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Ad Hoc Commentary

Friday June 1st 2012

Friday, June 1st 2012
What a shock!
The lowest estimate for the Non Farm Payroll was only 75,000, fully 125,000 below the top estimate of 195,000. However, the markets have been blown a hole below the waterline with the actual data point...+62,000.
This will be a figure that will trouble the White House as will the news that the unemployment rate edged higher again to 8.2%. Needless to say, these figures will be seized on by Republican Presidential nominee, Mitt Romney of absolute proof that the US economy is stalling and starting to struggle to find a gear.
The timing for the President is dreadful as it is now just 5 month until the November poll and of course the economy will be front and centre in voters minds.
Clearly investiors are worrying about the RETURN OF CAPITAL cf. RETURN ON CAPITAL.
European equities have fallen back and the Stoxx Europe 600 Index declined 2.2% to 234.35 at 13:40 in London and is on course for a fall of 3.4% this week. This index slumped 6.8% in May as concern mounted that Greece will be forced out of the Euro Zone and Spanish borrowing costs have surged amid a deepening banking crisis.
As we await the Irish vote of the Fiscal Compact the likely pattern of voting in Greece remans in a state of flux as 2 opinion polls published today showed New Democracy, which backs austerity measures, leading left- wing group Syriza, which opposes them. However, 2 other polls showed Syriza in the lead before the June 17th elections.  There is still a strong possibility that this election will be as inconclusive as the last!
Staying with the jobs...or lack of them theme, Euro Zone unemployment was recorded as the highest on record as a deepening economic slump and budget cuts prompted companies across the currency bloc to cut jobs.
The jobless rate was at 11% in April and March, the Eurostat resported, i.e. the highest since the data series started in 1995.  March data was revised higher to 11% from 10.9%.

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