Payroll Number Good For Equities.

July Non-Farm Payrolls down -247K, consensus was -275K. The consensus figure has been coming down steadily since the early part of the week when it was 330K. Goldman had a note out yesterday that payrolls would be closer to 200K. So this was predicted to be a positive report.

Futures were down a buck ahead, have rallied like I said they would.

tradersutra.blogspot.com/2009/08/employment-report-tomorrow.html

Futures up 8.25.

There is a huge disconnect from the ADP report released earlier this week, which showed a drop of 371K.

tradersutra.blogspot.com/2009/08/adp-data-less-catastrophic.html

So either the ADP report is too pessimistic, or the government is too rosy. Geez, what do you think? Remember ADP processes the actual payroll checks for millions of workers, they really don't have any insight into employment like the government does.

I will only say this. The government is making up the numbers as they go along! There is no way, with everything that is going on in the economy we have lower unemployment rate for July.

The unemployment rate nudged down to 9.4%, as well as June figures were revised down to a loss of 443K from 467K. Let me say...this is a very strong report for equities, very negative for bonds and the dollar. The general feel I get is that the pace of labor destruction is abating for the time being. These job loss predictions were to dire. After averaging 553K job losses in the fourth quarter and 691K in the first quarter, the pace of layoffs averaged just 400K in the second quarter and "expectations" are universally for a lower average than that in the third quarter.

Now what will happen is that payroll figures will get too optimistic going forward, and future payroll data will miss the mark, sending equities back down.

So far payroll data has been encouraging, but it will be more encouraging if the pace of firing matches the pace of hiring. That's totally another story. This will be the mother of all jobless recoveries. GDP growth has been spurred by inventory replenishment not the consumer.

Again, my big takeaway is this. Expectations for payroll were so dire, that even a small beat, would get people excited. People are down right euphoric at the moment, what typically happens from here Payroll figure expectations will get more optimistic going forward, opening the door for future disappointments.