JPMorgan Warns Of An Even More Disappointing Non Farm Payroll Number This Friday

First it was Zero Hedge two hours ago, now it is the turn of JP Morgan's Michael Ferolli. "The employment index plunged a huge 6.4 points to 53.5, a print which adds a little downside risk to our already-below-consensus outlook for only 45,000 job growth in this Friday's July employment report." As a reminder, consensus is 90,000 or thereabouts. A negative print this Friday will bring QE3 within weeks. Which, of course, is the plan to go alongside the $2.5 trillion in debt coming to the market.

Full note:

The July manufacturing ISM was a major disappointment, falling 4.4 points to 50.9. The details of the report were also discouraging, particularly the new orders index which fell below the 50 threshhold (49.2) for the first time since June, 2009. The employment index plunged a huge 6.4 points to 53.5, a print which adds a little downside risk to our already-below-consensus outlook for only 45,000 job growth in this Friday's July employment report. Why was this report so bad? One theory offered by, among others, an ISM spokesperson is that uncertainty over the debt ceiling is holding back business. The direction of this effect is clearly negative, and should be first manifesting itself in the July data round, which begins today. Even so, there were other reasons to expect a softening in the ISM, including the fact that the June orders-inventories gap suggested weakening in the ISM, and the level of the regional surveys had also been below the national ISM. So even absent the debt ceiling fracas there were good reasons to look for slowing in the ISM report. More generally, the slowing in industrial activity could be in part due to unwanted stockbuilding in the first half of the year, as final demand surprised on the downside. In that regard, one of the few bright spots in what was otherwise a miserable report was the decline in both the inventories and the customers' inventories indices.

Comments

[Sudden Debt]

<- SUPERSIZE ME!

<- I'm on a dieet... I'll only take the green stuff with extra sause

McDONALS DID IT'S PART!!

NOW IT'S TIME FOR WENDY'S, QUICK and BURGER KING TO STEP UP TO THE PLATE AND ALSO START HIRING HIGH QUALITY PEOPLE TO FLIP BURGERS!

[TSA Thug]

Isn't it past your bedtime? Please go to http://www.zerohedge.eu to post further comments.

These eurotrashers posting derogatory comments about the US should be stopped by administrators.

[fuu]

STFU

[TSA Thug]

http://www.zerohedge.com/news/bank-japan-coming-or-most-likely-not#comme...

[Herd Redirectio...]

Well, yeah!  The levels of unemployment here in North America have been staggering since we outsourced all our manufacturing (who saw that coming?). Good thing the multinationals have all their growth occurring overseas, in the developing world.   Meanwhile, here in the soon to be 3rd world...

Any way, check out the latest from the Capital Research Institute "The Sad Truth Regarding America's 'Deficit Reduction'":

http://www.capitalresearchinstitute.org

"Although Congress has not yet passed the ‘debt deal’ it certainly has all the looks of a done deal about it.  So lets cut to the chase.  America has a debt problem.  This year America spent $1.5 trillion more than it collected in revenues.  That’s $1500 billion.  This year alone.  America’s total debt, as we have all had drilled into us these last few days, is currently about $14 trillion dollars.  So what did Congress decide the solution to this problem should be?   On the one hand they kicked and screamed at each other, like siblings fighting over who gets the remote control.  But on the other hand, it is clear in hindsight the politicians have no appreciation for how serious the problems actually are (and they will only get worse, until they are seriously addressed).   The plan before them today allows for the debt ceiling to be raised (as if the debt ceiling is the problem, not the debt) and deficits to be reduced.  Yes, you read that right, deficits will not be eliminated, they will be reduced.

So that means…. The total National Debt will continue to increase. So the same group of people who vote wage increases for themselves have now decided that Social Security should be calculated in a new way.  A new way that shortchanges SS recipients, and doesn’t accurately track inflation, but hey, the government will save money.

The real kicker is in the spending cuts.  Very little, if any, has to occur straight away.  Almost all the cuts are ‘yet to be determined’ and occur at some point in the future..." 

[sgt_doom]

No offense intended, but...

"..since we outsourced all our manufacturing .."

I get a bit annoyed whenever someone repeats this, as ALL frigging categories of jobs have been, and are still being outsourced (they began going critical on scientist, enginnering, programming, etc., jobs beginning with Jack Welch of GE back in '85).

So manufacturing led the way, and now all those service jobs THEY promised us have been offshored, with 1999 to 2009 having essentially ZERO jobs (according to BLS report published in late 2009) being created by those so-called "jobs creators".

And why did the federal stimulus not really work?  Because it was too low, but far more importantly, because there needs to be an actual economy in order for any stimulus to function correctly (also, much of it actually was offshored also).

The "economy" those douchebaggers keep referring to was dismantled over the past 35 years, which is why there are sooooo many debt-financed multi-billionaires in America today, and why their trillions has bought and paid for the Supreme Court, Congress, etc.

Of course, it hasn't helped that Ahmanson and H. L. Hunt's family, those two ultra-rightwing whackadoodles appear to own the top voting machine companies over the years.

Which might explain why there's been a string of unending neocons in the White House (Reagan, Bush, Clinton, Bush, Obama)....

[Buck Johnson]

America will most definitely be a third world.  It will be a third world with feudilism and 3,000 leaders ruling the land (every 100 miles another "big man" will be in charge).

[kall]

I think you're only seeing one side of the truth, America may have outsourced manufacturing jobs but the main revenue from that comes back to America. We need to see the whole picture here and we need to understand that the whole world is struggling with the financial crisis, not just America. I prefer to keep my optimism and trust the revival signs on the job market. I just checked some statistics on employment on a peo company resource and things didn't look as bad as I expected. What America needs from its people is constructive criticism.

[camoes]

Did tweeter just flash crash??

[Cash_is_Trash]

Fireworks this Friday!

If you don't own metal, the fireworks will be invisible.

1700, bitchez

[TruthInSunshine]

This is only slightly off topic, but look at the RINO McCain rail on and on about how the debt ceiling must be hiked, and participating in kabuki theater with Dick Durbin, whereby they lamely act as if they're 'beating each other up,' when in reality, anyone who is awake knows that this is a pathetic attempt and the ONE PARTY system to appear as if it is offering a choice to Americans.

This game and the illusions are failing them now, I'd venture - this is the worst acting I've ever witnessed:

Senator McCain Debates Senator Durbin

[Rodent Freikorps]

McCain's manchurian candidtate programming is obvious at times of great stress.

His control word is Maverick.

Don't tell anyone.

[DCFusor]

Truth, the charade may be failing them as regards us, but I fear its still working fine for most....too bad, that.

[BaBaBouy]

Can Anyone spell... "Dubblaye Dipp" ...

[slaughterer]

Why must ZH repeatedly announce an accelerated start for QE3? It is clearly impossible to announce QE3 in a few weeks.  Given:

Core inflation is still increasing into the end of the year. 

10-year Treasuries are "not yet" down to 2.4%

The S&P is "not yet" below 1215.

There is still hope for a real GDP pick up in H2.

There might be a slight change in communication from Jacksn Hole, and then, 6 months after that, a change in the composition of Fed assets.  But an expansion of the Fed balance sheet (QE3) would need a negative GDP read, and not just a negative NFP read. 

[fuu]

"There is still hope for a real GDP pick up in H2."

Bwahahahahahaha! Put down the crack pipe.

[snowball777]

He said "hope" Not his, not mine, not yours, but hope.

[DUNTHAT]

Sorry, don't agree on the GDP thingy, but do agree FED knows better than to offer QE3 considering QE2's dismal effect.  The gold and commodities markets would scream up if they even hint at one.

[Sudden Debt]

No QE3?!

DO YOU THINK IT'S THAT EASY TO WAISTE 2.4 TRILLION DOLLARS BEFORE THE NEXT DEBT TARGET OF 2013?!

How else would Obama do that?

GS needs to pay it's traders a few billion dollar in bonusses at newyear! How are they supposed to do that without a little assistance from OB?!

DO YOU EXPECT THEM TO DRIVE THE SAME FERRARI FOR 2 YEARS IN A ROW?! STAY IN THE SAME HOUSE? That's just cruel of you...

[Rodent Freikorps]

Spoon ready jobs. The Rs will sign off on it if you -falsely- promise to cut spending in the 22nd century.

[Doyle Hargraves]

"There is still hope for a real GDP pick up in H2"

Hopium Bitchez!

[oldman]

I've always looked for the prime defintion of 'hopium'.

[Rodent Freikorps]

When wishful thinking wins out over logic, or even sanity.

Often inspired by lazy thinking or a religious belief in a messiah.

[sgt_doom]

It's Opium....gone to H(ell).

[cossack55]

Begging Bitchezzzzz!!!!!!

[Cash_is_Trash]

Tin can bull market!!!!!

[mt paul]

starve the beast

[FunkyMonkeyBoy]

If QE3 goes ahead, the $dollar, which is already at lows will go through the floor.

If QE3 goes ahead, the USs AAA rating, which is already a joke to any free-thinking human being, will finally crack like the dried turd it is.

If QE3 goes ahead, consumer prices (food, oil, etc), which are already at highs, will go through the roof.

Any 'benefit' of QE3 will then be seriously outweighted by the above factors.

QE3 AIN'T GONNA HAPPEN.

[Cdad]

Agreed.  And for the exact same reasons.  

[hedgeless_horseman]

Disagree. And for the exact same reasons.

[TSA Thug]

Stealth QE3 to the rescue. You can bet on it.

[Manthong]

The funds to buy all that new debt are going to have to come from somewhere and it ain't gonna' be Greece.

[malikai]

You've described "higher asset prices", therefore, it is a must for 'ol Benocide. Inflation can and will be fixed at the CPI.

[cartonero]

It HAS to happen.  Who else but the Fed can soak up $1.5T of new debt every year?  They've only been waiting for the credit line increase.

[camoes]

WRONG! The ponzi must go on, or it's game over! Not on Benny's watch at least. he must inflate asset prices so there is revenue to pay our Asian overlords. There will be QE3

[DUNTHAT]

AGREED TOO.

[Chuck Walla]

Then come the tax hikes to help us all get through this togeteher! /sarc

[lieutenantjohnchard]

where's that guy videoing himself beating home electronics with a baseball bat when you need him.

[Temporalist]

Here.  This always makes me feel better:

http://www.youtube.com/watch?v=zqHZWdFVyyQ

[Josh Randall]

+1000 - "Used Cars" is a severely underrated movie. I've found that many problems can be solved by just yelling..."I'm Roy L. Fuchs, God D#mn it!"

[lieutenantjohnchard]

good one!

[fuu]

Still on youtube under walstreetpro2. Or Chumbawumba.

[lieutenantjohnchard]

thanks. i'll look him up.

[baby_BLYTHE]

Chumbawumba is the Silverfuturist. One of the best PM channels on Youtube, IMHO. Cool dude.

[fuu]

It's just a long running joke, sorry. Chumba is awesome.

[GoinFawr]

As Ed Super fixes electronics:

http://www.ebaumsworld.com/video/watch/80925495/ so the Fed's minions attempt to repair your economy.

[lieutenantjohnchard]

nice, needed a chuckle.

[Cdad]

"...slowing industrial activity could be in part due to unwanted stockbuilding in the first half of the year, as final demand surpised on the downside."

Just who was surpised by this?  Seriously, if criminal syndicate Wall Street analysts were surprised, then they are not just stupid, but obviously stoned during the work week.

[anynonmous]

we mostly all agree qe3 is enroute - but what's the number?

[r101958]

$2.5 Trillion.

[CrashisOptimistic]

 I don't agree.  It produced 0.4% GDP and U3 of 9.2%.

Bernanke sees that.  There's no point to it.

[Temporalist]

The "point" is that it will "save" the economy and prevent a "deflationary depression" just as intended in the past; inflation, the poor and the middle class be damned.

[hedgeless_horseman]

The point is that QE is what floats the bond auctions.

We have long crossed the Rubicon of sufficient actual Treasury demand.

QE3 may not have a ceiling.  It may be something like, "...as The Fed sees fit."  The mother of all blank checks.

[Temporalist]

Yes I left out that QE is keeping the debt service "reasonable" by keeping interest rates low.

[sgt_doom]

Getting back on topic here, I counted over 50,000 layoffs announced for July (and I wasn't really even paying attention to that), and many in the high-end jobs category.

[Yardstick of Ci...]

Everyone talks about a deflationary depression, but dollars do not buy more today.  Deflation would enrich those with savings.  Inflation erodes their savings.  The upside for the rich, in terms of inflation, is that they gain massive amounts of wealth.  It also helps those with debt, no?

You seem to be saying that no QE = falling commodity prices.  What is your thesis for why dollars will buy more in the absence of QE, because prices seem to go up no matter what.

It would be great if anyone would take the time to explain this, because I've seen the question asked a few times now.

[sgt_doom]

Ignore them, they're confused.....they mean debt deflation.

[Iriestx]

It put $16t in the pockets of his friends and future employers.  He doesn't care about U3 or GDP.  Qx does exactly what it's intended to.  Take your tax dollars and funnel them to the ultra-wealthy.

[docj]

Not doing QE3 (n) == Benron has to admit that QE1, QE2, ... QE(n-1) were a failure and that he was, uh, totally freaking wrong as is everything he's made is beans on during his entire academic and professional career.

He has one tool in his entire arsenal - a printing press. And he's going to use it until it explodes.

[RmcAZ]

When's the last time Bernank "saw" anything?

[kito]

im confused, i always make money investing the opposite of what the wall street economists/tarot card readers say. does that mean numbers will print higher now that jp morgan says not.....?

[malikai]

Most likely.

[slaughterer]

JPM has been issuing reliable earnings guidance this earnings season.  Maybe JPM, in an effort to steal GSs clients, are actually cutting down on the normal load of fadeable disinformation. 

[snowball777]

You be correct on the direction while still being totally wrong on the magnitude.

[TruthInSunshine]

Just bring on the full blown depression.

The government should quit wasting money in the 'money hole' project, because it's only creating lower living standards and worsening conditions on Main Street, which is the generator of true and lasting economic activity, not the parasitic class of Bankers or Politicians (and government 'workers').

Vote out any legislator who votes to approve any debt ceiling deal without a pay-go provision (and a robust pay-go provision, with offsetting cuts that match any increased spending in real time).

Make that the single item on the re-election watch list. It's the only way to thwart the QEx dependant class of Welfare Queens (e,g. JP Morgan) and ensure real debt and deficit spending constraint.

Kill TBTF forever. Bring back G-S. Risk off, as it should always have been during the last 30 months.

And WTF, kill the private Federal Reserve Bank once and for all, and put in a poison pill Amendment to the U.S. Constitution that states that Congress may never delegate the coinage of money to other entities again, while backing currency with something of inherent value (gold, silver, whatever - something).

[Cdad]

Amen, brother Truth.

[TruthInSunshine]

If I were in Congress, knowing what I know about the area where I live, I could guarantee my re-election chances, even if I were a serial sinner, by making the following, simple statement, and following through:

I will not cast a vote approving any debt ceiling hike, period, and if Wall Street wants to crash the stock market as they did when the Troubled Asset Relief Program was first rejected, with TARP having produced horrendous consequences for the American Middle Class but a tsunami of ill gotten gains for Wall Street and bankers, than I would advise my constituents to diversify whatever remains of their savings away from the thieves of Wall Street, because I can't in good conscience ever again allow the bankers to control my vote by playing the economic armageddon card and taking 401(k) plans hostage in order to extract an economy and job killing ransom.

The American Government must grow up and live within its means, and break free of Wall Street extortion tactics, and my 'no' vote cast in opposition to raising the debt ceiling is my vote forever and always, regardless of the consequences, bitchez.

[oldman]

Sorry Sunshine,

The Government of the US is ,them, and ,they; and not a part of us, but

'They' are not going to grow up and

'They' are not going to go away

We will have to throw them out ourselves

I don't mean violence, either

It is time to do-nothing except

call a general strike and wait until 'they' leave for Greece and  that 'they' will include

a lot of us--------------we are part of the problem

What are we going to do, brother?

[vast-dom]

Sure dream on. The gov't IS the banksters = exactly opposite of your naïve idealism.

[FoieGras]

Negative NFP won't bring QE3.

[Frankie Carbone]

Gold, bitches!

[Jonas Parker]

and silver...

[Doyle Hargraves]

and lead...

[Sudden Debt]

and popcorn...

[youngandhealthy]

QE3 for sure.

ISM employment -6 something. Wait until Friday for the NFP. Or maybe even before that when the different "Banksters" at FED start to talk....blablabla...Easing.....blablabla...quantitive.....blablabla....Monday....blablabla on FOX news

[digalert]

QE3, waters clear....hmmm

Everybody back in the pool!

[trillion_dollar...]

If we get a negative print, then Obama might as well announce he will not seek re-election that afternoon.

[supersajin]

Isn't this supposed to be the "Recovery Summer"?  Ohh, that was last summer!!

[orangedrinkandchips]

These horrific shit-wads crack me up.....Reminds me of Meatballs the movie...where spaz is helping dad back up the car....'KEEP COMING DAD....KEEP COMING....YOUR GOOD...KEEP COMING...CRASH!.....STOP DAD".

Wait til the markets freeeze up THEN tell everyone. Fucking briliant!

fuckemall.....

[anynonmous]

Bachmann

we are now Greece

http://www.youtube.com/watch?v=M1imq73j_Ok

[karzai_luver]

Fed has no choice , they have to push out the zero. NO choice.

Once you are in the tunnel you can't stand still. He will be a swappin and a tradin like never before.

No choice ....he will fight deflation until death. The "cuts" clear the way for him.

[Hacksaw]

I'm sure the millions of workers who were sent packing by state governments under the influence of moronic tea baggers didn't have anything to do with the crappy ISM and GPD numbers. I'm sure it's just a coincidence that the economy went south as soon as the tea baggers took over state governments. I don't expect those millions of workers thrown out of work by the baggers to have any effect on NFP numbers either. What a bunch of morons. Welcome to the death spiral bitchzzzzzz!

[High Plains Drifter]

disappointing numbers?   is that before or after  bls adjustments?  duh?????

[RobotTrader]

I wish we would just go ahead and default already, then watch the Chinese Bagholders buy even more Treasuries, sending the 5-yr. yield below 1.25%.

[lieutenantjohnchard]

poor 'tard just can't get over the fact he's the world's worst trader so he continues to poke fun at gentleman jim sinclair (on several threads today) even as gold rises back to less than 1% from an alltime high. 

[Ecoman11]

No deal until the market plunges. Obama traded spending cuts for a market crisis in order to unleash QE3.

[monopoly]

I agree Robot, but this is just a slow agonizing bleed. The patient becomes sicker all the time. So, they add more drugs, more vitamins and more care to keep the patient alive. At some point modern medicine, ie. confetti, will no longer work and alas the poor soul, just dies....... Until then, the sheeples have hope and Congress gets its next pay raise.

[monopoly]

I bet he was upset that the market blinked, but did not gasp and die.

[monopoly]

Any day trader that bought the open is seriously under water. For me, impossible to trade this market, so I don't..

[DCFusor]

Gee, that sounds like wisdom -- if you know you're not reading things right, quit.  Few ever achieve that.  FWIW, fading the gaps has been doing better than buying the open of late.

[zorba THE GREEK]

Bernanki probably thinks QE2 was a success because without it things would have been a lot worse.

When the economy gets worse, and it will with major companies announcing further lay-offs, 

QE3 will be used to cushion the fall and prevent a steep downward spiral. The housing market is

horrible, the job market is abysmal, and since they were the major drivers of consumption, our

consumption driven economy looks very bleak for now. As the economy worsens and markets fall,

resistance to further QE will wane and calls for government intervention will bring QE3 and more

give-away stimulus programs.

[buzzsaw99]

Those who say "No more QE" are already wrong. QE Lite and Stealth QE are already in place. Do you think rates are going to stay low without **ANY** help? Don't be a doofus.

[valuetrader]

There are so many problems around, it isn't even funny. To name a few (they are all connected of course):

1. Weak economy and high unemployment.

2. Housing is behaving badly.

3. Consumer is weak.

4. Europe is on fire.

5. China is likely to grow slower (in the best of cases).

These are deflationary forces and you are actually likely to end up with some ''core'' deflation without the FED getting involved. Of course, they are already involved but I suspect they will need to do a lot more ''work''. I think that for the FED the housing market is key. This defines the consumer and also the health of the banking system. They can't afford housing to drop further - look at bank shares. What is going to happen to banks and consumer demand if house prices come down another 15-20%? This is why QE3 is even more likely than the weakness of the economy would suggest. The stock market is getting hit too ... it is about time to do something. What exactly they will do is hard to say. Can they simply announce QE3 or are they going to paint it in some different colours? Maybe they buy some houses this time ... who the hell knows. I am convinced more than ever that they are going to act by year end and most likely earlier. My year end target for gold is 1750. Is this too low?

[MFL8240]

Year two in the summer of recovery is really picking up steam.  Biden and Obama should be removed from office for lying to the American people.

[dbTX]

QE3 will arrive, unannounced

[MFL8240]

Set up.

[Eireann go Brach]

The "Real" NFP figure this Friday would be negative, but once Obama makes his monthly BLS call Friday morning at 7am to get it fudged higher, we will have +20k jobs, which incidently will come from fast food chains hiring 20k "Supervisor of French Fries" positions!

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