BAD FOR WORKERS, GOOD FOR INFLATION

Nothing cheers investors like bad news on the job front. Initial jobless claims were up for the second straight week, setting inflation-watchers to turn a cartwheel or two outside unemployment compensation offices as 6,000 more people than expected — 305,000 — signed up.

The May numbers on job creation were right in line, up only 11,000, following April’s 343,000. The month’s unemployment rate, though, dropped a notch to 4.2%, lowest since Nixon’s first term.

Also keeping the number of cartwheels down was the retail report, which showed sales hopping at a cheery clip in May. Likewise, new home sales were boosted in April by low mortgage rates, up 9.8% for the second-mightiest monthly rate on record.

The bad news, of course, is that growing demand pushed prices up to record levels, which increased the Nervous Normans’ fear of inflation, which pushed bond rates down, which made mortgages even cheaper which. . .well, you, Rube Goldberg and Alan Greenspan can figure it out.

No wonderland

Speaking of the chairman of the Federal Reserve’s Board of Governors, he’s losing his right-hand woman. Yup, after three years, Alice Rivlin, 68, is heading back to the Brookings Institution as an economist of the plain-speaking variety. On the board she was an interest rate dove and strongly pro-growth, a talker of plain English as opposed to the hieratic locutions of the chairman.

The resignation leaves the seven-member board with two vacancies. Both of the departures were women, by the way, and the White House is doing background checks on Carol Parry of Chase Manhattan Corp. as a possible replacement.

Pilgrim’s progress?

In the suit department, a team led by Pilgrim Baxter & Associates co-founder Gary Pilgrim took over three of the four funds run by James McCall; Jeff Wrona took over the fourth. Mr. McCall is suing the Oaks, Pa., company to release him from his contract. The United Asset Management unit countersued, saying Mr. McCall was trying to violate a non-compete clause by taking a job at Merrill Lynch & Co. Inc.

As I wasn’t saying…

New York Stock Exchange chairman Richard Grasso appeared live on financial TV to say that night trading won’t start until halfway through a year with no nines. Mr. Grasso had set himself a quicker timetable last week, saying maybe next month, but then Nasdaq announced it would start night trading after Labor Day.

The announcement came after a unanimous vote by the Big Board’s board, he said. Mr. Grasso cited concerns about pricing stock in dollars and cents, rather than fractions, as well as the ubiquitous Y2K problem as things he should take care of first.

Funny, Arthur Levitt, chairman of the Securities and Exchange Commission, has been saying the same thing for a while now.

Virtual split

Over in the cyberaction aisle, Ameritrade Holding Corp., the No. 6 online broker, is splitting its stock for the second time in this middle-aged year, this time 3-for-1. The unsplit stock was trading around $80, up fourfold in ’99.

No. 2 virtual broker E*Trade is paying $1.8 billion in stock for Telebanc Financial Corp., the online bank. The Glass-Steagall Act must be caught in the World Wide Web.

Better watch out

Speaking of caught, the regulatory arm of the National Association of Security Dealers signed a $2 billion, 10-year deal with Electronic Data Systems Corp. to manage the computer systems that track what stockbrokers do.

“This way we can do risk profiling,” said Mary Schapiro, president of the unit that keeps one eye on 5,600 brokerages and another on 550,000 stockbrokers. “How risky is that firm to the investing public and to the financial system as a whole?”

Bet it won’t be as risky as it usta be.