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Rosenberg Slams "Doubly Pathetic" Non Farm Payroll Report
We already noted that last Friday's NFP number was a major disappointment for everyone objective enough to acknowledge it for what is was. Here is David Rosenberg's even more aggressive condemnation of the continuous lack of economic recovery in this country, whose only impact it appears is to drive futures higher (not regular hours trading mind you - it is far easier to push the market in a desired direction when there are ten people and a few computers trading).
From Breakfast with Rosie:
- Forget about private payrolls, which for some reason the markets have been brainwashed into watching (though these did come in well below market expectations, at +71k versus +90k expected) — we should be adding in state/local government employment. Bottom line is that when adjusting for the Census worker effect, the economy only generated 12k net new jobs last month. Pathetic.
- The Birth-Death adjustment factor tacked in 16k jobs to the seasonally adjusted data, so actually, that 12k number was probably more like -4k. Doubly pathetic.
- The Household survey showed a 159k loss, which was the third decline in a row — something that in the past occurred outside of recessions a mere 2% of the time. Full-time employment tanked 570k (on top of a 70k falloff in June) which was the steepest decline since the depths of economic and market despair in March 2009.
- The Household Survey, on a population and payroll concept adjusted basis, posted a decline of 315k and this followed a 363k loss the month before.
- If not for the near one million decline in the labour force since April — the number of discouraged workers has ballooned 50% in the past year — the unemployment rate would be sitting at 10.4% right now (if the participation rate was unchanged from April’s level).
- As a sign of how far the economy has slowed from its springtime peak, the employment/population ratio dipped from 58.8% in April to 58.7% in May, to 58.5% in June, to 58.4% in July — the lowest it has been since the turn of the year. Moreover, two-thirds of the private sector job creation this year took place in March and April, when the economy was hitting its peak.
- We had mentioned that one of the bright spots in the data was the pickup on factory payrolls, but again this was more the result of seasonal adjustment wizardry than anything else. Somehow, a 16k drop in the automotive industry in the raw data managed to swing to a +21k print on a seasonally adjusted basis and this likely reflected the one-off lack of plant idling this year at GM.
- The workweek did edge up, but it is still an anaemic 34.2 hours and this reflects the ability of businesses to adapt their labour force needs more than anything else. The fact that they chose this route rather than add bodies, and shedding full-time workers, is a sign that companies lack a commitment right now. The fact that they cut their reliance on the temp agency market for the first time in 10 months is another indication that the aggregate demand for labour contracted last month.
- At the rate the economy is creating jobs — 654,000 so far this year — we will not get back to the previous peak in employment until 2017. Just to get back to the 8% unemployment rate that the White House had forecasted we would require job creation of at least 2.5 million. At the rate we are going, that will take longer than two years to accomplish.
- Let’s not lose sight of the fact that initial jobless claims kicked off the month of August by jumping 19k, to 479k, the highest level since last August. If we see this number back up to over 500k, then for sure we will see less denial over double-dip risks.
Source: Gluskin Sheff
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Well it must not have been too bad, the market has recouped all of its losses since Friday morning. <sarc on>
No worries.
There is still a voracious appetite for overpriced perfume, shoes, and lingerie.
How do you put images and charts in your posts?
Please advise.
You need authorization from Tyler. Robo is authorized.
And judging from Pladizow's avatar I don't see that authorization happening. :)
Yes, the lack of a tan on those feet was noticeable to me also.
I still say Pladizow's avatar is a thumb and an index finger holding an onyx ring...
Lots of LOLing
A ring yes, but onyx???
Yup, and here we go with the Dow flirting with 10,700 again.
Unbelievable.
Well, except for the fact that we can see it happening.
DavidC
DC, this is the image from this Wizard of Oz:
"A burning distraction reading *D*O*W* = (an LED readout), plastered in every town square and in every news venue and coffee shop world-wide. The slogan 'Healthy DOW is a Healthy YOU!' ingrained in every mind. T-shirts, theme parks, nightwear, condoms, etc.
Behing the curtain at *D*O*W* headquarters is a sweating BenB running the printing machine on full blast and feeding the paper to the ever more hungry FIRE of *D*O*W.*"
It is THE NATIONAL SECURITY of the CorporaKleptocracy that is at stake and so whatever is required happens.
Agreed, LeBalance
The 401k is the smartest thing Wall Street ever bought a politician for...
Since the 401k/mutal fund's inception... the Amerikan public have been following the Dow like a baseball score. Cheering the daily box score.
Robert the Rube and his lackey Fat Larry figured out in the 90's consumer confidence is thus influenced by the daily Dow and S&P... like the Daily Double... the Amerikan schleps love a game show...
Thus Slim Fast Larry and Wanker Timmay have tied the perception of the administration's economic success to inflating the market...
Remember Wanker Timmay's famous last words:
"There is no Plan B."
Imminent huge jump in taxes across the board, unpredictability regarding healthcare and other employer liabilites, openly hostile stance against business, overthrow of private property and contract rights, bursting of monetary bubble (deflation), and now employers are afraid to hire?
Weird. Who could have guessed?
"openly hostile stance against business"
you mean, other than TBTF banks, Wall Street and automobile manufacturers?
TBTF banks, Wall Street, and now the automakers are not businesses. They should be classified as Government, Privately Held Division.
Echoing "three chord sloth" above, TBTF banks, Wall Street, and today's automakers are not businesses. I like his description that they should be classified as, "Government, Privately Held Division". ;-)
Businesses actually make stuff. Goods and/or services. Those listed above are "overhead" sponsored by government.
By "hostile", I refer to small business (the only ones that actually contribute through new jobs), and medium and large businesses (they don't contribute jobs, but they *do* have large amounts of capital to deploy to productive endeavors). Both categories are demonized, sucked dry, and capriciously live below the Sword of Damocles since we have now established some agency or politically-appointed individual can show up at their door, demand a payoff, or shut them down without recourse.
But, I *do* take your central point that neither party has an advantage in this area -- both are run by morons that fundamentally do not understand how the economy works.
My point is that almost any business that plans expansion in this environment is absolutely insane. There may be a few niche sectors where that is possible, but no, it's crazy to believe you can quantify your business risks in this environment. Hiring today merely implies an unquantified forward-looking liability (don't do it).
If you are responsible to your owners and shareholders (which might just be you and your wife for a Mom&Pop), the only sane direction is to de-leverage, reduce overhead, cut back expansion, increase buffer, and possibly even liquidate the business.
Oh, lookie: That's what these numbers suggest. That will continue for years, and that's the only sensible approach.
The stock market coul'nt care less about the unemplyment numbers. Well - maybe it does - but it LIKES a bad unemployment number because that keepds the Fed loose.
The high unemployment also seems to have not hurt the earnings of large multinationls - not surprising. They sell 50% or more outside te US and in the US - they sell to the employed ( 90% of workforce).
So I dont have a problem people digging deep into the entrails of a very complex statistical number put out by the govt on unemployment - just that it have very little bearing on stocks.
+1000
primefool, unfortunately your whole theory is very short term. eventually the unemployment situation here starts affecting emerging markets...you know....wall st fgolks like you still for some reason think laborers in china and india and brazil making 1-10 bucks a day is gonna support IBM/PG/KFT earnings for example. LOL
its laughable imo. us going back into recession will start up the china housing crash to another leg down. no one will be safe
Tripps - absolutely right. I was just pointing out the possible reson for the short term stock market reaction. That should not be as puzzling as it seems to be to some folks. Yeah - have to separate the short term knee jerk market reactions from long term prospects - thats for sure.
As for long term forecasts - what I have learnt over the past 30 odd years in the markets is to have a large dose of humility in forecasting where the world is going to be in 3 years , 5 years etc.
I'd say that reality has very little bearing on stocks.
BTW, why do you use the word "market?"
While Obama preaches sacrifice, his family parties in Spain
http://www.theage.com.au/world/while-obama-preaches-sacrifice-his-family...
I'm not sure why there is any effort to fight the fed. The market is up, and not just in the pre-market. It's almost 12 and the gap up has led to more gains on the day. Looks like another 100/10/25 point day for your index of choice. Double dip, triple dip or even the big double D, I see no evidence the equity markets care.
Rosie may be 100% correct in his observations and assumptions, but he appears to be a contraian indicator relative to market performance in the short term.
I wonder who trusts the markets less, human traders or the Fed?
The Federal Reserve LLC via their free money printing and retail/member arms trust the market. After all, they make 'it' happen when they need to.
there are no double dip risks....it's been one long solid dump since 2008...which was in the making ever since 1999...
Make that 1997 - the Asian Contagion!
If QE2 is announced, the markets may continue to ignore everything that is bad and continue the melt up. People were calling for a crash in Sept/Oct 2009 -but it didn't happen because of QE1. Unfortunately we may not see a crash in fall 2010 because of the same. Unfortunately, this game may continue to nauseate us all for quite awhile. Bears may need to continue hibernating awhile.
Only difference is that, a week ago the FED said we didn't need it. I never thought I would say it, but we need full engagement from the prop trading desks - shorting this bastard to hell...
Depends on whether people are short. They can only rally when there are shorts to squeeze. This is especially true when there is no volume in July/August.
IMHO when the UI finally runs out TSWHTF. "When people have nothing left to loose, they loose it"
(Gerald Celente)
If QE1 failed to ignite sustainable private economic growth, why would QE2 be any different? It's Keynesian insanity to keep claiming that pump-priming will work if we only do it enough times and/or bigger than before.
This was something Rick Santelli was asking today as well. Someone in that TV discussion asked a question. What was the Fed to do then , just through darts at the board if they couldn't pump more money? Rick said "Yes, do nothing" if that was the only thing they could do. He then asked why the Fed couldn't simply let the recession come on and clean out the system.
The answer is now obvious. Because there's so much filth and corruption, so many plastered over back room deals and so much theft that to let any of it out would cause all of it to be exposed. It's do or die time folks as far as the Fed is concerned.
Parents, it's 11:00pm -- Do YOU know where your CDS are?
so if rosie is a contrarian indicator to some i would assume those same people are leveraging up on siv's, cmo's, equities, calls and the like.
my hunch is that these wise "investors" are loading up because they've accumulated a sizeable nest egg over many market cycles, and with their hard earned experience they want to really grow said egg big now, having sold at the top and waited for a pullback (bears are "always" wrong).
btw, what accounts for 70% of market volume these days? as i remember it zh wrote on this a while back.
The Warren Buffet wannabees, the small retail fraction left, and the mutual funds have adapted a gamblers mentality, doubling up in every dip for ten years, they have no idea of how much they've sunk. The real pain is coming. Let's watch the once mighty dollar rise one last time while watching this bastard ponzi scheme die.
Copper is leading the way again...it's been down all day, with the drop accelerating.
Have no doubt, the markets will be playing catch up very soon!
It's a sickening period waiting for the damn copper to tank...
QE2 is fully priced in. It will be sell on the news if it gets announced, which will really be sell on the existing facts. It wil be just like when they passed the bank bailout bill. Markets climbed before the vote, then dropped like a rock when it passed. And any QE they do will be too littl etoo late anyway. Only a massive removal of interest on home loans will really fix anything.
"not regular hours trading mind you - it is far easier to push the market in a desired direction when there are ten people and a few computers trading"
What a bunch of nonsense. How much of that "pushing around" is left after the 9:30 opening bell once volume kicks in? You may manipulate the market in after hours with a few thousand contracts but if you hope your manipulation survives RTHs then you're clueless.
Here's the thing.
There IS a limit to how long equities can ignore this stuff. The equities are all presuming earnings due to reduced headcount, but GS this morning cut their GDP-->S&P Earnings projection and odds are pretty darn strong that it will be much worse than even their projection.
The most likely outcome of the election will be Democrats retaining both houses with thin majorities that will utterly preclude any action at all. No more stimulus. No more anything. With the GDP dependent on such things, it will fall. That fall is not yet embedded in earnings projections.
Couple of observations:
1. Need to look at the global situation and not be overly affected by US data alone.
2. Some of the large cap blue chip multinationals are to some extent discounting a very slow to no growth environment
ie. Stocks that might trade wit PEs in the high teens are trading with PEs in the low teens.
3. In terms of a truly fundamental valuation one has to look out at least 10-15 years. And I have no idea what the world will look like!!
4. But - my best guess for the world is stagflation - spotty growth, high inflation ( driven by food, oil etc), shortages, periodic currency crises etc. Kinda like the 70s except worse.
I have to admit to a bias though. I think being petrified that the bottom may fall out at any moment and the Dow will do to 500 and stuff like that ( Elliott type stuff) - is extremely detrimental to making money in the markets.
I suppose anything can happen - by that kind of extreme fear is not conducive to doing anything productive in business or investing.
Completely agree. Hoping and bearishly cheerleading every drop in the market is about as detrimental to one's trading results as the perma bulls' endless rejoicing every new market record high in the late 90s. It's amateurish, it's stupid, it does not make you money. All it does is blind you to the opportunities on BOTH sides of the market. Around here, being long anything else but gold appears to be considered blasphemy.
I've gotten butt raped so many times in this market that it's not even funny anymore. But while we're stuck in this past weeks range, there is not a lot to do. I'm only seeing the dollar move. The Bond market has decided, maybe the currency market is about to make a decision, and the equity market is always the greatest fool - last to come around.
In my opinion trading this market is like picking up nickels in front of the steamroller. It's locked in a fairly tight trading - up 5-10%, down 5-10%. There's no real money to be made and a lot of risk. Plus it's not completely clear which way the market is going to break. My current plan of action is to sit on the sidelines building up capital until some clarity is forthcoming.
I have seen stock markets in various countries survive and even prosper through wars, military coups, political turmoil, floods, earthquakes , banking crises, currency turmoil, capital controls,deep recessions, high inflations etc etc.
BTW Thailand is up 15% ytd!!
Yeah, but if Thailand collapses then the world-wide impact will be comparitively insignificant.
If the U.S. collapses (which it is doing), then it'll take the world with it.