Today's Tidbits

Non-Farm Payroll Job Growth Estimates Rising
From Lehman: “We are revising our June Payroll estimate to 175K from 125K on the back of the recent claims data.”

From Morgan Stanley: “+175k preliminary forecast for payrolls…”

From JP Morgan: “Given the significant drop in initial claims, our preliminary forecast is for an increase in May nonfarm payrolls of 150,000 and a 4.5% unemployment rate.”
From Merrill Lynch: “Not at work due to bad weather in the 4-months of 2007 was the 3rd highest in 22 years. More to the point, the two years that were more severe had weather disruptions concentrated in one or two months (1996, 1994), and NOT SPREAD Over the ENTIRE Winter as in 2007!!!! So, with relief finally here, economic activity is picking up sharply in 2Q-2007, job growth should improve as well, and, with the economy's 4Q-06 an 1Q-07 inventory correction largely complete, and with motor vehicle production ramping ahead of September's sensitive contract negotiations, we look for job growth to be very resilient this summer, averaging near +130k per month.”

Objectivity and Reliability of Rating Agencies Under Scrutiny
From The Financial Times: “Confidence in the ratings agencies to get it right has been shaken recently by a number of missteps and controversies. Moody's and S&P, for example, have had to downgrade dozens of newly-issued securities backed by US subprime home loans as late mortgage payments and defaults by borrowers have spiked more severely than the agencies initially expected -suggesting the assumptions underlying the ratings might have been flawed…Moody's, for example, made 44 per cent of its revenue last year from structured finance deals. Such assessments also command more than double the fee rates of simpler corporate ratings, helping keep Moody's operating margins above 50 per cent. The potential for conflicts of interest in the agencies' "issuer pays" model has drawn fire before, but the scale of their dependence on investment banks for structured finance business gives them a significant incentive to look kindly on the products they are rating, critics say.”

Utilities Face Shortage of Employees - Slowing Growth Below Potential
From USA Today: “The nation faces a shortage of utility workers just as it gears up for the biggest wave of construction in decades to meet soaring power demand. The crunch is already affecting many cities — slowing new hookups for electric service, delaying post-storm power restorations and forcing utilities to skimp on maintenance. It cuts across job categories, from line workers and plant operators to senior engineers. "It's creating a real serious crisis…Everything in this country runs on electricity." About half the USA's 400,000 power industry workers, largely baby boomers, are eligible to retire in the next five to 10 years… The industry already has shed about 40% of its workforce since 1990 in response to deregulation… A bigger worker crunch looms. With power demand expected to soar 50% by 2030, utilities are planning hundreds of plants and thousands of miles of transmission lines. The surge is due to population and business growth and bigger homes brimming with computers and plasma TVs. Yet there may not be enough welders, plant operators and other skilled workers to build and run all the new facilities. Especially affected is the nuclear power industry, which is girding for a revival after a decades-long construction hiatus following the 1979 Three Mile Island partial meltdown. The 33 nuclear reactors on the drawing board "will not get built as quickly as we want," says Dale Klein, chairman of the Nuclear Regulatory Commission. "You'll see regions where there are shortages of electricity" that trigger blackouts or brownouts.”

MISC
From Dow Jones: “A fifth consecutive drop in weekly jobless claims sent Treasurys prices into a sharp decline early Thursday [10y Treasury +4bp to 4.75% yield]… The dollar gained [DXY +.17]… U.S. stocks were lower Thursday [Dow -11]… Crude oil futures jumped more than $2 a barrel…”

From RBSGC: “Former Fed Chairman Greenspan offers cautious comments on housing, noting subprime worries are hurting housing recovery and 'can't say' how the housing market will turn out. Bernanke says housing had a 'further step-down' in first-quarter, but suggests there is no serious spillover from the subprime problems. The Chairman sees an increase in foreclosures and delinquencies in 2007 and 2008.”

From Bloomberg: “U.S. Treasury bills surged, pushing the three-month security's yield to a one-year low, amid expectations for reduced sales. Growth in U.S. tax revenue has exceeded forecasts, reducing the Treasury's need to borrow. To ensure a liquid market for longer-maturity notes and bonds, the government normally reduces bill sales as a first step…. The three-month Treasury bill's yield declined 9 basis points, or 0.08 percentage point, to 4.73 percent …The yield was the lowest for a three-month bill since April 2006. …The rally drove the three-month bill's yield, which has exceeded the 10-year yield since July, to within a basis point…. ``The bill market is now showing the first signs that it is becoming too small for the demand…There's a whole investor class out there that needs short-term money rates, and the bill market is their vehicle of choice.''”

From Merrill Lynch: “First quarter earnings were better than expected, again. The majority of companies within the S&P 500 Index exceeded earnings expectations in 1Q, with the index in aggregate delivering 8.6% year-over-year quarterly growth. While growth blew away the consensus estimate of 3.6% going into the …earnings failed to break the 10% growth mark for the first time in fifteen quarters.”

From Dow Jones: “Manufacturing activity in the Philadelphia area expanded at a somewhat faster pace in May, with growth in the sector coming in modestly above expectations…. “Indicators for general activity, new orders, shipments, and employment all showed some improvement this month, following several months of nearly flat activity. Cost pressures continue to be reported by a significant share of the firms, but only slightly more firms reported higher prices for their own manufactured goods than reported price decreases,” the bank said in its report.”

From AP: “Buyers in India, the world's largest consumer of gold, devoured 50 percent more gold in the recent quarter than they did a year ago amid robust economic growth and a strong start to the wedding season. Chinese consumption jumped by nearly a third amid robust buying during the New Year's celebration's in mid-February. Gold demand for industrial applications and dental fillings increased 18 percent to $2.34 billion. Meanwhile, investor interest in gold fell 13 percent … as last year's excitement about gold investment subsided.”