The BLS has reported on December jobs, and an ugly sight it is. The household survey of individuals data was that employment dropped 589,000 last month (see Table A to review these and related statistics). The labor force dropped 661,000. "Not in labor force" rose by a massive 843,000.
Yikes and then some!
It is hard to see that the "Great Recession" (a polite term for what is a non-great depression) is definitively over. Yes, jobs are actually one of the factors that goes into recession dating, much as the MSM would like to divert attention to production (itself pumped up by Federal/Fed exertions).
On the "establishment" survey, the data came out the same as ADP, down 85,000. This of course was boosted by the unmeasured "birth-death" adjustment, which as usual was estimated as up (59,000 jobs) supposedly stemming from the vitality of small businesses that are not part of the "establishment" survey. Ha! Try a loss of 59,000 more likely. Or 159,000. Or 500,000 to come close to the household survey numbers. Those of us who live in the real world are aware that small businesses are mostly shrinking or closing or happy that they can simply stand pat and survive, that there is little appetite from those with savings to risk them on a new venture, and that the birth-death adjustment almost certainly should be negative rather than positive.
When you are part of the quiet coup that keeps its jackboot on the throat of the public at large, you will say anything you can to provide hope for the masses (that is, that part of the masses that reads Bloomberg.com). Here is the ridiculous statement from the article and a member of Big Finance about how things are going to get better, from Bloomberg's article at http://www.bloomberg.com/apps/news?pid=20601087&sid=aP0v0wdCG_YQ&pos=1:
In another government boost, the Census Bureau will hire 1.15 million temporary workers in the first half of the year to conduct the population count that takes place every 10 years. That hiring may boost payrolls by a peak of 700,000 in May before those workers begin getting dismissed in June, according to a forecast by economist Lori Helwing at BofA Merrill Lynch Global Research in New York. (Ed.: 700,000 is less than the number estimated to have left the labor force in December alone per above.)
“They’re going to hire an army of people,” said Julia Coronado, a senior economist at BNP Paribas in New York. “In some sense, this acts as a stimulus package and is a timely coincidence, coming so early in the recovery.”
Timely? You mean hiring a bunch of people for a few months is a timely stimulus? Wasn't there stimulus in 2008 under Bush? What about ARRA (Obama's stimulus of almost a year ago)? Gimme a break . . . And is this really "stimulus"? Then that perforce also means that there will be an anti-stimulus governmental effort timed to end in June when the census is completed. Oh, I forgot: the boom will be on by then. As if in 2003-7, the boom was not entirely artificial, fueled by mortgage and securities fraud, wildly unsound lending practices, dancing financiers, etc. The idea of a self-sustaining economic growth cycle is unproven of late in the U. S.
Brazil, it appears is in that zone of self-sustaining growth; but in parts of the world run by quiet coupsters doing God's work, the jury is out and we may be lucky if it is a hung jury.
When Big Finance is reduced to touting a Constitutional requirement to enumerate the population as a stimulus to the economy, things are bad. Real bad.
Hard times continue. The Economic Cycle Research Institute, which has been predicting good employment growth soon, will have an opportunity to comment. For now December goes to the bearish Dr. David Rosenberg in his ongoing debate with ECRI.
Copyright (C) Long Lake LLC 2010
Showing posts with label Unemployment report. Show all posts
Showing posts with label Unemployment report. Show all posts
Friday, January 8, 2010
Saturday, September 5, 2009
Unemployment, the Fed, and the Markets
On August 24, following comments from Fed officials, I blogged in The Fed Is Blowing It Again:
My take from what the Fed is saying is: buy gold; buy gold; also don't forget oil, silver, copper, etc., et al., ad infinitum.
In the two weeks through the close of trading Fri. Sept. 4, gold is up over 5% in price. Treasuries sold off Friday despite a truly dismal household survey of (un)employment. How dismal? See Mish's quote from Dave Rosenberg's Friday note. Another analysis of the data can be found at Dr. Ed Harrison's Credit Writedowns.
The index of average weekly hours worked for most workers dropped from 99.2 to 98.9 from July to August, where 2002 represents 100. This is despite an approximate 7% increase in population. Adjusted for population growth, this is about an 8% decrease. Here is a link to the BLS report itself; click HERE.
In the meantime, the Economic Cycle Research Institute is more and more bullish:
A weekly measure of future U.S. economic growth rose in the latest week, while its yearly growth rate surged to a 38-year high that suggests the recovery is on track. . .
The index's annualized growth rate rose to 20.8 percent from 19.6 percent a week earlier. The latest reading was the index's highest yearly growth rate since the week to May 21, 1971, when it stood at 21.3 percent.
Perhaps as part of the dispute between ECRI and Drs. Rosenberg and Roubini, the Reuters report on the ECRI data also included the following:
"With WLI growth rising to a new 38-year high, U.S. economic growth is poised for a stronger snap-back than most expect," said ECRI Managing Director Lakshman Achuthan.
Last week, Achuthan said a double-dip recession in the fourth quarter is "out of the question."
I went back to the data. Six6 months after the above-mentioned date of May 21, 1971, the Dow Jones Industrial Average had fallen about 10%, and the ten-year Treasury had fallen about half a point in yield despite the Viet Nam War and the secular bear market in Treasuries that began around 1965 and continued until 1982. Past may be prologue.
The DoctoRx thinking is that since the government is borrowing at minimal interest cost for now and has been financing immense amounts of transfer payments to people and businesses, there has to be a technical recovery. Yet I have no reason to doubt Dr. Rosenberg's analysis that the Q2 GDP would have been down at an annualized rate of 6% without stimulus, and that Q3 would be down at a mild 1% annual rate without stimulus.
So from an economic basis, it would appear that the bears who were bearish last December and this past January were correct. Now, if government were doing innovative things such as Eisenhower's new system of interstate highways, or the successful handoff from the Dept. of Defense to the private sector of the Internet, I would say that taxpayer funds were being well used.
As in Japan in its post-bubble phase, there were two trends.
One was debasement of the currency vs. the dollar. Recently, of course, as the U. S. has led the Western world in economic mismanagement, of course the yen has been forced to strengthen against the dollar. Thus, the parallel here is that the dollar has fallen against gold every year since, and including, 2001. This year is looking like no exception. How high could gold go if the stock market and financial markets stayed stable? Based on average ratios of the price of gold following
its manic run-up of the late 1970s that led to aggressive high-interest rate policies of the Fed, gold could very easily go to 2-3X the S&P price, or let us say 2500/ounce. The future is of course wildly unpredictable, but the Fed and stock market appear to be following the 2001-3 and beyond pattern, so why should not gold continue to go from strength to strength? After all, a $700 gold price in 1980 would translate in buying power to over $2000/ounce today.
The other trend, unpopular though it is to say, is toward lower long-term Treasury rates.
It is felt here that so long as one is willing to buy and hold a certain number of Treasuries, they can play a valuable role both for income and possible capital gains as part of a diversified portfolio. Tactically, it is easy to see that the Fed would want sustained low market rates a la Japan for it to make money off of its purchases of Treasuries and mortgage-backed securities. Remember that the economic recovery that is either beginning or will come at some point (if for no other reason than the law of averages and random fluctuations) and that may be a "fake" recovery could well be followed by the totally surprising events of 2008, meaning yet lower lows in Treasury rates. Similar things happened after the economic recovery of FDR's first term, after which long-term Treasury rates did not bottom till at least 1940.
Stocks are churning, in general offer insufficient income to be an attractive asset class and are manipulated or greatly affected in price by Big Finance according to self-serving metrics. Stocks that are liked here are some individual names, including Teva, McDonald's, Bristol-Myers, and National Presto (which is primarily a defense company now, though it is best known for crock pots and the like).
Currently the most interesting momentum and "fundamental" plays appear to include gold either via "GLD" or "GTU" or bullion; and TEVA and NPK in the stock market. Even if ECRI is correct about a very strong period of growth, as occurred in 1972, the general stock market could well be due for a rest.
Copyright (C) Long Lake LLC 2009
My take from what the Fed is saying is: buy gold; buy gold; also don't forget oil, silver, copper, etc., et al., ad infinitum.
In the two weeks through the close of trading Fri. Sept. 4, gold is up over 5% in price. Treasuries sold off Friday despite a truly dismal household survey of (un)employment. How dismal? See Mish's quote from Dave Rosenberg's Friday note. Another analysis of the data can be found at Dr. Ed Harrison's Credit Writedowns.
The index of average weekly hours worked for most workers dropped from 99.2 to 98.9 from July to August, where 2002 represents 100. This is despite an approximate 7% increase in population. Adjusted for population growth, this is about an 8% decrease. Here is a link to the BLS report itself; click HERE.
In the meantime, the Economic Cycle Research Institute is more and more bullish:
A weekly measure of future U.S. economic growth rose in the latest week, while its yearly growth rate surged to a 38-year high that suggests the recovery is on track. . .
The index's annualized growth rate rose to 20.8 percent from 19.6 percent a week earlier. The latest reading was the index's highest yearly growth rate since the week to May 21, 1971, when it stood at 21.3 percent.
Perhaps as part of the dispute between ECRI and Drs. Rosenberg and Roubini, the Reuters report on the ECRI data also included the following:
"With WLI growth rising to a new 38-year high, U.S. economic growth is poised for a stronger snap-back than most expect," said ECRI Managing Director Lakshman Achuthan.
Last week, Achuthan said a double-dip recession in the fourth quarter is "out of the question."
I went back to the data. Six6 months after the above-mentioned date of May 21, 1971, the Dow Jones Industrial Average had fallen about 10%, and the ten-year Treasury had fallen about half a point in yield despite the Viet Nam War and the secular bear market in Treasuries that began around 1965 and continued until 1982. Past may be prologue.
The DoctoRx thinking is that since the government is borrowing at minimal interest cost for now and has been financing immense amounts of transfer payments to people and businesses, there has to be a technical recovery. Yet I have no reason to doubt Dr. Rosenberg's analysis that the Q2 GDP would have been down at an annualized rate of 6% without stimulus, and that Q3 would be down at a mild 1% annual rate without stimulus.
So from an economic basis, it would appear that the bears who were bearish last December and this past January were correct. Now, if government were doing innovative things such as Eisenhower's new system of interstate highways, or the successful handoff from the Dept. of Defense to the private sector of the Internet, I would say that taxpayer funds were being well used.
As in Japan in its post-bubble phase, there were two trends.
One was debasement of the currency vs. the dollar. Recently, of course, as the U. S. has led the Western world in economic mismanagement, of course the yen has been forced to strengthen against the dollar. Thus, the parallel here is that the dollar has fallen against gold every year since, and including, 2001. This year is looking like no exception. How high could gold go if the stock market and financial markets stayed stable? Based on average ratios of the price of gold following
its manic run-up of the late 1970s that led to aggressive high-interest rate policies of the Fed, gold could very easily go to 2-3X the S&P price, or let us say 2500/ounce. The future is of course wildly unpredictable, but the Fed and stock market appear to be following the 2001-3 and beyond pattern, so why should not gold continue to go from strength to strength? After all, a $700 gold price in 1980 would translate in buying power to over $2000/ounce today.
The other trend, unpopular though it is to say, is toward lower long-term Treasury rates.
It is felt here that so long as one is willing to buy and hold a certain number of Treasuries, they can play a valuable role both for income and possible capital gains as part of a diversified portfolio. Tactically, it is easy to see that the Fed would want sustained low market rates a la Japan for it to make money off of its purchases of Treasuries and mortgage-backed securities. Remember that the economic recovery that is either beginning or will come at some point (if for no other reason than the law of averages and random fluctuations) and that may be a "fake" recovery could well be followed by the totally surprising events of 2008, meaning yet lower lows in Treasury rates. Similar things happened after the economic recovery of FDR's first term, after which long-term Treasury rates did not bottom till at least 1940.
Stocks are churning, in general offer insufficient income to be an attractive asset class and are manipulated or greatly affected in price by Big Finance according to self-serving metrics. Stocks that are liked here are some individual names, including Teva, McDonald's, Bristol-Myers, and National Presto (which is primarily a defense company now, though it is best known for crock pots and the like).
Currently the most interesting momentum and "fundamental" plays appear to include gold either via "GLD" or "GTU" or bullion; and TEVA and NPK in the stock market. Even if ECRI is correct about a very strong period of growth, as occurred in 1972, the general stock market could well be due for a rest.
Copyright (C) Long Lake LLC 2009
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