TheChek News Flow

And it’s a problem that even the Labor Department was having trouble figuring out on Friday.

Wall Street, of course, loved the 321,000 new jobs that Labor said were created in November. And I’m sure people looking for a job were equally thrilled. Hell, I was giddy until I dug deeper into the figures.

As it turns out, last month’s job growth was much more ordinary than the headline figure would have you believe — and it all lies with the seasonal adjustments Uncle Sam sprinkles onto all its data.

Government computer programs take into account seasonal abnormalities — like teaching jobs that stop in the summer and students who find jobs in the summer — so that the numbers don’t jump all over the place.

Nothing wrong there.

The “not seasonally adjusted” data are the raw, unadulterated numbers.

But take a look at November 2013 jobs data and last month’s data.

The raw, unadjusted data from Labor showed that 523,000 new jobs were created in November 2013. After that figure was seasonally adjusted, the growth was reduced to 203,000.

The raw, unadjusted numbers reported Friday showed 497,000 new jobs — or 26,000 less than last year’s 523,000 raw number. Yet, this November’s adjustment resulted in a headline figure of 321,000 — or a whopping 118,000 more than last year.

If the seasonal adjustments stayed consistent Friday’s growth should have been less than last year’s 203,000!

I called Labor and checked my figures. An economist there said they were still working on an explanation and that I wasn’t the only one who asked. She said the problem might be because there wasn’t a consistent number of weeks for the survey between this year and 2013.

“This was a big question last month too,” she said, before referring me to Labor’s PR people.

The Street’s high-speed stock traders are being dumped overboard as more layoffs and closures rock the thinning ranks of demoralized equity desks.

Slammed by stricter regulatory enforcement and mediocre volume, the US electronic stock-trading business continues to retrench — and it’s taking down some high-profile stars.

Citigroup is one of the latest victims. Last week, the bank confirmed its plan to shut down its private electronic stock-trading network, LavaFlow ECN, early next year.

LavaFlow agreed to pay the Securities and Exchange Commission $5 million, including a $2.85 million penalty, on charges it failed to protect sensitive information. And this past October, Wells Fargo said it was shuttering its “dark pool” alternative trading system (ATS).

Both Citi and Wells cited practical business realities for their exit. But people familiar with the markets said they aren’t fooled — the intense US regulatory focus on high-frequency trading played into the Citi and Wells decisions, they said.

“What do you expect them to say?” one well-connected trading exec, who does not work for either Citi or Wells, told The Post. “My experience is that a regulatory action does cause Citi to look at a business line and ask, is it really important enough to take the extra scrutiny from regulators and the media?”

There’s another open wound. Even as the Dow hits record highs, stock-trading volume has contracted sharply since peaking in 2009.

High-frequency traders then accounted for 61 percent of overall trading activity, compared with under 50 percent today, according to the Tabb Group.

Hundreds of once-highly paid stock traders have been made redundant as margins, subdued volatility and lower volume crimp profitability. “Unless a big uptick in volume comes along, I could see where certain ATSs may find themselves squeezed further — and having to scale back their operations and headcount,” said George Hessler, CEO of the Deep Liquidity ATS, which is bravely expecting to launch next year.

The two high-speed ATS operators are small fry compared to the largest, Credit Suisse’s dark pool, which can bang out well over 300 million shares in a good week.

Wells was happy to eke out 7 million to 8 million shares weekly. But the slaughter is across the board. The giant BATS Global Markets, reportedly facing a record $12 million to $13 million fine over how it handled customer orders, is planning to fire 56 workers in the New Year.

BATS’ former president, William O’Brien, left under a cloud last summer as the SEC investigated potentially lethal “orders types” offered by Direct Edge and others, including the New York Stock Exchange. (Direct Edge merged with BATS last year.)

Street execs say law enforcement is sapping morale — and resources. High-speed traders are accused of ripping off ordinary investors with complex business practices and dodgy arrangements. “The regulatory efforts on market fairness and best trade execution are only now beginning to catch up as a result of being back-burned due to significant work with Dodd-Frank and other congressionally mandated initiatives,” said industry consultant Chris Nagy.

Investigations have cut a broad swath. Credit Suisse has come under the microscope. The Financial Industry Regulatory Authority fined Goldman Sachs $800,000 for failure to prevent so-called trade-throughs on its SIGMA X alternative trading system. Goldman returned $1.67 million to customers. New York Attorney General Eric Schneiderman has sued Barclays on allegations of questionable favoritism toward high-speed traders in its dark pool. And SEC Chairwoman Mary Jo White entered the fray last summer, targeting these gunslingers for stepped-up enforcement.

Some firms have reshuffled management in light of the tougher environment. Last week saw the departure of Jose Marques, global head of electronic equity execution at Deutsche Bank in New York. The bank declined comment. UBS, seeking to bolster its global equities business, is transferring Mike Stewart, its current head, to a new role in wealth management in January.

“As the number of broker dealers and trading volume have declined over the past several years, regulation continues to be a growth area — it’s a curious thing,” said the New York-based Hessler. “Maybe eventually we will need to take a look at the proper amount of regulation given the current market maturity and volumes.”

The Street’s high-speed stock traders are being dumped overboard as more layoffs and closures rock the thinning ranks of demoralized equity desks.

Slammed by stricter regulatory enforcement and mediocre volume, the US electronic stock-trading business continues to retrench — and it’s taking down some high-profile stars.

Citigroup is one of the latest victims. Last week, the bank confirmed its plan to shut down its private electronic stock-trading network, LavaFlow ECN, early next year.

LavaFlow agreed to pay the Securities and Exchange Commission $5 million, including a $2.85 million penalty, on charges it failed to protect sensitive information. And this past October, Wells Fargo said it was shuttering its “dark pool” alternative trading system (ATS).

Both Citi and Wells cited practical business realities for their exit. But people familiar with the markets said they aren’t fooled — the intense US regulatory focus on high-frequency trading played into the Citi and Wells decisions, they said.

“What do you expect them to say?” one well-connected trading exec, who does not work for either Citi or Wells, told The Post. “My experience is that a regulatory action does cause Citi to look at a business line and ask, is it really important enough to take the extra scrutiny from regulators and the media?”

There’s another open wound. Even as the Dow hits record highs, stock-trading volume has contracted sharply since peaking in 2009.

High-frequency traders then accounted for 61 percent of overall trading activity, compared with under 50 percent today, according to the Tabb Group.

Hundreds of once-highly paid stock traders have been made redundant as margins, subdued volatility and lower volume crimp profitability. “Unless a big uptick in volume comes along, I could see where certain ATSs may find themselves squeezed further — and having to scale back their operations and headcount,” said George Hessler, CEO of the Deep Liquidity ATS, which is bravely expecting to launch next year.

The two high-speed ATS operators are small fry compared to the largest, Credit Suisse’s dark pool, which can bang out well over 300 million shares in a good week.

Wells was happy to eke out 7 million to 8 million shares weekly. But the slaughter is across the board. The giant BATS Global Markets, reportedly facing a record $12 million to $13 million fine over how it handled customer orders, is planning to fire 56 workers in the New Year.

BATS’ former president, William O’Brien, left under a cloud last summer as the SEC investigated potentially lethal “orders types” offered by Direct Edge and others, including the New York Stock Exchange. (Direct Edge merged with BATS last year.)

Street execs say law enforcement is sapping morale — and resources. High-speed traders are accused of ripping off ordinary investors with complex business practices and dodgy arrangements. “The regulatory efforts on market fairness and best trade execution are only now beginning to catch up as a result of being back-burned due to significant work with Dodd-Frank and other congressionally mandated initiatives,” said industry consultant Chris Nagy.

Investigations have cut a broad swath. Credit Suisse has come under the microscope. The Financial Industry Regulatory Authority fined Goldman Sachs $800,000 for failure to prevent so-called trade-throughs on its SIGMA X alternative trading system. Goldman returned $1.67 million to customers. New York Attorney General Eric Schneiderman has sued Barclays on allegations of questionable favoritism toward high-speed traders in its dark pool. And SEC Chairwoman Mary Jo White entered the fray last summer, targeting these gunslingers for stepped-up enforcement.

Some firms have reshuffled management in light of the tougher environment. Last week saw the departure of Jose Marques, global head of electronic equity execution at Deutsche Bank in New York. The bank declined comment. UBS, seeking to bolster its global equities business, is transferring Mike Stewart, its current head, to a new role in wealth management in January.

“As the number of broker dealers and trading volume have declined over the past several years, regulation continues to be a growth area — it’s a curious thing,” said the New York-based Hessler. “Maybe eventually we will need to take a look at the proper amount of regulation given the current market maturity and volumes.”

Including this round, Instacart has raised a total of $154.8 million with other investors that include Andreessen Horowitz, Sequoia, Khosla Ventures, Canaan Partners, Y Combinator boss Sam Altman and Box founder Aaron Levie.

We’re still working on verifying the lead investor, but at this time, sources indicate that Kleiner Perkins is in the driver’s seat. We heard rumors that KPCB took a look at Instacart during its last fund raise, which was led by Andreessen Horowitz instead.

Instacart launched two years ago to become the Uber of grocery delivery. Users choose a grocery store, shop for items, and get on-demand delivery of those items within an hour, either from their phones or the company’s website.

It’s an idea that has caught on with consumers, and Instacart has been growing rapidly over the last year. As of June 2014, Instacart was operational in 10 cities across the United States, showing 15x revenue growth. Given two huge cash infusions and the spiked valuation, it’s fair to imagine it will continue to grow aggressively.

But so does the competitive landscape.

A number of services offer an alternative to Instacart, though the SF-based startup does seem to have the lead with regards to newer companies.

FreshDirect has been around for quite some time, though doesn’t offer the same immediacy as Instacart. Meanwhile, everything-on-demand services like WunWun function rather well as an instant grocery delivery service. Plus, Amazon is throwing its hat into the ring with AmazonFresh, which has already launched in a few big markets.

That said, investors have been pouring a huge amount of funding into startups showing high growth. The biggest is Uber, which just announced it closed an additional $1.2 billion in funding at a $40 billion valuation. Stripe also raised $70 million in a recent deal that values it at $3.5 billion.

We reached out to Instacart and Kleiner Perkins, but haven’t heard anything back at the time of publishing. We’ll update you if we do.

The activist investment fund Crystal Amber is planning to take a shareholding in the listed UK-based supermarket group J Sainsbury, The Sunday Telegraph reported. The newspaper said Crystal Amber is in discussions with several overseas investors regarding a plan to acquire a substantial shareholding in J Sainsbury, but did not cite a source for the claim.

Crystal Amber is understood to believe that a group of activist investors could either force J Sainsbury to make substantial property disposals or prompt a takeover bid for the supermarket operator, the item said. Crystal Amber’s main objective is to engineer a takeover bid for J Sainsbury, but as it lacks the financial resources to push for change, the activist fund is looking to persuade other similar investors to acquire stakes, the report added.

It is believed that a US investor approached Crystal Amber this year with a view to buying a shareholding in J Sainsbury, the article said. Following those discussions, Crystal Amber is thinking about buying a stake worth an eight-figure sum, the item continued, adding that the investment firm could make its move early next year.

Crystal Amber has put together an extensive dossier on strategic options to that J Sainsbury could consider. Sources cited by the newspaper said the dossier argues that, absent a takeover offer, the best option for J Sainsbury would be a sale and leaseback deal.

It is understood that Crystal Amber thinks J Sainsbury could return up to GBP 2.25bn (EUR 2.85bn) to shareholders if it was to cut its ownership of its close to GBP 12bn property estate from 61% to 51% and increase its net debt to GBP 2.7bn, the item said.

Crystal Amber confirmed that it had put together a dossier on J Sainsbury but refused to comment about whether it has bought or is thinking about buying shares in the supermarket group, according to the report.

As previously reported, the government of Qatar failed in a 600p per share bid approach for J Sainsbury in 2007 that valued the target at GBP 10.6bn. The Qatar government still holds a stake just short of 26% in J Sainsbury, the item said.

J Sainsbury’s share price closed 4.9p at 238.3p in London on Friday, 5 December, giving the company a market capitalisation of GBP 4.56bn.

Sunday Telegraph

Pressure on European equities from more dismal economic data is shaping up to be a cloud with a silver lining for investors. In a week when euro-zone inflation slipped further below the European Central Bank’s target, oil fell under $70 a barrel, and manufacturing prices slid again, the Stoxx Europe 600 flirted with its highest level since the financial crisis.

The reason? Investors were betting that the euro zone’s mounting pain would stir the ECB to find ways to ease monetary conditions. Those hopes took a knock after the ECB governing council meeting Thursday. The ECB left rates unchanged and President Mario Draghi said it wouldn’t know until early 2015 if more effort was needed to combat ultra-low inflation.

Few expected immediate action. At least one ECB member had already signaled that time was needed to test the current policy. What investors really wanted was evidence that they and Draghi were on the same page and that the ECB would go further than its September plan to boost inflation by buying asset-backed securities and covered bonds. Draghi said the council had considered quantitative easing, but that wasn’t as positive as some investors had hoped and the Stoxx Europe 600 fell Thursday, ending down 1.3%. Over the week, the index was up 1%. More significantly, the euro rose against the dollar after Draghi’s comments, having touched a two-year low beforehand.

Graham Secker, Morgan Stanley’s head of pan-European equity strategy, says investors have reasons to be optimistic going into 2015, despite his forecast of a modest economic rebound. “From our perspective, we feel there is a materially higher probability of the macro news flow getting moderately better rather than worse, certainly over the next couple of quarters,” he says. This would favor cyclical stocks over defensive plays, which have been in favor in the last six months. Falling oil and metals prices—though bad for the ECB’s inflation target—will cut input costs, helping offset margin pressure.

ECB MONETARY POLICY WILL LIKELY keep the euro low for some time, which Morgan Stanley says will be good for euro-zone businesses with a high proportion of revenue from outside the currency bloc. Among those are two French companies: optical lens maker Essilor International (ticker: EI.France) and electrical business Schneider Electric (SU.France).

HSBC analyst Antoine Belge has Essilor at Overweight with a target price of 104 euros ($129.04). He estimates its price/earnings ratio at 29.7 this year, 24.2 in 2015, and 21.7 in 2016 and puts the stock’s potential return at 19.5%. In 2013 Essilor acquired the 51% in Transitions Optical it didn’t own and 100% of sun-lenses maker Intercast for $1.86 billion. By pumping some savings from Transitions into marketing, says Belge, Essilor should achieve organic sales growth of 5% next year. Essilor’s stock closed at €92.56 on Friday.

Exane BNP Paribas analyst Olivier Esnou has Schneider at Neutral with a €62 target price. He sees the P/E at 17.2 this year, falling to 15 in 2015, and 14.7 the year after. “We like Schneider for its high cash generation profile and safer business model relative to other large electricals,” he says. While concerned about pricing power, he likes its disciplined cost controls and focus on improving returns. Schneider’s stock closed at €63.54 on Friday.

Hawesko, the listed German wine trader, is talking to potential white knights, Boersen Zeitung reported. The paper noted that Haweso is looking for a white knight and asked Hawesko Chief and shareholder Alexander Margaritoff how far talks have progressed. Margaritoff told the German daily the company has attracted a lot of interest and the board is talking to lots of people.

Margaritoff restated he does not intend to tender his stake to Detlev Meyer's TOCOS Beteiligung investment company in the course of Meyer's takeover offer.

Boersen-Zeitung

Story

The Qatar Investment Authority (QIA) and Brookfield Property Partners are trying to persuade Songbird Estates shareholders China Investment Corporation (CIC) or Morgan Stanley to back their joint offer for the listed UK-based property company, The Sunday Times reported. QIA and Brookfield are thought to have made approaches to both CIC and Morgan Stanley as well as to Songbird’s third largest shareholder Simon Glick, the newspaper said, without citing a source for the claim.

Songbird’s board rejected QIA and Brookfield’s improved offer of GBP 2.6bn (EUR 3.30bn) last week, the item noted.

QIA owns a stake just short of 29% in Songbird, the item noted.

QIA and Brookfield have been informed that they must make representations to Songbird shareholders via its board, according to the report.

It is believed that both Glick and CIC were antagonized by QIA and Brookfield’s bid approach, the item said.

The report went on to cite a source close to Glick who said no UK real estate group would consider selling for a valuation below its net asset value. Songbird has valued itself at 381p, the article noted. QIA and Brookfield’s final offer values Songbird at 350p.

Songbird Estates’ share price closed 8p up at 338.0p in London on Friday, 5 December, valuing the company at GBP 2.50bn.

Sunday Times