Overview

Continue to set US trades for surprising vigor, not weakness.

Tomorrow’s Oct Retail Sales result will not be much to write home about, but that hesitation is priced in and tagged to E - Z violence.  Shoppers will become accustomed to this reality, if indeed it continues to be a reality, adjust, and then head for the shopping center into year end.

A headline this pm has SF Fed staff putting the odds for a recession H1, at over 50%.  Good. Since Fed staffers are the least capable of closing the pattern ahead, since they aren’t trained for it they deliver a gift from time to time.  Thus exploit, do not join any price change tagged to this well publicized story.

Finally, another leg of relative strength, and a desk anchor, is the US jobs market, but note relative, not strong. In the US the jobs market will improve despite the hindrances placed on employers by Obama. Without these, we would be hitting of 7 of 8 at the moment.  The flip side of Obama’s profoundly flawed policy is that employers were forced into efficiency; that is, they made investment decisions put off for years because new employees, even if needed, are freighted with unknown risk (Obamacare for ex). CEO’s are paid to take risk but not on an uneven and undulating playing field. This reality delays our recovery. That, in distilled form, is our jobs story.

The UK’s jobs story is illuminating, and something else altogether. Many UK employers are also on hold (witness today’s CIPD and CBI surveys) but not due to an uneven playing field at home, but to E - Z uncertainty, not a clueless administration. We note too from the CIPD that hiring in the private sector will hold up, it is the public sector which will take the hit.  Worse things have happened.

This reality is one reason we remain constructive on the UK.


Robert Craven