Friday, August 5, 2011

Morning Update/ Market Thread 8/5 – What Jobs Friday Edition…

Good Morning,

Stocks are higher this morning following the 9th largest point drop in history yesterday. The dollar is lower, bonds are lower, oil is higher, gold & silver are slightly higher, and food commodities are mostly lower.

Let’s face it, without massive QE, and especially with the potential of tightening budgets, the stock market is just a limp noodle. Actually it’s more like a great big fluffy marshmallow – except there’s absolutely nothing real on the inside, now not even the corrosive sugar.

There is currently a poll on the front page of that asks, “Which is a bigger concern for the U.S. Economy? Debt or Unemployment? And 76% of the respondents chose Unemployment, with only 24% choosing Debt. This tells us that the vast majority of people still do not understand that it is the DEBT that is leading directly to the unemployment! I think CNN putting those two topics together was a complete accident on their part, but it shows just how far away we are from a workable understanding that the WHO whom creates the debt is directly responsible for the high unemployment.

And speaking of which, the weak and trumped up numbers came in better than expected with 117,000 supposed nonfarm jobs being created, and the headline for chimps rate fell from 9.2% to 9.1%. Here’s Econofantasy:
The economy finally got a break with better-than-expected numbers in the July jobs report. Payroll jobs advanced 117, 000, following a revised 46,000 rise in June, and revised 53,000 in May. Analysts had projected a 75,000 gain. Also, the May and June revisions were up net 56,000. Private sector growth was somewhat healthier as private nonfarm payrolls grew 154,000 in July, following an 80,000 rise in June and 99,000 increase in May. The median forecast was for a 108,000 boost for the latest month.

A rebound in the auto sector appears to be helping earnings. Wage growth picked up as average hourly earnings increased 0.4 percent, no change in June. The market forecast was for a 0.2 percent increase. The average workweek for all workers in July was unchanged at 34.3 hours and matched the market consensus.

From the household survey, the unemployment rate slipped to 9.1 percent from 9.2 percent in June. The July figure came in below expectations for 9.2 percent.

Today's report should relieve fears that the economy is headed back into recession. Growth is still modest but positive. And maybe the phrase "transitory" will again be seen applying to first half weakness. Equity futures jumped on the news.

The BLS site is failing to serve up information, so I am unable to obtain the Employment Situation report or the phony Birth/Death Model. I will be out selling boats all day and all weekend (come by 12th and Commercial Avenue in Anacortes!), so I don’t have time to wait for their sites to return to normal service.

Here’s what John Williams thinks real unemployment is:

The Monster Employment Index fell from 146 to 144, not that anyone cares and gee, I can access that info.

Sorry I don’t have the time to wait for it.

The Head & Shoulders patterns are now obviously confirmed. The targets on those are 1,130 on the S&P and 10,900 on the DOW.

The VIX shot to well above the upper Bollinger band again, erasing the market buy signal from just two days ago: