Daily Market Commentary for February 2, 2012
The insider trading bill for lawmakers is something everyone should be calling your state representatives about - its common sense that insider trading should be banned for everyone, regardless of your job, title or government position. (read more at Millennium-Traders.Com)
The Labor Department reported that productivity of U.S. businesses rose at a slower rate in Q4, as labor costs rose. According to a preliminary reading by the Labor Department, productivity in the final three months of 2011 increased 0.7%, compared with a 1.9% gain in the prior quarter, with Q3 productivity revised down from a previously reported 2.3% growth rate. U.S. productivity rose at a 0.7% annual rate for all of 2011 which was much smaller than the 4.1% increase in 2010 and a 2.3% gain in 2009. Higher U.S. productivity is regarded as the key to a rising standard of living over time because it tends to lead to higher pay for workers and larger profits for companies. For example, companies might reduce staff but keep production at the same level or install more labor-saving devices to avoid the need to hire - which explains why hiring in the U.S. has been mediocre since the last recession ended. A drop in productivity stemming from higher output and more hours worked, such that occurred in Q4, is often a signal that companies need to add more to their staff. Real output, the amount of goods and services produced, grew at an annual rate of 3.6% in the Q4. Hours worked rose 2.9% and hourly wages climbed 1.9% after a small decrease in the prior quarter resulting in increase in unit-labor costs by 1.2%. Unit-labor costs reflect how much it costs a business to produce one unit of output, such as a ton of steel or a crate of toys. During 2011, unit-labor costs rose a minute 1.3% overall. Despite the increase in hourly wages and hours worked, employees didn’t benefit as much as expected. Hourly wages in Q4 rose just 1.0%, adjusted for inflation, and actually declined for the full year. The standard of living was reduced for millions of Americans in 2011 due to higher cost of basic necessities, mainly food and fuel. Inflation has seen to be leveling off in recent months.
The Labor Department reported fewer Americans applied for unemployment benefits last week, indicating the U.S. labor market continues to gradually improve. For week ended January 28, U.S. jobless claims dropped by 12,000 to a seasonally adjusted 367,000 - near a four-year low with the four-week average of claims fell by a smaller 2,000, to 375,750. Although the monthly average has shown little change over the past six weeks, it remains near a four-year low and stands at level that usually suggests a healing labor market. The recent decline likely indicates a slowdown in layoffs since claims reflect how many people lose their jobs. Even if companies are laying off fewer workers, it still does not they are eager to hire. The current pace of job creation of nearly 150,000 jobs a month remains too slow to put millions of unemployed Americans back to work. On the eve of U.S. data on nonfarm payrolls and joblessness for January, the past week’s jobless claims data are likely to draw more than the usual scrutiny. The Labor Department also reported continuing jobless claims - with a one-week lag - decreased by 130,000 to a seasonally adjusted 3.44 million in the week ended January 21. In the seven years prior to the 2007-2009 recession, U.S. jobless rate ranged between 3.8% and 6.2%. For week ended January 14, nearly 7.67 million people received some kind of state or federal benefit, virtually unchanged from the prior week.
Democratic leadership are hoping for votes on amendments Thursday to legislation seeking to curtail insider trading of securities by lawmakers, though many of the measures under consideration are controversial and could bog down final passage of the bill. The new legislation would prohibit lawmakers, their families and staff from buying and selling securities based on their knowledge of non-public information. Additionally, the bill will require lawmakers and their staff to report stocks and commodities transactions within 30 days of buying and selling the securities and, will require information about their trading to be published in a searchable, online database. Senate Majority Leader Harry Reid said Thursday morning that he and others were busy working on the insider trading legislation until late Wednesday and he has hopes to have votes on amendments to the bill Thursday. “We’ve worked very hard until late in the evening last night to try to come up with an agreement to complete action on this bill,” Reid said. “I will notify senators when those votes are scheduled. We hope that can be done.” The bill appeared to be on the fast-track after passing a key procedural hurdle late Monday with a vote of 93 to 2, easily surpassing the 60 votes it needed to move forward. A number of controversial amendments were introduced over the past few days, many of which could complicate final passage of the bill - nothing that surprises Main Street America. Lawmakers were negotiating in private over which amendments will be permitted to come up for a vote.
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