Friday, August 6, 2010

The Jobless Recovery Rolls On

I am sure you have seen this by now but I thought I would put it up anyway:

"Total nonfarm payroll employment declined by 131,000 in July, and the unem-ployment rate was unchanged at 9.5 percent, the U.S. Bureau of Labor Statis-tics reported today. Federal government employment fell, as 143,000 temporary
workers hired for the decennial census completed their work. Private-sector
payroll employment edged up by 71,000."

The last sentence on revisions from the BS...I mean BLS is a classic:

"The change in total nonfarm payroll employment for May was revised from +433,000to +432,000, and the change for June was revised from -125,000 to 

My Take:

Needless to say today's jobs report was terrible and the revisions were even worse. 

The revisions are what really frustrate me.  How in the hell can you be that far off in June?  The losses were almost double what was reported when the number initially came out last month. 

Why are they pulling this crap?  Does the government think that serving us up BS jobs numbers will make us feel better about the economy so that we spend more?

Perhaps they just wanted another 30 days to re-arrange the deck chairs on the Titanic?

Folks, whatever the reason, it's a huge negative for the markets because all this does is further erode confidence.  How can anyone believe any of the numbers when you see revisions like this. 

The economy is clearly tanking yet stocks rallied back hard late in the day.  HFT's anyone?

The bond market however wasn't buying it for a second and wanted no part of this late day pump.  Take a look at the 10 year:

As you can see yields collapsed this morning and closed down near 2.8% on the jobs news.  These are certainly historic times.  Folks, we have never seen price action like this where both stocks and bonds rally.  It's clear that the stock market is being overtaken by the HFT's. 

The news we got today should have sent the market down 300 points.  Treasuries CANNOT move up like this with stocks moving higher unless the market is being totally gamed. 

Where is the SEC?????


Alright before I throw this chart up let me admit that many of you who read me no that I am not a technical analyst and probably can do this a heck of a lot better than I can. 

However, I did put together an interesting chart today on TOS:

I thought a couple of things were interesting here.  First of all if you bought the market at the beginning of this year your money has basically done nothing other than give you a heart attack as the S&P swung in a whopping 20% range.

If you were brave enough to hold stocks throughout this volatile period you have basically been rewarded with zero returns.  So much for buy and hold.

Secondly, I wanted to point out that we are now up against the 1030 level on the S&P which is where we peaked before selling off pretty hard in June. 

This is a critical resistance level.  If we don't break through 1030 then there is a good chance that stocks could roll over again given all of the bad news the market has been forced to digest.

Keep an eye on this level over the next several trading days.  If we don't break through the resistance it could spell trouble for stocks.

The Bottom Line

Bonds are telling you one thing while stocks are telling you another.  The problem is the equity side is being gamed.  The treasuries are telling the real story of this market(like they always do). 

This is a suckers stock market IMO.  The government is gaming the numbers while the HFT's game the stock market.

Follow the treasury market and you will be just fine.  I think owning a bond fund makes a lot of sense right now.  My largest holding here is PTTRX.  Treasury and bond funds should both continue to do well as the risk of deflation increases.

One thing to also take note of is we have the Fed meeting next week.  Any talk of a QE2 could create even more distortions in the bond and equity markets. 

I continue to sit in cash for the most part.  I will not put myself in the position to be taken advantage of by the predators on Wall St that have the system set up to take advantage of the retail investor.

I suggest you read this piece around how the trading sharks are now even eating the index funds for lunch as they begin gaming the commodity markets.  This is increasing the cost of living in many poor countries which is causing mass starvation.   

A shout out to The Automatic Earth for finding this.  This article will make you want to vomit but I think it's important for everyone to realize how vile Wall St has become. 

They would sell their own mother down the river if they could make a buck off of it, and I think it's important that every retail investors understands this before they take capital and attempt to trade against them.

I will close with a little quote from the article above:

"Commodity-index ETFs are a global threat far more dangerous to the world than nuclear attacks from terrorist nations. Nuclear WMDs have the power to wipe out major urban areas killing tens of thousands instantly, like Japan in 1945, leaving massive scars across humanity for many decades.

And yet, as Funk puts it: "Heilberg's bet on chaos is beginning to play out on the streets." The toxic trail of commodity ETFs is already proving to be deadly, starving thousands worldwide, while the new Capitalists of Chaos only see incredible profit opportunities, as they make huge bets that they'll get even richer in the next round of catastrophes, disasters, poverty, starvation and wars.

Bottom line: Commodity ETF/WMDs are mutating into a toxic pandemic fueled (and protected by) the insatiable greed of banks, traders and politicians whose brains are incapable of giving up their profit machine, won't until it implodes and self-destructs. The Wall Street Banksters have no sense of morals, no ethics, no soul, no goal in life other than getting very rich, very fast. They care nothing of democracy, civilization or the planet.

They are in a race to become the richest man in the world, to control more assets, more commodities, more rights, more land, more money than Warren Buffett, Bill Gates and Carlos Slim combined. It's a contest and the other 6.3 billion humans on the planet are just profit opportunities (and collateral damage) in the dangerous high-stakes games played by the new Capitalists of Chaos ruling the world."

Please be careful out there all and have a great weekend.


getyourselfconnected said...

TAE is always a great place to find good stuff.

The jobs numbers today were terrible. But as you say, the stock market can be goosed and at this point is the only "proof" of any recovery so i would not bet against it overall, but I am not buying something fake on principle either.

Have a great weekend!

Jeff said...



I am eating some popcorn on the sidelines while I watch this insanity play out.

Crazy! you have a great weekend too.

CT-Hilltopper said...

My popcorn is butter flavored.


I'm sitting it out with you guys.

Want some popcorn? I'll share...LOL

getyourselfconnected said...

hope you caught my birthday shout out!

Jeff said...


I love buttered popcorn.

Forgot to talk about lucky

That's good for our gold get!

Jeff said...

Typo I meant bucky! Damn