Friday, May 6, 2011

Morning Update/ Market Thread 5/6 - Would you Like Fries with That(?) Edition…

Good Morning,

Equity futures are zooming higher on the Nonfarm Payrolls report despite the Unemployment Rate rising from 8.8% to 9.0%. The dollar had a huge move higher yesterday but is only slightly lower this morning. Bonds, which have gone straight up since the wide held belief that Bill Gross had sold everything, finally did make a move lower on this report. Oil, which crashed yesterday is bouncing slightly today. Silver, which has crashed over the past four days is bouncing. Gold is retesting $1,500 from below, and food commodities are mixed.

My perspective on the commodities crash yesterday is that is what happens when you produce false fluff markets and then throw in more manipulation. But make no mistake – the trend is clear, and the trend is money printing to accommodate the impossible math – base money just updated yesterday:

Not that base money is everything, it most definitely is not. Remember, there are THREE kinds of money; credit money, sovereign money, and other money such as margin and derivatives. That category of other money is by far the largest, HUGE, and it is not tracked and not reported. Silver is just one tiny example where margin allows people to leverage small amounts of money into larger plays – make no mistake, that is money creation, but it is TEMPORARY, and can easily go away. And so we ride the waves of insane and out-of-control “moneyness” at the whim of those who are in control of the production. And note that the banks own the exchanges and they ultimately set the rules on how much other money is allowed – they create the vast majority of derivatives, they control the whole shebang, lock, stock, and politician.

And here’s were PERFECT comes in. This morning JPMorgan joined Bank of America in reporting PERFECT trading days for Quarter 1. Again, not one day of losses. And yet no one stands up and shouts about what that means. It means complete and total capture, that’s what it means. It means that for all their wins, someone else lost. Who is that someone else? Well, that would be you if you are trying to beat their HFT machines, money creation, after hours low volume moves, and rule manipulations. So, let’s be clear: THEY WIN, YOU LOSE. What do you lose? Your money… How did you get that money? You, unlike them, earned it with your life’s energy. So, their exchanges and HFT machines are actually PERFECT AT STEALING YOUR LIFE’S ENERGY.

No, that’s not hyperbole, that’s just FACT.

Oh boy, let me spend my life energy deciphering a phony Employment report for you – I mean if we TRUSTED our government, then I wouldn’t need to, but yet here we are. Below is the entire report from the BLS:

Employment April

Here is Econospin’s summary:
Job growth surprised on the high side but there are still soft spots. Nonfarm payroll employment in April expanded a healthy 244,000, following a revised 221,000 advance in March and a 235,000 rise in February. The April gain topped analysts' estimate for a 185,000 advance. Also, the February and March revisions were up net 46,000. Private nonfarm payrolls were even stronger, growing 268,000 in April, following a 231,000 rise in March. The consensus forecast called for a 200,000 increase in April.

Gains were seen in goods-producing and service-providing sectors. Goods-producing jobs posted a 44,000 boost, following a 37,000 rise in March. For the latest month, manufacturing jobs increased 29,000 after a 22,000 gain in March. Even construction expanded though with a modest 5,000, following a 2,000 uptick the prior month. Mining jumped 11,000 in April.

Private service-providing jobs increased 244,000 after a 194,000 rise in March. Trade & transportation was up 71,000 in April with 57,000 coming from retail trade. Other notable gains included professional & business services, up 51,000; health care, up 37,000; and leisure & hospitality, up 46,000.

Government jobs fell 24,000, following a 10,000 dip in February.

Wages were sluggish in April as average hourly earnings rose 0.1 percent, following a 0.2 percent gain in March. The latest figure came in lower than the median forecast for a 0.2 percent improvement. The average workweek for all workers posted at 34.3 hours, the same as in March and the consensus estimate.

On a year-ago basis, overall payroll job growth in April was up 1.0 percent, matching the prior month's pace.

Turning to the household survey, the unemployment rate rose to 9.0 percent from 8.8 percent in March.

Today's report is notably positive on balance. Equity futures rose on the news.

Now, let’s dig in.

First some math. The population of the United States is growing at about 1% per year. There are 310 million people, that means the population will grow by 3.1 million this year, or about 258,000 per month! About 60% of the population works, so that means that we need to create about 155,000 jobs per month just to accommodate that growth in the population. So, if we take the BLS at face value then we are net positive for April by about 89,000 jobs.

So, why did the rate from the Employment Survey go up?

Because in fact the number of people in the Household Survey who are UNemployed ROSE by 205,000. Yet they spin that from there magically into a jobs created number with the Establishment Survey manipulations.

The truth is that in the past year the labor force has shrunk by about a million and the participation rate has shrunk by about 3 million.

Below are charts showing the precipitous decline in both the Participation Rate, and in the Employment Population Ratio:

And if we’re truly adding jobs, then how come the Average Duration of those unemployed is still climbing straight up into absurd levels never before seen?

It’s because we aren’t really adding ANY jobs, that’s why.

The now famous “Birth/Death” model was used to add 175,000 phantom jobs in April – many of which likely do not exist in reality. And the trend on the part of the BLS is clear – bigger numbers month after month which means more and more phony jobs added:

When you look at the year over year change, the BLS has created 173,000 more jobs this year with that model than they did last year for just the first four months. These distortions really add up over time, and while we don’t know how many actually were created, you only have to subtract out about half of this number before we’re back into real negative job creation territory.

And of the jobs “created,” we know that 62,000 of them were created at McDonalds. Would you like fries with that? Of course this is nothing but a publicity stunt on their part, this is typical of their spring hiring pattern. All corporate spin, all the time – and yes, they got a mention on my site, way to go marketing department! Is it just me or are you craving a greasy cheeseburger?

Turning to the Alternate table, we see that indeed they are counting more people as looking for work and that is a large part of why the Rate moved from 8.8% to 9.0%. Whether that’s reality or not is another matter entirely, but that’s part of what’s happening. You can see that unadjusted U-6 fell from 16.2 to 15.5%, but that with seasonal adjusting it ROSE from 15.7 to 15.9%:

My take is that overall we are still not even close to producing a single job – we are in fact still losing jobs – still. And the jobs we’re losing are the good jobs, while the jobs being created lack living wages, benefits, and real retirements.

And the BLS got to steal about two more hours of my life’s energy force, and distracted all of us from the point which is that debt saturation caused by the central banks has turned us all into debt money slaves.

As frequent commenter Fred importantly pointed out, for every winning trade they produce, someone is on the losing end. Don’t let it be you. In fact, these perfect trading quarters alone should be enough to convince you that what the people should really do is simply withdraw all funding and refuse to participate in these “markets” until the HFT trading nonsense is gone. Heck 10% moves on the open should also convince you that it’s no place for those without insider information to be playing – playing in the middle of the freeway is safer.