Market Likes Payroll Numbers, But Likes Dollar Rally More
Futures rallied 12 points on better than expected nonfarm payrolls report, with minor revisions in February and March numbers. The market will like it because while the economy is clearly soft, we are not seeing a wholesale collapse in the job market. Wages, however are weak, negative in fact if adjusted for inflation.
More importantly for stocks, the dollar rallied, commodities declined modestly.
1) Cadbury has split from Schweppes (gads!); it will continue to trade under the symbol CSG . The beverage unit will be renamed Dr. Pepper Snapple Group (double gads!) and will begin trading next week.
2) Unlike Exxon ,Chevrondid beat its numbers, but they had the same problems Exxon had. Upstream earnings benefited from a big increase in oil, but refining suffered because they couldn't raise gasoline prices as much as oil was going up. How bad was downstream earnings? They made $4 million in downstream earnings (total earnings were $5.17 BILLION); they made $347 million in downstream earnings for the same period last year. Like Exxon, production also declined. Up 1 percent.
3) NetSuite hit hard here, down 21 percent. Their numbers (loss of $0.01) were basically in line, and guidance was within the range of expectations, maybe at the lower end. Investors obviously were expecting more. The company made a splash at its debut in December; they provide software to businesses through "cloud computing" a hot application that allows them to access their applications over the Internet.
4) In case you thought the credit crunch was over, the Fed has apparently noted the elevated levels of LIBOR recently. Just before the nonfarm payroll reports, the increased the size of the TAF (Term Auction Facility) to $150b from $100b but is leaving the maturity at 28 days. The TAF, you will recall, allows the Fed to auction funds to depository institutions and accept a wide range of collateral in return. They are also expanding the type of collateral they will accept in the TSLF facility to include AAA asset backed securities.
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