Wednesday, March 31, 2010

The Depression Continues

ADP's hiring numbers are out. February was revised down by 4000 jobs to -24,000. March was listed as -23,000. Census hiring was irrelevant as the Gov't does not outsource its bookkeeping/payroll to ADP! And ADP says the storms in Feb. did not affect its numbers. shows that hiring/not hiring shrank to -1 as of today, a number it first hit Nov. 2008. It also showed that elective spending was down to $61/day, a number first hit in Feb. 2009. Even at much better #s such as +10 (% seeing hiring - % seeing negative hiring), unemployment was increasing in 2008.

In the real world, there has been no economic recovery. There has simply been looting of the public's money to pay off Big Finance's bondholders and enrich its stockholders, along with various other shenanigans such as stealing through ZIRP from savers. Though the Govt might counter that absent FDIC, savers in many banks wouldn't have received 100 cents on the dollar from their savings. Given that in the Great D, almost all the money center banks were money good and only a very small % of all bank savings were lost to bank failures, the current crash has been far worse than that of the early 1930s. Nothing like modern life support methods. It used to be that a massive heart attack could not be survived. Dr. Ben: committed malpractice but the patient is sort of alive, suspended like Hamlet between heaven and earth.

Remember that the non-farm payrolls # in 2 days will be revised. It cannot be profitably traded off of unless one is a true pro.

Stock prices cannot go down: bad data means easy money forever; good data means that Larry Kudlow and other permabulls such as Brian Wesbury are right that America has one damn great economy.

At some point presumably ECRI and Conf Board will be correct. There will be hiring. But at about 200,000 jobs added monthly for 12 months needed to bring the unemployment rate down a mere 1%, even a nice job gain number needs to be greeted with restraint. Plus, normalization of Fed policy may accompanying greater economic activity and therefore may be further associated with another conundrum on interest rates and sluggish stock price reaction.

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