Market Update Jan. 10, 2012

2012 January 9
by SJ Leeds

Really Odd Statistic

I thought that this was the oddest stat in Friday’s employment report:

There were 200K jobs created.  One-fourth of them (50K) were in “transportation and warehousing.”  “Almost all of that gain (42K jobs) occurred in the couriers and messengers industry.”


Analysts are saying that this is a seasonal issue (maybe the seasonal adjustment is wrong) or that it reflects the fact that people are shopping online.  But, it sure is odd.


Quoted in Houston Chronicle

I was quoted in The Houston Chronicle last week.  It also appears online and you can read it here.  I was interviewed about the recent Fed announcement that they would start publishing their interest rate forecasts.


Here were all of my thoughts (that I described to the author, Loren Steffy):


I think that it’s difficult to know the effect of this.  We already know
what the market believes that the Fed will do with the Fed funds rate —
we can tell this through the Fed funds futures contract.  It will be
interesting to see what happens when there is a release that shows that
the FOMC has different expectations than the market.  Will the market
change or will the market think that the FOMC members are wrong?


We have always had limited transparency and this is just making it
slightly more visible.  In the past, Fed Presidents and Fed Governors
have given speeches to let the market know what they are thinking and
where policy is headed.  Now, it will be more explicit and it will
involve the more distant future.  The fact that they’re predicting
further into the future means that there will be more mistakes.


Overall, I think that the increased transparency is consistent with what
the Fed has been doing through Chairman Bernanke’s press conferences,
the announcement that they would likely maintain a near-zero Fed funds
policy for a specific amount of time and more detailed minutes of the
FOMC meeting.


Based on these changes, the Fed seems to be increasingly focused on
their ability to impact expectations.  It’s hard to say whether that is
because they think they can have a positive impact on the economy, avoid
a panic or just think that transparency is the right thing to do.  But,
as Richmond Fed President Lacker pointed out two weeks ago, “Monetary
policy is often credited with entirely too much influence on real


In my opinion, the change will not be huge.  Ultimately, we’d be a lot
better off if Congress would let us know when we could expect to end the
gridlock and reduce the deficit.

The Game

It’s hard to say much after a game like Alabama played.  It’s actually a lot more fun to talk trash before the game.  For the record, I actually thought that there was a very good chance that LSU would win this game.  During the season, LSU reminded me a lot of Alabama two years ago and Auburn last year.  There were times that Alabama (two years ago) and Auburn (last year) looked bad.  Yet, they always found a way to win.  LSU looked bad a few times this year, but they always found a way to win.  Everyone talked about how Alabama would have won on November 5th if they had hit their field goals.  But, you really couldn’t be sure – because LSU seemed like they would score in games when they had to score.  Tonight though, it was Alabama’s night.  It was a great night for Alabama fans.  Of course, I’m just happy that I won’t receive the barrage of LSU emails that I thought were likely.


Roll Tide!

Have a great week.


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