Markets: the “Good News/Bad News” Problem; Jobs Drop

image(Deep in the Wisconsin, Illinois, Iowa Triangle)

We find ourselves this morning wondering if someone would be kind enough to prescribe some major league anti-psychotics for this market.

The problem is this morning’s Job Report which we will get to in a moment.

It’s the set-up of market psychology, however, that causes us concern.  You know markets are in a precarious state when news “flips.”

In other words, when “Good” news is taken as bad, and “Bad” news is taken as good, then trying to make sense and reasonably investments using other than purely technical trading tools because something of a mind-eff.

Here is how the Job report looking from the “flipped” perspective.

Say the Jobs report comes in stronger than expected.

In as normal (non-psychotic) world, this would be good news and the market would go up.

What’s not to love?  After all, more people working means more tax revenues for government, so pressure comes off there.  Fewer people would be “on  the dole” and we would have an increase in savings and investment, which could get us thinking in terms of the Virtuous Cycle in economics, once again.

But that may not work out this way.

Instead, the market could be thinking:  “With more people working, the Fed would be more likely to raise rates in the coming months.  This would increase business costs because money would be less free…and that, in turn, would mean less money available to shareholders as dividends.  So that means that when the Fed raises rates, we would see stock prices come down, and we would not make as much money…”

Oh, and let’s not leave out that a recovering economy is press oil back up…

It’s wrong-headed, of course.  The fact is that a slow, rounding bottom to interest rates is coming, like it or not, and the fact that a return of the “I” word (inflation) would kick sales (buy before prices go up) and give a major boost to Housing (buy before rates do up) is completely missed.

So too the impetus for some of the dark pools of capital to edge out of bonds, which would then drop in price, and into stocks, which should rocket moonward, is also missed.

The battle between the factions – believers on both sides – is what makes a market.

Markets are only rational in a limited sense, and only some of the time.

This may not be one of those.

The Jobs Data

Which gets us to the Hot off the Press Release:

“Total nonfarm payroll employment increased by 142,000 in September, and the unemployment rate was unchanged at 5.1 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and information, while mining employment fell. Household Survey Data In September, the unemployment rate held at 5.1 percent, and the number of unemployed persons (7.9 million) changed little.

Over the year, the unemployment rate and the number of unemployed persons were down by 0.8 percentage point and 1.3 million, respectively. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (4.7 percent), adult women (4.6 percent), teenagers (16.3 percent), whites (4.4 percent), blacks (9.2 percent), Asians (3.6 percent), and Hispanics (6.4 percent) showed little or no change in September. (See tables A-1, A-2, and A-3.)

The number of persons unemployed for less than 5 weeks increased by 268,000 to 2.4 million in September, partially offsetting a decline in August. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.1 million in September and accounted for 26.6 percent of the unemployed. (See table A-12.)

Importantly, the labor participation rate dropped from 62.6 to 62.4%.

The Big Lie about jobs is the absolute number of people working dropped 236,000 in  the detail here.  The “increase in non-farm” misses the point.

Another made-up number:  The civilian workforce dropped 350,000.  Oh?  Was there a rapture we missed?

Then the CES Birth-Death Model took away 34,000 jobs.  You know things are bad when the made up jobs number drops.

A-15 U-6 alternative measures of unemployment declines to 10.0 from 10.3 in August.  And I have this bridge for you…

The futures dropped one percent on the news.  How we get a $20 pop in gold has me eyeing the hookha.

But hey!  Not exactly fuel for the rate hike bonfire, right?

Where is Our Commander in Chief?

Care to explain to me how in a couple of months, Vlad Putin can take out an ISIS command center and how the US hasn’t been able to?

It certainly adds street creds to conspiracy theory that we’re being “had” by the defense industry and an administration that seems to be failing us on purpose through poor direction and second-guessing of the military.

But then you knew we had problems there,. right?  Should have been evident when the house cleaning of the military ramped up…they don’t want success.  Fact is, America can’t afford peace or the economy craters.

Bitch of a problem, eh?  Vlad sees it…exploits.  West pictures it as a “PR machine” but dare we ask who is the master of those PR machine tactics?  Tonkin, II forward…

Court Out of Touch

I don’t call the Supreme Corps that lightly.

This morning here comes a Gallup Poll that says more than half of Americans don’t trust the court.

The court has strayed miles from strict Constitutionally informed decision and has gone down the legislate from the bench road…although I’m confident court apologists who like the directional drift of the country would argue the point.

VW:  Kick ‘Em When They’re Down

America tradition best seen in football previously:  Pile-on is now happening as states are lining up on the VW emissions-gate.

Global Caliphate Oil Grab

Interesting to note the outbreak of Boko Harum attacks in Nigeria.  Another one overnight underscores that while Isis/extremism Global Caliphate is being a thorn Syria, they have a business sense, it seems.  Nigeria has oil and here come the attacks.

Mexico’s Satellite Program

Yes, Mexico has enough money to pop a billion dollars for a satellite launch.

But they don’t have universal free education for their people yet.  You see, the poor in Mexico are born at home…and many don’t receive a birth certificate…The Birth Certificate is a requirement to get into school…and that’s how that game in played.

Meantime, the American Media is complicit in continuing the misperceptions about Mexico.  One way was painting Jorge Ramos of Univision as a “reporter.”

The reality is Ramos is more like the Mexican version of Bill O’Reilly…which turns US mainstream media into something of a joke among the intelligent immigrants to ‘Merica.

Mexico is continuing to act in excess testosterone fashion:  “My communications satellite network” makes more political sense than “Our educated people and enlightened government…”

Mexico:  People aren’t the problem – their government is.

Ain’t it always the case?

Comments

Markets: the “Good News/Bad News” Problem; Jobs Drop — 11 Comments

  1. Considering our byzantine form of government, and the fact that barely 50% of the people in this country support themselves, the other non-working 50%, the supremely top-heavy government in all its countless nooks and crannies, the wealthy ( by performing the very labor that makes them wealthy) and still have enough left over to support endless charities, causes, churches, etc. and are able to still maintain a fairly decent standard of living ( although I do realize indebtedness and fake money are a large part of this formula).. What the hell would this place be like if EVERYONE contributed their fair share, and no one wasted anything? It boggles the imagination.

  2. All of my children were born in the USA to two American Citizen parents, and they were all born at home with no “licensed professional” in attendance. All were and are healthy and have legitimate American birth certificates and consequent documentation.

    There’s no reason for Mexico to not issue birth certificates to their citizens born at home, other than local customs and inertia. There’s no reason to prevent their public education other than the above. With the democratizing of information on the net, all but the poorest can learn one way or another if they are sufficiently motivated. Schools are primarily credentialing mechanisms, as learning almost anything can be done alone. The greatest gift a parent can give, other than life and health, is the ability to self-direct, self-motivate, and self-learn.

    • Actually, Mike, there is a reason for Mexico NOT to issue birth certs,. It’s how to collection of ‘jefes’ keeps the little people down…just like the ‘M erican aristocrats choice-limit this once-free country. T’ain’t right butd it is what it is

  3. “But they don’t have universal free education for their people yet.” and neither do we – no such thing as “free education” – unless you are Abe Lincoln and have books. School supplies alone belie the fact of “free” education, then there are the school taxes and the pensions – cause teachers don’t teach for free – now or ever. AND if our “free education” is so great – explain the influx of immigrants to fill positions that should be going to our own college/university grads?!! YOu don’t really need much of an education to do ‘lawn care’ or pick up trash on the highways and by ways, nor a PHD to flip burgers.

  4. Oops… that’s 10,000 turning 65 every day, or 300K per month. We now have 64.8 million people collecting Social Security.

  5. 10,000 Americans turn 65 each month. That explains most of your issue with people leaving the workforce. September is also the month school starts, and since the labor force participation rate takes all Americans over 16 years old as the denominator, that explains the rest of the mystery. Problem solved.

    • Absolutely wrong!
      Please review the employment data here and you will see the workforce grew 200+ last year in the same period.
      http://www.bls.gov/news.release/archives/empsit_10032014.htm
      I can only conclude your assertion is more wishful than useful.
      Data does not swing that rapidly and school started about the same time last year.
      Got another apology for the lack of recovery?

  6. The whole Donald Trumnp/Bernie Sanders is a public referendum on Citizens United. Not that I think Trump would be a good Prez, far from it, but he has captured the throw the professional politicians out spirit.