Metropolitan area employment and unemployment – Sep 2014
“Unemployment rates were lower in September than a year earlier in 339 of the 372 metropolitan areas, higher in 26 areas, and unchanged in 7 areas, the U.S. Bureau of Labor Statistics reported today. Six areas had jobless rates of at least 10.0 percent and 118 areas had rates of less than 5.0 percent. Nonfarm payroll employment increased over the year in 314 metropolitan areas, decreased in 53 areas, and was unchanged in 5 areas. The national unemployment rate in September was 5.7 percent, not seasonally adjusted, down from 7.0 percent a year earlier.”
Bureau of Labor Statistics, “Metropolitan area employment and unemployment – Sep 2014“, 29 Oct 2014 (10:00) More
Federal Open Market Committee meeting: 28-29 Oct 2014
“Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee’s longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.
The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”
Federal Reserve, “Press Release“, 29 Oct 2014 (14:00) More
“The exit protocol has been so well documented for the last nine months that the market has fully priced it in. I don’t anticipate any movement. I feel as though this is one meeting where they almost don’t need to hold it because they have made it perfectly clear.”
Barbara J. Cummings, Portfolio Manager, Boston Private Wealth Management (Boston Private Bank & Trust Company) ($3.5bn) More
“The statement was a little bullish on the economy and if anything, on the hawkish side, just because of the nod to the improvement in the labor market. The expectation going in was the Fed would probably be dovish to minimize market reaction but instead they’re optimistic, which has resulted in slightly higher bond yields and equities down here.”
Anthony Valeri, Market Strategist, Lpl Financial LLC More
“The Fed’s decision is a surefire indication that the U.S. economy is continuing to move along at a robust pace. The liquidity program has been a major stimulant to the market, and investors will now have to readjust to the new environment.”
Chad Morganlander, Money Manager, Stifel Nicolaus & Co. ($160bn) More
“Anybody who was holding out hope that QE would continue now has to throw in the towel. Just like a kid moving out for the first time, until they actually have to pay those first bills, it hasn’t really registered.”
Joe Kinahan, Chief Strategist, TD Ameritrade Holding Corp. ($666bn) More
“I was pleasantly surprised that they removed the reference to there being significant underutilization of labor resources. I think that is a hat tip to some of the progress being made in the labor market.”
Brian Jacobsen, Chief Portfolio Strategist, Wells Fargo Funds Management More
Stock market indices
|Index||Ticker||Today||Change||31 Dec 13||YTD|
|S&P 500||SPX (INX)||1,982.30||-0.14%||1,848.36||+7.25%|
The shape of the day
“The Fed’s announcement is exactly what everyone expected. The Fed sees enough improvement in economic activity to end QE, but at the same time, it will keep low rates because it isn’t yet seeing what it wants to see as far as inflation goes. Stocks are falling a bit because the recent rally brought us to very overbought levels, so we need to consolidate a little bit.”
Wayne Kaufman, Chief Market Analyst, Phoenix Financial Services More
Facebook fell on yesterday’s outlook for Q4 2014 and an announcement of increased spending in 2015. LinkedIn fell ahead of its earnings announcement. The market was generally down because of the FOMC’s decision to end QE. However that decision strengthened the USD, which lifted our AUD index.
|Outperformed||Currency||Today||Change||31 Dec 13||YTD|
Stock price movements
Portfolio stock prices
Another record high for Apple today.
|Stock||Ticker||Today||Change||31 Dec 13||YTD|