Interview: John Snow --- Treasury Secretary
>> the dollar hit a low against the euro as u.s. jobs numbers disappointed investors. michael mckee spoke with john snow.
>> i felt for a long time, mike, that we’d see good job pickup because it follows naturally from having strong g.d.p. growth and we’ve had good g.d.p. growth, basically since the president’s jobs and growth bill took effect.
>> can you explain, though, the caution we’re seeing from employment offices around the country? if g.d.p. is growing around 4% as most economists think, 112,000 jobs created doesn’t seem to connect with that kind of expansion.
>> well, productivity is still very high, of course and this month’s numbers come on top of numbers from last month of 300,000 so we’re averaging about 200,000 jobs a month for the year and at that rate, we’re -- jobs are growing at a rate above the entry participation rate of new workers. so i want put―wouldn’t put too much weight on one month. i’d look at the averages and they’re pretty good.
>> you were in new york yesterday meeting on wall street to talk about the president’s deficit reduction plans. there are fears that unless you follow through, we’ll see higher interest rates and lower dollar. what did you tell them and how did they response?
>> i told them that we are committed, the president’s committed to bringing the deficit down. it’s essential that we do it. and there are only two ways to do it, one is to continue to see growth, because a growing economy, creating jobs and profitable businesses means the government revenue stream goes up. but that’s not enough, i also said. we have to get tougher, more tough-minded and we will, on spending controls.
>> if you’re going to do that and you’re committed to following through and the economy is as strong as you say, why are foreigners fleeing u.s. assets? why is the dollar weak right now?
>> you’re asking a broad question about currency levels and i don’t ever directly address the question of relative values of currency. i will say that, having just returned from the g-20 meetings, we had a good opportunity to talk with my g-20 colleagues about the larger issue of the current account deficit and what can be done about it. i think there’s a sense that it’s a shareholder responsibility. it’s important that our trading partners grow faster, particularly in europe. it’s important that we get the deficit under control, get our net savings rate up, encourage household savings, deal with the deficit. it’s also important, though, that where currencies aren’t flexible, that countries move to more flexible currency regime. all of that will help to deal with the current account deficit.
>> speak of that meeting, recently, jean-claude trichet, the president of the european central bank, said that interventions in currency markets are always a tool for policymakers yet you’ve said they have an unrewarding and checkered history, which people took as the u.s. ruling out intervention in markets . is there a common position among the g-8?
>> that’s one of those things, mike, that if i did discuss it with my claegs in the g-8, we would never make public. so whether i did or i didn’t, it’s a matter i couldn’t talk about.
>> can you tell us your position? are you firm in the idea that there is no way, at no time, the u.s. would intervene?
>> well, i’ll go back to the boca raton g-7 finance ministers’ statement where we said we favor flexible exchange rates, that in open, competitive markets with currencies that aren’t flexible, moving to flexibility, but also recognize that exchange rates movements should be orderly.
>> let me ask you one last series of questions here, and that is the treasury department is going to have a full plate of issues next year―social security reform, tax code overhaul goes through your department. the question people are asking is whether you’re going to be around to oversee those or whether you’ll be leaving the administration when the second term begins?
>> that’s a question for me and the president to resolve. but i will say i’ve been honored to serve in this administration and i’m delighted to have played a part under the president’s leadership in seeing the american economy turn around and get on a good path.
>> that was treasury secretary john snow. after building solid customer rosters and market capitalization of $17 billion, sirius and x.m. are ready for the big leagues.
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Listen Unemployment rate --- Peter (medium)
The slowdown in hiring --- Su (fast)
NYSE --- Julie (slow)
Nasdaq --- June (slow)
the unemployment rate dropped from 5.5% to 5.4% according to the labor department. weakness in manufacturing month with the third straight monthly drop. manufacturing was down 5,000 jobs in november following a drop of 2,000 in october. the head of a staffing company says companies are still figuring out employment needs.
>> we see, if you look at last month, it was euphoria. the month before that, depression, and the month before that, euphoria so we see a market that is more measured and clawing its way back up the hill in the labor market .
>> digging down deeper in the report, the fed will not find many signs of inflation in the report. workers earned a penny more an hour in november than a month earlier, the smallest increase this year, at a time when they were paying for more fuel. overall employment in service industries rose 104,000 down from the prior month and retail employment decreased more than 16,000, suggesting holiday hiring may not be as strong as first thought. construction jobs rose by 11,000 last month, after rising 64,000 in october, that october gain due, in part, to rebuilding after the hurricane.
>> we look at this over the longer term and the trend. since the beginning of this year, the economy has created north of two million jobs. the president’s policies are working and we have a strong economy, neither too hot nor too cold.
>> with the report, average monthly job creation since the beginning of the year stands at 180,000.
>> today’s lower-than-expected job growth is one of the last major pieces of economic data before the federal reserve neets mid december. su keenan joins me to look at how the slowdown in hiring affects that debate.
>> michael mora says the latest number throws cold water on the idea that the labor market has recovered. other evidence demonstrates lower confidence about the economy and lower expectations the fed will make up the pace of interest rate increases.
>> the fed is showing vigilance. everything they say and do seems to be consistent with the idea that they will stamp out any inflation pressures. that’s a good thing for the long end but it’s not the best time to own treasuries.
>> today, philadelphia federal reserve president anthony santomero says the fed should continue to raise rates at a “measured pace” and he is concerned about inflation.
>> i am hearing from businessmen that there is pressure on margins and wholesale price pressure is showing up. we must be watchful because it’s important as the economy proceeds that we keep that inflation well contained so i guess i would say that i’m a bit more vigilant.
>> that’s twice, now, on the word “vigilant.” the futures market is forecasting that fed fund policymakers raise the benchmark overnight bank lending rate a quarter point to 2.75% on december 14. lark man―lakshman achuthan says the jobs number does not point to a downturn this is consistent with the leading indicators of the job market and i suspect they’ll show more of the same when they’re updated, a slight disconnect between the numbers of jobs and the economy and we’ll see more weakness in manufacturing and strength in services.
>> analysts surveyed by bloomberg expect a quarter point increase later this month. >> treasuries tumbled and the dollar hits new lows after the employment report. treasuries had a huge rally, up on the 10-year, down to 4.25% yield.
>> stocks ended the day slightly higher after intel raised its sales forecast and oil prices fell. for more on the day and the week of trading activity, here’s a from the julie hyman at the new york stock exchange.
>> a choppy session on wall street but we ended the day quite little changed. a lot of different pressures pulling the market in different directions. let’s talk about the big movers―semiconductors creating a lot of the gain in today’s market after that positive news from intel. you can see the stocks traded here at the nyse that gained the most within that particular group. also wanted to point out the move in texas instruments, in particular. the news came from intel’s mid quarter update. t.i. is scheduled to give its own update on tuesday. today, we heard from a smith barney analyst on that update who says that’s the next catalyst for the industry and he expects an upbeat announcement from t.i. this morning, we had the jobs report. the positive effect was that with treasuries higher, bonds were lower. so interest-rate-sensitive stocks were doing well today, including real estate investment trust, some of the biggest advancers within that group. homebuilder also doing well today after falling yesterday. also looking at some of the big gainers there, k.b. homes and toll brothers among them. on the downside, the drag on the s&p 500 coming from the banks. this is after fifth third had negative news, saying its fourth quarter would not be as good as analysts’ estimates. it dragged down other banks with it. since banks are heavily weighted within the markets , this created much of the drag today. a couple of important dow stocks falling today, procter & gamble falling after an f.d.a. advisory panel said it would not recommend approval of the company’s catch to treaty is mail sexual dysfunction. alcoa downgraded by u.b.s., the analyst concerned about rising costs at the company. i’m julie hyman, bloomberg news, at the new york stock exchange.
>> the nasdaq finished the day and the week higher. our june grasso has details from the nasdaq marketsite in this taped report from that center in times square.%
>> shares of intel rose as much as 7.9% this morning, the biggest gain in more than two years, after a surprise pick up in demand for computer chips prompted the company to raise its fourth quarter revenue forecast. the chief executive says revenue was greater than expected in all products and geographies. intel led the nasdaq higher, the best performing stock by percentage in the nasdaq 100 and led the philadelphia semiconductor index higher, as well. kla-tencor and novellus were also leaders on the semiconductor index and top performers on the nasdaq 100. intel led the computer index higher and the computer index led the economic groups at the nasdaq all day. microsoft leading that higher, applied material and electronic arts. dragging the index dunn, apple xuret which―apple computer which declined after needham and company downgraded their rating to hold from buy. the worst performing group at the nasdaq, the biggest drag was the banking index. fifth third bancorp led that index lower. it’s the 10th largest bank in the u.s. and the largest on the nasdaq. it said it would earn 28 to 30 cents in the fourth quarter, well below the 82-cent average estimate of analysts. the company is selling debt and
