7/8/11…stop the insanity!

Bloomberg Quote of the Day: It is far easier to be critical than correct.” – Benjamin Disraeli.


TB’s Quotes of the Day: have to be summarized below as Warren Buffett is spouting off all over the place…a reality check? TB


Non-Farm Payrolls rose just 18k in June vs. an upward revised consensus of 105k from 90k following the ADP report which looked like the beginning of a bullish trend…they were wrong and took stock investors with them! Worse, May was revised down to just +25k from +54k, and April to +217k from +232k for a net loss of 44k jobs. Private payrolls rose a meager 57k while government shed 39k (budget cuts will add to this problem when we SHOULD be adding jobs). Factories lost 6k jobs; Construction -9k, even Temp lost 12k jobs while the biggest gainer was Leisure and Hospitality added the most at +34k jobs…a total disaster of a report!


The Household survey tumbles by 445k workers!!! And the Labor Force Participation Rate fell to 64.1% - lowest since 1984!!! This caused the Unemployment Rate to surge to 9.2% from 9.05% - it has only declined by 0.3% over the past year. The Adjusted Unemployment Rate, which includes discouraged workers, rose to 12.9% +0.3.Wake up and look at the raw numbers: 14.1 million officially unemployed;6.5 million discouraged workers who want jobs; and 8.6 million working part time for economic reasons only. That means it still hovers at around 16%!`


Bloomberg Top Stories:


*U.S. Payrolls Rise by 18,000 as Jobless Rate Unexpectedly Climbs to 9.2%!!!

*Stocks, Commodities Tumble as Treasuries Climb on Slowing U.S. Jobs Growth

*Buffet Bets ‘Very Handily’ Against Second Recession Even After Jobs Data

*Bonds Sales Rebounding to Most Since May as Spreads Narrow – banks big buyers!

*Italian Bank Stocks Tumble on Capital; Draghi Says Lenders Will Pass Tests

*AIG Joins Citigroup, GM in Deferred Tax Asset ‘Hall of Fame’

*Natural Gas’s Six-Month Decline to End on Heat

*Manhattan Apartment Rents Jump 7% as Landlord Deal Become Thing of Past

*Obama Summons Lawmakers for ‘Hard Bargaining’ on Broad Debt-Reduction Deal

*Syrian Forces Kill at Least Five during Rallies Against Assad’s Government


Volume rose to 3.7B shares while Big Board volume increased slightly to 843 million shares from  821 million – second lowest since 6/24. Volume crossed 600 million 30 minutes prior to the close. Meanwhile the VIX still says ‘no problem’ as it closed at 15.95 vs 16.34, up only slightly from Friday’s 15.87 (lowest since April 30th!).

The two Nasdaq indices rose 1.4% and Russell 2000 +1.5%, while the S&P 500 rose +0.9%. Dow +0.7%, Transports +0.9%. Advance/Declines ran +3x on the NYSE and +3.3x on Nasdaq, while Breadth was +4.9:1 on NYSE and +4:1 on Nasdaq. Payrolls will pare back all gains and don’t forget options expiry next Friday.

Treasuries, even with the debt ceiling problems were an immediate beneficiary with both the 10 and 30 year jumping 3/4 and then moving slowly higher, currently 3.04% and 4.31% respectively.


Overnight the stock market was blasted on the payrolls with the S&P futures plunging 14 points in seconds after the announcement, and are now off 17. Dow futures went -106 and after the opening are now -120 while Nasdaq futures dropped 19 and the spot is now off 23. Strangely the VIX volatility index remains complacent at 16.37 up only slightly from the very low level. Gold is now $1541.50 +$10.90 while Crude is $96.07 -$2.61.

…TB could not accept the ebullience even with the higher than expected ADP report yesterday. As TB stated we need 400k new jobs each and every month…we are a far cry from that which means it will take years to get out of this mess. The only bright spot is for college grads who are steady at about 4.4%…that speaks volumes about the education level in this country and why there can be no quick fix…especially without a housing boom.

Speaking of which, Warren Buffett had numerous comments today. First, he said the economy is poised to take off when housing recovers (yawn). Then he said ‘some banks are too big to fail’ – yep and we made them that way starting with the Continental Illinois bailout engineered by The Gipper, over objections from Treasury Secretary Don Regan. THEN he called Jamie Dimon a brilliant banker, adding he doesn’t own the stock and isn’t contemplating buying it…some vote of confidence in an organization that vies with Citi on ripping of state and local governments…apparently not his problem…yet they keep popping up.

He also said that the GOP is threatening to blow our brains out by holding up on the debt ceiling noting that when Dubya was president they raised it EIGHT times while THEY controlled the Congress and also passed those tax cuts that helped the wealthiest 2%. Buffett added that that the tax rate on the wealthiest Americans is too low.

Then a whistleblower at CAT said that they evaded $2 billion in U.S. taxes by shipping from the U.S. but booking them as from a Swiss sub (taxed at 10%). Watch this one closely as it is a hard case to prove but he might have the ammo to do it. CAT is off over 2% today.

HAD the rally continued, TB figured it would end on Tuesday or Wednesday due to options expiration next Friday…now all bets are off.

. . .  – – –  . . .    . . .  – – –  . . .

What a time to be holding the government hostage and threatening more government jobs cuts just when we SHOULD be hiring…true we have a major problem but it was CREATED by the GOP with Dem support, and now they are trying to solve it overnight without raising taxes on the wealthiest or removing subsidies…this is total insanity and despite Buffett saying we won’t double-dip (did he look at the payroll numbers first???), TB sees that as the direction we are headed. How long can companies continue to increase earnings when they are out of options on cost cuts and revenues seem destined to slow?

It’s summer get out there and enjoy the sunshine over the weekend…we’ll get through this…we always do…right? Right?



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