Friday, May 8, 2009

Morning Update/ Market Thread 5/8

Good Morning,

The “official” unemployment rate jumped to 8.9%... that’s the headline number. And everyone’s cheering the fact that “only” 539,000 lost their jobs in April. Well, we’ll see what types of “adjustments” were made; at first glance it would appear that the un-seasonally corrected U6 number actually fell a little. Hey, spring is a time when you expect an improvement, so I do not read too much into that number. I would need to see a trend of lower losses develop, and one month is not a trend. And note that the RATE is still rising. That means that those who already lost their jobs are not finding work as the new losses pile on top of them. That statement is backed up by record continuing claims as reported yesterday.

Here’s what Bloomberg has to say:
U.S. Job Losses Slowed as Economy Began to Stabilize

By Shobhana Chandra

May 8 (Bloomberg) -- Employers cut fewer jobs in April as signs emerged that the worst of the U.S. recession had passed and hiring for the next census boosted government staffing by the most since 2001.

Payrolls fell by 539,000, after a 699,000 loss in March, the Labor Department said today in Washington. The jobless rate still jumped to 8.9 percent, the highest since September 1983, and probably won’t start retreating until an economic recovery is secured.

DuPont Co. and Microsoft Corp. this week said more staff reductions may be necessary. The worst jobs slump in the postwar era and the accompanying loss of wages will temper an economic recovery should one take hold in the second half of the year.

“The labor market is still incredibly weak, albeit not quite as weak as before,” James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, said before the report. “Even when we see smaller declines, it doesn’t necessarily mean the labor market is strong. We’ve got a long way to go.”

Stock-index futures, which had risen earlier in the day, remained higher, while Treasuries gained. Standard & Poor’s 500 Stock Index futures were up 1.4 percent at 920.00 at 8:33 a.m. in New York, and yields on benchmark 10-year notes fell to 3.30 percent from 3.34 percent.

Deeper Losses
Revisions subtracted 66,000 from payroll figures previously reported for March and February.

One bright spot was government, with public payrolls rising by 72,000 after falling by 6,000. The U.S. Census Bureau began hiring 140,000 temporary workers last month to start conducting the population count that happens once every 10 years. It will hire more than 1.4 million people over the next year.

Payrolls were forecast to drop 600,000 after a 663,000 decrease initially reported for March, according to the median of 70 economists surveyed by Bloomberg News. Estimates ranged from losses of 360,000 to 750,000.

The jobless rate was projected to jump to 8.9 percent from 8.5 percent. Forecasts ranged from 8.6 percent to 9.1 percent.

Since the recession started in December 2007, the world’s largest economy has lost 5.7 million jobs, the most of any economic slump since the Great Depression.

Isn’t nice that the bright spot in hiring was the very department that brings you this report! There’s economic strength for you, we all can get jobs counting one another. This really is a brilliant plan, I’m surprised Obama didn’t hold a press conference announcing this new jobs plan!

Meanwhile, over at the BLS Alternative Measurements table, we find that seasonally adjusted U6 rose from 15.6% to 15.8%! That is the number that is most comparable to the way the data was calculated back in the great depression. And actually the non-seasonally adjusted data showed a slight decrease, falling from 16.2% to 15.4%, a rather sizeable reduction.

And the banks are all out diluting their stock to raise funds, Morgan Stanley just raised $7.5 billion. Little Timmy Geithner is claiming that we won’t get Japan because the banks will earn so much! And he is hell bent on ensuring that they do, too. He’s going to rob you directly and hand the cash to them, while at the same time robbing you some more to force rates lower and widen spreads so that the banks can rob you yet some more by charging usurious interest rates to YOU. It’s a great plan really. Love that little Timmy, what a pistol!

Last night the futures rose basically from the close yesterday:

The oscillators were indicating some rally was needed to work off oversold on the very short time frames. IF yesterday was a top, then the rise into this morning sure looks like a wave 2… IF that’s true and a wave 3 is coming, I would think that we would need a little more time before it would start. Of course it’s very difficult to say yesterday was a top yet as the uptrend channel is still in tact.

The NDX looks most like a top of some duration and remember that it and the RUT tend to lead. Here’s a chart that Ethan Taub was kind enough to send to me last night of the Nasdaq… here are his comments, “Looks like you might have called the top right… for example on the Nasdaq there's a lot of stuff today -- ascending pitchfork + descending pitchfork + 200 day MA + 100% time retrace all converging at once price/time instance. That blue square on or about 06/18 is my guess for where it goes next.”

That’s some pretty powerful overhead resistance, and I like the pitchforks, they are actually channels that define the range of motion. His target could be a likely spot and I like his time proportionality as well – nice chart, thanks for sharing, Ethan!

Yesterday was the Thursday before Options Expiration. Prices fell. That means, 70% of the time, that the week of Opex prices will be higher. So don’t get too carried away on the downside, there is something to that rule, although last month was a MISS, one that I squarely lay on the back of manipulation. Again, you can call that bull if you want, but when the Fed is buying the bond market, you cannot deny that the markets are no longer free, they are NOT. My sense and feeling is that those actions are just the tip of the iceberg when it comes to manipulating the markets.

I’m late getting this posted, so I’ll stop here. I have a couple of articles coming, one by Martin Armstrong on a world currency! This is something I have been saying would be coming and the central bankers are, in fact, sneaking one into the back door on us. Although the IMF has already begun to take action the mainstream press has been ignoring it – gee, why do you think that is? It will be interesting to see what Armstrong says about it.

Okay, have a good day, rally on Garth!