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This Friday's NFP Will Be A Disappointment: Here Is Why
Earlier today we noted that while the headline Services ISM number came slightly better than expected, if still damn ugly, it is the Employment index which stuck out, coming at an almost 2 year low and which, as the chart below demonstrates has an uncanny correlation with the NFP number. In fact, based on the two series' 5 Year rolling correlation of 0.89, the September NFP is expected to print at just about ~0, unless the establishment survey has somehow joined the Chicago PMI in decoupling from the rest of the US economy. But that's only half of it. As BNY's Nicholas Colas reminds us, a far more important and fundamental driver is the trend in monthly tax receipt withholdings, which actually indicate not correlation (which never implies causation), but true causation: i.e., if less tax withheld, then less people employed - simple. To wit: "If employment is improving on a monthly basis, it should show up the Treasury data pretty quickly. New hires – and existing employees, for that matter – usually receive their compensation in the form of a paycheck. The monies withheld for items like Federal and state taxes as well as Social Security go directly to Treasury from a payroll processing company or employer. There are always adjustments to be made as you analyze the data, of course, as withholding tables are a favorite political tool to juice the economy when things are slow." Unfortunately, the data is far from pretty, and in this case causation does imply correlation.
But speaking of simple correlation, here first is just NFPs compared to the Employment Index in the Services ISM. As can be seen, NFP would be expected to come in not only below 60,000 which is the consensus (and Goldman at 50,000), but negative.
But, far more importantly, the actual causation of tax withholdings as proxy for actual jobs. From BNY ConvergeEx:
We’ve attached several charts to highlight the most recent trends and what they say about the both the upcoming Friday Jobs Report and the current U.S. employment picture. Here are a few summary points on the topic:
- September’s total receipts (adjusted for changes in withholding tables) were up 5.9% from last year. That’s slower than the August data, which was up 9.5%. When you only look at deposits to Treasury for paycheck-type withholding, the results are largely the same. Taxes and withholding from this source is up 5.9% as well, as lower than the 8.8% increase year on year in August.
- The three month rolling average for increases in tax and withholding receipts is certainly moving lower, and peaked in the Winter/Spring of 2011. This corresponds very well to the lower jobs growth numbers we’ve seen in recent months, punctuated by the August zero reading.
- The summary message here is that we shouldn’t expect very much from the Friday Jobs Report, the current +60K headline estimate notwithstanding. Labor market conditions do not appear to have strengthened much in September. The incremental tax receipts we are seeing point to employers either hiring more part-time labor or paying select employees an incrementally better salary. Real labor market growth is likely still on the back burner.
So when NFP comes in far worse than expected in order to make the case for the Goldman wet dream of $2 trillion in LSAPs, please do not be surprised.
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Who cares, they'll spin it till they winn it! Or until we SHOOT them in the HEAD, execution style!
Your Right, number can be spun any way they want. People know, they walk around, they shop. They see things are not good at stores, and tons of places for rent.
The time is now for some real ideas to come foward and try to get this economy going again. Otherwise, its just going to continue
http://www.dailyjobcuts.com
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Tyler - You may be quite wrong on this one. If less tax is withheld it might mean fewer people employed BUT it may also mean the same or more people working at lowere wage rates.
Possible, but unlikely here. If employment is picking up, that gives more strength for existing employees to ask for raises as employers will be more likely to want to hold on to existing employees before taking on new ones. This would more than offset people "voluntarily" taking paycuts elsewhere, or hiring increasing with people coming in at lower salaries. Additionally, companies are more likely to hire from a contracting pool as 1099s than they are W2s, which means that contract hiring numbers should begin showing some strength, and from what I've seen elsewhere, most contract hiring is stagnant or on the decline. Your scenario is probably more likely just past the top of a cycle, when employers are trying to keep their existing workers but business is beginning to dry up and so they're willing to invest less or even ask for/demand a reduction in salary. I don't think we ever reached a point since 2009 where business really became robust enough for that to happen here.
Thanks for the thoughts. We will have the answer soon enough.
All well said and most likely correct. However, stand by for the possibility that the headline UE rate might go down. Why? Because they will once again chop 300k or 500k off of the work force participation numbers thereby allowing the UE rate to drop or stay the same. The people dropping off will actually be the 99ers dropping off the back end and not being counted as unemployed anymore, even though they really are unemployed. We all know that the headline UE rate is what will be touted by the MSM even if there were 0 or only 10k jobs 'created' last month. Same ole schmidt, different day. Who knows though...I might be wrong and they might decide to report real numbers this time. On the other hand, no, I don't think so.
It's always been counted that way. There is a rationale to it that you may not agree with.
Not correct. They just started exluding these folks from this particular calculation last year. There were never 99er's before this time. Tyler posted on this before and you might also check Shadowstats.com.
THanks for that info.
So what is the best way to trade this? Short DJIA or S&P500 into the close on Thursday? If it is an up day all the better, right? Friday night being the start of the Jewish holy day of repentance, many traders may not be working a full day. Some traders should take 2 days to repent.
Wonder if it takes into account people changing their withholdings? Claim 8 and at the end of the year send Uncle Shine a big FUCK YOU letter.
cnbc tried to continue the lie about germany coming to the rescue this morning but kyle bass gave them what for when david faber tried that shit with him...........ha ha ha ......i wish kyle bass was a guest blogger on here. that would be interesting....
He's been here
http://www.zerohedge.com/article/kyle-bass-latest-must-read-letter-cognitive-dissonance-it-all
I find it interesting that we're in the middle of a retard rally and my short positions (junk: ex - CMG, BIDU, REK) are all green. Something stinks more than usual.
This explains today's surge on vapor volume and no news. Some people want better shorting positions.
plus we will get the pre anouncement spike to decieve small traders that someone is trading on inside info
surpriZed? L0L!!!
Comic relief: here's a vid mash of White Shirt goon Commander 'Jaws' Dudley at Brooklyn Bridge protest
added feature: last 5 seconds - Ben Bernanke's lost brother - separated at birth...
http://www.youtube.com/watch?v=cc-9nlCwa_Q
wow that guy looks anal rententive. he probably thinks he is above, what he thinks is, the rabble in the street
He looks like an SS officer or concentration camp commandant to me. What a fucking fat pig. (quite literally!)
Economic data is meaningless, according to none other than Zero Hedge itself. Yet post after post is all about economic data. Funny.
ZH recognizes that it's readers like to see the data minus the MSM spin. Regardless of whether it is meaningless or not, we still like to know what kind of swill the mainstream is being fed.
Actually, it doesn't really matter what (mis)information is being broadcast to the masses. Either the global economy is able to generate additional credit (ie expand its balance sheet), or it doesn't. If it does, the status quo retains its power, regardless of any information to the contrary. It it doesn't, then the status quo will lose its power, regardless of any information to the contrary. Pretty simple, really, which is why most of this hyper-information flow is irrelevant.
(This explains the outright corruption & fraud - they win, there will be no repercussions. They lose, and it doesn't matter what additional charges are brought.)
It really gets back to growth - organic or superficial, either will do, it really doesn't matter. Growth, or the prospect/lack of such, is the core driver behind your 'fractal' social emotions. If it was announced that an oil field 2x the size of Ghawar was discovered, ZH could shut down the same day. Re-iterative fractal optimism would explode to such a degree as to make the 20s & 00s look like the GDI.
Sadly, however, there are no add'l Ghawar's, so the PTB is only left with superficial attempts at expanding the balance sheet. Tyler, Mako, Trav, LH and a a few other astute posters have repeatedly stated variations of this fact on numerous occasions. Tyler has said it simply doesn't matter what the asset base is, as long as it increases. (Mako's variation was it can't/won't, so we're all doomed.) Trav has pointed out the lack of organic growth, while LH said that Fed will never stop financing fed.gov.
If you dial back 10+ years, this of course was the driver behind CDO/CDS - absent real organic growth, the banks had to constantly split & re-split the pie in order to generate new fees and expand asset values. We are, of course, at the same point with the EFSF and other rumored/proposed programs. At their heart, they all the address the same exact thing: the balance sheet must be expanded through increased leverage.
If one understand this extremely simple concept, then everything else falls into place.
Damn, you still mad?
Yeah I'm upset because I can't find any silver anywhere to buy.
You're not looking very hard, then. Silver spot is down less than 50% from the peak. Not even appraoching zero yet.
Well LRC Fan CNBC sure seems to find Zerohedge relevant, as they bristle and get their neck feathers all rustled up over what is said here.
According to people here, no one watches CNBC anymore, so who cares?
I've never seen anyone here claim that no one watches CNBC. A lot of us here do. Its one of our sources of entertainment.
I only watch for Kayla and Mandy...otherwise it's muted. Plus I get it from Thinkorswim, because I tossed the television out a window about 5 years ago.
Damn, more strawmen. You have quite a cottege industry here.
No-one has said "No-one watches CNBC anymore". They said "no-one intelligent watches CNBC anymore for anything other than entertainment value".
But you're so mad you can't even understand simple distinctions.
I'll bet MOST of the people here have CNBC on most of the day. That said, during the Cold War, the CIA read Pravda every day.
Man you are one of the worst trolls ever. Maybe you should take some trolling lessons from Robo.
Tyler you left the front door open again. Another pesky troll wandered in.
So LRCFan what kind of content would you like to see on Zerohedge then? Spongebob cartoons? Gay midget porn?
I just don't see the point. Either the data is meaningless, or it's not. If it's meaningless, why bother reading/writing/commenting on it? Obviously it means a lot if ZH can't go half a day without posting about it. I have no problem with ZH posting about the data but to call it meaningless is just another in a long line of ZH hyperbole (along with "Goldman buying every oz of gold", "Gold about to break above $2k any day now" and many others).
Then don't read ZH. Simple.
Double post.
If the content bothers you that much what the fuck are you doing reading it? Go away and chill out...
I read it to see what the herd is saying.
come and play... everything's NOT ok
http://artsbeat.blogs.nytimes.com/2011/10/03/sesame-street-special-on-hunger-introduces-new-muppet-character/
you're right about one thing, you "don't see the point."
+1 . ZH manages to put a negative outlook on every angle of every story. Up till now it was backed by the gold bugs with the shiny metal reaching new highs on a daily basis (ever heard of a bull rally?), however since its pull back from its artificially inflated highs (hey every market is rigged right?) the posts of this wealth preserving miracle have stoped. While I agree that there is doom and gloom out there and XAU might reach higher highs, other than the carefully disacted analysis reports, the one sided argument and reporting style of ZH can be a drag. I only see upbeat comments once gold ticks up a dollar or two. Quite funny really.
Lies, damn lies, and statistics.
"i.e., if less tax withheld, then less people employed"
Or... less withheld. Can't employees choose whether and how much to withhold? If so, maybe people need cash flow more than withholdings. Maybe all this stat says is that people are withholding less. And the causation conclusion is flawed.
double
Tax receipt withholdings more accurately reflects unemployment/underemployment/gross labor than any other stat - thus its disuse.
I am betting on positive surprise and short squeeze.
until the revisions come out.
$2 Trillion in LSAP
When did toxic waste become an asset?
BTW, what' the half-life on the threat of QE? I think the Bernank can blue-up his 'nads a lot longer...
Thats some prime choice toxic waste assets right there!
You makin' fun o' my sheep, sheep?
Is there even a correlation between the employment #'s and the equity markets anymore? That's assuming they're even slightly accurate...Which is by the way, going pretty far!!
You mean hope doesn't increase revenues?
What made up rumor will FT print to counteract the bad jobs report?
The question is whether or not the bad news is bought or sold.
The anarchists really need a giant rally of epic proportions in the stock market, right here and now.
It is the only way to get these junior mining stocks like UXG to rally 300% in order to just get back to the spring 2011 highs.
L0L---anarchists in need of a giant rally of epic proporions!
Well RearViewTrader was saying we were going to get a rally of epic proportions back at DOW 12,700 too. Its all good in his world, all just paper trades anyway.
RT is not infrequently incomprehensible, SD1!
and reasonably so!
but he has gone tit & slewie gone tat for many moons regarding the miners, the "markets" for which have truly been among the strangest of the strange; we are both in wtf mode over them, especially as their charts keep promising one thing and then doing the exact opposite!
slewie wouldn't be surprised if china wanted these mining companies at these prices, as well as others in europe or N.America, for "capital" and that the US would much prefer them sticking w/ bonds, and NOT moving into equities, right now, hence the sabre-rattling in the Senate over "how much their 'currency' can buy" perhaps?
but at the level(s) at which these two juggernauts of central planning and market control are tottering, along with the EU, the farce of the mad-men trying to "defend" things for their different audiences, while continually slipping on their own banana peels is quite entertaining...
Seems like every meltdown in Europe is yet another excuse to buy a U.S. based specialty retail stock.
Hardly any of these stocks have cracked more than 10% off world record highs.
And don't even get me going on the REIT stocks, which are even more insane.
robo - 3 weeks ago
you guys are utterly ruthless.....
i used to work with guys like you...
+1 buzz and dog...
Direxion announced 5 triple x etf 5 for 1 reverse splits today 4 bulls and 1 bear the REIT bear . 5
'Bears, you better get all-in long here like me at DOW 12,700 for this debt ceiling resolution epic rally thats about to happen!'
RoboTrader, 8 weeks ago. Gee, what happened?
Hey Robo: Have you ever seen a better buying opp. in any sector or will they continue to be shed as before
I would suggest that buyers of junior mining stocks are part of the system, and are in no way actually fighting it.
Can you expand on your post...Seriously I'm curious...
That Hopium is some strong shit. Do you snort or mainline?
Dude, it looks like you take Kayopectate before you post. Or, Ipecac. Or, both. No one can be this stupid. Seriously.
"...but true causation: i.e., if less tax withheld, then less people employed - simple."
...or, more folks employed but at far lower wages....
either way, it's still bad. Can't pay the bills on no or substandard job
Yep, one of my nieces just moved in with us because she could not make enough money to live on her own. Couldn't find a job in here field, she had a job as a waitress but she was only getting 12 hours a week. You know it is a depression when have three generations living in the same house like the Waltons. "Goodnight Johnboy"
I've still got some work to finish in my basement. I didn't mind at all that it was an empty concrete shell, but my sister in law and her 2 daughters need a place to live.
We moved their stuff in over the weekend.
Buy the rumor, sell the news.
Now will someone please post the new POMO schedule for the 400 billion benny bucks. A link will be fine. I have a hunch this friday would be a good day to push on a string.
This short covering rally before Friday's number is going to provide another great opportunity to short again.
So when NFP comes in far worse than expected in order to make the case for the Goldman wet dream of $2 trillion in LSAPs, please do not be surprised.
Or don't be surprised to get the mother of all rumors roughly 45 minutes before the market closes on Friday. And every market ramp, with every poor tic in economic data, just means LSAP is just a bit more out-of-the-money than anyone thinks, re: "We currently have no plans in place for QE3, but we're monitoring the economy," Bernanke's response to a congressman just yesterday.
The Bernank won't unlease LSAP until Europe falls apart. And according to Kyle Bass of Hayman--it will, and it will not be orderly. He's been right about every macro trend for 4 years now. And that is why the Bernank is waiting: "Should I do 2 trillion? Or should I wait until everything comes unglued and do 3-4 trillion?" To this end, that is the only real question that looms.
Oh....and let us not forget without Europe completely unravelling or a stock market crash there is no way to fund our U.S. unfunded deficits without LSAP.
And the first words you will hear broadcast as soon as it hits the tape will be "Pass this bill!!!"
Insider trading laws don't apply to Congress, so expect a yowling from them when the market tanks. They'll want Ben to print to his heart's content then. It's only irresponsible if they're not cashing in.
good, be a great buying opportunity
Bad news already price in the market. Dow will be up 200 points tomorrow.
Judging from the fishy numbers of earlier reports (as ZH puts it: decoupling) I'm not so sure the number is to be trusted either way. In all reality, we should be adding 700,000+ jobs/month if all the trillions of dollars spent on stimulating this economy actually worked.
The fed has done nothing but create the biggest wealth transfer in the world and now you have morally bankrupt (and soon to be financially) institutions like the IMF calling on the fed to do more. There's only so much you can steal from the peasantry before the tide turns.
We never recovered from the great recession and things are getting exponentially worse. The so-called solutions: stimulus, austerity, coordinated efforts, shock and awe, etc. are programs that have an entropy of 0 and if anything have made things worse by shifting the risk onto ordinary citizens and limiting their individual rights and liberties and decimating any potential to live a prosperous life.
Markets are just setting up at a higher level to fall from because this is what is considered an 'orderly default'. Just beware of any 'solutions' when we are at the bottom of the crisis because that's how we got Paulson's bazooka from the last one-- crises are a disguise for the policymakers/elites to impose another attempt at social genocide.
The only real crisis is that we allow this to continue everyday.
Yeah the data may dissapoint, but this market is still likely headed higher over the next several days. http://bit.ly/pt0BR4
If nothing else, I believe enough people have lost trust in government that anything they do will be watched. When MSM is reporting it, you know it's bad.
NFP will be epic fail. Stocks to crash. Only then will the helicopter engines be started up.
Attn: ZH Anarchists
All I can say is that many bloggers here were decimated by being long PM's hoping for a global financial crackup.
And true to form, the XAU has a 100% track record of false breakouts the last 8 years.
And PM stocks always fall 3x faster than any other sector during a "liquidation" precipitated by a financial crisis.
So don't laugh when I say you guys should be cheering higher stock prices, more monetizations, more Fed meddling, more money printing, and more hockey stick ES runs at the end of the day.
Yes Robo: Not everyone here is for equity crashes...But the question remains...If there is a pump up, are the miners smacked down enough to go long into eternity?? Robooooo...Are you out there
"...you guys should be cheering higher stock prices, more monetizations, more Fed meddling, more money printing, and more hockey stick ES runs at the end of the day."
We are doomed
There is a massive difference between being long paper PM and holding actual PM. Additionally those that hold physical do not buy and sell it as much as use it as safe keeping for wealth. I love massive stock dips in that it allows me to buy contracts for physical delievery. So go ahead, let it dip to $100/oz, it is about the long-run.
Robo, what the fuck are you talking about. Who gives a shit about paper gold. You moron.
he always seems to miss that aspect of it......
He's just a paper tiger.
@ jmcadg: Who gives a shit about paper gold? nobody! just like the paper losses on many people's PMs, especially silver!
RT is going on abt the false break-outs in the unhedged miners ETF. so yes, it is paper, but based on major mining corporations stock prices. looks like maybe da boyz R buying.up.the.mines while shorting.the.ETF? [is there a certain truth to "ETFs were made for shorting"?]
even RT + slewie don't = too styooopid to realize if Big Money wanna buy something, they gonna also enjoy buying it very, very cheap-0, BiCheZ!
while investors, traders, gamblers and their "advisors" buy and sell the shorted ETF "shares", da boyz will actually own and operate the fuking mines. they don't care as much about the stock or the PM prices as they do about holding the mines and the PMs!
just b/c i have no idea what i'm talking about doesn't mean everything i say is bullshit, right?
Birth Death ratio biatch.
When the administration is pushing a jobs bill to buy votes, the administration no longer has any incentive to fudge the numbers to the upside...quite the opposite actually. If/when the jobs bill passes, then look for birth/death to go parabolic.
Bill will never pass. There are not even enough Democrat votes to get it through the Senate
The Decline in tax reciepts is easily explained by the official authorities in govrenment: "The huge growth in jobs is not reflected in the tax receipts because we have reduced taxes to ridiculously low percentages and much of the booming economy is black market, underground economic dealings."
Robo, come back!!!!
NFP will disappoint, but less than expected. Rally!
There is a misunderstanding here. NFP stands for New Fucking Problem. Same as the Old Fucking Problem. Robo is bullish on the Problem. Short on survival skills. Welcome to the jungle.
NFP important on Friday, but now ECB rate cut tomorrow will lead to 1150 Thursday high.
It's seems you might be a day off. Just 5 more handles.....
RIM up 14% on rumor takeover lol...ah the rumor market lol sheeple going to get burnt..
http://finance.yahoo.com/news/RIM-jumps-more-than-14-rb-320014084.html?x=0&sec=topStories&pos=3&asset=&ccode=
( just received this and i am not even an American)For weeks, protesters have been camped out in Liberty Square near Wall Street.
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Protesters are now in immediate need of 200 sleeping bags to keep warm and keep the occupation going.
Donate $20 here to buy a sleeping bag to keep the occupation going in the cold. <http://act.democracyforamerica.com/go/1206?akid=1388.968504.FXVrS1&t=1>
Working together, we can build a movement to take back our country from corporate greed.
In solidarity,
- Gregg
Gregg Ross, Political Campaign Manager
Democracy for America
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Democracy for America relies on you and the people-power of more than one million members to fund the grassroots organizing and training that delivers progressive change on the issues that matter. Please Contribute Today <http://www.democracyforamerica.com/contribution_pages/109?akid=1388.968504.FXVrS1&t=1> and support our mission.
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James --
I need your urgent help. Controversial Republican billionaire brothers Charles and David Koch -- who have spent untold millions bankrolling right-wing candidates and causes -- are now the subject of a new Bloomberg investigation that shows Koch Industries profited from doing business with Iran.
This is all despite American trade sanctions against Iran and the country’s known links to financing terrorists.
House Republican Leadership’s response: Silence.
This is unacceptable. We can’t let this stand.
Sign our petition right now demanding that House Republicans immediately demand an investigation of Koch Industries’ business dealings with Iran.
If we can get 50,000 signatures, we will deliver them directly to Republican Speaker Boehner and Majority Leader Cantor.
Bloomberg reported that Koch Industries benefited from bribes to win business and sold millions of dollars of equipment to the Iranian regime which is known for their sponsorship of terrorism and calls of "death to America."
Charles and David Koch who run Koch Industries are the same billionaire brothers who have fought for taxpayer subsidies for their own Big Oil interests and advocate privatizing Social Security.
We need to show grassroots Democrats are strong and unified in telling Speaker Boehner and Leader Cantor they must immediately demand an investigation of Koch Industries and its business dealings with Iran. Help us reach 50,000 people standing strong.
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Oooh! I can't wait to read the replies to this one....
"This is all despite American trade sanctions against Iran and the country’s known links to financing terrorists."
Are you joking? Out of all the shit going on in this country, you are going after somebody that is exporting American goods?
You're a stupid fuck, JW, to get bothered by this... with all due respect.
You may find more sympathy for this drivel over at the Daily Kos.
Yes, Even wealthy foreigners are calling up midtown pizza joints and feeding the Wallstreet protestors...my only fear are the crowd control weapons the PTB have in arsenal...Sound wave disruptors, fake shill messiahs, police brutality that you won't walk away from! There's got to be another way!?...If it gets bad, we will see what they really have...Is it really past that point!!! God help us!!!!!!!!
Has anyone considered that NFP might be an epic beat, resulting in a massive short squeeze, setting up the ultimate shorting opportunity at 1250??
I could see 100k+ NFP coming....
nice article....per usual...directly misleading...thanks for being consistent :)
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