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Is a Big Global Risk Reversal At Hand?
The February non-farm payroll showed a further loss of 36,000 jobs, versus an expected loss of 75,000, and the unemployment rate remained unchanged at 9.7%. December was revised up by 41,000 and January was revised down by 6,000, so netting everything out there was essentially no change. Those hired now exactly equal those fired, about 3 million a month. There were continued big losses in construction, and decent gains in temps.
This month I decided to put to use former Labor Secretary Robert Reich’s course on labor statistics which I took at UC Berkeley, and dig through the supporting data at the Bureau of Labor Statistics website (click here for the link at http://www.bls.gov/ ). Something amazing is happening. There is a barbell effect in the labor markets which few seem to see, which is rendering the aggregate payroll figures meaningless.
There is a barbell effect taking place, where the 40% who have been jobless for more than six months, who worked in the bubble industries of real estate, housing, and construction, are never going to see their jobs come back. The 60% who are short term unemployed, who recently lost jobs in finance, accounting, and health care, are getting rehired very quickly. In fact, 20% of the jobless are getting rehired in only six weeks.
There is another effect at work. While the employment rate is for those with no high school diploma is 16%, the kind of worker who lost their manufacturing jobs to China, the jobless rate for those with college degrees is only 4.5%. This is proof that the dying sectors of the US economy that is delivering the highest unemployment rates, and that America is clawing its way up the value chain in the global race for economic supremacy. The bottom line is that payroll figures are much better than they appear at first glance. Alert: the markets don’t know this.
The financial markets had been expecting dire payroll numbers, thanks to the huge snow storms that hit the East. I am going to go way out on a limb here and bet that the snow will be gone by June. In fact, without the snow, the February number could have been as high as a positive 100,000, and that we may actually see this in the March figures to be released in a month.
I think the report is spectacularly good news, because it suggests that the rise in jobless claims and unemployment is now at its apex, and is about to reverse and return to earth. Mind you, we aren’t going back to 5% unemployment anytime soon, but any number showing job gains will have a hugely positive psychological effect.
It will be an improvement that the markets don’t expect, don’t believe in, and therefore will catch them seriously off guard. This means that the global risk reversal trade that started on January 11 may be over, and that big hedge funds are about to start adding on positions across the entire range of financial instruments.
That great bell weather of global risk taking, the Euro/Yen cross is telling us as much, having popped from ¥120 to ¥123.5 on the payroll news. You also see this in the Ausie/Yen cross, and outright yen markets. Those who managed to catch my recommendation to short the yen at ¥88.40 on Thursday bagged an instant profit of ¥2.
This numbers are good news for stocks and emerging markets, although I don’t expect to see huge gains. Focus on big cap technology. It will juice commodities, oil, and precious metals. These numbers also put another nail in the coffin of the 30 year Treasury bond, which I have been despising all year.
For more iconoclastic and out of consensus analysis, you can always visit me at www.madhedgefundtrader.com , where the conventional wisdom is mercilessly flailed and tortured daily, or listen to me on Hedge Fund Radio at http://www.madhedgefundtrader.biz/ .
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MHFT you are an ass.
Sometimes in the chat-room I frequent, a nOOb trader who is
watching the 1min chart will say excitedly, "wow look, the
trend is changing, it's going up!!!"... :)
It is good to see the common man have his guard up. Skepticism is healthy and the recent problems have paid large dividends in the level of awareness the average guy has to the machinations of oligarchy.
Seeing comments like this make me bullish on hope for the future for truly skepticism of oligarchy is the fundamental commodity of short supply needed for the middle and lower classes to have a hope!
Some great news in the bad news I say!
It is good to see the common man have his guard up. Skepticism is healthy and the recent problems have paid large dividends in the level of awareness the average guy has to the machinations of oligarchy.
Seeing comments like this make me bullish on hope for the future for truly skepticism of oligarchy is the fundamental commodity of short supply needed for the middle and lower classes to have a hope!
Some great news in the bad news I say!
It is good to see the common man have his guard up. Skepticism is healthy and the recent problems have paid large dividends in the level of awareness the average guy has to the machinations of oligarchy.
Seeing comments like this make me bullish on hope for the future for truly skepticism of oligarchy is the fundamental commodity of short supply needed for the middle and lower classes to have a hope!
Some great news in the bad news I say!
Businesses are hiring? Really? That's great. And, I am sure that those are all high paying jobs. Maybe they'll be able to save their houses and pay their car loans. Let's not forget about the credit cards, too. I am not seeing the glory here folks. The only way to make money is to risk it in gambling in market ups and downs. You can't go out and create a real business these days selling to robust consumers flush with after tax dollars. the consumers are spending stimulus money or money they have because they are failing to pay their mortgage. Hell, I'd feel rich if I didn't have to pay my California mortgage. Maybe I should invest in guns and bullets. What a bunch of crap.
Every comment here pointing out the hasty generalizations, lack of empirical thinking and dump truck sized holes in this post adds to the complacent smile(s) growing on the face of the author (mad is the operative word) and slavish minions like LK. When I read Leo's posts on pension problems and his piffling comments here I could swear there are actually two of him.
Anyway, despair not ye investors/punters of bearish bent! Hulbert Financial Digest says all the talk of uber bearishness is a complete fiction. Bulls have increased their numbers by an astounding 13+% in the last thirty days (Dow up 4%ish) and now stand at 62.8% (isn't that close to a Fibonacci number?). The rest can be found here for all your schadenfreude needs:
http://www.marketwatch.com/story/advisory-bullishness-reaching-too-high-...
At the risk of provoking the ire of some goldbugs, these guys were bang on when they similarly interpreted gold financial writer sentiment three months ago. This wasn't the first time newsletter sentiment called a top in the precious and it probably won't be the last. Those who choose to ignore the parabolic rise in equity newsletter sentiment do so at considerable peril if recent history is any guide!
And while a day does not a trend make, is that a nascent (sorry Mish) divergence I see in gold?
Surely nobody can be stupid enough to believe this ridiculous nonsense? And I even include MHFT in this, which means he must have some pretty dark motives for writing this bullshit.
Didn't we just revise down all of 2009 jobs by over 800K just a month ago? Quantative easing done (for a while) and mutual fund cash at an all time low. Now you have MadHedge Fund Trader and of course Leo bullish. These 2 represent the mentally challenged traders as does Jim Cramer and Larry Kudlow. Get a grip. As soon as option expiration is over as they use that week to put the last of the QE money to use, it's tits up.
The only green shoot is they're going to build inventory until we're tripping over it on the sidewalks. A boom for mall cops - keep the homeless from stealing packaged durables for the boxes.
Real or not, these are the numbers people trade on. Let's not forget the Fed is stuck with $1.25 Trillion in toxic mbs that they must dump on the last suckers left. And let's face, there are still plenty out there if the market goes much higher from here. Therefore, investors must believe, even if only temporarily, in a real recovery. The Gov/Fed/Treasury (i.e. Banksters) will do everything in their power to make sure the MOPE doesn't stop until they've offloaded all the crap they are holding. That means making all the stats create a perception of a recovery in jobs and spending and enticing investors to get invested so as not to miss the new bull market. It doesn't matter if these are real numbers or not. The Gov and Fed will lie and lie some more to keep the ponzi going as long as possible. Most of us have already figured that out. The only question is, "Can they pull it off?"
Ruby
TLDR
Anyone who has read this entire thread or scrolled down to this posting is a fucking idiot, for or against MHFT, LEO, and all the other charlatan posers.
The answer to everything and anything is to fuck over and step on as many people as necessary to get to the finish line. Who gets there first is the winner.
Then, you die. THE END.
Bankers, lawyers, accountants, and medical insurance clerks make a "recovery"? Recovery to what? To an "economy" that doesn't produce anything, but just extracts interest, talks, rigs numbers, and looks up ways to tell people, "we can't do that"?
Thank you DUMPSTER. LOL
a dumpster in every garage,, live large ,, double up ..
i followed this mad hedge fund guy for some time and must tell you his musing are empty and useless like may i say piss in a wind. not even bother to reply to him, he is gonna write something again...
I can't use image tags, but this should be the correct icon for MHFT ....
http://cdn1.ioffer.com/img/item/703/977/46/hMc9gFmrbCS7pFS.jpg
MY COMPANY is in my garage. i have a B.Comm collect no benefits and live trading options (gambling).
i dont count as unemployed.
We have the claims of the above article, and then we have reality:
http://finance.yahoo.com/news/Congressional-estimates-show-apf-221676001...
There are two words we need to learn: unserviceable debt
There is one consequence we will know: default
I spoke to my UPS driver yesterday. He mentioned that they doubled up on his route because the number of packes being picked up/delivered have declined significantly in the last couple of weeks. They are also laying off 1,800 managment and administrative personnel. Drivers have already been cut significantly. http://www.upi.com/Business_News/2010/01/09/UPS-to-lay-off-1800-manageme... I'm just the owner of a small manufacturing business here in Silicon Valley so I probably don't know anything. But the last time my UPS driver complained about the big decline in shipments was in October 2008.
"The bottom line is that payroll figures are much better than they appear at first glance. Alert: the markets don’t know this."
I nominate this for the idiotic statement of the year. Anyone want to second the motion?
Based on reductions in Tax Collections at the State and City level, as well as the Federal Income tax revenue reductions....
I SECOND!
All in Favor?
second.
Obviously providing healthcare to aging boomers and skimming off their retirement assets, are two areas of future growth for the US economy.
US employment is really much better than it appears ??????? CIA ??? NSA ????? or just say no to drugs !!!!! one of the 3 is what i think !!!!!!!!!!!!
This post was a joke, right?
Yeah..great..so the usless paper pushing positons are coming back. When you have the US Govt/economy running the biggest Madoff like ponzi hedge fund, its no wonder jobs in finance and accounting are plentiful.
Rosy---Rosy is that you!?
i still see a lot of stupid people with money everyday... this shit has a looong way to go
Maybe if he wrote this Feb/Mar '09, he'd have more relevance.
The big question is when. There are serious cracks in the foundation of the domestic and global financial system and there is likely a day (or years) of reckoning in the future - but the last Fed rate-driven 'correction' in this secular bear market lasted for nearly 6 years ..... and all that money pumped into the system' has to go somewhere...
This continues to be all misdirection BS! Give the analysts numbers to analyze while the Treasury continues to be looted. QE, montized debt and turn the IB's loose to game all markets has been the strategy for almost a year now. Do any of you really think the data matters anymore? Does the phrase "Better than expected" not ring in your ears?!?!?
Hi there! Long time listner, first time caller.
Just had to chime in with a WTF. This is a very long winded version of something I'd expect to see on a Yahoo msg. board.
"Barbell effect" ?
"UE for those with a college degree is 4.5%" Nice way to play the number. How about UE rate for recent grads, those that are counted as being in the workforce that is.
Shite, pure shite.
The only thing that matters now is Gold, Guns, and Guillotines. Just an OPINION by the way........
So here's the sequence from the Fed's point of view:
1) Fed (owners) finishes buying up Treasuries via 3rd parties,
2) Fed collapses the Stock Market to scare everybody into buying their worthless Treasury and Dollar stash,
3) Fed buys up all the crumbling Dollar denominated commodities on the cheap,
4) Fed pulls the plug on Treasuries and the Dollar collapses along with every currency, every government, and every nation on earth,
5) Fed (owners) consolidates its power over the entire world.
You have nothing if you don't have production. Ravi Batra-297
Why snow made all those NFP numbers worse? If there was any influence it should've been positive, they hired a bunch of workers for clean-up. They try to say that all businesses wanted to hire workers exactly at the moment of snow storm and after that they changed their minds and never did?
I believe the current administration, which controls all of the DOL(BLS) and Commerce Dept numbers, said that unemployment would not exceed, as I recall 8ish something percent with the stimulus program.
I could say case closed but then someone who want more info and i'm kinda tired of quoting bernanke and greenspan for the last 20 yrs and for that matter, most of what politicians have said during economic/financial crises over the past several hundred years.
This time is not any different from others. This time is very similar to the (relatively few) major systemic bank crisis/debt crisis/ of the past 200 years.
It's a pop in a serious secular bear market. pretty simple really. it.has.happened.before.please.read.history.and.compare.
This post would have been good if it was dated 3/5/2009...where have you been my friend we just had a monster global risk reversal.
+100
What a bunch of baloney! The author is a smuck! He's just hyping the market on fake statistics so he and his buds can get out! The smart money knows we're on the cusp of a massive engineered collapse and they're getting out! Treasuries are being bought up by the Federal Reserve through third parties to make it look as if there are foreign buyers when in fact there are none. Nobody wants our debt, nobody is silly enough to think we can ever pay it back. For the Federal Reserve to get out of the position they have to collapse the stock market to scare the money back into Treasuries and the Dollar. When Dollar denominated commodities subsequently crumble the primary shareholders of Federal Reserve banking cartel will scoop them up for a song. Then they'll pull the plug on Treasuries revealing them for what they really are, empty promises, and the Dollar will collapse along with every currency, every government, and every nation-state on earth. Voila, move complete, the elites will have secured control of all remaining wealth consolidating their power over the entire world. They will have achieved their dream, absolute control over the entire human race to mould and to farm as they see fit in perpetuity.
Collapse in payrolls and income tax receipts calls bullshit on everything this idiot said
I want to know what kind of weed MHFT and Leo are smoking, 'cos that's about the only green shoots out there. Believing the BLS stats is the first sign of dementia...
Unemployment is no problem, the government will just create a million new jobs:
http://globaleconomicanalysis.blogspot.com/2010/01/2010-census-hiring-em...
Tumors keep growing even when the patient is dying.
So WAIT!
Reggie and the usual ZHers are right. We are just "reflating" and "inflating". Just building the next crisis. That is NOT A REAL RECOVERY. We all know that.
In 10-yrs... with US GDP at $30T, 2 great "tech" development bubbles behind us, amazing wealth development, and huge "inflation" returns to those willing to take risk...
Reggie and ZH will be "right" for 2 years of a serious downturn. They pop back up. Roubini will be 70 and have "called it" all along. Faber will be touting how one should be "buying Gold at $700 cuz its up 100% from $350/oz in the last 5 years". The SPX will drop to 2500, after cutting its divs from $100 to $90/shr.
And at that point, the next time you hear their names... get LOUD and get LONG.
Its that easy.
-BBH
"In fact, 20% of the jobless are getting rehired in only six weeks."
Would that not mean that 80% are NOT getting hired?
How is this good news?
Even if there is a barbell, there is a good side and a bad side. The way I see it the bad side stays bad till all overcapacity in cars, commercial real estate and housing works it self out. Not to mention consumer spending and the
US and Fed Balance sheet. The Government has been propping up the economy and they can't do it forever. God forbid what happens when rates go up. The Ferderal Budget will really go into the toilet. Equities are rising because all the sellers got out. Now there are no more sellers. just some buyers(And Shorts). All the Friends that I have in Manufacturing are either in China or going there. Even if they have 20 or 30 employees. The Unemployment rate is going to stay high for 3 to 5 years at least. Its a good time to work for the government.
Strange though we've been hearing that employment will be booming in the next quarters for the last 3 quarters. Yet where's the beef? With the last drops of stimulus and inventory correction dripping out the helmet could it be that we are at a crest of a wave and not its trough?
"While the employment rate is for those with no high school diploma is 16%, the kind of worker who lost their manufacturing jobs to China, the jobless rate for those with college degrees is only 4.5%." BLS Table A-4 Employment Status over 25 by ed attainment actually indicates that "UNEMPLOYMENT" for those with no high school diploma is 15.6% (up YoY from 13.0%) and for those with a bachelors or higher the "UNEMPLOYMENT" rate is 5.0% (up YoY from 4.2%). Table A-13 Unemployment by Occupation not seasonally adjusted indicates that unemployment rates are up and the number of employed are down in every occupational class except employment numbers are up slightly for professional and managerial occupations. So first, let's get the numbers right!! Then, celebration seems premature, does it not, or is there some fancy seasonal adjustment that will fix things?!
How bout this..I'll believe there is a real recovery when I'm paid a decent wage again and let you wizards fight about bullshit statistics till your all blue in the face.