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Following a wall of discouraging data recently things turned more upbeat this week, as we received positive surprises from both the US and China coupled with a continued flow of solid eurozone data. There is little doubt that the US remains in a slowdown phase. However, the data published so

USDJPY: The pair continues to retain its broader downside bias as it looks to recapture its YTD low at 83.58 despite its price hesitation. A breach of there will open the door for more downside towards the 82.00 level, its psycho level with a cut through there aiming at the 81.00 level.

The US Non-farm employment data posted better than expected results and revisions to the markets delight. As a result, we saw improved risk appetite. Expectations were for an overall loss of over 100,000 jobs and an increase in the private sector by 42,000 jobs. The street was pleased to see

As reported by Thompson-Reuters there has been a 7.3(On the Richter Scale) Magnitude Earthquake that has hit South Island, New Zealand.

• US Unemployment to come down slowly
• 5.5% to 6% realistic Long term target but will be a while
• No apetite in Fed to monetize Federal deficit
• Uncertainty a major factor in Business and Consumer
• Admin/Congress must agree on fiscal gameplan
• World will calm down with credible fiscal plan.

The comments made by Lockhart look great on paper but what are the realities of the ideas. 

The markets applauded the better than expected Employment report .  Stocks opened up 100 points and it looks like a gain will be sustained.  The 9.6% unemployment rate, the NFP job loss for both headline and Private Sector jobs, the revisions were all better than expectations.  

However, historically, when employment starts to come down, there is a sharper move down in the rate as the economy recovers from the low.  We are not seeing that at all.

In 1982 when the unemployment rate peaked at 10.8% in December, 10 months later the employment rate was down 2% to 8.8% or 18.51% lower.  One year later the rate was down to 8.3%.  18 months later the rate was down to 7.2% — 3.4% lower than the peak.

In 1975 the rate peaked at 9.0% in May of 1975.  10 months later the rate was down to 7.6%.  The  decline equaled a 15.55% percentage decline from the peak. 

In 1992 the Unemployment Rate peaked at 7.8% in June 1992.  10 months later the rate was down to 7.0% or 0.8%.  Although less of decline than 1982 and 1975, the fall on a percentage basis was still a respectable 10.25%.

In 2003 the Unemployment Rate peaked at 6.3%.  10 months later the price reached 5.6% or 0.7% from the peak.  The decline represented a 11.11% decline from the peak.

In the current cycle the Unemployment Rate has moved from 10.1% in October 2009 and 10 months later the rate is down only 0.5%.  The percentage decline from the peak has been a scant 4.95%.  Since January of this year, the rate is down from 9.7% to 9.6% – only 0.1%.  That is not exactly zipping along.  Moreover, expectations of a sharper fall are not in the minds of the market economists.

A move to 6% would imply a percentage fall of 40.5% .  It took 52 months to do that in 1982 or 4 years and 4 months.  In the 1975, the percentage  fall never reached 40.5%.  In 1992 it took 66 months – or 5 1/2 years – to have the rate fall 40.5%.  In 2003, the rate did not fall 40.5%.

With the small fall to date, the record of 66 months seems like a good bet to beaten. 

Looking at the FRB’s own estimate, it sees the Unemployment Rate falling to 8.3%-8.7% in 2011.  A move to the best case scenario of 8.3% would imply a fall of 17.82% from the peak of 10.1%. 

In 1982 it took 10 months to lose that percentage (to 8.8%).  We are currently at 10 months now and at the end of 2011, we will be  26 months into the “recovery”.  At the 26th month in 1982, the rate was down to 7.2% from a higher peak of 10.8%.  An equivalent % move (33% decline) should have the rate down to 6.7%! 

By the Fed’s best scenario, the rate of 8.3% will be a full 1.6% higher than the 1982 equivalent (8.3% vs 6.7% of 1.6%).

The first 26th months are supposed to be the fast decline years.

The US ISM non-manufacturing report should be considered the premiere survey of US business conditions as it covers the US services industries, which represent some 70% of the US economy. Today’s report for August was very negative, at a barely expansive 51.5 vs. 53.2 expected and 54.3 in July. Particularly

The ISM non-manufacturing index indicated that the sector grew for the eighth consecutive month, although the pace of expansion slowed more than was expected, as shown by the index dropping to 51.5 in August from 54.3 in July (a reading above 50 indicates the sector is generally expanding). Market expectations

Payroll employment in August fell 54,000 in the month, which was about one-half of the 103,000 decline expected going into the report. Greater than expected strength in labour markets was also reflected in declines in earlier months being revised lower to 54,000 and 175,000 in July and June, respectively, from

Total nonfarm payrolls declined by 54k in August, dragged down by a 114k decline in census employment. Excluding census, nonfarm payrolls increased by 60k and private employment gained 67k. On top of this, net revisions to June and July amount to +123k, although only about half of this (+66k) was

The dollar gained sharply against the yen Friday after better-than-expected U.S. jobs figures soothed investor nerves that had been jangled by worries over the pace of the U.S. recovery. Currencies closely tied to the pace of global growth, such as the Australian and Canadian dollars, took advantage of the improved