SAN FRANCISCO -- The expectation for tomorrow's key (to the city? The hearts and minds of traders?) employment report is an increase in nonfarm payrolls of 205,000 (vs. 268K in June). The
consensus estimate calls for the unemployment rate to remain steady at 4.3%, and for average hourly earnings to rise by 0.3%.
-- not the music guy --
reported, today's jobless claims data have some market players worried about a blockbuster employment report. Such an occurrence would almost certainly stop the market's nascent rebound in its booties, especially following today's weak productivity figures and last week's stronger-than-expected ECI data.
"If the report is strong tomorrow, you're going to get" a rate hike on Aug. 24, said a friend who happens to be a bond trader. "If it's strong enough, people are going to get worried about a 50-basis-point tightening, and the market ain't prepared for that." (Remember, you heard it here first. Unless, of course, you've heard it somewhere else already.)
Moreover, our bud -- who is currently short bonds -- scoffed at the idea proffered by some economists that recent ECI and productivity figures are not inflationary because year-over-year figures are tame.
"Don't we want to be looking into the windshield vs. the rearview mirror?" the trader asked. "I want to know, where are we going?"
Our admittedly very cynical source believes many months of robust housing data augur inflationary pressures. "When you buy a house, it costs you a load of money, but you've just started spending," he said. "You're buying everything from cocktail napkins to refrigerators. People are going to fill up their homes."
Credit Where Credit Is Due
I've been critical of
in this column but must give kudos to Ron Insana for helping put some of the hedge fund rumors in perspective today.
Insana, who's obviously bright and well connected, noted that some of the rally in bonds was due to traders' memories of
Long Term Capital
. They believe the
will either hold steady or -- if need be --
if hedge funds' faux pas warrant.
Moral hazard with your oatmeal,
(you knew I couldn't resist, didn't you?), many readers responded to
on Renay San Miguel and, less directly, Steve Frank. Unfortunately for both, the vast majority supported my viewpoint.
"I couldn't agree more about Renay," writes
Michael R. Hunt
of Richardson, Texas. "He was boring as a news anchor and is worse on
. Steve Frank is terrible. I also miss Bruce Francis and wish he would return."
Hunt then offered a unique proposition: "Let's see if
Lauren Thierry for Renay, Steve Frank and the
boys," he wrote.
Throw in Bruce Francis for an anchor to be named later and I say, Let's make a deal, Monty.
Big day on the site. Such much so, we've got a rare tie for the Special. Don't miss associate editor
*Update* Truth Serum: FDA Squashes Aronex Application, Stock Goes Poof or staff reporter
Kevin "I'm not worthy" Petrie's
Net2Phone CEO Retains Opt-Out Clause.
The Next Wave, Revised
I hope you found
Tuesday's deviation from the norm interesting and useful. A few more thoughts on the subject:
has the appeal of flexibility, Windows has the enormous power and capital of
behind it in providing a very solid and well-established support infrastructure," emailed
, an ex-Softee now with
, a San Francisco (!)-based developer of software design and development solutions. "If an IT manager installs Linux on a desktop or a server, who does he
or she call for bug fixes or service releases -- and if there is someone to call, what will the response time be? I'm not saying that Open Source initiatives will fail -- I just don't think they will be taking major corporate and end-user market share."
Although Linux is just one example of Open Source development, Wells raises a good point. For Open Source to really take hold (much less unseat Microsoft) it has to overcome a classic
: Open Source products must prove to be stable and well supported, which won't be the case until corporations embrace them. That, of course, won't happen until corporations feel they're safe.
David E. Lilienfeld
of Columbia, Md., wondered "how much in favor of open sourcing
would be if its source code were suddenly 'open sourced.' Everyone who believes in open sourcing seems to think that software should be free, but few are ever willing to take the thought to the next level, i.e., that the hardware should be free, too."
That sends me spinning off into a tangent about this idea that free PCs are "good" for
, as was bandied about recently. Then there's today's report in the
about Microsoft planning to attack
with free (that's synonymous with "no cost") Internet service.
A few years ago I came across an analyst who touted a "crazy" theory PCs were in the throes of an inexorable decline (Roxanne Googin, whom I couldn't reach today). Obviously, she was way early in terms of the stocks, but it's looking like she was right on the money in terms of
PC prices. Surely Intel, Microsoft, AOL,
and other biggums will survive the price-slashing storm.
But look at
to get an idea how Wall Street treats companies that either overspend or can't keep growing as fast as expected.
Free PCs and nose-diving prices can't
a company whose revenue growth is dependent on those markets. Unless, of course, the laws of economics really have been repealed.
One more thing to keep in mind as you watch the landgrab for eyeballs: When was the last time
clicked on a banner ad? What happens to the revenue streams of sites (including this one) that depend on advertising when advertisers realize nobody is "clicking through"?
Hopefully I'm wrong. Maybe, I'm missing something (and I'm sure you'll email me to share). All I know for certain is I suddenly feel the need for a drink.
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at