Friday, June 5, 2009

Quick Notes for the Day - June 5

Payrolls Fall Less Than Expected, Hourly Earnings Rise - Now, the headline number will be that the unemployment rate jumped to a 26-year high of 9.4% in May, but the big item looking forward (and not back as the unemployment rate does) is that 345,000 payroll jobs were lost in May compared to the 500,000 that had been expected. Average hourly earnings rose by 2 cents, or 0.1%, to $18.54.

Over the previous six month, there had been an average loss of 643,000 jobs. Payrolls in March and April were revised higher by 82,000. The payroll figures from a survey of business sites was much better than expected, a separate survey of households showed unemployment increased more than expected. Officially, unemployment rose by 787,000 in the month to 14.5 million, pushing the jobless rate from 8.9% to 9.4% which is the highest since August 1983.

In a separate survey of households, the government found that employment fell by 437,000. While unemployment rose by 787,000 to 14.5 million, the data showed that 350,000 people joined the workforce last month. The number of people who've been out of work longer than six months rose by 268,000 to stand at 3.9 million. Representing 2.5% of the workforce, this figure marks the highest seen since 1983.

Rio Tinto Jumps - Rio Tinto shares shot up 14.4% on the new that the Anglo-Australian mining giant said that it decided to reject a $19.5 billion deal to sell part of itself to China's Aluminium Corp. and announced the launch of a heavily discounted rights issue to raise about $15.2 billion in gross proceeds. The company also announced that it's in a deal with BHP Billiton to establish a production joint venture that will cover both of the companies' Western Australian iron-ore assets. BHP Billiton shares rose 10.6% in response.

FDIC Looks to Change Citi Management - The FDIC is pushing to change Citigroup's management, and they may be starting at the top which would threaten the future of Chief Executive Vikram Pandit, The Wall Street Journal reported, citing people familiar with the matter. Officials at the FDIC have been concerned about the lack of senior executives with experience in commercial banking, and Pandit comes from an investment-banking background, The Journal said Friday.

The Journal quoted Ned Kelly, Citi's chief financial officer, as responding: "The FDIC is our tertiary regulator," implying that any decision about the bank's fate would first have to be addressed by the Office of the Comptroller of the Currency or the Federal Reserve. This is just more fuel to the fire to somehow streamline the regulatory procedures with someone being the ultimate regulator.

Oil, Copper Up, Treasurys, Gold, Silver Down on Jobs Data - Oil and copper futures rose Friday after the government data showed the U.S. lost much fewer jobs last month than expected. After data, oil broke through the $70 a barrel barrier and rose 1.7% while copper for July delivery rose 0.7% to $2.318 a pound. Meanwhile, Treasury prices plunged sending yields to their highest point since November 2008. Additionally, gold fell 0.4% to $977.60 an ounce and silver lost 1.5% to $15.66 an ounce.

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