The number is . . . a much better than expected loss of 345,000 jobs.

Let’s put this into some perspective, both good and bad:

• Its the best NFP release since the crisis exploded in September 2008;
• Average hourly earnings advanced $0.02 to $18.54;
• Temporary workers continue to loss jobs, but seem to be moderating, losing only 7,000 jobs;
• Unemployment rose to to 9.4%, a 25 year high;
• Unemployment rose by 787,000 in the month to 14.5 million;
• Total job loss sine the recession started is now over 6 million;
• The broader U-6 unemployment hit 16.4%.

While many view the decelerating job losses as signaling the end of the recession, they appear to me as signaling the end of the panic period of the credit crisis. We are now in an ordinary, as opposed to historic, recession.

Category: Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

301 Responses to “NFP is . . . -345k”

  1. ericholtman says:

    It’s UFB. Take the market on that!

  2. ZackAttack says:

    So we expected a loss of 525k and headline of 9.2%.

    Instead we got a loss of 345k and a headline of 9.4%.

    Color me puzzled.

  3. Mike in Nola says:

    U6 up to highest yet. Meaning? Or just to be expected.

  4. B/D +220, U-6 jumps to 16.4%.

    All is well, nothing to see here………….

  5. schoolsout says:

    yea, what Zack said….

  6. constantnormal says:

    Another ROARING UP day …

    … so back in the dawn of time … back when markets were markets and not some sort of rigged crap game (if there ever was any such time) … how was a monthly job loss figure of 345K received by the markets?

    Was that a good thing?

  7. Stuart says:

    600K new filings each week and records levels of continuing claims, 9.4% unemployment rate, a U-6 of over 16.4% and they post 345K lost. Who the hell is running the show at the BLS? Baghdad Bob? They just nuked their last shred of credibility with even bozo the clown. Utterly worthless their releases are now.

  8. cvienne says:

    Look at the yield on the 10y Treasuries…

    3.83%

    The BV’s are going to start stepping up to the plate now…

    The market may be up this morning on a little “short squeeze”…I’d say it could get aas high as 966 if they want to pump it hard (Andy T could probably give a better number)…

    But they’re going to start doing some work on the long bonds here or BB is going to lose all his credibility…

    I’m moving $$ from 2-10′s here…

  9. The Curmudgeon says:

    While your eyes were averted to the “green shoot” of less bad unemployment numbers, the little ol’ US Treasury market is doing its own shooting. Ten Year @ 3.82%, according to latest Bloomberg. And mortgage rates at their highest this year (about 5.5% for 30 year fixed). Now we just need some fertilizer to spread on the shoots…but that would be expensive, since ag commodities are also shooting…my isn’t “reflation” a wonderful thing? Green shoots everywhere.

  10. jqui says:

    More good news. Employers trimmed only 345,000 jobs and the unemployment rate is only 9.4%, the highest since 1983. Time to buy stocks. I hate to be a wet blanket (actually, I love to be a wet blanket. It’s my thing). Please look at the old birth/death adjustment chart. According to the BLS model, small businesses added 220,000 jobs in May after adding 226,000 jobs in April. Isn’t that precious. In the midst of the worst recession since 1930 our beloved government agency is telling us that small businesses are hiring like crazy. In two years they will adjust this data when no one is paying attention, because it is WRONG!!!!!!

    Small businesses are going out of business in record numbers. I can guarantee you that small business subtracted at least 220,000 jobs in May. Therefore, the REAL TRUTHFUL losses are 345,000 + 220,000 + 220,000 = 785,000. Do you think the market would be rallying if that number was reported?

  11. cvienne says:

    To put this in a different perspective…

    Since last October, the economy has lost between 3.5 million – 4 million jobs…Foreclosures are on the rise…a HUGE wave of ARM resets are coming in a couple of months…the US Government is now running a $2 trillion deficit (most of that paper has yet to be brought to the window)…Oil prices are back up (and predictions are for further increases)…

    Yet the S&P is at the exact same level as last October…

    That’s a heck of a lot of optimism for a recovery…

    Quick, cash on the sidelines, GET IN b4 it’s too late!

  12. cvienne says:

    If the FOMC doesn’t come in here and do a rate increase sometime this summer, they will lose any credibility they even THOUGHT they had in the first place…

    Come on BB, this jobs number gives you cover to hike…

  13. Mike in Nola says:

    Curm: the Ten year was actually at 3.9% at one point. I’m pulling for it. Want some decent CD rates before the next panic and the fed pegs than a ridicuously low returns again for an even longer period.

  14. Stuart says:

    The Chinese laugh at Geithner, now the bond market (and anyone else thinking clearly) laughs at the BLS.

    The destruction in credibility is epic.

  15. VennData says:

    America! What a country.

    Fed should start the process, that begins the discussion, that gets market participants ready for teeny-tiny future hike in rates… a small, but a necessary one.

    And the GOP should start looking for their sacrificial lamb for ’12.

  16. call me ahab says:

    my guess- the top is in- don’t sell any shorts now

  17. jc says:

    Something fishy about the disconnect beween the monthly reported job loss number and the 9.4% rate, why?

    Any changes in methodology?

    Maybe CA and MI forgot to report? LOL

  18. Mike in Nola says:

    jqui: link to the small business model?

  19. dead hobo says:

    Wait until later this afternoon. The pump will return and the market will end with another predictable sharp increase right before the close. According to the flotsam available to sort through, this is still a professional’s market. Mom and pop are sitting this out. Me too. It’s all about preservation of capital. Where’s the upside from here without the pump? Multiple expansion?

  20. cvienne says:

    In the “you gotta be kidding me…” category…

    Fed Intends to Hire Lobbyist in Campaign to Buttress Its Image …

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aZjQKyLci1AM

  21. JusTryinTaMakeIt says:

    This 200,000+ increase from the addition of new companies (B/D) is a joke. And I am sure all these new companies have a ton of business, great cash flow, are paying their employees great wages (and bonuses), and are throwing off great earnings to their owners. And of course they are debt free with no onerous financing costs. OR… Are they selling products on the internet, after watching an infomercial on TV. Or maybe selling Avon door to door.

  22. matt says:

    Did they release the hours worked?

    If these numbers are accurate, this is incredibly news (didn’t Rosie say when it gets into the -400k range, we’d be ready for recovery?).

    It’s kind of weird though, since all of the states are cutting and we have automakers entering massive shutdown periods…

  23. TrembleTheDevil says:

    Didn’t you write a book about this or something? Why would anyone want to buy your work if you’re not even going to examine what the real numbers are?

    All that’s going on is what technically counts for “unemployment” is incredibly disconnected from reality, an article about April’s number explains it:

    -The 8.9 percent April unemployment rate was based on 13.7 million Americans out of work. But that number doesn’t include discouraged workers or people who gave up looking for work after four weeks. Add those 700,000 people, and the unemployment rate would be 9.3 percent.

    - The official rate also doesn’t include “marginally attached workers,” or people who have looked for work in the past year but stopped searching in the past month because of barriers to employment such as child care, poor health or lack of transportation. Add those 1.4 million people, and the unemployment rate would be 10.1 percent.

    - The official rate also doesn’t include “involuntary part-time workers,” or the 2 million people like Noel who took a part-time job because that’s all they could get, plus those whose work hours dropped below the full-time level. Once those 9 million workers are added to the unemployment mix, the rate would be 15.8 percent.

    http://news.yahoo.com/s/ap/20090605/ap_on_bi_ge/us_becoming_a_statistic

    ~~~

    BR: Also, Kennedy was shot.
    Dude, you are 3 years late to this party.

    I’m the guy who advocated using the U6 over U3 in this report, as well as mercilessly mocking the B/D report.

  24. jc says:

    From Big Picture almost 2 years ago

    B/D is why we are smelling fish!

    The Accelerating BLS Birth/Death Adjustment
    Tuesday, July 10, 2007 | 07:20 AM
    in Data Analysis | Economy | Employment | Real Estate

    I’ve mentioned the B/D adjustment over the years, and how its become an increasingly large portion of the reported BLS new jobs.

    What I haven’t previously mentioned is that over the past year, it is accelerating: the Birth/Death Adjustment has become an ever-large portion of the reported NFP payrolls.

    How much larger? Well, consider the following data points: Over the five month period ending in June, BLS B/D adds was a total of 922,000 new jobs. During the same period, the actually head counted Non-farm Payrolls (NFP) job creation was 709,000.

    That’s right, fictional Birth/Death job adds have been outpacing actually measured job creation by some 30%.

    As they do every year, BLS Net Business Birth/Death Model deleted jobs in January — in 2007, it was 175k. That means that year-to-date, the net fabricated BLS new jobs was 747k — versus NFP growth of 871k — that’s 85.58% of NFP job growth.

    Example of the absurdity of the new Birth/Death model — in place since 2001 — can be found in the specific employment sub-sectors. Construction jobs are an obvious error (housebuilders added 12,000 workers), big jumps in education while school is out for summer is another, ‘Leisure & Hospitality’ B/D jobs are a multiple of the net category jobs created.

    Prior to 2001, the B/D adds were less than 20k per month. Now, they dominate the Non Farm Payroll report.

    Beneath the headlines, we see a far different reality. The FT noted:

    “Wall Street economists, meanwhile, were surprised by continued hiring in the construction sector seen in Friday’s figures as despite a prolonged housing market slump…The bulk of the hiring was in the service industries, as employers such as banks, insurance companies, restaurants, added 135,000 workers last month after hiring 199,000 workers in May. But they also pointed to signs of potential economic weakness, as the retail sector cut 24,000 positions.”

    Economists also said an unwelcome percentage of last month’s hiring was attributable to state and local governments, which added 40,000 staff and are not viewed as good indicators of economic activity.”

    I mentioned my incredulity over the fawning WSJ page 1 headline this past weekend (How Good Was NFP Really?). That is the soft prejudice of low expectations in action.

    My favorite skeptic on BLS data is Bill King; Bill is even more incredulous over the reaction to what was by all measures a mediocre jobs report:

    “And once again, The Street and their fin media stooges bray about how bullish 132,000 NFP jobs are (CSFB’s chief economist called the report ‘excellent.’) even though just a few years ago Street Conventional Wisdom held that the economy must generate about 175,000 jobs each month just to absorb demographic growth.

    Lehman’s economist said, “The labor market is one of the stronger parts of the economy right now.” This is a Clintonesque, qualified statement. It could imply that the rest of the economy really sucks.”

    Sucks, indeed.

    Here’s Bills’s chart of the past few decades NFP growth:

    NFP with 1-year (12 month), 10-year and 40 year (480-month) moving averagesNfp_20_years

    Source: M.Ramsey King Securities

    >

    As the above chart clearly shows, the June NFP number is hardly ‘excellent’ or indicative of economic strength. With NFP yearly average of 167,333, how can a release ~35,000 or > 20% less than the yearly average be ‘excellent’?

    The 40-year average NFP growth is 150,600 — and that is with a national population considerably less than 300 million people. Anyone asserting a NFP number ~15% below the 40-year average as ‘excellent’ or a sign of strength is a shill who has failed to do the math . . .

    UPDATE 3 July 11, 2007 8:20am

  25. I-Man says:

    OH I love it…

    Not the fact that our labor conditions are still disgusting… I dont like that.

    But I LOVE that the bond market is finally calling out the bullshit this morning. Just love it.

    They can only spin and shine the data for so long, and then the clear coat is gone.

  26. Andy T says:

    This is a fairly dramatic reversal across the board: DX, Energy, equities…

    As leftback has pointed out and is clear to most traders….it’s all ONE trade: the US$. Can we keep artificially juicing “assets” by debasing our currency, or will the credit contraction once again take hold and cause the $ to rally?

    Right now the US$ looks to be breaking out of the severe downtrend channel from 87 to 78.35 and is producing a hammer bottom on the weekly chart–a hammer bottom that began from a 61.8% retracement (just about near perfect retrace) of the entire move…

    Still another 6 hours of trading left in the week, but right now that is one bullish looking development in the DX.

  27. manhattanguy says:

    As I predicted yesterday, Dollar is up ($UUP), Oil is down ($DUG). Indicative of a reversal day in equities today?

  28. franklin411 says:

    As usual, the bears are on the losing side of the macro picture here. The problem is that the bears are committing the same sin as the bulls committed during late 2007/early 2008: the sin of ignoring the data.

    January: -741,000
    February: -650,000
    March: -652,000
    April: -504,000
    May: -345,000

    Green shoots, comrades…green shoots!

    @Barry:
    You asked: I have these questions for the green shoots crowd: Are firings decelerating? Has Housing and construction stabilized? When will hiring commence?

    Yes, the data above shows firings are decelerating. Housing and construction has stabilized–construction spending is surprising to the upside, and construction job losses dropped by 50% m-o-m (108k in April, 59k May). The unemployment rate will peak in July and contract to 5% by 2012.

    Green shoots, y’all! Green shoots!

  29. matt says:

    OK, here are the “AVERAGE WEEKLY HOURS OF PRODUCTION WORKERS” (seasonally adjusted version):
    Year Jan Feb Mar Apr May
    2009 33.3 33.3 33.1 33.2(p) 33.1(p)

    OK, so that looks like a decline to me. The not seasonally adjusted number came in with an increase, but that’s probably due to the seasonal hiring by the government.

    “Temporary help services EmploymentSeasonally Adjusted” also showed a decline.
    2009 1965.7 1892.7 1835.4 1780.7(p) 1774.2(p)

    These forward looking employment indicators aren’t looking so good. I’m not sure what to think. “Hold cash,” comes to mind.

  30. Mannwich says:

    Jack Welch must be running that numbers machine behind the scenes. Or at least working as a consultant.

  31. franklin411 says:

    @Matt:
    Sorry to burst your bubble, but: “Even the government reduced employment — by 7,000 — after bulking up by 92,000 in April as it added workers for the 2010 Census.”

    http://finance.yahoo.com/news/Jobless-rate-hits-94-percent-apf-15449251.html?sec=topStories&pos=main&asset=&ccode=

  32. Mannwich says:

    @franklin411: I know several people who are just hanging onto their jobs for dear life. You’re living in a fantasy land, my friend.

    Heard from a buddy that stealth layoffs are happening at Oracle. Two groups in his area (sales) got cut yesterday. Thankfully he and his group were spared…for now, but he’s already talking about getting ready to leave the Bay Area if/when it happens.

  33. Mannwich says:

    In our bizarro world, a sell off will happen today. Better than expected may finally be all priced in.

  34. Stuart says:

    The NFP data results do not reconcile with the household survey data, the pace of a rising U-3 rate or U-6 rate as well as the continuing claims data let alone the specific employment data points within the ISM results nor do they reconcile with state payroll reports which are more consistent with the household data. Yes, the sign of ignoring the data, willfully is…. well sinful.

  35. Cursive says:

    Forget the B/D adjustment, the official margin of error was +/- 275k? Did anyone else hear that correctly? If so, this report is statistically meaningless.

  36. jc says:

    Prior to 2001, the B/D adds were less than 20k per month. Now, they dominate the Non Farm Payroll report.

    So with the population approximately the same as 2001 the estimated monthly job creation (220K) is 11X what it was prior to 2001 and generally larger than the counted new jobs sniff sniff

  37. AmenRa says:

    When was the last time there was a divergence between jobs lost and the unemployment rate?

  38. Mike in Nola says:

    jc: to be fair, Birth/Death model has only contributed 338k jobs so far this year. If they stay on track, the will be about 530k for the year by the anniversary date of Barry’s article.

    Still doen’t mean this is great. I still don’t put a lot of faith in any of these figures because they are adjusted so much. They are more of a very rough guide and maybe a trading item. I think figures released by big businesses and retail sales figures are a much better guide to how we are doing.

  39. dead hobo says:

    BR offered:

    We are now in an ordinary, as opposed to historic, recession.

    reply:
    ———–
    Agreed the panic is gone. Now, can anyone come up with reasonable scenarios that describe the economy over the next 6 to 12 months and why it will behave that way? Thoughtful analysis should provide insight into the real economy.

    (This is opposed to the stock market and other leveraged investments, which will go boom and bust again over a time that can not be predicted at this moment, but will be well within 12 months; the boom will be more of a boomlet compared to 2008, but still be significant)

    I disagree with the ‘ordinary recession’ characteristic. Thoughtfully rebuilding inventories and adding a little stimulus will not fix anything this time. Supply will not create it’s own demand, in spite of the power of Kudlownomics, the Laffer Curve, or Say’s Law.

    I’ll go first.

    I’m still predicting a future that corresponds to a balance sheet recession. Too many people owe money and have concerns about being able to pay it off. Foreclosures are still significant and will remain this way. Thus, Consumption will deteriorate and tend towards low end substitutions over high end discretionary vendors. Actual job loss will continue for a while and indicators of expansion, such as temp help increases and a lowering of underemployed workers, will not show improvements. Savings rates will improve, causing Consumption to take another hit.

    Oil prices will continue to rise because of leveraged positive feedback loops of asset bubbles. Gasoline will take a larger part of disposable income and create uncertainty about whether or not normal life will be affordable in a couple of years. This will also hurt Consumption -ex oil products. Second round effects will cause high oil prices to permeate the economy, creating inflation that the Fed will ignore.

    Pundits will claim oil prices last year and before were this high with little ill effect. They will change the subject if you remind them that oil prices were a concern, but that concern was offset by asset bubbles in the stock market and in real estate. Thus, the higher prices could be ignored by most people because of the wonderful money machine called their house and the personal ATM it provided. This does not exist today, will never again exist, and thus cause higher oil prices to hurt a lot.

    The coming stock market crash will create another credit freeze throughout the economy. Liquidity is driving the markets now and when defaults occur due to idiotic investments, it will again vanish, putting Uncle Stupid in an embarrassing position. How should he fix the fix in progress, due to problems caused by morons he can’t control? Who will be too big to fail for the 2nd time in a couple of years?

    Nothing of note will occur that will promote real Investment that would create actual private sector job growth. Maybe a few hedge funds will place help wanted ads on Careerbuilder, but that’s about it. 1 million census workers will be hailed as a green shoot.

  40. jc says:

    Deutche Bank says the workweek decline from 33.2 to 33.1 is the equiv of 350K jobs (lost).

    So that doubles the counted job losses to 700K plus 220K B/D imaginary jobs and it’s -920K jobs equiv

    I wonder if DB or someone else does a monthly number accounting for these factors, I’m sure somebody must.

    There obviously have been changes made to the B/D since 2001 and maybe there were changes made this month. Thats my suspicion.

  41. JusTryinTaMakeIt says:

    I was being facetious above explaining the B/D increase as an increase in Avon representatives. But here is the proof
    http://www.forbes.com/feeds/ap/2009/05/05/ap6382372.html
    The number of these “independent representatives” has increased more than 10% in the past year. Of course, at the same time, ” Avon announced a restructuring that incorporated a freeze on salaries and hiring. They have already cut jobs and closed some operations and moved some work to countries where labor is cheaper.” This is REALLY good news for the U.S. economy. GO CHINA GO!!!

  42. dead hobo says:

    I said

    (This is opposed to the stock market and other leveraged investments, which will go boom and bust again over a time that can not be predicted at this moment, but will be well within 12 months; the boom will be more of a boomlet compared to 2008, but still be significant)

    Damn I hate not being able to edit on line …..

    I meant Bust, or boom as in KABLOWEE. I don’t know if 685 will be tested or surpassed, but a down vertical line is in our future if the pumpers remain successful.

  43. franklin411 says:

    @Mike
    Agreed that they’re not fantastic, but it’s getting less and less bad. I would consider it a tremendous victory if some of the tinfoil hatters in the comments section (the ones who advocate investing in “guns, gold and God” in anticipation of the “next big leg down”) would admit this fact.

    When a person has the flu, they start off well, get a little sicker, then more sick, then very sick, then less sick, then kind of sick, and then they’re well again. We’re still very sick and we have a ways to go, but we’re definitely over the hump.

  44. matt says:

    @Franklin: “Sorry to burst your bubble…”

    I’m not sure how that bursts my bubble. The bottom line was that hours worked were down, seasonally adjusted.

  45. Transor Z says:

    There is variation from month to month in the calculation of civilian labor force. This can vary U% by a few tenths of a percent.

    MoM civilian unemployed has been growing by an average of about -5.5% monthly YTD. Projecting forward with favorable “second derivative” slowing to -4% MoM thru Q3 and -3% for Q4 we will be right around 12% unemployment by year end. Tweak that to -3% slowing to -2% and you’re at 11% by year end. In a very optimistic case you might project, say, a very dramatic slowing to only -2% MoM thru Q3 and level (0%) U thru Q4 giving a mere +2.5% annualized increase to U for 2009, i.e., from 7.6% to 10.1%.

    So annualized unemployment growth of 2.5% to 4.5% added to the 7.6% Jan starting point certainly seems within the realm of possibility. I think those are pretty conservative projections, don’t you?

    Considering that it’s not even Q3 and we’re already past the 8.9% U “adverse case” of the stress test for 2009 . . . wow.

  46. matt says:

    From DB, via acrossthecurve:

    “The -345k decline in May nonfarm payrolls was significantly better than
    expected, and the prior two months were revised higher by 82k. However,
    the details of the report were not anywhere near as upbeat as the headline
    suggests. In particular, the weakness in hours and earnings are reason for
    concern.

    The length of the workweek declined by 0.1 hour to 33.1 hours,
    which is the aggregate hour equivalent of an additional loss of about 350k
    jobs.

    More importantly, the manufacturing workweek also declined (39.3 hrs
    vs. 39.5 previously)?this is a negative sign for inventory restocking in
    the current quarter, because inventory rebuilds have historically been
    accompanied by a rise in manufacturing hours worked. Average hourly
    earnings rose 0.1% in the month, lowering the 3- and 6-month rates of
    change to 1.7% and 2.2%, respectively. In short, wages are rolling over
    and this is likely to continue in light of another large jump in the
    unemployment rate to 9.4% from 8.9% previously. The unemployment rate is
    now at a 25-year high.”

  47. ben22 says:

    Anyone claiming the bears are missing something isn’t paying attention to the fact that on almost any measurement you look at, right now, there are more bulls than bears. In fact, some things are even getting close to the bullish extremes we saw in October 2007. I would argue it’s the masses that are flipping bullish that are the ones missing something.

    There has become an idea that bearish means you are ultrashort the market. This is false. Bearish just means you think the trend of prices will be down for some period of time. Right now, all the pressure is on those that are bullish to be right IMO. It is the bulls that are grasping at straws, not the bears. It also seems to me most people that are still very bearish haven’t been really short for a while now, rather, they are just holding more cash, what CNBC might refer to as under-invested. Some, or many should be sucked in right at the very top of this countertrend rally, which I don’t think has happened yet. I think most that were bearish before have either recognized the current trend, which is now months old btw, and are trading or they are waiting for real proof things are getting better, not green shoots that are spun into misleading headlines that indicate things are turning, or have already turned.

    We are going to need to see the savings rate drop pretty big here in order to know the consumer, which drives our economy, though there are far less consumers when using U6, is spending again. If that does happen, can we really even be happy about it? People need to be saving more, personal balance sheets are still far too levered. But hey, green shoots right?

    UUP trade is looking better today but it’s only 10:30. That seemed to me a pretty nice set up to getting long.

  48. dead hobo says:

    I said

    The coming stock market crash will create another credit freeze throughout the economy. Liquidity is driving the markets now and when defaults occur due to idiotic investments, it will again vanish, putting Uncle Stupid in an embarrassing position. How should he fix the fix in progress, due to problems caused by morons he can’t control? Who will be too big to fail for the 2nd time in a couple of years?

    addendum:
    —————–
    Since Uncle Stupid is very likely supporting the stock market pump, directly or indirectly, this would put him in the position of being renamed Uncle Double Stupid. Where’s Ross Perot and his observation of pointy headed bureaucrats when we need him most?

  49. cvienne says:

    @Franklin (9:59)

    Franklin…

    In cinema & screenwriting they use a technique known as “suspension of disbelief”…In other words, REASONABLE people, when they go to see a movie, know that the whole thing is concocted, but they are willing to SUSPEND their disbelief for a couple of hours to enjoy a show…

    After the show is over, reality sets back in…

    That is what has been happening in the equity markets over the past 3 months now (and could, perhaps, go on even a few more weeks, or all summer for that matter)…But eventually reality is going to set in and the show is going to be over…

    Last week I posted about the BOND VIGILANTES, and you laughed at the idea as if it were just some “bear talk” nonsense…Last week, when the yield on 10 year treasury notes spiked up to 3.77, the S&P sold off rather hard…I mentioned that it was a “shot across the bow”…Subsequently, yields came down for a few days (and equities rallied a bit more), but after this NFP number, the BV’s were out in full force again…(The 10y note hit 3.9% “pre-market” this morning)…

    I don’t know what’s going to happen, but it is HIGHLY LOGICAL to assume if the 10year note gets up over 4%, then anything related to a recovery in housing is TOAST…Which means a RECOVERY from RECESSION is toast (in fact it portends more of a “double dip” scenario)…

    Things change…For 2-3 months now, the market has been able to exist in this “idyllic” world of HOPE, OVERSOLD CONDITIONS, and BETTER THAN EXPECTED data releases (because the bar had been set so low)…Add to that the fact that they’ve basically let the banks off the hook with regards to accounting rules…

    All of that is coming to the end of the movie right now (the credits are starting to roll)…

    So I’d caution you that you can’t live your life as if the movie were still running…You seem to want to live in this PERFECT CHOREOGRAPHY world where your SAVIOR in OFFICE comes in and saves the economy and the world in 3 short months and everyone lives happily ever after…

    You’re setting yourself up for 3 1/2 years of bitter disappointment…

  50. cvienne says:

    945 on the S&P is going to be an interesting number…

    This morning, the S&P retraced 61.8% of the move from the 923 support to the high this morning…

    It bounced off that fibonacci, and 945 will be a 61.8 retracement back to the high…

    There is a line in the sand right as we speak here (at 945)

  51. call me ahab says:

    prediction-

    continued job losses as far as the eye can see- there comes a point where there just is not enough people to lay off once you have cut back substantially- does not mean we will see growth- outside of the federal government- where will the new growth come from??- nowhere- I predict continued contraction and continued deflation- people simply are not spending money- hopefully this is the new America- not the fat stupid – let’s go shop to amuse ourselves America-

    contrary to what those dumb fucks in Washington want- also-

    current equity/commodity rally will fail and reverse course south- soon

  52. Mike in Nola says:

    @deadhobo: predictions for next 6 months

    Let’s see if I can channel F411:
    (going into trance)

    1. Green Shoots
    2. Green Shoots
    3. Green Shoots
    4. Green Shoots
    5. Green Shoots
    6. Green Shoots – Obama declared living god by US Senate.
    (Sorry F411. Couldn’t help meself.)

    MHO:

    Employment figures continue to be bad. They should bounce around more as in graphs from prevous downturns, but BLS smoothing distorts data, so you have to just look at the trend and see all the qualifications to get an idea of what’s really going on.

    Unemployment at 9.4% now. Bank stress test assumed worst case scenario of 10.3% at end of 2010. As Mish says, we will likely hit that by August 2009. People once again realize banks are severely undercapitalized and there is distress in the markets and in DC. Arrogant bankers will be back for more bailouts saying it wasn’t their fault. More acronyms of expansion of existing ones. Fed prints more money, but still no real inflationary effect as it sits in vaults.

    Home prices crash as rates rise, mortgages reset, and REO’s get dumped onto market. CRE continues to deteriorate, taking down small banks that funded stripmalls and have just been ignoring delinquencies.

    Another liquidity squeeze at some point as we sink to the bottom and commodity bubbles pop when everyone realizes there really, really is no demand for all that stuff and with leveraged players have to cover bets.

    See last quarter of 2008 for endgame.

    P.S. AAPL collapses back to 80 :)

  53. Pat G. says:

    In Census land, of the 69K which were hired a few months ago, 60K have been terminated in the last couple of weeks. Since many of these folks “expect” to be called back in October or December, if they haven’t applied for UCB they’re not in the count, yet…

  54. leftback says:

    LB says good morning but is experiencing market-related cognitive dissonance.

    The Spinmeisters responsible for generating the employment numbers and Mr Market’s reaction this morning have simply combined to blow LB’s neocortical circuitry. Now the team on the desk at Schadenfreude is having trouble remembering its positions and why we have them. We think we are long cash (aka “underinvested”) and short gold. Normal service will be resumed soon.

    Mike, that looks like a good summary, once we have recovered normal cognitive function we will read it again.

  55. Transor Z says:

    This is as good a place as any to raise this issue: 401(k) loans. We’ve all been very focused on HELOCs, but no doubt these bad boys have also contributed to over-leveraging. According to this Harvard study, 18% of 401k participants had 401(k) loans in 2006. I had forgotten about the whole 401k debit card thing from a few years back.

    http://www.hsph.harvard.edu/pgda/events/seminars/2009/Loans_Madrian_Fall2008.pdf

    This report was prepared pre-crash and takes a neutral stance on the impact of these loans.

  56. franklin411 says:

    @all,
    I’m stepping out to the gym and regret not being able to fully reply. But I had to post…anyone watching Steve Liesman DESTROY that libertarian wacko on CNBC right now? It was very, very sweet–the libertarian snarkily asked him “How did we live before 1913 when the Fed wasn’t around?” and Liesman replied–”we had a lot of panics and bank failures!” Ha! Exactly…you go Steve!!!

    @Cvienne
    I repeat again that I’m not interested in daily market movements. 99.98% of the real world lives in the broad economy, not in Wall Street’s microcosm. I care about where the real economy is going, and it’s definitely on the road to recovery. I have money in the market, and long term I see the capital markets following the economy rather than leading it.

    @Mike
    I don’t mind…especially when the data is going my way! “In war, resolution; in defeat, defiance; in victory, magnanimity” — Winston Churchill :)

  57. cvienne says:

    @Mike in NOLA (11:02)

    IMHO (if we’re on this subject)

    Summer ’09 (June/July)
    - S&P reaches some kind of ‘technical’ crescendo (I still like ben22′s 965-1k call)
    - Obama throws Netanyahu & Israel under the bus (I predicted this last week, it’s already happened)
    - Oil peaks at $85 in July
    - Bond Vigilantes take 10y note yield over 4% next week
    - FOMC ratchets up rhetoric about raising interest rates
    - S&P finally sells off (4-5 days trading wipes out all the gains from May 1st on)
    - Another push upwards (for S&P), but the “high” for the year has already been printed

    (August/September)
    - Any ‘rally’ in S&P on very light volume (still no FEAR in market)
    - Mid August sell-off takes out technical levels
    - Traders come home EARLY from Hamptons vacation (before Labor Day)
    - Market is in full SELL mode until the end of the quarter
    - A hurricane or two bears down on the US…(one actually threatens New York)
    - The world stays ON ALERT for an Israeli strike on Iran’s reactors

    (October/November)
    – Seeing the FEAR in September, Joe Retail cashes out his remaining positions in stocks (he’s had enough)
    - Fund managers are forced to liquidate due to redemptions
    - Money pours back into Treasuries & US Dollar
    - S&P hits low for the year in October (possibly around 560)

    (December)
    - a bounce off the bottom, and then some ‘window dressing’ until year end.

    January ’09
    - Obama replaces Bernanke with Larry Summers
    - On that news, the dollar collapses, Treasuries sell-off, and the real “inflation” starts to pick up
    - Gold, after reaching a “low 800″ handle in the fall, spikes to a new ALL TIME HIGH…
    - Option ARMS start to kick in to high gear (taking financials down)
    - CRE finally collapses

  58. The Curmudgeon says:

    @cvienne:

    @4% 10 year Treasury, the housing green shoots all whither and die. The crash of housing prices, temporarily abated by massive cash infusions, resumes. Mortgage rates are already higher now than they’ve been all year. When the 10-year hits 4.5%, the dollar/T-bond crash will be irretrievably underway. It’ll hit terminal velocity about time for mid-term elections. And there’s not a damn thing all the kings horses and all the kings men can do about it. The end game to this experiment begun in September is about to begin. It’s going to get ugly from here.

    But in my view, that’s a green shoot. Flaming out and blowing up what we’ve got is the only way to make room for something real.

  59. Mike in Nola says:

    Boy, not having good preview and editing in WordPress really sucks. Sorry about the typos.

    To see the Fed’s assumptions about unemployment in the stress tests, check out page 9 of the white paper:
    http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20090424a1.pdf

    I’m sure some enterprising blogger will plot acual unemployment alongside the assumptions. (Hint, hint)

  60. Pat G. says:

    @franklin411 said:

    “How did we live before 1913 when the Fed wasn’t around?” and Liesman replied–”we had a lot of panics and bank failures!” Ha! Exactly…you go Steve!!!”

    So, what has actually changed pre-1913? I suggest you reflect a little more on your points BEFORE you post them.

  61. leftback says:

    What’s quite amusing is that we are told that China has supposedly been snapping up the short end – 2yrs and less while selling the long end, to the benefit of those of us who had the steepening trade on. Of course China doesn’t look so smart today, as we now see the yield curve suddenly begin to shallow – typically a sign that the economy is LESS robust than people think (a steepening yield curve typically indicates a stronger growth potential).

    It’s not out of the question for a modest curve flattening trade to continue here, along with a stronger $ – so sell the short end, providing insurance against rate hikes or other forms of tightening by the Fed – while simultaneously buying the long end, providing a stable 4% yield over the summer months.

  62. I-Man says:

    Nice work on those fibo’s this AM cvienne…

  63. Transor Z says:

    @Mike in Nola:

    As I suggested at 10:30 a, minimum 10.1% U at year end 2009 seems a virtual certainty. That’s with a very favorable “second derivative” for Q3 and Q4 ’09.

    The actual charts, when they are written, will probably not look like the gently rolling Appalachian hill curves of the Treasury assumptions. ;)

  64. lawyerguy says:

    I’ve been a longtime reader, first time poster and thought I would contribute with a little insight on the status of the legal profession. While it had been the general consensus that being a lawyer is a recession proof occupation, I can safely say that is not the case in the current crisis.

    On a personal level, I was laid off a few months ago from my firm. I went to a top 5 law school, and worked at a leading global, diversified firm. Contrary to all of the green shoot stories I hear about every day, I can tell you that the picture at the multinational law firms is very bleak. Thousands of legal personnel have been laid off in the past year and there are no prospects that these jobs are coming back. Like the rest of the economy, law firms levered up during the boom and overhired big time. Now, they are feeling the effects of the downturn and are cutting workers and reducing wages by 10% or more across the board. In addition, new attorneys that typically start in the fall are being deferred for up to 6-12 months and are getting a pittance of the income that they had expected upon their graduation. From an economic standpoint, salaries at these firms start at 160K for a new associate, so you can understand the large multiplier effect when these jobs go away.

    As alluded to by dead hobo, the balance sheets of most lawyers is horrible as most are vastly in debt. I left law school with over 150K in loans, and have thanksfully paid down a large portion of them, but many of my friends were not as fortunate and thought the good times would last forever. From the perspective of the legal profession, this downturn is not ending anytime soon, and I full expect to see further wage deflation as the year progresses

  65. Pat G. says:

    @ leftback

    When do you think the FED will hike rates?

  66. cvienne says:

    @I-man

    Thanks…

    Man those hit right on cue…

    923 was support earlier this week…Then we hit 951.69 this morning…S&P sells off exactly 61.8 to 934 and bounces hard…That retraces 61.8 upwards to 945…All by 10:30…

    So now I’d say we hover north & south of 945 all day…It seems like it’s doing a little more GAP COVERAGE from the other day…(that GAP from 945-937)…

    Probably what’s more important is what the DX does…It’ll probably be a yawner from now until 3:30

  67. cvienne says:

    @LB (11:36)

    I’m with you on that brother, I said so this morning…

    http://www.ritholtz.com/blog/2009/06/nfp-is-4/comment-page-2/#comment-179585

  68. cvienne says:

    People,

    You gotta think BB is between a rock and a hard place right now…

    If the ‘mandate’ is employment & price stability…and with a NFP number like this (coupled with oil prices going to the moon again on “easy money” speculation), HE’S GOTTA CONSIDER RAISING RATES AGAIN…

    But if he raises rates, then the stock market SELLS-OFF…then “confidence” drains, Obama replaces him with Larry Summers come January ’10…

    Tough spot…

  69. Marcus Aurelius says:

    franklin411 Says:

    “99.98% of the real world lives in the broad economy, not in Wall Street’s microcosm. I care about where the real economy is going, and it’s definitely on the road to recovery.”
    _________

    Put the bong down, franklin 411. There is no credible, realistic, fundamental, or anecdotal data or information that would support your assertion. None.

    BTW: where do the other .02% of the world live?

  70. Mike in Nola says:

    Stuart: Thought they choose Joe Isuzu as spokesman.

    I forgot that he already works for the Fed.

    http://www.youtube.com/watch?v=R8H-D_KP3x8

  71. cvienne says:

    @lawyerguy

    Don’t worry…WALMART is hiring 20,000 workers I hear!

    PS…Sorry man…that was meant to be a silly joke…It’s a tough crowd around here…

    In all seriousness…thank you for that input…and I hope you recover soon and find something…we’re all just trying to make it through these times as best we can…

  72. DL says:

    lawyerguy @ 11:43

    Probably a great time to be a bankruptcy lawyer.
    Also, I wouldn’t think that trial lawyers who work on contingency would be hurt by the downturn.

  73. leftback says:

    @cvienne: Nice one. Outstanding contrarian thinking.

    @ Pat G asked: “When do you think the FED will hike rates?”

    Not any time soon, in fact.

    What I have been thinking is that BB will simply cease and desist from the more outrageous monetizing the debt comments [that were clearly designed to scare money out of Tsys into equities and commodities in order to prevent a deflationary price spiral], and we will now see a reversal of that trade as the $ firms up a bit. For my money, the short end was the true panic trade from September to December and that is now unwinding, as is gold. The 10-year, having sold off from 2% to 3.8%, now represents greater value – but only in the medium term.

    So my call is: BB to cease QE jawboning, talk about improving conditions and have Timmy say Strong Dollar.

  74. johnny says:

    “While many view the decelerating job losses as signaling the end of the recession, they appear to me as signaling the end of the panic period of the credit crisis. We are now in an ordinary, as opposed to historic, recession.”

    Agreed.

  75. DL says:

    cvienne @ 11:54

    “If the ‘mandate’ is employment & price stability…[etc.]”

    Depends what one means by “price stability”. As the Fed sees it, this criterion is met if the “core” CPI is tame.

    IOW, expect much higher oil prices for the next 2-3 years.

  76. call me ahab says:

    lawerguy-

    hang in their dude- when one door closes- another one opens

  77. karen says:

    Re: raising rates. I noted this @ acrossthecurve earlier this morning.. “Someone just related to me that the futures contract in Fed Funds implies a 16 percent probability that the Fed will tighten in August, a 33 percent chance in September and a 50 percent chance in November.”

    and the follow up was this: “Someone just pointed out that typically the Federal Reserve does not raise rates and unravel an ease until there has been at least six months of job growth. So any possibility of the FOMC raising rates this year is virtually nil.

    The trade today is about position management. The entire world is (was) long the yield curve. Profit taking began and forced more profit taking as investors and traders dis not want to watch profits evaporate. As I write this post,the market is turning and the back end is losing ground. Ar one point today the 10 year note and the 2 year note were down even ticks. That has reversed and the 10 year is down over a point.”

    I would definitely counter that we are not in typical times, however.

  78. I-Man says:

    No way BB can raise rates here… thats the nature of being “painted into a corner” or “between a rock and a hard place”… your logical options are removed due to decisions you already made without regard for the consequences. Gotta love the law of unintended consequences… these guys have been on a hope and a prayer that they can achieve the historically impossible and keep walking the tightrope… but the longer you’re on it, the higher the prob that you will misstep.

    They made their bed a year ago, and now they have to fitfully sleep in it.

    I said it a few weeks ago, and I maintain it now, the buzz word of the summer will be Bond Vigilante.

  79. dead hobo says:

    lawyerguy,

    Sorry to hear of your troubles and I hope they go away soon.

    With your legal background, and your probable high degree of people skills, why not look into human resources. All medium and large companies rely on legal resources for just about every operational hiccup involving something or other. Even the best managed companies have managers who screw things up. There’s opportunity in pure legal and in HR operations. The pay won’t be as high, but can still be pretty good. The hours would be a lot better, I bet.

  80. Gavshire Hathaway says:

    The historic “recession” will be back. It is a mathematical certainty. Claims on the productive economy by the unproductive (see FIRE economy) ensure it. See debt/GDP, wealth polarization stats, income vs. asset prices, equity prices vs. dividends, monetary ponzi scheme growth vs. production growth.

    The only uncertainty is timing.

  81. I-Man says:

    Meanwhile… yet another triangle pattern emerges on the 5 min charts…

  82. cvienne says:

    @DL (12:12)

    If you use 2-3 years as your timeframe on oil, I’d tend to agree…

    In the SHORT TERM, however, after you see this “classic” PUMP into summer, I think oil prices will peak and then retrace hard into the fall & winter…

    It seems to me like it’s the SAME TRADE as ’08…(only last year it was “hedgies” & leverage money speculating – this year, it’s taxpayer bailout money speculating in oil)…

    I think you are about to see the reversal…Spec money will come out of oil and flow back into long bonds…You’ll probably see the PEAK in oil prices hit right about when you see a 4% yield print on the 10 year Treasury…

    Goldie will keep it’s $90 oil call on (and re-iterate it) as it’s unloading it’s oil position…

  83. super_trooper says:

    “We are now in an ordinary, as opposed to historic, recession.” Hardly, with this trajectory, employment rates will start increasing in August/September. The stimulus plan is working and the recession will be over in Q3!

  84. leftback says:

    DL is correct, the Core CPI is the target, which means that we will have inflation (ex-inflation) for some time.
    A perfect complement in the statistical sense to employment (ex-unemployment). The B/D adjustment is insane.

    No hikes here. The less the Fed does at the moment the better. We need to have normal dynamics restored to the market. That means no more free candy. As Barry says, we are in the recession now, the Depression is off the table. Sell in June and Watch it Swoon.

  85. Pat G. says:

    @ leftback

    Thanks for your input. So, your call is all about jawboning, nothing substitive. Until I see a “real” action taken by BB or Timmy to back up their rhetoric, nothing changes as talk is cheap. And I believe the rest of the world is catching onto that now as well. Your thoughts?

  86. CNBC Sucks says:

    Raising interest rates? Who is talking about raising interest rates? Are you a Commie, I-Man? INTEREST RATES OVER 2% ARE ANTI-AMERICAN.

    I suggest we put all the unemployed to work on waste disposal for the new nuclear plants my Republican Party wants to build. We can give them a bonus if they will store the spent nuclear fuel rods in their homes.

  87. Onlooker from Troy says:

    cvienne

    You mean there’s no easy way out of this? No way to avoid all the pain after decades of irresponsible behavior?

    Gosh, that’s just no fair! ;) The hubris of Bernanke and other economists that think we can manage the global economy just so, is palpable. And those who lulled the public into a false sense of security about deficits and spending excess over the last couple of decades should go to their graves feeling shame. Many out there are just realizing the enormity of what’s happened and feel very betrayed.

    As for the market, well who the fork knows at this point. Given the irrationality of the oil market that was displayed last year I’d be scared to death to get in front of that train. And nat gas still searches for a bottom here with spurts of speculative frenzy. Nice trades if you got on the right side. I’m playing it mellow on the long side with a handful of pipeline MLPs owned from 30-40% below these levels, hedged with some short S&P500 exposure.

    It’s still a bloody casino out there; low volume with thinly traded issues being tossed around like hot potatoes; short squeezes and speculative run ups. Somebody’s gonna take a bath on those junk stocks some day.

  88. Onlooker from Troy says:

    Spammer alert: GREENER

    Don’t take the bait.

  89. I-Man says:

    Talk IS cheap… and the bond market has been calling the fed’s bluff since the day they announced QE… March 18th.

    All they did was give a bunch of peeps an outstanding opportunity to reload on TBT… which I’m sure pissed the fed off something fierce. As an aside… that trade looks a little spent here, but my top calling skills havent appeared that sexy lately so its probably good for another 10%. (snark engaged)

    Now we have the yield on the 10 at 4% and rates on the 30 year fixed mortgage up a shitload in… a week.

    So much for QE… but I cant knock their hussle.

  90. I-Man says:

    GREENER… you’re the same douche bag who was on here yesterday posing as “aptld” or some shit like that…

    Now, please GTFO of here… bumbaclot.

  91. cvienne says:

    @CNBC Sucks

    Yeah, isn’t that interesting (and why isn’t anyone talking about this)?

    Obama wants to let Iran go nuke, yet he doesn’t want the USA to go nuke…

    Instead, he wants to build solar & wind power here…

    If Iran needs the electrical power so bad, why can’t we help them build solar & wind farms?

  92. Pat G. says:

    @ karen

    Thanks Karen, that info was helpful….

  93. leftback says:

    @cvienne: Our devious minds think alike!

    “I think you are about to see the reversal…Spec money will come out of oil and flow back into long bonds…You’ll probably see the PEAK in oil prices hit right about when you see a 4% yield print on the 10 year Treasury…”

    Sounds like a very reasonable scenario. Could be now, could be after July 4. It depends on how many knobs the brokers can suck in to this market in the meantime. As usual I prefer to be ahead of the crowd than behind.

    @ PatG: “We have a Strong Dollar Policy”. LOL. We usually do in the summer, b/c we need to go to the beach.

  94. rootless_cosmopolitan says:

    As for economic recovery. Here is an interesting article on VoxEu, which compares the current recession to the Great Depression using global economic data, not just US data.

    http://www.voxeu.org/index.php?q=node/3421

    According to this, the trajectory of the current global recession has been similar or worse than the one of the Great Depression regarding economic output and global trade. I don’t think it means it is certain that the current recession will continue on this trajectory. However, note the wobbles in the data from the Great Depression. Franklin411 and the likes would have celebrates each of the wobbles as proof for the impending recovery. So much for the wishful thinking that draws far fetched conclusions from a few months of “less bad” data that could be nothing more than some statistical noise at this point in time. We just don’t know yet. We know, though, that the total credit market debt to GDP ratio has reached about 375% nowadays. It’s a enormous mountain of debt. It had reached 175% or so at the start of the Great Depression and 250% or so at its maximum back then, before it collapsed. How far up can it go this time until the day of reckoning? These are definitely interesting times.

    rc

  95. Onlooker from Troy says:

    Oil and the broad market up now with the dollar still up on the day. Seems that the speculative urges are overcoming the dollar play for now. Interesting. Or maybe we really are on our way to strong growth in the economy! TIC

    And nat gas continues on it’s little roller coaster. What a ride.

  96. cvienne says:

    @onlooker

    Forget about trading the spot markets people (re: oil & nat gas)…

    What everybody SHOULD be doing is something I did last year…Re-fit your auto or truck to be able to run on NAT GAS (the conversion only costs about $2,000 and then your car [or truck in my case] basically runs on either – you just flip a switch)…

    Now that NAT GAS prices are coming down, I went to AMERIGAS and got a huge container that sits in my backyard…many people already have one of these whose homes run on nat gas generators…

    Anyway – you can “lock-in” nat gas supply contracts from Amerigas…

    It’s a GREAT HEDGE that will serve you in a REAL WAY if gasoline prices spike in the future (and there are shortages & gas lines – as I expect we’ll see in a few years)…

    With this system, you can basically fill up your car AT YOUR OWN HOME for half the price of gasoline, and you have your own supply…

  97. Mike in Nola says:

    Re: Bernanke and rates

    I don’t think Bernanke will tighten anytime soon as he is a student of the Great Depression and it is conventional wisdom that premature tightening in 1938(?) caused a downturn. The caveat on this is he has spoken about a zillion times and may have changed conclusions. You are welcome to read his speeches here:
    http://search.newyorkfed.org/search/search.jsp?template=BOARD&type=adv&who=patx&directory=pwall&text=bernanke