In the Financial Papers: Today’s Top Forex News 04.11.08

**I will be a Featured Guest Fox Business’ Opening Bell 4/14-4/18 (9am-10am ET), so there will be no In the Financial Papers next week!

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In the Financial Papers:

 

Podcast Covers:
Dollar Sells off on Problems at GE and Frontier Airlines
Chinese Yuan Returns to Early 90s Level
Eurozone Warned on Impact of Credit Crisis
New Signs of Stress for UK Retailers
G7 Meeting on Tap
WSJ Survey Says US Economy Hasnt Hit a Bottom
Trade Deficit Widens as Imports Gain

In the Financial Papers: Today’s Top Forex News 04.09.08

kathysmallHere is the “In the Financial Papers Radio Broadcast” (Length: 10:11 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
US Mall Owners Feel the Chill in Retail
Dimming Job Outlook in US Slows Migrant Crossings
NYSE Volume Drops to Lowest This Years as Investors Wait and See Earnings
Real Estate Problems Hit Japan
Dividing Growth Within Europe
Fed’s Alternate Options
Foreclosure Bus
Oil to Average 101 Barrel This Year
Focus of G7 Meeting
Money Market Funds Have Cash Parked on the Sidelines

In the Financial Papers: Today’s Top Forex News 04.04.08

kathysmallHere is the “In the Financial Papers Radio Broadcast” (Length: 05:14 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
Non-Farm Payrolls Drop 80k
Dell Plans to Cut More than 8,800 jobs
Jobless Claims Indicate that Recession Has Started
Britain’s $60,000 Tax Bill
Canadian Employment Rate Jumps to 6% but Still Creating Jobs
Fed Signals More Rate Cuts as Officials Cite Market Stresses
Australian Retail SAles Weaker Than Expected

Non-Farm Payrolls: How Bad Will the Drop Be?

Now more than ever, the change in non-farm payrolls for the month of March will determine the outlook for the US dollar and US monetary policy. All but one of our leading indicators for non-farm payrolls point to another month of job losses, which means that a negative print alone will not be enough to drive the US dollar lower. The dollar has been rebounding in the days leading up to the non-farm payrolls report and interest rate expectations for the FOMC meeting at the end of this month are strongly skewed in favor of a 25bp versus 50bp cut. We have seen these expectations change on a dime in reaction to incoming economic data and given the fact that the non-farm payrolls report is the most market moving indicator for the US dollar, there is no question that a weak release could alter market expectations significantly.


Could Non-Farm Payrolls Drop by 100k?

In the month of February, the US economy lost 63k jobs, which marked the second consecutive month of negative job growth. This is certainly bad for the US economy, but not as bad as it has been in past recessions. Although Bernanke stopped short of saying that the US economy is already in a recession, the fact that he indicated the possibility of a recession this year is monumental because yesterday was the first time in this business cycle that he had acknowledged what the market has known for some time.

Over the past 3 decades, the US economy has gone through 3 recessions. In each of those 3 recessions, there was a string of job losses that lasted for a minimum of 10 months. Many people argue that the current downturn in growth could be more severe than the recession in the early 2000s due to the triple blow of a housing crisis, credit crunch and skyrocketing commodity prices. If this is true, we will see far more than 3 consecutive months of job losses. Also expect the level of job losses to climb because in each of the past 3recessions, the largest single month job loss was more than 300k! In this context, a 100k drop over the next few months is not only realistic but practically guaranteed.

nfp040308_1

The following chart illustrates the strong correlation between the employment component of service sector ISM and non-farm payrolls. The last time, the employment component (blue line) was at current levels, job losses were double the drop in February. Could there be a rebound in NFPs this month given the rebound in the employment component of ISM in February? Yes, but consider it just a rebound before a more serious deterioration in the US labor market.

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In the Financial Papers: Today’s Top Forex News 04.03.08

kathysmallHere is the “In the Financial Papers Radio Broadcast” (Length: 07:49 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy

In the Financial Papers:

 

Podcast Covers:
Jobless Claims Breach 400k
Bernanke Says Recession May be near
US Slowdown Takes Toll Across the Globe
US Factory Orders Fall for Second Month in a Row
Credit Crisis May Advance European Cross-Border Bank Rules
Making Sense Of Mixed Signs On Recession
Troubles in the UK
Australia prospers from China’s resource needs
Japan opposition in no hurry to fill BoJ post
Food Inflation
Why the euro is unlikely to eclipse the dollar