconomic Advisers, which helps produce the report, struck a note of caution, telling reporters that the December surge in hiring might have been caused in part by year-end seasonal factors and revisions were possible.

In the U.S. stock market, stock futures pared losses after the data while U.S. government debt prices fell slightly.

A more comprehensive government report due Friday is expected to show the economy added 150,000 public and private sector jobs last month, but the ADP report may cause some to revise that total upward.

Thursday's data "point to what should be a fabulous number tomorrow," said Todd Schoenberger, managing director at Landcolt Trading in Wilmington, Delaware. "We should welcome this positive news because clearly Santa Claus is still around."

A separate report from consultants Challenger, Gray & Christmas showed the number of planned layoffs at U.S. firms fell to a five-month low in November.

But John Challenger, chief executive officer, said the two sectors that suffered the most job cuts in 2011 -- government and financial services -- look destined to struggle again this year.

The jobless rate is expected to have edged up to 8.7 percent as some Americans who had given up their search for work were lured back into the market, according to a Reuters survey.

Even so, economists say recent labor market trends have been encouraging. The number of Americans filing first-time claims for unemployment benefits fell last week for the fourth time in the last five weeks.

However, in December 2010, a surge in private sector hiring far exceeded the total job gain for that month reported by the government.

"Some caution is required," said Theodore Littleton, economist at IFR Economics, a unit of Thomson Reuters.

I have been telling people to prepare for better than expected economic results coming out of the US. Do not want to hazard a guess for tomorrow's jobs report, but guarantee you that over the next 12 months employment growth will come in much stronger than expectations.

In fact, Joe Weisenthal of Business Insider is asking whether this is the next great jobs boom in America:

If America is going to have a real recovery in jobs, and get back to anything resembling what people think of as "full" employment, some new industries are going to have to step up and do a lot more business and hiring.

A couple of months ago, economist James Hamilton wondered: What could America be good at?

His answer: The resource sector: Mining, energy, rare earth metals, and so on.

He wrote:

For over a century, the U.S. produced more oil than any other country, and even today we are still the third biggest oil producer in the world. The U.S. today is the world's leading producer of items such as lumber, corn and poultry, number 2 in coal, oranges, soybeans, and gypsum, and third in cotton and lead. Our abundant natural resources have always been an important advantage for America, and are still an important advantage today.

And it is within our power to do more with our natural resources. A decade ago, the U.S. was the second biggest producer of rare earth elements, which play a critical role in many of today's high-tech devices and systems. But U.S. production stopped in 2002, as a result of environmental regulations and competition from cheap Chinese imports. With prices back up, U.S. production may resume.

In a note out today, Citi's Steven Weiting also hints at big potential on this front. One thing that's clear is that in recent years the US has staged a reversal of the big, multi-decade secular decline in mining employment.

Assuming global resource demand growth continues, and assuming that the government is mostly favorable to more resource explanation, there's likely a lot more upside on this front.


And even though Europe remains a huge concern, Joe Wiesenthal thinks this will be the first black swan of 2012:
If the Eurozone doesn't go into a deep recession in 2012, that would probably count as the first black swan of the year.

Okay, purists might not think this rises to the level of "black swan" — maybe it would just be a "surprise" — but given the assumption that the best case scenario in Europe is a prolonged, deep slump, anything that's not horrible would be huge, positive, and unexpected.

So far we've just gotten a few hints.

Germany's unemployment rate continues to plummet. U.K. PMI has beat expectations, and a string of positive PMI numbers from the BRICS support the idea that the wheels aren't falling off the global economy.

Needless to say, it's still super-early to be making any predictions, but be on the lookout for this wildcard.

Will eurozone avert a deep recession? Possibly. Will mining, metals, energy and rare earth metals lead the way in terms of job creation in the US? I am bullish on all of them. I am also bullish on housing, financials, tech, and solars. And after a terribly volatile year, Wall Street is starting to be more bullish too. Watch the Bloomberg clip below. Cheer up folks, listen to the music, I'm getting a real good vibe on all levels.

No comments:

Post a Comment