Friday, July 8, 2011

Morning Update/ Market Thread 7/8 - What Employment Edition...

Good Morning,

Equity futures plummeted on the Employment Situation release with headline numbers far worse than expectations, coming in at only 18,000 supposed nonfarm payroll and the headline rate spun for mass media consumption rising to 9.2%. Once again this report is way off the expectations set by the notoriously bad ADP Report that came out just yesterday. The reality, of course, is far worse and we’ll dive into that in just a minute. The immediate reaction sent the dollar lower, bonds way higher, oil lower, gold & silver higher still, and most food commodities are slightly higher.

Take a look at the 5 minute short term chart of the dollar, and you’ll see that once again it fell just off of overhead resistance. I would not be surprised to see it reverse and break that triangle higher today, we’ll see:

The expectation for the Employment Report was that there would be 105,000 nonfarm payroll jobs added, and that the rate would fall to 9.0%, not rise. Of course the truth is far worse as the economy continues to shed jobs like crazy and reports like this continue to expose the lies from the administration and from “economists” for what they are – complete nonsense. Before I jump into the spin, here’s Econospin doing their part to convince you to please, oh please, keep the Ponzi scheme going – least they wind up being included in the BLS’s numbers:
Today's employment report is abysmal. We have had two months in a row of essentially no growth. Nonfarm payroll employment in June slowed to a crawl with an 18,000 gain, following a revised 25,000 rise in May, and revised 217,000 in April. The market median forecast was for a 105,000 boost. Also, the April and May revisions were down net 44,000. Once again, the government sector held down payroll numbers as private nonfarm payrolls outpaced the total with an increase of 57,000 in June, following a 73,000 advance in May. Analysts had projected a 125,000 gain in June.

Most major industries were little changed. Goods-producing jobs edged up 4,000, following a 3,000 rise in May. Manufacturing jobs rebounded 6,000 after a 2,000 dip in May. However, construction declined 9,000 after decreasing 4,000. Mining advanced 8,000, following 9,000 gain the prior month.

Growth in private service-providing jobs slowed to a rise of 53,000 after a 70,000 increase the prior month. Leading the increase in June was leisure & hospitality, up 34,000 with professional & technical services, up 24,000. Health care continued to trend upward with a 14,000 boost. On the downside, standouts were educational services, down 17,400; financial activities, down 15,000; and temp help, down 12,000.

The government sector shed another 39,000, following a 48,000 drop in May. This latest decrease was led by local government but declines were also seen at state and federal levels.

Average hourly earnings also slowed June, coming in at no change, following a 0.3 percent rise the prior month. The consensus forecast was for a 0.2 percent increase. The average workweek for all workers in June slipped to 34.3 hours from 34.4 the month before. The June figure came in lower than the market projection for 34.4 hours.

On a year-ago basis, overall payroll jobs in June improved to a still soft 0.8 percent from 0.6 percent the previous month.

From the household survey, the unemployment rate edged up to 9.2 percent from 9.1 percent in May. The consensus expected 9.0 percent.

The June jobs report reinvigorates the argument that the economy is in a soft patch. While a number of indicators have picked up strength, employment is key for the consumer sector to add to economic growth. On the news, equity futures dipped significantly, bond prices firmed, and crude oil declined.

Pretty hard for them to spin that one. Note the revisions lower to the previous months, and also that earnings are falling as well. Price inflation in the things you need while earnings are falling. Terrific economy, and I’ve been telling you why that’s happening, and I’m going to tell it like it is once again, but first here’s the entire report…

Employment June 2011

Let’s start uncovering the lies starting with the advertised rate of “only” 9.2%. First of all, even by their own convoluted methods, the teen unemployment rate is 24.5%. When we turn to the “alternate” tables (where we get much closer to reality) we find that U-6 unemployment jumped in June a full percentage point(!) from 15.4% to 16.4% not seasonally adjusted, but still jumping from 15.8% to 16.2% even with seasonally adjustments:

Now let’s talk about the phony “Birth/ Death Model” adjustments. This number manipulation devise added a whopping 131,000 supposed jobs in June, surprisingly the exact same number this model added in June of last year. While that’s a pile of wishful manipulation, it breaks the trend where they grow the number by telling an even bigger lie than they told last year:

While this number can’t be just subtracted from the headline number it is clear that without this phony model that the economy is still shedding thousands upon thousands of jobs. A lot of those jobs are governmental jobs, heck, just yesterday the state of Minnesota shut down completely idling thousands of state workers who not only are losing pay, but also currently have no benefits either. This as Minnesota has an impossible $5 billion hole in their budget, this is just slightly smaller than Washington State, here in my home state. And this highlights the reality that is DEBT SATURATION. Once the economy is saturated with debt, then adding more debt only works to burden the economy with higher interest payments and thus IT CANNOT SUPPORT AS MANY JOBS.

This means that all the supposed experts are WRONG. They are wrong and cannot wrap their minds around debt saturation because their livings are corrupted by special interest money. But since my living is not corrupted in such a manner, I can show you the following chart comparing Base Money to the Mean Duration of Unemployment and you can draw your own conclusion – I think it is self-evident:

Just yesterday the “Fed” released their M2 money supply figures that zoomed up a whopping $76.1 billion in just the past week! This is up sharply and is a huge one week figure. Since all money in this country is created as an obligation (generally in the phony bond market), it all carries interest with it, and thus places an even greater anchor around the neck of employment.

Below you can see in the M1 Multiplier what effect adding more debt has upon the way money goes through the economy... or in this case how it fails to ripple through the economy:

Again, prior to the debt saturation point, adding debt works to stimulate the economy – after debt saturation adding debt does the exact opposite. You can see that on the following chart of the Employment Population Ratio which rose in waves leading up to the year 1999, but then has declined ever since. Hey, where is the supposed recovery?

Of course I’m not the only one pointing out the lies, John Williams at Shadow Stats also tries to paint a picture of reality by tracking employment the way it was tracked prior to the current manipulations, according to him real unemployment is pushing 23%:

As sad as these statistics are, they pale in comparison to what’s happening in and around Fukushima, Japan. The lies being told there were whoppers of historic proportions, but they are now being exposed… finally. Things like ordering irradiated TEPCO workers to stand in front of television cameras and pretend to be just ordinary citizens, ordered to lie about how nice life is and has been in the Fukushima area while failing to identify themselves as employees who were told directly to lie to the Japanese people and to the world. That’s just the tip of the iceberg, there is far more occurring than I can possibly cover here. I suggest that you stay informed on this subject, we generally discuss it every day inside of our Daily Thread.