Many banks like Citigroup own securities dealers but section 23A of the Federal Reserve Act imposes limits on loans between the bank and dealer units to protect the taxpayer-backed bank deposit insurance fund.
The Fed, in a letter sent to Citigroup Monday, exempted it from the limit on how much its bank unit, Citibank N.A., can lend to its affiliated broker-dealer, Citigroup Global Markets. In the letter, the Fed said it would permit Citibank to lend up to $25 billion to market participants in need of short term liquidity to finance their holdings of certain mortgage loans and related assets, and it could channel the transactions through Citigroup Global Markets in the form of offsetting repurchase agreements, which are short-term loans secured by financial assets.
spike66, the BED includes anyone for whom companies paid unemployment insurance. So the answer is probably yes for some illegal immigrant workers, and no if they were cash workers.
That disparity in Q3 06 is quite troubling for the "model" that BLs likes to use to pad their numbers.
The state data showed a marked decline and they were still positive with job creation.
I wonder how the data for the next few weeks is going to look with the increasing number of unemployed from mortgage company layoffs and other retail layoffs quietly proceeding through the economy.
Uncertainty over the sale of Home Depots supply unit to a group of private equity buyers including Bain Capital, Carlyle and Clayton Dubilier & Rice remained on Thursday night.
Even though the second-largest US retailer tentatively agreed to renegotiate the deal at a lower price, three investment banks were still resisting financing it because of the credit crisis, according to people familiar with the matter. Last-ditch negotiations with the lenders to salvage the deal were continuing after the market closed on Thursday, when the sale, originally priced at $10.3bn in cash, was scheduled to be completed. Theyre trying to work it out, one person close to the matter said.
That disparity in Q3 06 is quite troubling for the "model" that BLs likes to use to pad their numbers.
The Q3 BED report was used to criticize the birth/death model used as part of the CES survey, but it's worth noting that the Q4 numbers for net employment from both surveys were nearly identical:
Home Depot was Thursday night close to accepting about $1.2 billion less for the sale of its wholesale distribution business to three private-equity firms, people familiar with the matter said. But there were still substantial doubts about whether the deal will actually close before a Thursday deadline, as three major banks continued to balk over the financing.
Steve, I think the aggregate of state data is far more accurate (aside from the lack of identification of residential construction as a component of total construction), than a "model".
One of the points that CR made is that an inflection point is not necessarily apparent in model smoothed data, where the actual numbers provide more of a check on reality.
Okay, who is willing to chip in to let CR/Tanta attend (lead???) the following:
Moody's Economy.com Webconferences
Assessing the Economic Fallout of the Subprime Financial Shock
Host: Mark Zandi
Date: September 4, 2007
Time: 2:00 p.m. ET / 6:00 p.m. GMT
Cost: US$ 95.00
The global financial turmoil precipitated by the meltdown of the U.S. residential mortgage market will have significant implications for the U.S. and global economies. This conference call will identify the links between the financial market problems and the economy, and assess their impacts.
IIRC CW applied successfully to become a thrift bank about 6 mo ago. why would they have done this if their mortgage unit couldn't access Fed funds such as the discount window. can the mortgage unit access the Federal Home Loan system?
Steve - I think CR's graph makes it clear that CES sometimes misses the turn, but that the B/D model usually works.
In any case, CR's been puzzling over the discrepancy between the Starts/Permits and the employment for over a year now. That puzzle does seem to have been substantially solved.
Citi's letter doesn't work for CW, since CW wouldn't be extending liquidity to third parties via its broker-dealer (not its mortgage company -- different regulations). The letter requires mirror arrangements between Citibank and its broker-dealer, on the one hand, and the broker-dealer and third parties, on the other. Citibank's risk is therefore not to its broker-dealer but to the third parties. Not the case with an arrangement between CW bank and CW mortgage company.
Also, the letter says Citibank will be overcollateralized. Probably also not the case for a hypothetical and counterfactual arrangement between CW bank and CW mortgage.
What strikes me here is the stately pace of data as it finds its way to policymakers. Has Moore's Law been rescinded?
Analogous example - in 2004 hurricane Charley "current" reportage at NHC showed the storm well out into the Gulf, a category 2 on a track for Tampa at the very moment the storm, in fact a category 4 with winds of 145 mph, had already laid waste to Boca Grande and Captiva Island and was bearing down on Tampa evacuees as they fled from a safe location to the East. The embedded time lapse placed many thousands in the path of real danger.
Doesn't the timeliness of these data - economic and meteorological - constitute a significant part of their usefulness?
MOM said: "In any case, CR's been puzzling over the discrepancy between the Starts/Permits and the employment for over a year now. That puzzle does seem to have been substantially solved."
"Solved", in the same sense as "Mission Accomplished."
I don't see how CR's forecast of 400k-600k in lost residential construction jobs was anywhere near accurate, even if one were to eliminate the part of the prediction that said "by this summer."
Also, from the posted chart it appears that whenever the BED number drops below the BLS number there are periods when it rises sharply and overtakes the BLS number.
Not that such observations cut much ice on this board.
CR - thanks & interesting. Could you clarify quarterly change on 3-mo centered avg. for me ? I take it a month's data is the average of the one behind and ahead ? And you're looking at QtQ changes ? Or YoY ?
That aside it looks like the Birth/Death model (which btw made up over 50% of the new jobs in the last several quarters) will undergo some serious revision to bring the monthlies into line with the better grounded BED survey. Won't the market be surprised. It'll turn out a lot of folks who were arguing a weak job creation economy might indeed have been right. Not to blow to hard on my own horn but I took a look at the l.t. trends and based on a requirement for 150K jobs/month creation looked at the last several years and found we've still been in the hole about 2 million net lost jobs verses a robust recovery. That is we're not even treading water well. Jobs, We Don't Need No Stinkin Jobs: Long-term Employment Trends ( bizzXceleration: Performance, Value and Profit: Jobs, We Don't Need No Stinkin Jobs: Long-term Employment Trends )
CR, that was an interesting analysis. Having gone through the BED report on the BLS website I just wanted to point out that BED only covers private sector employment. So your second graph comparing job gains under BED and BLS establishment should make that adjustment. It will still show that the establishment data overestimates job additions but to a lesser extent viz. 991,000 vs 535,000. Cheers.
Does the BED model include illegal immigrants?
OT but interesting:
Many banks like Citigroup own securities dealers but section 23A of the Federal Reserve Act imposes limits on loans between the bank and dealer units to protect the taxpayer-backed bank deposit insurance fund.
The Fed, in a letter sent to Citigroup Monday, exempted it from the limit on how much its bank unit, Citibank N.A., can lend to its affiliated broker-dealer, Citigroup Global Markets. In the letter, the Fed said it would permit Citibank to lend up to $25 billion to market participants in need of short term liquidity to finance their holdings of certain mortgage loans and related assets, and it could channel the transactions through Citigroup Global Markets in the form of offsetting repurchase agreements, which are short-term loans secured by financial assets.
Citigroup Gets Fed Help on Using Discount Window - Real Time Economics - WSJ
spike66, the BED includes anyone for whom companies paid unemployment insurance. So the answer is probably yes for some illegal immigrant workers, and no if they were cash workers.
"Legal" cash workers aren't included too.
Best Wishes.
dis
so why wouldn't CW seek the same exemption for its mortgage unit via its bank? i think moral hazard is alive and well.
Or subcontractors who 1099 their employees.
That disparity in Q3 06 is quite troubling for the "model" that BLs likes to use to pad their numbers.
The state data showed a marked decline and they were still positive with job creation.
I wonder how the data for the next few weeks is going to look with the increasing number of unemployed from mortgage company layoffs and other retail layoffs quietly proceeding through the economy.
Someday this war's gonna end...
Very nice analysis, CR; thanks for sorting through the report.
Yep, that Q1 07 BED report should be interesting (honestly, I was hoping that this one would be 'interesting').
jg, sorry I didn't mention that you reminded me of this report. Thanks!!!
Best Wishes.
idoc,
I see no reason why CW would not seek the same exemption and use it.
It is beyond me why haven't they especially since arguably this discount window action might have been to aid them.
jg, I've remedied the oversight. Thanks again.
Credit crunch unhinges home depot deal
Uncertainty over the sale of Home Depots supply unit to a group of private equity buyers including Bain Capital, Carlyle and Clayton Dubilier & Rice remained on Thursday night.
Even though the second-largest US retailer tentatively agreed to renegotiate the deal at a lower price, three investment banks were still resisting financing it because of the credit crisis, according to people familiar with the matter. Last-ditch negotiations with the lenders to salvage the deal were continuing after the market closed on Thursday, when the sale, originally priced at $10.3bn in cash, was scheduled to be completed. Theyre trying to work it out, one person close to the matter said.
FT.com | Error | Page unavailable
That disparity in Q3 06 is quite troubling for the "model" that BLs likes to use to pad their numbers.
The Q3 BED report was used to criticize the birth/death model used as part of the CES survey, but it's worth noting that the Q4 numbers for net employment from both surveys were nearly identical:
BED: 516K
CES: 531K
The wsj's take on the same story
Home Depot was Thursday night close to accepting about $1.2 billion less for the sale of its wholesale distribution business to three private-equity firms, people familiar with the matter said. But there were still substantial doubts about whether the deal will actually close before a Thursday deadline, as three major banks continued to balk over the financing.
Home Depot Talks On Unit Get Hostile - WSJ.com
Steve, I think the aggregate of state data is far more accurate (aside from the lack of identification of residential construction as a component of total construction), than a "model".
One of the points that CR made is that an inflection point is not necessarily apparent in model smoothed data, where the actual numbers provide more of a check on reality.
IMHO.
Someday this war's gonna end...
Okay, who is willing to chip in to let CR/Tanta attend (lead???) the following:
Moody's Economy.com Webconferences
Assessing the Economic Fallout of the Subprime Financial Shock
Host: Mark Zandi
Date: September 4, 2007
Time: 2:00 p.m. ET / 6:00 p.m. GMT
Cost: US$ 95.00
The global financial turmoil precipitated by the meltdown of the U.S. residential mortgage market will have significant implications for the U.S. and global economies. This conference call will identify the links between the financial market problems and the economy, and assess their impacts.
dis
IIRC CW applied successfully to become a thrift bank about 6 mo ago. why would they have done this if their mortgage unit couldn't access Fed funds such as the discount window. can the mortgage unit access the Federal Home Loan system?
Steve - I think CR's graph makes it clear that CES sometimes misses the turn, but that the B/D model usually works.
In any case, CR's been puzzling over the discrepancy between the Starts/Permits and the employment for over a year now. That puzzle does seem to have been substantially solved.
idoc and dis,
Citi's letter doesn't work for CW, since CW wouldn't be extending liquidity to third parties via its broker-dealer (not its mortgage company -- different regulations). The letter requires mirror arrangements between Citibank and its broker-dealer, on the one hand, and the broker-dealer and third parties, on the other. Citibank's risk is therefore not to its broker-dealer but to the third parties. Not the case with an arrangement between CW bank and CW mortgage company.
http://online.wsj.com/public/resources/documents/wsj070823_citigroup1.pdf
Also, the letter says Citibank will be overcollateralized. Probably also not the case for a hypothetical and counterfactual arrangement between CW bank and CW mortgage.
What strikes me here is the stately pace of data as it finds its way to policymakers. Has Moore's Law been rescinded?
Analogous example - in 2004 hurricane Charley "current" reportage at NHC showed the storm well out into the Gulf, a category 2 on a track for Tampa at the very moment the storm, in fact a category 4 with winds of 145 mph, had already laid waste to Boca Grande and Captiva Island and was bearing down on Tampa evacuees as they fled from a safe location to the East. The embedded time lapse placed many thousands in the path of real danger.
Doesn't the timeliness of these data - economic and meteorological - constitute a significant part of their usefulness?
MOM said: "In any case, CR's been puzzling over the discrepancy between the Starts/Permits and the employment for over a year now. That puzzle does seem to have been substantially solved."
"Solved", in the same sense as "Mission Accomplished."
I don't see how CR's forecast of 400k-600k in lost residential construction jobs was anywhere near accurate, even if one were to eliminate the part of the prediction that said "by this summer."
Also, from the posted chart it appears that whenever the BED number drops below the BLS number there are periods when it rises sharply and overtakes the BLS number.
Not that such observations cut much ice on this board.
Sebastia
CR - thanks & interesting. Could you clarify quarterly change on 3-mo centered avg. for me ? I take it a month's data is the average of the one behind and ahead ? And you're looking at QtQ changes ? Or YoY ?
That aside it looks like the Birth/Death model (which btw made up over 50% of the new jobs in the last several quarters) will undergo some serious revision to bring the monthlies into line with the better grounded BED survey. Won't the market be surprised. It'll turn out a lot of folks who were arguing a weak job creation economy might indeed have been right. Not to blow to hard on my own horn but I took a look at the l.t. trends and based on a requirement for 150K jobs/month creation looked at the last several years and found we've still been in the hole about 2 million net lost jobs verses a robust recovery. That is we're not even treading water well. Jobs, We Don't Need No Stinkin Jobs: Long-term Employment Trends ( bizzXceleration: Performance, Value and Profit: Jobs, We Don't Need No Stinkin Jobs: Long-term Employment Trends )
CR, that was an interesting analysis. Having gone through the BED report on the BLS website I just wanted to point out that BED only covers private sector employment. So your second graph comparing job gains under BED and BLS establishment should make that adjustment. It will still show that the establishment data overestimates job additions but to a lesser extent viz. 991,000 vs 535,000. Cheers.