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. Christopher 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.”

    Or…..we’re just taking a breath before the grand finale….a 2 1/2 twist triple lindy….into an empty pool.

  2. Bruce N Tennessee says:

    I think the news today was interesting. This is really the first news that I would label a green shoot.

    The bond at 3.84…..now that is interesting…I wonder how this will affect home purchases…

  3. Onlooker from Troy says:

    Good plan cvienne, for those who drive enough to make it worth the investment. We put so little mileage on our cars that it wouldn’t be worth it though.

    Interesting nugget on the junk stock fiesta:

    http://sentimentrader.blogspot.com/2009/06/surge-in-lottery-ticket-trading.html

    Seems that the traders are getting bored with all the “regular stuff” and are looking afield for other crap to throw around and feed their speculative juices. I’ve heard others say that the feel of this is very much like the market’s late bull stage in ’07 (Mark of Trader Mark fame, for one, http://www.fundmymutualfund.com/, excellent blog by the way) . I wasn’t watching it so closely then so I can’t say.

  4. rootless_cosmopolitan says:

    I noticed the change in the number of unemployed derived from household survey data, draws a much darker picture than the change in nonfarm payroll numbers derived from establishment survey data. Why do the nonfarm employment change and the unemployment number change differ so much? Looking at the BLS website, I found following explanation for sources of this difference (in addition to statistical uncertainty in the data and pending revisions):

    Differences in employment estimates. The numerous conceptual and method-
    ological differences between the household and establishment surveys result
    in important distinctions in the employment estimates derived from the sur-
    veys. Among these are:

    –The household survey includes agricultural workers, the self-employed,
    unpaid family workers, and private household workers among the employed.
    These groups are excluded from the establishment survey.

    –The household survey includes people on unpaid leave among the employed.
    The establishment survey does not.

    –The household survey is limited to workers 16 years of age and older.
    The establishment survey is not limited by age.

    –The household survey has no duplication of individuals, because in-
    dividuals are counted only once, even if they hold more than one job. In
    the establishment survey, employees working at more than one job and thus
    appearing on more than one payroll would be counted separately for each
    appearance.

    (Source: http://www.bls.gov/news.release/empsit.tn.htm)

    rc

  5. lawyerguy says:

    @ cvienne: Walmart is expanding. . . yes. More green shoots people. I actually hope they open one in NYC.

    @ call me ahab – thanks for the kinds words

    @ DL: Bankrupcy lawyers and litigators are still in high demand. I have a corporate background, but am junior enough that I can switch easily. It all depends on whether an employer wants to train someone fresh out of law school or “re-tool” an experience attorney.

    @ dead hobo: Thanks for the input. I never thought I would be a career corporate attorney and believe my skills are transferrable into a variety of jobs. While looking, I am really learning a lot from the many posters here and appreciate all of your guys and gals insight.

  6. CNBC Sucks says:

    cvienne – you actually missed the deep cynicism and antipathy towards my own party in that comment. Sometimes my sarcasm is over the top. Nuclear power is an ideological reactionary joke as far as an energy solution.

    I have to hand it to leftback, I-Man, Steve Barry (is he here?), and the other smart, veteran traders on this blog, for maintaining discipline in appearing to pay attention* to macroeconomic statistics that are so fudged, spun, generally inaccurate and imprecise in real time, and micromanageable by monetary policy that they are utterly meaningless in terms of investment decision-making. The “recession” is over; the jobless recovery has begun; there will be no “inflation”. Millions of Americans will be underemployed for eternity, their real wages will dive, but who cares because they will buy the next iPhone at the earliest opportunity. We will pay for our goods with freshly printed greenbacks and the rest of the world will not blink. “Happy” days are here again, as long as you work three jobs and can identify with either emo or indie.

    *By the way, I know you guys don’t really pay attention to the useless numbers so much as gauge how the market will react to the useless numbers.

  7. cvienne says:

    @onlooker (12:47)

    what fascinates me about these “lottery tickets” is that I’ll bet you a certain number of them come out as winners when the economy finally does bottom out…

    If you look back 20-30 years, a large portion of what makes up today’s S&P or DOW were companies nobody ever heard of back then…

    In the turmoil that exists today (and will exist for sometime), a premium is going to be put on companies that have a great innovative idea, yet no real overhead in terms of employees, rents, etc.

    It’ll be your classic Bill Gates working out of a garage scenario…

    Now if we could only FIND the winners…

    I’ve held a few of these “penny stocks” all through the downturn…Interestingly, because the positions are so small, they’re the only ones I don’t feel compelled to DUMP on a moments notice…So I’ll hold on to a few of these…If they go to zero, so be it…

  8. hopeImwrong says:

    Dollar up, and other markets (stocks, commodities) hanging in there well. This could be the divergence which may last a few weeks (lower probability of months) before a breakdown. The longer the divergence goes, the bigger the fall.

    This divergence will be seen as a Huge confirmation of the return of good economic times (dollar up and stocks up). Actually, it will be called indisputable evidence. Retail tools will panic into the market, and it will actually catch professionals by its hypnotic moves up. Then, yikes, look out.

    Otherwise, crash II is probably off the table for a while for now. Boring bear market moves up and down.

  9. Christopher says:

    “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.”

    F411…can you provide a link of that quote on this forum?? Or anything remotely close even??
    Fridays slow in the ivory tower?? Time to break out the hyperbole and sticks??

  10. leftback says:

    @Onlooker: I bought UEC and GMO as my “lottery tickets” at the bottom and they did 200-300% of business for me, and people are still piling in to them. Remarkable. It does feel like it is getting very very late for this rally. The pump in oil has been remarkable to overcome this very significant reversal in the $. I am selling my last longs.

  11. karen says:

    Bruce, a half point more on a 30 year mortgage doesn’t increase the payment by much… ($61 on a $200k loan at 5.5%) actually, the rate increase could be completely negated with a reduction in $gaso.

    with a loan amount of $500k, the difference between a 5% and a 6% on a 30 yr fixed is only $313… again, lower $gaso could cancel that out..

    i suppose my point is, rates are still at historic lows.. i expect to see the 10 and 30 stabilize soon, a bit higher than where we are today…

  12. Onlooker from Troy says:

    No doubt cvienne re: the lottery ticket stocks. It’s always a matter of finding the right ones. And we all know that the small cap stocks perform best out of the bottom of the market because they’re trashed in the downturn because of uncertainty about their viability through the worst of the recession.

    So that’s undoubtedly affecting performance as some are really buying the idea that we’ve seen “the bottom.” But the risk is very high from here because any serious market watcher will tell you that a retest of the bottom will likely occur and the ride down won’t be pleasant in that sector.

    But it’s also clear that the speculative crowd is just roaming here and there to find more low priced stocks to toss around. And luring in less experienced traders no doubt at this point. Who do you think is going to be left holding the bag? (rhetorical, I think you know)

  13. cvienne says:

    @LB

    Here was a post I made from earlier this morning…
    http://www.ritholtz.com/blog/2009/06/nfp-is-4/comment-page-3/#comment-179660

    That was two hours ago and we still haven’t budged off of 945…

    It’s RAINING in Southampton…

    Are the “B” traders at the desk eating Chinese takeout and watching porn? Or are they just keeping the ‘A’ Team’s seats warm until 3:30?

  14. Christopher says:

    @ evienne

    ie penny stocks…

    Like GM?? LOL
    I kid….

    RGUS has always struck me as a possible game changer….if it does every break out I know who’s gonna be a happy man.
    :)

  15. thetanman says:

    cvienne,

    For years I have been promised the BVs were lurking around every corner. Its taken on the mantle of an urban legend. The BVs are one of the longest running themes that just never seems to play out. Its like my grandmother talking about the comet of 1910 and how she got scared and put too much bluing in the wash.

  16. I-Man says:

    @ CNBCS @ 12:24pm:

    Am I a commie???

    Here at Dread Capital, we na check fi no ‘isms’. We na check fi no politricks. We only stand firm fi uprightfullness… and trading profits.

    JK… I love your sarcasm bro.

  17. Onlooker from Troy says:

    Kass is saying he thinks we’ll trade in a 890-950 range for the near future. Pretty tight range for such uncertain times, it seems to me. And I seem to remember hearing exactly the same thing back in January before the market just started inexorably going down. I just can’t see such a small range when the future is so uncertain.

    The tug of war between deflationary and inflationary forces, combined with the speculative investing world we live in, tells me that the range will probably be much larger. Dr. Hussman has talked about a 25-35% range since January. Seems more likely to me.

  18. manhattanguy says:

    Someone posted about the 5 minute triangle forming on indices. Looks like they broke down.

  19. cvienne says:

    @karen (1:03)

    The thing about it is karen is that most of the re-fi requests that have come in over the past 2 months are interested in ADJUSTABLE rates not FIXED rates (or so my friend, who is a loan officer is telling me based on his & his partners traffic)…

    I asked him…”are people crazy”…don’t they know that we are printing money and that these low rates won’t really last for very long if we continue the policy of monetizing our debt?

    He says all they care about is lowering their monthly payments right now…80% of requests are for yet another ARM…

    So even if we get out of the crisis now…We’ll be back in one again in 5 years unless the government stops borrowing money…

  20. franklin411 says:

    @Pat G.
    Quite a lot has changed in the trajectory of American economic history since 1913 vs before 1913. From approximately 1870-1913, the American enconomy was marked by cycles of “boom and bust”–dizzying bubbles followed by horrifying panics. The Federal Reserve introduced an element of stability to the US economy, particularly in the post-WWII era.

    @Marcus
    The other 0.02% live in the make-believe world of Wall Street. I was referring to the whole “Bond Vigilante” bogeyman.

    @Rootless
    This economic crisis isn’t remotely comparable to the Great Depression. Not in the slightest. For one thing, we didn’t have to suffer through 3 years of Hooverism. For another thing, the Federal Reserve is not stocked with incompetent Republican cronies as it was under Coolidge and Hoover. Third, American workers aren’t nearly as heterogenious as they were in the 1920s and they won’t accept massive layoffs on the scale of the Depression. Fourth, there is no more World War on the horizon. Fifth, we much more accurate tools to take the temperature of the economy now than we did in the 1920s and 1930s. Sixth…shall I go on?

  21. Mannwich says:

    This one is for franklin411. Just got back from a PACKED Costco near my house but it’s always pretty busy and today IS Friday. On another note, just passed our little town center where the annual Art Fair is taking place. Very busy there. Not sure anyone buying anything but a lot of people out. Feels like a Saturday. Are all these people just taking the day off or is it something else entirely? Just feels weird out there today. A lot of people out and about for a weekday, although I do know Fridays are different.

  22. cvienne says:

    @thetanman

    It might not take the 10y yield to go to 4% for the BV’s to come out…

    Obama just gave Congress the signal that he wants the HEALTHCARE PACKAGE on his desk by the August recess…

    Wait to see what comes out of that (and how they expect to PAY for it)…The details in that ought to wake the BV’s up (as it did in Clinton’s first term)…

  23. CNBC Sucks says:

    I-Man, I love the intricate analytical arguments of the smart peeps on this board, but CNBC / NYSE stock sales courtesan Becky Quick probably has a greater effect on market movements than the NFP on Squawk Box.

    God, I am particularly bitter today.

  24. hopeImwrong says:

    Who is John Galt?

    Who is Franklin411?

  25. leftback says:

    LB remains brain dead after a rather torrid evening encounter followed by the mind boggling NFP spin…..

  26. bill_from_chicago says:

    @Bruce N Tennessee

    Unemployment going from 8.9% to 9.4% a green shoot?

  27. Mannwich says:

    Maybe this chart is what Ben & friends mean by “green shoots”? Talk about ugly. A lot of green though. Let’s face it, this is all just hiding the trash long enough so the taxpayers end up eating it for breakfast, lunch, and dinner, while bankers go buy some hookers and blow with their bonuses……

    http://1.bp.blogspot.com/_FM71j6-VkNE/Sik7CKZto7I/AAAAAAAADFc/Rv0s4X2MB2E/s1600-h/Fed+Balance+Sheet+6.3.jpg

  28. leftback says:

    In other news, the last TWO major plane crashes have resulted from the fact that airplanes have to fly at a certain speed in order to stay up in the air and this speed seems not to have been exceeded. Is Moody’s rating pilots now? LB feels like quizzing the pilots of any plane now concerning the relationship between air speed and stalls.

  29. karen says:

    LB, that was a bit of a tease on this particularly boring day, following yesterday’s particularly boring day. You have me on the edge of my seat… lol.

  30. manhattanguy says:

    USD will rally $UUP near term high $25, $DUG will follow suit as oil trade is over in the short term.

  31. dead hobo says:

    Mannwich Says:
    June 5th, 2009 at 1:16 pm

    Not sure anyone buying anything but a lot of people out. Feels like a Saturday. Are all these people just taking the day off or is it something else entirely?

    comment:
    ——————
    I noticed the same thing last weekend at a similar type of event. One explanation offered to me was going to art fairs and the like is a downsized way to relax. Costco loaded up is not a good indicator, although an empty Costco would be very interesting. Is Talbots, or Borders, Or Word Market, or Best Buy, or Marshalls bustling or empty? What about a garden supply store? All will have customers, but do they look as busy as you remember and is parking easy or hard to find? In the stores you visit, are they crammed with merchandise or is it spread out to look full, but is really not very dense?

    Where I live, gas prices are converging on $3 and will be there in a week or two if prices keep going up. That has to make a difference.

  32. hopeImwrong says:

    LB – good one on airplane speed.

  33. cvienne says:

    @F411

    As you dismiss the idea of BV’s my friend, keep something in mind…

    There is a high probability that the phenomenon will be contained in somewhat of an orderly fashion over the next 6 months or so (if you’ve been reading into what LB has been saying)…

    That is…

    - The yield on the 10 year Treasury has gone from 2% to almost 4% now in six months (a signal that the BV’s ARE, IN FACT emerging)
    - Phase two is the notion that, after this run-up in equities, equities will sell-off into the fall, and that money will pour back into the 10 year…Rendering the BV notion “unfounded” for awhile…

    So the ONUS is on the economy itself to actually show some life come January ’10…

    All the stuff over the past 2-3 months has not meant a thing…

    Obama was voted into office on November 4th (and took office in January)…

    He campaigned on the following:

    - He said his stimulus plan would CREATE 3.5 – 4 million jobs (so far the economy has LOST that many jobs since last November)
    - He vowed to close GITMO within a year (that idea is getting tougher by the minute)
    - He promised a HEALTHCARE PACKAGE (we’ll see in August)
    - He promised to pull us out of Iraq (the timetable has been pushed farther into the future)
    - A “surge” has actually been implemented in Afghanistan

    All of the above has COST the taxpayer over $2 trillion in the form of stimulus allocation slush funds, omnibus bills, bailouts, guarantees, etc.

    So far it has produced SQUAT…It’s going to be a TOUGHER SELL in January ’10…You’d better hope Apple sells some phones between now & then…

  34. Mannwich says:

    @hobo: We ent to our local nursery for our annual flower purchase a few times recently (and am planting tomotoes for the first time this year) and it was very busy each time (especially on the weekend) but we do live in a fairly affluent area. These folks in this neighborhood and the wealthy suburb right next to it love their flowers and tend to do a lot of gardening. We don’t spend nearly as much as others do, but some of these folks go hog wild every year. It’s a great nursery though. Very well run with an awesome selection.

  35. cvienne says:

    @dead hobo

    all those FAIRS & FLEA MARKETS are all the people setting up stands to sell all their worldly goods after they just filed for Chapter 7…

  36. karen says:

    Tranzor Z posted an interesting link on that Air France flight that I doubt anyone but me saw…

    http://wattsupwiththat.com/2009/06/03/air-france-flight-447-a-detailed-meteorological-analysis/

  37. Mike in Nola says:

    David Rosenberg’s comments on today’s numbers is up. Would not be F411′s liking, but he’s well reasoned as usual and puts them into perspective.

    https://ems.gluskinsheff.net/Articles/Coffee%20with%20Dave_060509.pdf

    You have to register if you haven’t already, but it’s free.

  38. karen says:

    here is an interesting look at gld if anyone is interested:

    http://stockcharts.com/h-sc/ui?s=gld&p=D&yr=0&mn=5&dy=0&id=p38298062762

  39. Transor Z says:

    @LB: See my post at the end of the Open Thread from the other day re: AF447. Link to a site where pilots and flight meteorologists do an armchair post mortem on the event. Bottom line factoid I didn’t know: the protocol is to dramatically reduce flight speed when flying into T-storms because a strong updraft can rip the wings off a commercial jet flying at the normal ~Mach .8 cruising speed. So if those poor pilots had to slow down and their instruments were giving them an inaccurate speed . . . very sad.

    @lawyerguy: First, I’m really sorry you lost your job. Somehow I signed myself up for this JDJournal daily email thing that reads like a daily casualty report. When I saw that Skadden deferred ALL 2009 summer associates for a year . . . yikes.

    If you’re willing to move out of NYC, there are jobs out there, but the bad news, as I’m sure you realize, is that most likely it will be a few years on a new path until you see six figures again. There are in-house compliance positions and government positions posted pretty regularly. If you’re lucky, you might only take a 50% hit from where I’m guessing you were before the layoff. And who knows? It really might be a new door opening for you as someone said above. Good luck!

  40. leftback says:

    “Although the Fed is looking for exit strategies, I don’t think anyone at the Fed is anywhere near contemplating raising rates,” said Gavin Friend, a markets strategist in London at National Australia Bank Ltd. “There is no evidence so far that quantitative easing is fueling inflation.”

    Plenty of room below for gold. No panic, no deflation, no inflation (yet), $ rally = BIG gold sell off coming*

    *Disclosure = long DZZ.

  41. call me ahab says:

    “Third, American workers aren’t nearly as heterogenious as they were in the 1920s and they won’t accept massive layoffs on the scale of the Depression. ”

    HAHAHAHAHA- that’s a good one- like they have anything to say about it- HAHAHAHAHA- my guess is-if you used the same analysis they did back then- unemployment would be much closer to 20%-

    are you really in college dude- or are you just funnin’

  42. Mike in Nola says:

    Everyone not watching CNBC is missing out. Larry’s not there, but the question under discussion is

    “IS THE RECESSION OVER?”

  43. ben22 says:

    Re: Rates.

    No way in hell the Fed starts raising rates any time soon. Anyone thinking this, imo does not understand how real credit deflation already is.

    On another note, thank god we have “more accurate tools to take the temp. of the economy” than we did during the depression. I never thought of that, that right there is reason enough that the depression is off the table…. that’s the funniest thing I’ve heard in a while.

    As for no war, I could be wrong but have we not had a war following virtually every major stock sell-off in the last 150 years? Was North Korea not doing missle tests a few weeks ago? Did I imagine all of that?

  44. ben22 says:

    Prediction:

    By October the long dollar trade and no inflation will look like it should have been the easiest thing to see, much like a bet against real estate or the banks in 2008 looks now.

  45. dead hobo says:

    Mike in Nola Says:
    June 5th, 2009 at 1:57 pm

    Everyone not watching CNBC is missing out. Larry’s not there, but the question under discussion is

    “IS THE RECESSION OVER?”

    reply:
    —————-
    Absolutely!!! But the recovery will be murder.

  46. I-Man says:

    @ karen:

    Nice… but I prefer the Oceanic Flight 815 explanation…

  47. Transor Z says:

    Last time I looked we were in the middle of a war with operations in two countries and a standing armed forces that is now #1 and not #16 as it was during the GD. But WTF do I know?

  48. karen says:

    more rate hike talk coming from the futures market: (don’t forget the fed really only controls the fund and discount rate… the real rates are determined by the market and QE.)

    Fed funds futures pricing in rate hike by year-end
    1:55 PM ET 6/5/09 | Marketwatch
    SAN FRANCISCO (MarketWatch) — Investors in interest-rate futures are now betting the Federal Reserve will hike rates by year-end, taking into account a surprising reading on the state of the U.S. job market as well as some hawkish comments by Fed officials.

    Taken together, these investors find greater conviction in the case for tighter monetary policy.

    The December fed funds futures contract is now pricing a federal funds rate of roughly 0.5%. A week ago, it priced in an approximately 0.3% fed funds rate.

    As it seeks to get capital flowing, the U.S. central bank has kept its fed funds target rate near zero, at a range of nil to 0.25%, and has employed a new set of tools to depress interest rates, from handing out cheap loans to institutional investors, to acting as the buyer of last resort for certain securities.

    But signs of improvement in the economy, plus some comments from Fed officials, have encouraged some to bet the Federal Open Market Committee will start to tighten credit in coming months.

    Coming just in the space of a week, the jump in expectations for higher rates — even by the FOMC’s November meeting — “is a pretty dramatic change,” said Max Bublitz, chief strategist at SCM Advisors.

  49. karen says:

    The silver lining of higher mtg rates: (dovetails with my previous post about rates and the price of $gaso.)

    Rising mortgage rates could spur undecided buyers
    1:59 PM ET 6/5/09 | Marketwatch
    Don’t miss these top stories:

    Mortgage rates’ big jump

    Overlooked recovery signs

    Mortgage-modification frustrations

    Mortgage rates took a big leap this week, causing many to wonder if the days of extremely low mortgage rates are coming to an end.

    The 30-year fixed-rate mortgage averaged 5.29% this week, up from last week’s 4.91% average, according to Freddie Mac’s weekly survey of conforming mortgage rates.

    Rising government debts and hopes of economic recovery are pushing up long-term interest rates on government debt, said Brett Arends, in a recent piece for The Wall Street Journal. And that pushes up rates on other long-term loans, he added. The rise in rates could continue, and that will affect those searching for a new home.

    The rate jump could very well be a deterrent for those buyers on the fence. Or it will motivate people to make a move, instead of waiting for financing costs to grow more expensive.

    “If they’re reading the same reports I’m reading, they’re seeing that rates will go up more than they will go down,” said Eric Mangan, spokesman for ForSaleByOwner.com. “That may motivate buyers to get off the sidelines,” he said.

    Read more about mortgages in this week’s real estate pages, as well as an audio report from an economist who believes that home sales probably bottomed earlier this year.

    There’s no way to know for certain the direction mortgages are headed in the short term. But those in the market for a mortgage should think about acting soon, because when rates stay near record lows for months, eventually the only direction they can go is up.

    – Amy Hoak, Real Estate writer

  50. call me ahab says:

    Karen-

    stupid move if done- but maybe by rasing it neligibly they will send a signal to the rest of the world that they are serious about inflation

  51. ben22 says:

    Karen,

    You know, mabye I should take my statement back. We could get a few Fed officials that really believe we will get some terrible inflation due to a month or two of numbers, they raise rates too quick and then credit deflation destroys us.

    this would be fitting from the Fed and all of their superior decision making skills.

    Really though, why would you read into something like that article so much. Investors in interest-rate futures are now betting on a rate hike by year end. Could that have anything to do with the fact that now 90% of economists are predicting a second half recovery and the market has gone up 40% in the last few months. Should we believe that interest-rate futures traders don’t suffer from herd mentality?

    I don’t even really get the article. They are expecting an increase in the rates due to signs of improvement in the economy and comments from Fed officials??? Is credit flowing somewhere I don’t know about?

    for me, just another sign too many people now think the last 18 months was just a bad dream and we are getting very close to the top of the countertrend rally.

  52. Mannwich says:

    @karen: If that’s true, then people are even more irrational (and have less of an understanding of simple math) than I thought. They can buy my home if they want it. If it’s true that rates are going way up, wouldn’t that also push home values/prices down as well? Is a home purchase really that an emotional thing that people forget to think a little first? Good grief.

  53. cvienne says:

    @ben22

    I didn’t say they were going to raise or not going to raise…

    All I said was that this NFP number put BB squarely in the crosshairs (with his job up for re-appointment in 6 months – and – I’d imagine – the DECISION to go one way or another coming long before that)…

    Personally, I don’t think they’ll RAISE rates…Instead, I think they’ll jawbone the thing and start waxing ‘hawkish’…

    In the end, I’m in the same camp as you (and have been all along), DEFLATION is the issue here, and the dollar will rally in the next 3-4 months…Moreso if EQUITY MARKETS start breaking down…

    What’s “fascinating” though is the fact the GAME IS OVER in terms of trying to paint a rosy picture of the economy…I mean, if the NFP number is to be believed, and the price of oil and steep yield curve are signals that a RECOVERY is on the way…The FED WOULD HAVE TO START RAISING RATES…

    The fact that they WON’T, is an automatic “tell” that nobody believes a RECOVERY is on the way (despite the cheerleading efforts)…Well, at least FRANKLIN believes them!

  54. I-Man says:

    @ Left, Karen:

    On GLD… so is this a range trade? Are you just trying to catch a move down to 85 or so on GLD?

  55. rootless_cosmopolitan says:

    @Franklin411:

    “This economic crisis isn’t remotely comparable to the Great Depression. Not in the slightest.”

    It is comparable. The article I linked just did. Industrial output on a global scale, world trade, debt to GDP ratio are comparable. Please disprove these data. Or explain why they don’t matter to assess the trajectory of the economy today compared to the Great Depression. Or why the debt to GDP ratio doesn’t matter.

    “For one thing, we didn’t have to suffer through 3 years of Hooverism. For another thing, the Federal Reserve is not stocked with incompetent Republican cronies as it was under Coolidge and Hoover”

    In what way have Bernanke and Co. at the Federal Reserve proven their high competence regarding understanding economy? In 2007, they didn’t even see the recession coming. Besides that, this argument is based on the assumption that the Fed can control capitalist world economy and its crisis trajectory. I think the assumption is already faulty.

    “Third, American workers aren’t nearly as heterogenious as they were in the 1920s and they won’t accept massive layoffs on the scale of the Depression.”

    I don’t see the relevance of this point for the data of world industrial output, world trade, or for the debt to GDP ratio. How does this point change these?

    “Fourth, there is no more World War on the horizon.”

    We are talking about the world economy in the time period from 1929 to 1932. What does WW II have to do with this? WW II started in 1939. The economic development in the 1920s that lead to the Great Depression is relevant. And one of the important features was the debt bubble back then. The one today is even bigger. It’s at about 375% now. How much can this debt bubble expand further nowadays before the day of reckoning? What will happen then? The basic principles on which the capitalist world economy works today are still the same as the ones in the 1920s or in the 19th century (as already analyzed by Marx). The difference is, it’s even more a world economy than back than, more interwoven and tightly coupled.

    “Fifth, we much more accurate tools to take the temperature of the economy now than we did in the 1920s and 1930s.”

    I don’t understand what is supposed to follow from this point.

    Sixth…shall I go on?

    Yes, please. Especially, I would like to see

    1. How you want to disprove the data regarding world industrial output, world trade or debt to GDP ratio. Or how you want to explain why latter is not relevant for the coming trajectory of the world economy.
    2. How you want to prove the statistical significance of the data you cherry pick when you claim the economic recovery is impending and everything will be almost as it was not long ahead (5% unemployment rate in 2012?). This is my main point of criticism. You cheer data that just could be a wobble in statistically noisy time series. Your cheering of the BLS data release shows that you cherry pick. You take the 345,000 nonfarm payroll decrease to prove your point, but you ignore the increase of the unemployment number by more than 700,000. Why is former relevant, but not latter?

    rc

  56. karen says:

    ben, i’m just putting the articles up for discussion… who said i read much into them? I review all news and commentary with skepticism.. the only opinion on rates that i have at the moment is that they are still historically low and should move up more, then trade in a narrow range..

  57. karen says:

    I-Man, I’m playing it by ear.. my gold short is still slightly red, btw.. gold sell 0ffs can be so wicked.. I haven’t figured it out yet to be truthful.. and it’s even harder now that i’m playing on both sides of the fence…

  58. call me ahab says:

    interesting quote from CNBC-

    “On one hand it took less bad data to rally the market (previously). Now investors are getting used to that. It will take more than that in the months ahead.”

    so I guess we are back to bad and good- “less bad” just won’t cut it anymore

  59. cvienne says:

    @RC

    Don’t waste your time with Franklin…

    He’s convinced that BIG GOVERNMENT is the solution to all problems…And now that his “flavor” of government happens to be in office, he’s content to cherry pick numbers to support his ideaology…

    By the time he sees the error in his thinking, he will be long gone from this blog…

  60. leftback says:

    both sides of the fence, Mistress? like swinging from both sides of the plate??

  61. hopeImwrong says:

    Sold 1/2 my positions in gld and slv for a profit. Still have a good cushion on the rest.

  62. cvienne says:

    @call me ahab (2:33)

    And isn’t it AMAZING that that “quote” and that REALIZATION comes at a time where the market is reaching technical resistance to the upside…

    So when all the trades of the past 3 months get reversed…All this crap will have been a simple TECHNICAL bear market rally all along…

  63. ben22 says:

    Cvienne,
    didn’t mean to imply you said anything about rate changes, just commenting on it in general.

    karen,

    also, didn’t mean to direct that at you, you know I think you are the smartest trader on here, but…, I think those two marketwatch articles are a joke.

    The move in the long bonds has actually been fairly orderly this year, imo.

  64. leftback says:

    @ben22: Prediction: By October the long dollar trade and no inflation will look like it should have been the easiest thing to see, much like a bet against real estate or the banks in 2008 looks now.

    Agreed. No rate hike. No inflation (yet). No bond vigilantes (yet). No more equity rally.
    Panic trades are finally being unwound from Depression levels of fear to a more normal Recession level.

  65. cvienne says:

    @LB

    I think you made a good play on DZZ there…

    Take a look at the DZZ chart on an “hourly” basis and slap a 55 EMA on that…

    What had been weakness (going all the way back to April 20th), has finaly broken to the UPSIDE and then confirmed a test of that upside break…

  66. cvienne says:

    @LB
    “No bond vigilantes (yet)”

    I agree with you that as the dollar strengthens and equities & oil sell off, there will be no imminent need for the BV’s…

    However, I’d like to see how Congress expects to PAY for the Healthcare package (that is coming to vote in August)…I think they’ll have a say in that if the pricetag looks too high…

  67. Onlooker from Troy says:

    Rising mortgage rates will no doubt spur some people into taking the plunge for fear of even higher rates down the road. Kind of like somebody waiting on a stock price, wanting to get it lower but then jumping on it if it ticks up a few percent for fear it’s hit bottom and they’re missing the rise.

    But I think that even more people will be priced out by the smallest of rate rises due to extremely tight household budgets (not that Americans have been known to operate on a budget :) .) And the reduction in buyers combined with the increasing rates will help put continuing downward pressure on home prices. No surprise there for readers here.

    The anecdotal evidence of people still looking at ARMs vs. fixed further strengthens that perspective. They’re squeezing every possible dollar out even with the longer term risk it poses. I’m wondering if there’s some good national data on recent ARM vs. fixed mortgage originations out there. It would be interesting to see vs. historical data.

  68. ben22 says:

    RE: Gold short

    I haven’t actually looked but I have to think that there are some good opps to short metals stocks/or stocks in that sector for a large profit if you are in the no inflation, dollar strength camp.

    Lots of names, like NEM for example, have had a huge move up since last Nov.

  69. cvienne says:

    After all…

    This is going to be BHO’s one and only shot to get this Healthcare Package passed…

    If it fails this time, it will be hard to resurrect…They wouldn’t be able to do it until next year…By that time, the market will have sold off, confidence will be down again, and 2010 middies will be on the horizon…

    So by 2010 if the economy hasn’t REALLY recovered, a lot of DEMS are going to dump BHO and get hawkish about saving money so they can get their own butts re-elected…

  70. leftback says:

    Housing in CA and FL, cheap but everyone broke, BK or unemployed. This small rate rise crushes the market.
    Housing in NY NJ and CT. Still too expensive. Fuhgeddaboudit.

    Home prices to go lower. What a shocker.

  71. Onlooker from Troy says:

    cvienne

    Isn’t is kind of perilous to do TA on leverage ETFs? Seems like you should use the underlying as the leverage can skew things in longer periods.

    karen

    Curious about the choice of MAs on that chart. Why 13 & 34? To my admittedly untrained eye there doesn’t seem to be any particularly informative trend info there. But I could easily be missing something. Just wondering.

    Gold sure went into a power dive there for a bit today, didn’t it?

  72. cvienne says:

    @ben22

    re: Gold miners short

    The problem is Ben…Gold may only “correct” to 850 or so (and oil may come down harder)…As such, the margins will still be pretty good…

    But I can’t say anything “quantative” about that because I haven’t been following the PRICE action on stocks like NEM relative to their cost of production…

  73. leftback says:

    “China’s investments in the US are safe” (although they plummeted today). :-)

    Tiny Tim’s phone will be ringing off the hook. The broker-dealers will soon sell the Spoos and buy the 2s.

  74. cvienne says:

    @Onlooker

    you use numbers like 13, 21, 34, 55, 89, 144, 233 on MA’s because they are fibonacci numbers

  75. Mannwich says:

    Today’s Wells rate alert. This puppy hits high 5′s/six and it’s game over again for the housing market……

    Today’s Rates: JUNE 05, 2009

    40-year fixed1 6.625% 6.827% 1

    30-year fixed1 5.625% 5.846% 1

    20-year fixed1 5.625% 5.922% 1

    15-year fixed1 5.000% 5.368% 1

    5-year ARM1 4.500% 4.305% 1

    FHA – Loan limits vary by county.

    30-year Fixed FHA1 5.500% 6.170% 1

  76. cvienne says:

    @Manny

    It’ll only be GAME OVER until the equity markets take a dive again and money pours back into Treasuries (this fall)…

    They’ll get another bite at the apple…but they better TAKE IT and TAKE IT FAST next time…There might not be a 3rd bite…

  77. batmando says:

    @ f411 @ 10:22 a.m.
    “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.”
    The course of an illness can depend on…
    – the disease, is it actually the flu (avian, swine or just regular seasonal flu) or something else, e.g., measles, against which many today are not vaccinated? Apparently, it’s not ebola. Counting our blessings, so far.
    - the patient’s general health at onset; were they a debilitated alcoholic, diabetic or HIV+?
    - was the disease correctly diagnosed? is the treatment appropriate (e.g., treating massive credit destruction with more massive credit) and efficacious, or just palliative?

  78. karen says:

    Onlooker, that might be my most important chart template. I use 13 and 34 EMAs to confirm a trend. They also give off fairly reliable buy and sell signals..

    LB, you are on ignore.

  79. franklin411 says:

    @RC
    This is a drive by post, so fair warning.

    Herbert Hoover was an advocate of voluntarism, which held that government should limit itself to encouraging private efforts to achieve public policy. Example: The midwest suffered from a horrific drought from 1930-1931. Americans were literally starving. Hoover’s answer? He encouraged Americans to donate drought relief fund. When this fund failed to collect anywhere near the amount of money required, Congress attempted to enact a program to relieve the hunger. Hoover stopped this effort dead in its tracks, arguing that the government had no role in helping starving people with basic foodstuffs. That’s Hooverism; the idea that government should not play a role in addressing economic problems.

    WWII started in 1931, with the Japanese invasion of Manchuria. Later, the Italians invaded Ethiopia, the Germans fomented civil war in Spain, they occupied the Rhineland/Austria, and then the invasion of Czechoslovakia. All these occurred before September 1939. The point is that the world was living under the gun from 1931-1939, which certainly had a depressing effect on the investment outlook.

    Having better economic data reduces the liklihood of making significant policy mistakes.

    Sixth, Q1–You miss my argument completely, which is that the political situation now and in the Depression is critically important. Q2. I don’t cheer a wobble; in fact, I established that the trend is towards reduced levels of job losses. The number of lost jobs has dropped precipitously since the peak in January.

    @batmando
    Well, I think we can all take death off the table. The bears can’t even bring themselves to concede that point!

  80. karen says:

    Take a look at this pattern in GLD… if it fails, it will be ugly for gold longs and a tremendous buying opportunity.

    http://stockcharts.com/h-sc/ui

  81. cvienne says:

    @Franklin

    “The point is that the world was living under the gun from 1931-1939, which certainly had a depressing effect on the investment outlook.”

    yeah Franklin…I guess Americans were getting ALL DEPRESSED watching MSNBC & CNN report about the world events on the TV’s that they didn’t own…

  82. I-Man says:

    @ K-

    For some reason it pulls up a DJIA chart…

  83. cvienne says:

    @karen

    I’ll second that…Take a look at this chart on GLD “hourly” 55EMA

    http://www.freestockcharts.com?emailChartID=e8d42bee-404c-4c52-bef3-2e09b89f9699

  84. call me ahab says:

    cvienne Says-

    “However, I’d like to see how Congress expects to PAY for the Healthcare package (that is coming to vote in August)…I think they’ll have a say in that if the pricetag looks too high…”

    that is really the trillion dollar question

    and cvienne Says-

    “80% of requests are for yet another ARM…”

    have to disagree cvienne- I live in Mertro DC- not low rent by any means and almost %100 of business is for high balance conforming loans and FHA high balance loans- all fixed rate. For those loans above the high balance limt of $729,750- folks still lean toward fixed- although there are a smattering of 5/1 and 7/1 ARM’s. Keep in mind that any ARM that is less than 5 years at the 1st adjustment is qualified a 2% over start rate- so doesn’t help in qualifying for a mortgage. Lastly- there is not enough of a spread between ARM’s and fixed to make it worthwhile-

    not sure what price range your friend is in re mortgages he is providing but don’t see an advantage for an ARM in any case

  85. karen says:

    I-Man, you are right… sorry not sure how to fix that… it was a weekly chart of gld showing the 18 month R H&S pattern. today is putting a brutal red mark on the right shoulder… not broken but not nice…

  86. leftback says:

    Karen said: “LB, you are on ignore.”

    LB is bereft. LB is also contemplating a change of nationality – England are about to lose to Holland at cricket.

    Meanwhile the USA was spanked at football (“soccer”) by Costa Rica, as the Ticos ran out 3-0 winners in a World Cup qualifier on Wednesday in San Jose. LB noted that a young man called DaMarcus Beasley occupied the critical left back position and performed adequately – except in the areas of ball control, tackling, marking and positioning. LB notes that a trash can placed in the appropriate spot would have been more useful defensively. Midfielder Pablo Mastroeni distinguished himself in front of the back four, but only in the areas of falling over and passing the ball to Costa Rica. In fact, other than Tim Howard and Landon Donovan the whole team was completely pants.

  87. Mike in Nola says:

    More consumer deleveraging. Credit report latest

    Consumer Credit – M/M change
    Previous $-11.1 B
    Consensus $-7.0
    Consensus Range B $-11.0 B to $-4.7
    Actual B $-15.7 B

    Bad news for consumer-oriented stocks, specially the high priced ones, like….AAPL. :) How many people pay cash for Macs?

  88. cvienne says:

    @ahab

    That is my point…THERE IS NO REAL BENEFIT IN ARMS…but idiot people are looking that way anyway…(Which proves they don’t understand anything)…

    In any case, you know as well as I do that it is irrelevant the nickles & dimes saved on re-fis…

    If you’re on the MD side of DC, O’Malley is going to kill you with taxes…plus, Montgomery County (& neighboring Howard County) have high real estate values that kill you on property tax…

  89. leftback says:

    $-15.7B ??? That’s not a green shoot….

  90. karen says:

    Stuart, thanks, years ago that site used to be one of my stomping grounds… interesting analysis… i was thinking 880 would hold but hoye may be more accurate..

  91. leftback says:

    The 2-year at 1.31%.. someone was over-leveraged on that curve steepening trade, I guess.

  92. call me ahab says:

    Mike in Nola-

    Apple’s expensive? please- they are worth their weight in gold- in fact- better than gold

    also- was in New Orleans in March- wild town- stayed at the Royal Sonesta on Bourbon St

  93. Mike in Nola says:

    @Stuart, Karen, Leftback:

    Hoye has a weekly audio show answering question from listeners and there is a lot of info on his opinions to be gleaned. You can access them from here:

    http://www.institutionaladvisors.com/whats-new.htm

    Somewhere on his site there is a speech that he recently gave, outlining his methodology, which is basically comparing this recession to prior depressions going back to the 1800′s. His opinions are similar to lefty’s at this point.

  94. call me ahab says:

    cvienne-

    I am on the Virginny side

  95. Transor Z says:

    And I bet next week’s revision shows *accelerating* consumer de-leveraging from last week to this.

    Confirms that the American people really do have brains. There’s a true sentiment indicator right there.

  96. Mike in Nola says:

    @ahab: You not making fun of greg are ya?

    Haven’t been back in a couple of months, but if you read http://www.nola.com, you will see how wild it really is. Currently murder capital of the US.

  97. Mannwich says:

    Here’s a chart on consumer credit. Not looking “green shooty”……

    http://2.bp.blogspot.com/_pMscxxELHEg/Silul63XCyI/AAAAAAAAFdQ/EXMKaQReM4Q/s1600-h/ConsumerCredit.jpg

  98. I-Man says:

    I like Hoye

  99. hopeImwrong says:

    Karen,

    Re: “I use 13 and 34 EMAs to confirm a trend. ”

    Do you use a cross-over (one ema crosses the other)? Both rising? What do you look at to confirm a trend? The price crossing one of the EMAs, the price above both EMAs?