9/1/11…payrolls, America, and Ayn Rand

U.S. Non-Farm Payrolls were UNCHANGED in August vs. consensus +75k – also predicted by the ADP report. Worse July was downward revised to just 85k from 117k while June was increased by 20k to a weak 46k gain. That means that effectively we lost 58k jobs in August! Manufacturing jobs declined by 3k, Construction by 5k. Now get this: the average workweek for all employees DECLINED by 0.1 hours, same as for production workers, while average hourly earnings declined by 3 cents…and this was before Irene so don’t trot out that horse…it is dead!


The Unemployment Rate was steady at 9.1%...that is only because the Household Survey showed an increase of 331k…and if you believe that there is a bridge…

Total Hourly Earnings rose by 1.9% from a year ago BUT declined by 0.1% for the month! If you add in discouraged workers the unemployment rate is 9.6% vas 10%, with marginally attached 10.6% vs 10.9%, plus part time for economic reasons 16.1% vs 16.3% - TB included the changes to show this wasn’t a totally abysmal report!  


Market Reaction 8:40am EDT: At the release the long bond was up 3/8, it is now 3.41% +1-3/4!!! The 10 yr is 2.04% +3/4. Gold was up $36 and is now up $43 to $1872.40! Crude was off but holding $88, it is now $86.97 -$2.04!!! Futures were off but plunged on the release: DOW -130; SPX -16.70!!!; NDQ -27.50. We have an early close in bonds today ahead of the three day weekend…bon chance!


Bloomberg Top Stories:


*Stocks Decline, Gold Rises Before U.S. Payrolls; Swiss Franc Strengthens

*AIG’s Jet-Leasing Unit Files for Initial Share Sale on New York Exchange

*Payroll Gains in U.S. Probably Slowed as Slumping Stocks Hurt Confidence

*Italian Bonds Fall for 10th Day as Greek Two-year Yield Climbs to Record

*Hedge Funds Landowne, Odey Suffer Rare Down Years on Bullish Stock Outlook

*Banks in U.S. Overwhelmed by Mortgage Refinancing Boom After Reducing Jobs!!!

*Buffett’s BofA Lifeline Reverses Inverted Credit Curve - $5B will do that!

*AT&T Said to Misread U.S. Signals in Meeting Before T-Mobile Deal Blocked

*American Autos 5% Fuel Saving Seen With New Johnson Controls Battery

*Saudi Oil Premium May Rebound as China’s Refineries Resume Production

*Gas Tax Income Falls as Drivers Cut Miles to 2008 Level – unexpected???

*Rogers Shuns Goldman Glare to Gain Power While Outlasting Corzine, Paulson

*Noda Avoids Losing as Judo Fighter Leading Japan Without Winning Strategy

(Imagine a country as big as Japan with 5 administrations in five years!)

*Libya Rebels to Get Cash as Qaddafi Threatens Nation ‘Engulfed in Flames’

*Merkel Brings European Debt Crisis to Home-State Campaign in Taste of 2013  


Volume was steady at 4.6 billon shares on the NYSE while trades executed on the Big Board slumped to 1.0B from 1.27 billion, following Monday’s 912 million share ‘rally day’, lowest since July 26th. Volume for the 4 days has averaged just 1.05B with the highest being less than 1.3B shares. Compare to the wwek of 8/8-8/12 when the market tanked and bottomed. The volume on the selloff day was a huge 2.54B, highest of the year and the average for the week was 2.05B. This is pathetic when you factor in the moves and volatility! We also that we had a ‘double top’ in July with the first coming on 7/7 and the second on 7/24, which could prove ominous. We took out the TRIPLE TOP of the bounce from the 8/9 lows which were lowest since 9/17/10 on Tuesday with little follow thru! Advance/Declines were very negative: -2.7:1 vs +2:1 vs +1.8x vs +1.5:1 vs +5:1 vs -3.3:1 vs +2.3:1 vs +5.5:1 vs -1.2:1 on NYSE and -4:1!!! vs 1:1 vs +1.1:1 vs +7:1 vs +4:1 vs -4:1 vs +2:1 vs +4.8:1 vs -1.2:1 on Nasdaq. Breadth was even worse: -7x! vs +2.5x vs +1.3x vs +31x!!! vs +9.5x vs -3.1x vs +3.4x vs +4.4x vs -1.2x on NYSE and -4.7x! vs +1.1x vs +1.2x vs +39.5x!!! vs +8x vs -9x vs +2.6x vs +6.2x vs -1.3x on Nasdaq. New 52 week highs were shrunk to 57 from 71, while new lows nearly doubled to 41 from 22. The ratio has been positive now for four sessions for the first time in weeks, but not by much! The VIX did little yesterday but remains above 30, and closed 31.82 +.20. 48 was the selloff high, not seen since 5/21/10: 48.20!


It was a down and dirty day despite attempts to rally it early on: Dow -1.0% vs +0.5%; Transports -1.4% vs -0.4%; S&P 500 -1.2% vs +0.5%; Nasdaq Composite -1/3% vs +0.1%; 100 -1/0% vs +0.1; Russell 2000 +2.5%!!! vs -0.2%. A horrible quarter!


A sea of red ink: FTSE -1.5% vs -0.1% CAC 40 -2.3% vs +1.3%; DAX -2.4% vs -1.6%; Nikkei -1.2% vs +1.2%; Hang Seng -1.8% vs +0.3%; Korean KOSPI -0.7% vs flat; Indian Sensex +0.9% but closed yesterday. U.S. futures were weak ahead of payrolls, see market reaction above…also for Gold and Crude.


…there is nothing positive in this payrolls report – nothing! Worse if you recall yesterday Productivity slumped while labor costs rose…normally a sign of growth – but from where? Not in these numbers…just decreased productivity which is a negative for earnings, right? Yet they tried to ignore facts and rally the market yesterday…until they couldn’t…then they took it down. The only two indices that were positive year to date fell to unchanged yesterday…yet we keep being told stocks are cheap.


Yesterday, CNBC had fund manager Charles Yacktman on. He talked about his long-term performance vs. the S&P 500 and how much more you would have made with his fund. But since you didn’t make any money in the S&P 500, just how well did you fare? That is the problem with relative performance. As for the decline he indicated that he owned the stocks he wanted so did little…think about that. Yet he was hailed as a guru…must be nice…either that or the standards for guru are lower….why not, we lower the bar on everything, right? But hey, it makes us feel better.


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


Last night watched ‘Ayn Rand, in her own words’ on Netflix. You have to wonder at what kind of man Alan Greenspan really is. This Russian-born intellectual influenced him greatly. Her belief in laissez-faire capitalism, putting yourself first, government should have no safety nets, and people who are philanthropists are fools to do this…why is anyone else more important to you. But what is really striking is she grew up in Communism…yet doesn’t realize that it came to be as do all social revolutions as a result of heavy poverty and an enormous wealth gap – just as we are facing here. Double digit…averaging near 20% for blacks, latinos, and teenagers. In a democracy this is not a good thing as TB has repeatedly said, and been admonished as a socialist for this. But if a leader comes around that can united the minorities you have a majority and in a country where about half the people vote the results could be shocking. The irony of course, is that Alan Greenspan was a sub-par economist who used his political persuasion to be elected Fed Chairman and was praised although no one ever knew what he meant. Think of this: a man opposed to any governmental regulation running the most important government agency in the country…world? The results show what happens under those circumstances.


If you listen to Ayn Rand you have to wonder how and why she became an icon…bring on the Depression. But what is worse is that what she said is the essence of the tea party. Cut spending, tax rates should be zero (and we know that several CEO’s are paid more than the taxes their companies pay to OUR government). It is time for Americans to wake up, it’s later than you think. You should not and cannot try to balance a budget in a recession. You do that when you are in a boom…yet the GOP had that opportunity and squandered it on tax cuts for the wealthiest Americans and a total lack of regulation.


Enjoy your long weekend! Have fun!



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