Thursday, January 6, 2011

Morning Update/ Market Thread 1/6

Good Morning,

Equity futures rose overnight but fell back to just above level on release of the Weekly Jobless Claims Report. The dollar is slightly higher, bonds are slightly higher, while most commodities including oil and gold are lower.

The Monster Employment Index fell during the month of December to 130 from November’s 134. That is the opposite of what the ADP data showed yesterday, here’s Econoday’s short take:

The Monster employment index fell four to 130 to indicate slowing volume of online recruitment in December. The report notes state and local government hiring continues to slow.

As I noted yesterday, the government is now leading the layoff trend, they are certainly not adding workers and with Republicans now under pressure to control the deficit large hiring is nowhere to be seen despite the media hype.

Meanwhile this week’s Jobless Claims prove that last week’s report was an anomaly… but we already knew that because the unadjusted numbers rose significantly last week as they did once again this week! Last week’s report came in at 388,000 (revised higher again) and the adjusted headline number came in at 409,000 this week, putting the figure back above the psychological 400k milestone. Remember, any figure over 350k shows that jobs are being lost, heck, we’re still not even breaking even despite all the hype. And the unadjusted claims rose by 52,038 in the past week, bringing the total up to 577,279! How in the world they are able to adjust out nearly 170,000 claims is beyond me. Here’s Econospin trying to convince themselves that’s everything’s okay:

Jobless claims haven't been too bumpy this holiday period, moving convincingly lower. Claims did rise to 409,000 in the January 1 week yet follow the prior week's 391,000 for the second best reading of the recovery (prior week revised from 388,000). The four-week average is telling the story, down 3,500 in the week for a 410,750 level that is down nearly 20,000 from a month ago.

Continuing claims also continue to move lower, down 47,000 in data for the December 25 week to 4.103 million. The four-week average of 4.123 million is trending about 100,000 lower from a month ago. The unemployment rate for insured workers is unchanged at 3.3 percent.

Jobless claims data, not to mention ADP's big call, are signaling solid strength for tomorrow's big employment report.

Delusional is all I can say regarding their comments if they actually believe their own drivel.

And how does Bloomberg spin this news? Why into a positive headline, of course; “Fewer Jobless Claims Filed in U.S. Over Past Month as Labor Market Revives.” LOL, note how they took a negative report and spun it into a positive by incorporating last week’s rogue data? Hell, all the data is rogue, this week is even worse.

Change? Here’s your change nearly three years after we learned that Goldman was selling bad debts while simultaneously betting against the very “investments” they were selling:

Goldman Sachs Says It May Sell, Hedge Facebook Stake

Jan. 6 (Bloomberg) -- Goldman Sachs Group Inc. clients considering whether to buy shares in closely held Facebook Inc. should take heed: Wall Street’s most profitable securities firm could unload its own holdings without letting them know.

In the last sentence of a one-page investment profile sent to private wealth clients, the firm explains: “GS Group may at any time further reduce its exposure to its investment in Facebook (through hedging arrangements, sales or otherwise), without notice to the fund or investors in the fund.”

Now that’s CHANGE you can believe in! A lousy note at the end of an investment profile… no kidding, buyer beware. My take is that anyone buying anything whatsoever from Goldman Sachs is suffering from a serious case of failing to do their due diligence. And the same goes for buying any equity in the current “market.”

Not to worry, state revenue for 2009, the Census Bureau reported, only fell by a measly 31%! I’m sure that 2010 was much better right? I just received notice that the tax value on my home fell by about 8% for 2011, so I’m sure governments will be collecting more this year! Ooops…

McHugh is running an Elliott Wave count showing we are possibly very near completion of the end of wave 5 at this time. One way or the other we are long overdue for a serious correction and I believe one will begin soon. I do note, however, that bonds have still not reached their strong support zone, and further declines in bonds can help to levitate equities. And don’t forget, a POMO a day keeps the correction at bay!