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NFP Report - "It Sucked"
I suppose that the Non Farm Payroll report could have been worse than it was. But not much worse. Some
of the talking heads are calling the latest news a “soft patch”. Maybe
so. We shall see. My read is that the report was (more) clear evidence
that the economy is grinding down. The second half of this year is
likely to show only marginal growth. The June NFP was the tip off.
As is often the case, pictures tell the story better than words.
A recap of the NFP data. Note that there is no category that was not
under street expectations. Things are much worse in employment land than
anyone thought.
Labor force participation is now at levels not seen in a decade. A look
at this chart confirms that as of Friday it hit a new record low.
So why no jobs? Easy, we are not making as much “stuff”. Follows are
some regional indicators of economic performance. Yes, there are a few
“plusses” on the list but mostly it is flat to down. This chart and the
key underneath tells the story of the decline.
The best single gauge of manufacturing comes from the ISM. This is now
at 55. A fall below 50 would signal a contraction. Are we going to get
to that magic number? This chart suggests we might:
There are some conflicting signals in the credit market. If you believed that the Leading Indicators Index gives
a clue to the future you might get a “warm” feeling looking at the
following chart. The yield curve is now as steep as its been in a very
long time. Some economists will tell you that a steep curve is a sign of
an expanding economy. I take a different view. To me this
steepness is just a reflection 0f the fact that short-term rates are
stuck at zero because of continued Fed efforts to stimulate the economy.
I don’t see this chart as something to cheer about. To me it is
evidence that the bond market is becoming unglued.
This final chart poses an important question. It is very clear that the
correlation between stocks and bonds has broken down in the past few
months. Bonds have been (correctly) signaling a slowdown. Stocks, on the
other hand, have been oblivious to what the bond market is worrying
about. That can’t last in my opinion. Something will have to give.
Either stocks or bonds are mispricing what is going on in the summer of
2011. That, or another QE is right around the corner.
I'm in the camp that says, "the Fed’s hands are tied". There will
not be another big effort on the monetary front for the rest of the
year. The Fed has shot its wad and they have nothing left to shoot but
blanks. For me, the weak side of the equation is stocks.
We have three weeks left until 8/2 and the world blows up. The latest
NFP report might be the ticket to get a handshake deal between the
warring factions. I see a package coming that will include another big cut in FICA taxes.
The existing 2% reduction for workers will be extended for another
year. It is possible that it will be cut by another point or two. We
will also see a reduction in the rate that employers pay. They could get
a 2% break in a desperate effort to create some jobs.
It will be the ultimate joke if the biggest deficit reduction effort in
history results in an increase in the 2012 red ink by about $300 billion
due to the new cuts in payroll taxes. The joke will be on us. Minor/temporary
cuts in payroll taxes are not going to change the structural problems
the country faces. More debt (and bad faith) are not what the global
markets (and bond raters) are looking for.
Hulath concludes:
After
QE2, The Fed’s UST demand will be replaced by UST demand of market
participants who, again, and to their general surprise, find themselves
back in a deflationary, consumer deleveraging environment.
I disagree. If the big Deficit Reduction Plan of 2011 brings us a $2 trillion deficit (an increase of 300-400b versus current budget) for 2012, then all bets are off. I think bond buyers will go on strike if that is what we get.
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Workers, and unions, didn't begin to make any real headway in America until an unholy alliance was formed between the unions and the smaller ethnic criminal organizations (incorrectly referred to as organized crime, as the banksters have always been the supreme criminal organizations).
Until the bad guys once again begin blowing up in their cars, houses and offices, little will ever change.
Free Trade!
The word FREE is used to describe something that can not exist. It's an idea only, and never real. So the media sold the idea to the sheeple, and the corporations made more and more profits, as the jobs went outside the country. It's just like the Glass Steagall Act. We left the store to be minded by the press???
As of now, and where I live in the Marcellus shale region of PA, Chesapeake is hiring left and right, Bradford County has one of the lowest unemployment rates in PA, anything that gets cash in peoples pockets I support.
Just don't drink the frigging water there, doods.
Plenty of work, just don't drink the water.
"just don't drink the water."
Why? I live in the Barnett Shale. I have a well. Water samples always come back good for me. Is there something special about a well in Pennsylvania that makes it more susceptible to "whatever" evil you are talking about, as opposed to those in Texas?
The economy will not legitimately improve until after we get obama out of office and even then, even with the right replacement, it will take years to see health at the ground level. Massive damage has been done. obammer has stocked the infrastructure of government with wild eyed extremist who only ever dreamed of playing sims with a real nation...right up until obamer assigned them to do just that.
We basically have a bunch of campus radicals playing with a real country and the results are in your face.
13 year olds are running the show, and so naturally the adults are keeping their distance, waiting for everything to blow up before accepting the responibility to come in and clean up the mess.
ISEEIT, What the Fuck are you talking about dipshit? Do you remember the Great Recession that started in late 07/08?? Did Obama cause that fuck head? Seems your great hero Bush didnt want any financial regulations... The market will self regulate, give me a fucking break
ISEEIT, you're an idiot who knows even less about economics than you do about politics.
America has had an unbroken string of neocon administrations, from Reagan to the present.
Larry Summers, Timothy Geithner, and a bunch of others in the Obama administration were first appointed to the Geo. H.W. Bush administration.
All those consultants on Cheney's boy Poindexter's Total Information Awareness Project, have since been appointed to the Obama administration.
Get a brain, get a life, then begin to read a little, stooge!
Take a look at the June Employment-Population Ratio also: 58.2. It has bounced off 58.2 twice before in the last three years, and if it breaks below, it would be the lowest since late 1982. There will be no meaningful, lasting economic recovery with Labor-Pop and Employment-Pop ratios at generational lows. It's now (and has been for the last three years) all about the JOBS, and the Obama Administration's inability to attend to this issue, which polls far higher than deficits or debt ceilings, likely may be its undoing in 2012, as energy prices were the undoing of Jimmy Carter and taxes were the undoing of Bush 41.
Can somebody riddle me this?
What happens come August 2 if the debt ceiling is not raised and the country goes into technical default or shuts down? Does it really mean the end of the world?
What happens if the Treasury starts dumping gold wholesale immediately when the country goes into default as Timmy warns?
Pay attention to what's going on in Minnesota, that's the pols' dry run, or slight microcosm of what to expect.
The top one-tenth of one percent in North America gets richer, the rest of us will somehow, for some reason or other, some real, many manufactured, become more impoverished.
These fears are the result of years of psychological conditioning. You are naive to believe Timmy has not developed a laundry list of funds to plunder, both public and private. Its simply easier to cry wolf than chance pissing off yet another block of voters without the political cover of an unwilling republican party. Timmy's cries of impending doom are no different than Paulson's $700 billion blank check and Rumsfeld's WMDs. Dumbass American's fall for it every time.
Yea, and every single one of those plunderings occurred. Why wouldn't they plunder everything else? I'm doubtful at best of the apocalyptic outcome, but it certainly makes headlines. And headlines sell fear and fear opens the door to all sorts of theivery.
What gold?
I think the odds of no deal happening are virtually nil, but if it does happen then Goldman and the bunch will crash the stocket market so hard that the current opponents to increasing the ceiling will come out begging for more money printing to prop up their soon-to-be worthless fiat based 401(k) and pension plans. The people running the show are nothing if not smart. It's really easy to stand on principle until your retirement account drops by half.
I think you're exactly right. The best way to neuter the Tea Party zealouts and their debt ceiling nonsense is to halve their 401ks. Basically, we're damned if they do, damned if they don't.
"The people running the show are nothing if not smart."
I'm sick of hearing this bullshit. Einstein was smart. A genius.
The people running the show have proven that they are not unique and fatally corrupt. There is no genius in corruption.
While i agree with you in principle, i would add that Einstein also wasn't smart....... well, okay, perhaps smart in redefining and swapping terms, while keeping the maths intact... resulting in a theory that is the inverse of what it claims, yet the maths working just fine. I guess that requires some talent.
Hopefully the end of fraud/fiat money.
I see a lot of cheap gold being picked up by TBTF, while the UST being bankrupted.
Bruce, do you have any thoughts on this?
I'm not sure the TBTF are so big in gold. Nor do I think gold is cheap today. I actually don't think there will be a default.(but don't bet on it) I've said all along there will be some kind of deal on the last day.
We shall see.
Bruce,
And what about the Swizz passing the vote into parlement to back up their currency again with gold and coining a gold coin again to be put into circulation?
It's only 0,1gr content and sells as low as 4 euro a piece but it's circulating money with a actual value.
It mostly starts with one country and grows from there on out.
In that perspective, gold is cheap because it's not the weight that counts but the pressence.
"And what about the Swizz passing the vote into parlement to back up their currency again with gold"
I might be wrong on this - but I thought that the Swiss Franc (CHF) was already at least partially backed by gold (10%)?
I'm with you on the last minute deal. So this is probably all a moot point.
What I'm concerned with is the fire sale option should the impasse go on beyond Aug 2. Referring to Timmy's April 4th letter to congress, he mentions specifically that this option should not be considered. This is what worries me, as his track record of truthiness is quite inverted.
My concern is that while gold is certainly not cheap today, what would happen should almost $400 billion in bullion suddenly be on the market? Our overlords have already shown a complete willingness to sell whatever is under the roof in order to keep the music playing (SPR release, for example), so why wouldn't they do that?
Since when does physical supply have anything to do with spot price? What matters isn't so much how much is available, but if they want it cheap.
A big problem is large corporations have many jobs in China, read in Business Week that Huntsman Corporation has over 12,000 employees with only about 2,000 in the US, bring jobs here, I would be willing to pay a bit for something American made, in the end it will work out.
No.
The problem is that the US doesn't produce AND consume what it needs itself, at wages and prices that do not require stealth gov-sponsering - corporation size mostly irrelevant here. In fact, most of those "big corporations" you speak of here, are parasites..... they have no intention of producing at wages and conditions, that allow the workers to actually buy those goods.... all they're after is, ripping off the population and national budget, and then exporting elsewhere (typically to a nation which then on top of it all gets cheap credit from the producer nation.... because you know, the gov paying your wages isn't enough, it should also pay for your sales!).
Strenghten local production and buying power, and tax imports and exports. Supply and demand will do the rest after some time.
"I would be willing to pay a bit for something American made..."
You, Goldencross10, are repeating a bit of drivel -- a long favored talking point of the multinationals. (A famous case in point: the dramatically rising cost of Nikes after that company offshored its manufacturing. Which equalled the rising salaries and perks to its senior management.)
Labor costs are frequently the least cost fraction of a product, and long economic history proves that regardless of where the multinationals manufacture something, the price will still rise.
Just as one often hears that the minimum wage is a premier cost driver in America, yet when that wage has remained the same, the price still continues to rise, and when the minimum wage is finally increased -- although still dreadfully lower than where it should be (around $22 per hour, at least) -- there is no significant increase in price; it simply continues to raise accordingly.
In America, as of 1999, critical mass with regard to the offshoring of jobs was reached -- this was predicted waaaay back in 1978 by at least three different political activist groups, and several federal analysts.
A BLS study published in late 2009, crunched the numbers and arrived at the conclusion that effectively ZERO jobs were created by the Private Sector between July 1999 and July 2009!
The American economy, similar to so many other economies, has been dismantled over the preceding 35 years -- which is why we now have so many debt-financed billionaires, and several debt-financed trillionaires.
In 2007, wages among American workers aged 18 to 29 dropped by 28%, while In China real wages in the same age group rose by exactly the same percentage --- no coincidence there, but exactly correlating numbers.
Morgan Stanley's entire mutual funds business is centered in India, the majority of processing the world's credit derivatives, of which the majority originate within JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup and BofA, takes place in China.
Got jobs......? Not in Amerika.
It's not whether it's made in the USA, it's whether it's made by a corporation.
If one is truly willing to "sacrifice" for US workers, stop buying ANYTHING from international corporations and seek out the local alternative. Good luck buying even a bicycle.
That is the magnitude of corporate welfare Congress has extended to manufacturing in OTHER countries. One can't even buy a bicycle locally (in most places) if they wanted to.
I was talking the other day to an entrepreneur who is starting her own swimsuit line. For now she is having the line sewn locally, but she expects that she will need to go overseas eventually to be competitive. It would really take concerted government action to change the current cheap labor business model that even small businesses are beginning to follow. But there is zero chance of that happening anytime soon. The free-trade and trickle down economic model has become so mainstream, and the outright bribery of politicians by corporate donors so accepted in our system, that it is hard to find any candidate in any party who will vote against it.
"current cheap labor business model"? GM tried the expensive labor business model and that didnt work out so well.
Hey LoneCapitalist - would have helped if brilliant GM management would have built the right mix of cars and properly funded pensions in the 70s and 80s. Funny how Japanese and German carmakers with equally high costs managed to succeed. Always blame the worker with no blame to management. You are a pretty smart man...
I love this argument. Of course it didn't work out because the average American was duped into believing he would benefit from free trade agreements with countries like China. We're just one step as a society from accepting that slavery is a good idea, because it's good for profits. If we start doing business with countries that use purely slave labor, then those well paid Chinese will have to start looking for work too. Let's just keep concentrating more and more wealth up at the top. It's working so very well.
well it worked for the unions , for the short term
"Bring Jobs here"??????
Who would when compared to China, the US labor force is FAT, OVERPAID, AND, IN GENERAL, PRETTY STUPID (just look at how they vote).
And fuck off..
Actually you idiot you have it wrong.. US Labor productivity is at record highs while working for the smallest percentage of GDP in modern history. The only thing bloated is the paychecks and perqs for most of our corporate executives.. You are stupid
And more importantly, the American labor force still has these quaint notions that they should be paid a living wage and receive luxury benefits like a modest health care plan. The Chinese are much better servants to our corporate masters. Eventually, Americans will get desperate enough that they too will work for an amount that covers only their basic necessities (food, shared living arrangements). Better to work for peanuts than to starve. That certainly seems to be the long-term objective of our robber baron governing class.
Then there's the quaint notion that a job is something you have rather than something you do.
http://www.youtube.com/watch?v=nWNho8g0lsU&feature=related
Or, as I used to say every time I had to break in a new subcontractor: Everybody wants a job but nobody wants to work.
It's amazing to me that one statistic after another shows that Americans work harder than almost any other country, yet when jobs are lost we hear that it is due to American worker laziness. Yep, has nothing to do with the fact that American workers are competing with autocratic openly crony capitalistic countries whose populations are all but enslaved.
We are making comments yet failing to define the word "work".
That hurdle must be cleared first before any headway can be made in the quality/quantity of American "workers".
Showing up, breathing, and collecting a paycheck does not constitute work as I define it.
Some element of productivity has to be included, less the factor of humans being let go in favor of technological advances. The Industrial Revolution is a nice study in that area.
So how do you propose this be measured? I have seen plenty of studies that purport to show Americans to be the most productive working force on the planet, or certainly among the most productive. The missing element for the mega-corporations is that many American workers still believe they should have a piece of the pie that they are helping to bake, whereas the boardroom view of workers is that they are a necessary evil who deserve nothing. The magic answer to that problem over the last several decades was to find the most desperate populations on earth, enslave them, and have them do your labor instead under the guise of "free trade." The big flaw in this equation is that if you kill off the middle class, no one will have any money to buy the crap you are building in the foreign factories. They have kept this ponzi going the last 20 years by extending credit to the masses. That game is almost up.
"Measure"? Who cares. Does every goddam thing on the planet have to be measured?
Are you more secure and/or happier when something comes to pass?
Therein lies the ultimate test of success or "growth".
So how do you propose this be measured? I have seen plenty of studies that purport to show Americans to be the most productive working force on the planet, or certainly among the most productive. The missing element for the mega-corporations is that many American workers still believe they should have a piece of the pie that they are helping to bake, whereas the boardroom view of workers is that they are a necessary evil who deserve nothing. The magic answer to that problem over the last several decades was to find the most desperate populations on earth, enslave them, and have them do your labor instead under the guise of "free trade." The big flaw in this equation is that if you kill off the middle class, no one will have any money to buy the crap you are building in the foreign factories. They have kept this ponzi going the last 20 years by extending credit to the masses. That game is almost up.
Well said. But not only "credit", my socialist friend. Massive, debt-financed handouts to group entitlements as well and gub'mint employees in particular. This is a capitalist reaming combined with a socialist reaming.
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Yah, but look at the choices being offered! I hear smarter 10th graders walking home from school. Milestones
Gold is telling me that QE3 is right around the corner....And we should stop expecting big employment increases. Warren Buffet is right when he says we'll see better employment numbers when the housing market improves. And with the current number of vacant homes due to foreclosure, that should be in about 10 years.