Few Days Removed From Payroll Data

Now that we have a few days to totally digest the bogus payroll report.

The headline figures from the report were better then expected. Less Horrible is Great in today's tape. But as always the Devil is in the Details, and the details were weak.

These results had tremendous seasonality to them. If you take into account adjustments in the auto industry, job losses remained large and widespread through out the country. Granted that job loss destruction has eased from earlier in the year, but its going to take more time, painfully more time to actually add jobs back into the system. Do I envision a time when the unemployment rate heads back down near 5%? Not for many many years.

Everyone is so convinced of a v shaped recovery, its not happening! This is going to be a long u-shaped recovery.

tradersutra.blogspot.com/2009/07/positive-spin-on-banks-maybe-unlikely.html

OK, so we had -247K jobs lost, that is less then the 3 month mean of -311, this is still a brutal figure. That -247K figure was helped bu seasonal adjustments in the auto industry, its safe to say that 50k was added to the July report from this alone. Even with this, the pace slowed, that's the good news.

As I have stated before, most people are clueless to what a recession actually is.

tradersutra.blogspot.com/2009/07/david-rosenberg-on-18-year-cycle.html



Typically in a recession, job losses are more concentrated around the goods producing sector or sectors where there are inventory dislocations, and food news is here as well, but its far from healthy.

Average hours increased as well, also good.

But what really got the market in mojo mode was the decrease in the unemployment rate to 9.4%. but this figure was helped by the labor force shrinking from 65.7% to 65.5%, taking this into account, net net, the unemployment rate would have risen to 9.6%. So to be included in the actual unemployment figure, one actually has to be looking for work. If you run out of unemployment insurance, you stop looking for work, you leave the labor force, making the unemployment rate look better. 1.6 million people will exhaust employment benefits, once they go off of this, the rate will decrease, the pundits will spin it as a positive. That is why its a political minefield when they talk about extending employment benefits, not a fiscal minefield.

Don't ever underestimate the power of government to keep the masses in the dark. Its a conspiracy to keep people stupid, while the rich rape the country.

All in Obama's circle are pouring cold water over this report. Why? You guys did such a nice job of lipsticking your pig, you should be congratulating yourselves for a fine diversion.

As for GDP, it was expected that the consumer spending would decline, and it did, but the reason this report was better because we had a smaller trade deficit this quarter. Yes, we spend less money, money we don't have, then we import less. But it was nice to see inventory fall as this is always a real lagging indicator. Remember its the change in the change of inventories that leads to growth in GDP. Inventories don't have to rise, they just have to stop falling. So in fact if inventories just stay the same, we might see up to 3% in GDP growth in the next 3 quarters, but it means nothing if consumer spending is in the dumpster.

Bottom line, with all of the various revisions, real GDP fell 1.9% over the four quarters ending 4Q2008.

The stimulus will help in the 2ND half of 2010, but with employment still not great, the FRB will leave rates unchanged for the duration of 2010.

Whats interesting is that Retail Sales figures for July actually declined 1%, which is not good, if you remember, I stated back in February that when retail sales were getting stronger it was good for the markets. A month later the markets rallied big time.

tradersutra.blogspot.com/2009/02/whats-working-in-this-market.html

Well from today's surprise decline in retail sales, one can say that maybe the rally is over? Maybe 1 month from today we can look back and say it was.