Bureau of Labor Statistics

We will start with an appetizer of Liquidity Tenders and Securities Market Program Bond Purchases, move on to a plate of Emergency Liquidity Assistance, sample a pre-entre of Pro-Growth measures and ECB Covered Bond purchases, dive into an entre of Fed Swap Lines, medium rare, with a side of Emergency Liquidity Assistance, and finally unwind with a desert plate of Firewalls. To close we will dream of tomorrow' menu which some say may feature the mythical Eurobonds and even the, gasp, legendary Europan Bank Deposit Guarantee... Please charge it all to the taxpayer, of course.

When inflation isn’t particularly hot, it’s praised as something desirable....

Zero Hedge has a habit of trying to simplify that which is otherwise unnecessarily complex, convoluted and opaque. Today, we wish to explain the primary reason why Europe has still not be engulfed in fire and brimstone and collapsed straight to the 9th circle of overlevereged Hell(as). The reason, as we henceforth dub it, is Ponzi Patriotism^TM.

Stop us when this sounds familiar. Last week's 365K number has been revised to 368K, which is where the expectations for this week's print were. Instead, we got 367K claims this week, a 1K beat to expectations, which will be a 2K miss next week of course, but at least the pre-election propaganda media has their headline: "Initial Claims improve by 1,000." And scene. Naturally, the same thing happened for continuing claims, which beat expectations of 3275K, printing at 3229K, with the last week's print revised to 3290K from 3276K. The more disturbing form an end demand standpoint data, is that yet another 40K dropped off extended claims and EUCs. Finally in what is the best new for the market, and worst for the Economy, is that the March trade deficit soared to $51.8 billion, on expectations of -$50 billion, which was the biggest trade balance drop in 10 months. What this means is that Q1 GDP which already is tracking at 1.9%, just got lobbed to 1.5%. Yes: the Q1 GDP first revision will likely show the 2.2% number is now in the low to mid 1% range.

As noted earlier this week, while the theater of Greek elections serves as a convenient distraction from the epic depression the country of 10 million is undergoing, the reality is that very soon it won't matter at all who is left to govern this ruined country. Because if previously we demonstrated the collapse in two primary drivers of government tax revenue, namely tourism and commerce, today we show the logical follow through to economic flatlining: jobs and industries. Sadly, both are getting trounced. As Reuters reports, "Greece's jobless rate hit a new record in February, underscoring the pain austerity policies required by the EU and IMF have inflicted on the debt-laden country which is struggling to form a government. More than one in five Greeks and one in two youths are out of a job, statistics service ELSTAT data showed on Thursday. The unemployment rate hit 21.7 percent from a revised 21.3 percent in January. In the 15-24 age group, joblessness stood at a record 54 percent." It also appears that Greece has been getting ideas from the BLS: an 11 million population, and a pool of employed at a record low 3.87 million! "Nearly 1.1 million people were without a job, 42 percent more than in the same month last year, the data showed. The number of those in work declined by 8 percent over the same period to a record low 3.87 million." In other words, less than 4 million people are working to pay off the country's bailout package and debt which at last check was about 200% of GDP? At least of all indicators, the GDP is collapsing the fastest. Very soon Greece will be treated to a merciful #Div/0 when attempting to calculate its debt to GDP ratio. We can't wait to see the IMF's face then.

We are in the last innings of a very bad ball game. We are coping with the crash of a 30-year–long debt super-cycle and the aftermath of an unsustainable bubble. Quantitative easing is making it worse by facilitating more public-sector borrowing and preventing debt liquidation in the private sector—both erroneous steps in my view. The federal government is not getting its financial house in order. We are on the edge of a crisis in the bond markets. It has already happened in Europe and will be coming to our neighborhood soon. The Fed is destroying the capital market by pegging and manipulating the price of money and debt capital. Interest rates signal nothing anymore because they are zero. Capital markets are at the heart of capitalism and they are not working.

Taking current trends across all employment indicators, using 12 Month trailing averages in the changes of those employed, unemployed and dropping out the labor force, we can predict, with IMF-level precision, that at the current surge of those leaving the labor force, the US unemployment rate will hit 0.0% in December of 2021 and finally go negative, or -0.1% in January 2022. So there you have it: maybe the BLS can just fast forward us to the end of this thought experiment when everyone will be so fat they couldn't look for a job if they wanted to (recall by 2020 75% of Americans will be obese), but at least the Propaganda Times will be blasting in 24/7 red flashing headlines that, for the first time ever, America's unemployed are now somehow negative, and we can all rejoice while collecting all those welfare stamps bought on negative interest credit funded directly from the uber politburo of the USSA located in the Marriner Eccles building.

After an extended and detailed rant against the BLS and their ineptitude, which is worth watching in its own right, Charles Biderman (CEO of TrimTabs) sums up Europe's troubles and hopes in 30 seconds. Towards the end of the clip, Biderman notes that Monsier Hollande is saying that governments should borrow more money so they can give more money to more people and THAT will create economic growth. Instead, Charles sees Europe sliding down a slippery slope faster and faster with no end in sight.

The entire bogus recovery is again being driven by subprime auto loans being doled out by Ally Financial (85% owned by the U.S. government) and the other criminal Wall Street banks. The Federal Reserve and our government leaders will continue to steer the country on the same course of encouraging rampant speculation, deterring savings and investment, rewarding outrageous criminal behavior, purposefully generating inflation, and lying to the average American. It will work until we reach a tipping point. Dr. Krugman thinks another $4 trillion of debt and a debt to GDP ratio of 130% should get our economy back on track. When this charade is revealed to be the greatest fraud and theft in the history of mankind, Ben and Paul better have a backup plan, because there are going to be a few angry men looking for them.

There was a little mentioned tangent to last Friday's very disappointing NFP print of +115,000 (driven by a surge in temp jobs offsetting a collapse in full time positions): as David Rosenberg notes, the jobs number was about half of another far more important number - that of Americans applying for disability, which in April was +225,000. He continues: "this is the new stealth stimulus program - so far in 2011, nearly one million Americans have applied for disability and year-to-date, 333k have actually enrolled (covering 539k family members). In total, more than five million people have been added to disability coverage since President Obama took over three years ago." The punchline will make all those who adore (insolvent) welfare states shake with giddy delight: "So look - either safety standards at work have eroded dramatically or the "99%" have found a creative way to milk the system and turn the economy into a quasi welfare state".... Yup. What he said. Because remember: the BLS assumes that any amount up to the total 53 million people, is not in the labor force as they have other "wefare" based forms of government handouts and see no need at all to look for a job. Is there any wonder why US unemployment is realistically 20% if not much higher? As for the other chart, food stamps, we know that story all too well.

While events over the weekend have had a dramatic impact on the political landscape of Europe, that's just what they are: political events. Yet for all the rhetoric, promises, and bluster, only one thing matters in the end: cold, hard math. The same math which last weekend indicated that Europe is still facing trillions and trillions in bank deleveraging. That has not changed one cents between then and now, regardless who is the puppet (muppet?) head of this country or that. But since that won't become evident for at least a few more years, it can be safely forgotten, until the time comes to recall it that is, at which point there will be a full blown crisis even though there were years of advance warning to prepare for the crunch. So here is some more math: in a downside case forecast looking at funding capacity of Spanish and Italian banks - the same banks that would have been long insolvent had it not been for a $1.3 trillion injection by the ECB - Deutsche Bank predicts that the two groups may have as vast a funding shortfall as €210 billion in 2012 (€114.4 billion in Spain, €96.1 billion in Italy). Which to DB means one thing of course: more LTROs coming because once the market has habituated to the now periodic infusion of monetary heroin it will not let go until it is convulsing in its death rattle, something the status quo will never allow, or until it gets just one more hit.

The April jobs report was 'worse than expected'. While some will tell you that with revisions is was 'as expected is say: Huh? Do they mean that now that March job gains are stronger at +154K it is more likely that we would have projected a slowdown to +115K jobs in April? Really? As expected net of revision? On what planet? No We think you should look at the headline numbers and revisions as separate events to some extent. When you do you learn a lot more. On balance we think there may be room for optimism in this dismal-seeming report. But it's guarded and speculative optimism.

Presented with little comment except to note that in the minute or so before the actual sanctioned release from the dark little room at the BLS, S&P 500 e-mini futures slumped by 7 pts, surged and then slumped again by 7pts - double the entire overnight range in those 30-45 seconds. So after all the efforts to maintain the integrity of the NFP release, it seemed someone knew something early...

Here is what Wall Street expects will be announced at 8:30 am Eastern today:

And while as usual the actual number will be largely meaningless, and is merely an indication of our headline chasing nature since as the BLS itself says the error interval is +/- 100,000, a few hnndred purely statistical jobs will make or break the market and send it soaring on either "virtuous circle" expectations, or on NEW QE coming back with a bang.

While much has been written on the revisions, adjustments, and just-plain-guesses that make up the BLS' non-farm-payroll data, the frustration levels are building in the Bay Area as Charles Biderman provides the most in-depth discussion of why we need a better press corps. The simple truth, as Charles notes, is that even the BLS doesn't believe its own hype (in its footnotes) and while mainstream media and talking heads will quote the unemployment rate or NFP change as if it was transcribed by the hand of God, it is in fact an extremely ill-formed, very narrow survey with such huge statistical noise as to be entirely useless. However, while every human should watch this brief clip before buying that 100-lot ES milliseconds after the release tomorrow, we suspect, as usual, it will be algos-gone-wild no matter how many sigma we beat or miss.