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To: Bill Harmond who wrote (42847)	6/6/2008 11:54:54 AM
From: Bill Harmond	Read Replies (1) \| Respond to of 57684

09:07 ECONX Why the unemployment rate jumped The increase in the unemployment rate from 5.0% to 5.5% was caused primarily by an increase in the size of the labor force and the number of people saying they are unemployed and seeking work. The increase in the unemployment rate is not due to a downtrend in the number of employed. There was a decline in employed levels in May, but over the past two months, the number of employed persons in the household survey actually rose 77,000 even while the unemployment rate jumped from 5.1% to 5.5%... Thus, the jump in the unemployment rate is not a reflection of lower employment levels (or an indication that the nonfarm payroll data are misleading). It is due either to a large number of people re-entering the labor force and being counted as unemployed, or to a one-month aberrant swing in the data. Our bet would be on a combination of the two... The jump in the unemployment rate has no direct implications for other economic data as it reflects more people seeking work rather than a downtrend in the level of employment... Note: The unemployment rate is determined by a household survey that is different from the hard data in business establishment data that produces the nonfarm payrolls, and is therefore considered less important in terms of assessing overall economic conditions.

To: Bill Harmond who wrote (42847)	6/6/2008 5:12:17 PM
From: stockman_scott	Respond to of 57684

Exxon's Hoard seekingalpha.com By Felix Salmon posted on: June 06, 2008 I missed this, last week: Exxon Mobil has amassed a large pile of common stock held in treasury. At the end of 2007, the company had 2.367 billion shares held in treasury, for which it paid $113 billion over the last 10 years, according to a regulatory filing. If that stock were valued at the current market price of $90 a share, it would be worth $237 billion, or $124 billion more than what Exxon Mobil originally paid for it. In fact, if you look at the most recent 10-Q rather than the older 10-K, the numbers are even bigger: Exxon now has 2.736 billion shares held in treasury, for which it paid $123 billion. (The NYT report has a typo: the number at the end of last year was 2.637 billion shares, not 2.367 billion shares.) But the value of the shares that Exxon owns in itself is still about $238 billion, since the shares have now softened slightly to just over $87 apiece. This is a good reminder that Exxon is not in the business of investing in oil production, so much as it's in the business of maximizing shareholder value. That $123 billion it's spent on its own stock could have been invested instead in the oil business - but Exxon refuses to invest any money unless it gets a return on capital employed of more than 35%. Any excess cash gets returned to shareholders in one way or another, either through dividends or through stock buybacks. State-owned oil companies are also prone to underinvestment these days, using the much easier tactic of simply leaving oil in the ground: The Saudis have indeed deliberately decided to leave theirs in the ground. "King Abdullah, the country's ruler, put it more bluntly: "I keep no secret from you that, when there were some new finds, I told them, 'No, leave it in the ground, with grace from God, our children need it'.'' FT 5/19/08. I see the interest rate as part of the Saudis' decision how much oil to pump. Because the current rate of return on financial assets is abnormally low, they can do better by saving the oil for the future than by selling it today and investing the proceeds. Holding back production raises today's oil price, to a point where the expected future return on oil has fallen to the same level as the interest rate. All of which leads me to conclude that if high oil prices act like a natural carbon tax, in terms of bringing down demand, then financial incentives act a bit like a natural carbon cap, in terms of bringing down the amount of investment and production in the oil industry as a whole. It's just that at the moment, the financial benefits of these decisions go entirely to oil-producing nations and to the shareholders of big oil companies. If we implemented a carbon tax or a cap-and-trade system, everybody could get some of the upside. _______________________ Felix Salmon arrived in the United States in 1997 from England, where he worked at Euromoney magazine. He also wrote daily commentary on Latin American markets for the former news service Bridge News, freelanced for a variety of publications, helped set up the New York bureau of a financial website, and created the Economonitor blog for Roubini Global Economics. He has been blogging since 1999 and now writes the Market Movers blog for Portfolio.com.