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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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bellwether: noun
1. a wether or other male sheep that leads the flock, usually bearing a bell. 2. a person or thing that assumes the leadership or forefront, as of a profession or industry: Paris is a bellwether of the fashion industry. 3. a person or thing that shows the existence or direction of a trend; index. 4. a person who leads a mob, mutiny, conspiracy, or the like; ringleader.The Mad Hedgie writes: "In fact, 20% of the jobless are getting rehired in only six weeks" - you call it "good news"? AFAIK, thsoe who don't get job within 6 weeks likely will not have a job after 6 month. Anyway before calling the 20% "good", how does this 20% compare with the pre-bubble average? What % of newly unemployed accepted job offers within 6 weeks in the 80, and early 90s?
The Hedgie also says: "America is clawing its way up the value chain in the global race for economic supremacy" Are you sure about that? Are we really "clawing up" or sliding down less fast? Because net high tech and white color jobs are NOT increasing.
Increases in Health Care and Finance employment? These are parasitic jobs that suck investment from productive sources.
This is not good news!
Where are all these "bearish" investors? Everyone and their brother are uber bullish now and expect job numbers going forward to be much better. Is this a joke piece or something??
Gallop says unemployed and underemployed at 19.8%
U6 from 16.5% to 16.7% unemployment
Forecasting 20% decline in manufacturing jobs over the next 5 years.
Non seasonally adjusted UE now 17.9%
Emergency Claims up 207,000. Now 5.7 million from 5.5 million. Benefits now extended from 27 weeks to 99 weeks
Record numbers under 30 unemployed who are moving back home and delaying starting a family. No need for starter homes, appliances, etc.
Record numbers over 60 delaying retirement who are saving rather than spending.
Move along no problems here
is it true that in 1980 banks and insurance companies were 5% of gdp and now they are 25%? or did i read that somewhere else?
after the all the taxes you pay, these parasites take pretty much what's left of your hard earned cash.
still i guess we have american idol and pro sports to keep us happy...
this country is fucked and people like the mad hedge fund trader are parasites not patriots.
a recovery - who for, the cunts who are already loaded thats who...
fuck off back to the hole you emerged from you smug wanker.
You are aware that in 2005 only 28% of Americans aged 26-64 had a four year or higher college degree ? And 85% had a high school diploma ? Do you see the problem ? If 16% of the 72% (with just HS diplomas)are unemployed and 4.5% of the 28%, the numbers you are talking about aren't impressive at all .
Ain't it wonderful..now they raise UC rates by 32%, and others by lord knows how much...pretty soon no one but Goldman Sachs kids can afford an education. Keep higher education out of the reach of the riff raff, and there you have it!
We are too damn smart to have this takeover happen. We have the interactive audio/visual, same as being there internet connection! Use it!
Why the hell is U6 still at 17.9% unemployment??? My observation is that the System is geared towards Socialism for the NY Banksters, Darwinism for everyone else!
MHFT answered a work from home ad
I don't see how there can be anything but "good news" in numbers that result from telephone surveys by BLS employees with very specific marching orders.
Alas, they didn't call my house. I not only have a college degree, but I have a graduate degree with decades of experience (mature worker) and I cannot find a job. I live in a relatively affluent community of about 900k people but there is no work. None. The "Help Wanted" section during the week may have 5-10 jobs listed. The Sunday paper has more listings but most are healthcare related (for which I don't have the training) or they are sales jobs with no benefits. (Like selling credit card payment systems.)
I would like to believe things are getting better but when I look around and talk to people it seems quite the opposite.
leo is hiring
har har har har har
Thank you. I thought I was the only one.
BTW - I am not officially "unemployed" since I never qualified for UI.
Tarp effect at :19 - Monetary policy at :23
Where's that bowl of kool aid?
You, sir, are the reason I will never, ever, ever, trust "money managers." You guys are freaking delusional. Unreal.
This is such a completely bogus post. It is especially telling that the blogger mentions a stat course he had from Robert Reich. I would give him a followup academic assignment:
Go back and read the news when Reich was Sec'y. of Commerce under Clinton, and read how clueless he was about all those "jobless recoveries" we had during the Clinton years (and yes, I know he claims to have created 23 million jobs, but they were 22.3 million temp jobs not lasting a year or more, while only 700,000 actually lasted up to and over a year).
Now the fellow at the post below has gotten IT!
http://vituscapital.blogspot.com/2010/03/banks-arent-lending-issue-once-more.html
it's all about privatization-securitization, then running off with the money.
There is no economy.....
for you to be right we have to assume that the BLS birth/death adj of nearly 100k [97k] is not BS ... so far they haven't exactly been reliable ... but its possible.
for you to be right we have to assume that the BLS seasonal adjustments aren't BS ... as they have been lately ... U3 from 10.4 to 9.7 ... U6 from 17.9 to 16.8 ... but its possible.
for you to be right we have to assume that the federal income tax with-holdings, which continue to decline, are wrong; i.e. the various employers aren't with-holding taxes OR that the tax incentives are so great as to offset them ... which is possible, but disastrous.
for you to be right, the really great same-store sales retail numbers [compared to last february!] can't be pumped-up by having fewer stores [all of those closed in the last year] or by income tax refunds [and lets face it, there are LOTS of refunds this year!] ... but its all possible, i suppose.
for you to be right we have to assume that the states sales tax receipts, which continue to decline, are wrong ... but its possible.
for you to be right, we have to stop seeing so much of what is detailed here ... http://www.dailyjobcuts.com/ ... but its possible.
for you to be right, the shrinking and depreciating middle-class of the USA must stop pouring every last available devalued penny into de-levering [and they need to keep paying their mortgages while they're at it, unlike current reporting suggests is happening] ... but while thats a terribly horribly awful idea, its possible.
for you to be right, we can't have any more sovereign debt [PIIGS, USA, GB, dubai, CA, IL, NJ, AZ, FL, etc] crises and the global CDS and other derivatives ... which above $50t is greater than the entirety of the global economy ... can't explode as they've already done more than once [LTCM ...?] ... bit its certainly possible ... or at least concealable, sort of.
now ... NONE of what i detailed above in any way means that we can't or won't see the reports you suggest. after all .. the sheer number of fabrications out of the federal gov't, esp the BLS, are staggering. you know ... like the dramatic improvement a month or so ago when just about every female in her 20's seemed to find two or three jobs. so ... its all certainly possible ... and today's gunning of the futures to gap up around resistance and short-covering action demonstrates that its not merely possible but not remotely unlikely.
of course we [try to] trade the markets, not reality.
cheers
perfect antidote, thank you.
I never post but I have to on this one.
You are not taking into account the economy itself. You cannot print money ad nauseum.
Have you factored in:
the states will have to fire people eventually- a lot of people. My state is over one BILLION in debt. The government rescued us this year.
Gas prices are rising- a tax.
Taxes are and will be increasing.
Debt payments will increase a lot over the next few years.
What banks what health care? What are you talking about. Less mortgages, less loans commercial and otherwise. Less people needed.
Health care-hospitals are barely making it. Who are they hiring?
Doctors are being payed less.
Taking away the stimulus eventually- yeah right.
So unless you expect a bubble repeat. Rinse repeat.
They know that, silly. They are busily preparing the rollout of ad infinitum. First you retch, then you die with an empty stomach.
We are in the middle of a bubble, and have been since March 18th of last year. It is a Fed liquidity bubble, brought on by 1.5T of newly printed paper being pushed into the economy via MBS purchases. For every dollar the Fed prints to buy MBS, that is a dollar that is created into the economy.
In many ways the bubble in the economy today is bigger than in 2007. Except when this one bursts, it won't be select companies failing.
you're absolutely mad, mad i tell you. Oh, i guess you already know, cause its in your name.
unbelievable number of typos in this piece. almost unreadable.
Another way to describe the barbell is to say that you have a large problem with structural unemployment that aint disappearing anytime soon and a temporary problem with cyclical unemploymen that will.
As for your value chain, just 33% of entrants to the job market are in the position of having a college degree (thats 2% below the developed world average)
So you got a lot of ball and not much chain sweetie. YoY numbers can do what they like, some people aint going back to work and the natural rate of unemployment will rise in a post credit world.
Great points!
We are still at the very beginning of The GREAT Deleveraging...
Hmmm, I'll freely admit to not being the brightest guy in here, but line U-6 shows at 18% unadjusted. That means that roughly 82% of the work force has a full time job.
Men have taken the brunt of the job losses and now women outnumber men in the work force, and get paid less. Wages have gone nowhere for a decade in real terms, and benefits have been cut. So overall compensation, excluding bankers, is down, and not enough to support past spending and debt loads, excluding bankers.
More workers are getting reduced work weeks especially at local government levels. And a lot of self employed types who went bust don't show up in the BLS data tables as unemployed, right?
So maybe we see a bump in the headline numbers, but of much lower quality than past recoveries. I don't see reason for bullish enthusiasm here, even if the numbers do come in stronger. But like I said, I'm not the brightest bulb lighting this place up.
wages have gone nowhere in real terms since 1973
Its the bright bulbs that scare me. They all work in finance and their primary point of brilliance is deception. Where did all the illegals go? When they start coming back, I'll start believing the lies.
if you look at all the U numbers, you see the trend, and the trend is up. government employees are the line in the sand, and that has been especially brutal, teachers mostly. if the administration did achieve meaningful healthcare reform we could say goodbye to more jobs. not to mention government employees with no colas for the last several years. the worst is yet to come. oh and we could end the war in Iraq and Afghanistan too.
Sorry, I remain skeptical about the accuracy/legitimacy of jobs data based on the methodology used for the reports.
I would put actual job losses for the month at:
-36,000 number so massaged and jerked to be meaningless
-15,000 census workers working a few weeks to a few months
-97,000 number of imaginary jobs the CES agency created out
I would put actual job losses for the month at:
-36,000 number so massaged and jerked to be meaningless
-15,000 census workers working a few weeks to a few months
-97,000 number of imaginary jobs the CES agency created out
you speakum with forked tounge
The next two months will show massive positive job gains, due to the fact the census is hiring over 1 Million people over the next couple of months. Of course, those same jobs are going to go away 12-15 weeks later; so it will be important to back those numbers out - of course the mainstream media won't - so be prepared for "huge job gains in March and April".
Looking at Feb., job losses were 36K, but the birth/death model added 97k (which are mostly phantom/non-existant jobs). So, net-net, we probably really lost 100k jobs last month, when we needed to create about 150K just to keep up w/population gain.
Still, a 250k negative job spread is still better than we've seen in prior months, so I'd have to read the report as a positive.
Whoa there, don't step in front of the happy days bus! "When Mr. Bigglesworth gets upset Mr. Bigglesworth gets angry and when Mr. Bigglesworth gets angry people DIE."
don't forget the census already added 15k jobs in Feb, so those need to be backed out too.
Dearest MHFT:
You really should READ the labor dept report on employment.
It clearly says that there was no noticable effect from winter weather in the survey, but what there was was likely a temporary GAIN in workers to clean up the mess.
Just read the report. Alert: you don't know your ass from your elbow.
which explains why most of the gains were in the 16-24yr old group. One would hope jobs would come back after all this stimulus but it will take years for slack in the labor markets to go away. You need 100-150k per month in job creation just to keep up with labor force growth. In the meantime, weekly jobless claims have edged back up.
Let the risk guys have their fun. Will end in tears. Consumer still needs to delever big time and last I checked they were still 70 percent of gdp.
zit faced keynesian junkies
reminds us of the guy that jumps off a multi-story building and as he passes each floor on the way down is heard to be saying, “So far, so good.”
"That was Wilkins. Bet you Parkinson's next."
http://www.youtube.com/watch?v=iVk22RGXIUM&feature=related
Ah yes, good one, thanks.
- here's one, 2009 was completely off the charts...2010 may be a bell ringer!!
http://www.thehorizonproject.com/earthquakes.cfm
Look out San Francisco / L.A.
Swing big, miss a lot, hit a home run here and there, proclaim self to be genius.
a home run .. with 20 feet away fences
load the backend .. frudge the numbers ,, give it a shove here and their ,, and a few of the obviously economic keynesians will think that debt ,, monetary window dressing will an economy make
bullshitsky lol
seriously, the mad hedge fund trader must be on crack. not good for an old man...
"...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."
So what the economy is telling us... Construction, not important. Finance and accounting, critical?!!
If this is true, it is due to an imbalance. The same imbalance that existed during the last two bubbles. Caused by the same forces. Creating new bubbles.
+100
The FIRE Economy is dead - long live the FI Economy!