Non-Farm Payrolls are unchanged. Estimates called an increased in jobs; unemployment rises at 9.1 %.
Today's numbers underscore the severity of the soft patch that the economy is going through which could very easily tip us back into recession given the contractionary pressure of fiscal policy at the state/local/federal level. There were zero (yes zero, and this is not 08-09) new jobs created in August in the business survey and the household survey showed no change. This is one more reason to think that the fed will embark in a third round of monetary stimulus given that they are clearly failing in one aspect of their dual mandate (employment)while the inflation outlook remains tamed, something that becomes evident with the fall of average weekly earnings in the report.
It is very possible that we see at least the broadcast of QE 3 in the September fed meeting, the only question is whether it will be aggressive enough. My take remains unchanged. given the strong possibilities of new stimulus on the part of the fed, risk assets are a good place to be or acquire with sight on the short-medium term. However, considering the liquidity trap conditions of the economy and the fact that expectations of the effectiveness of the monetary policy lever have been severely diminished it is difficult to see a sustained rally after initial pick up.
We will have to wait and see.
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