Unemployment up to 9.2 percent. Ugly economic news.

[The Big Ragu]

Jobs report for May this morning disappointed in a massive way. They were expecting a huge gains in jobs, based on recent economic gains. They came in at 18,000 non-farm payroll jobs; expectations were for 125,000.

For those who seem to root against me personally on here, I'll spare details, but I am getting hammered on some trades as a result. It's going to be a bad time for me.

This is bad, overall. All the news the last 2 weeks in producer and manufacturing numbers spelled a different story. This suggests to me that the unemployment picture is going to remain bad for a while -- perhaps years.

I'd don't know about a QE3, but I would bet they are going to tinker again, maybe a payroll tax holiday, maybe pushing through the repatriation of taxes they have been talking about. And maybe a QE3.

The bond markets are factoring it in right now. And the stock market, which had been rallying on expectations of the economy picking up are going to end the week with a thud.

 

[suburbia]

A part of me wonders if corporations, which are flush with profits and are producing, are gaming the system. Are they holding back on hiring they can (if not should) be doing in the hopes of booting Obama from office next November and getting a Republican President and Senate that will give said corporations a friendlier tax and regulatory environment?

Or am I being too cynical?

 

[Michael_ Gee]

I don't think so. Corporations are holding back because there is not much demand for their products or services. There is no immediate answer to the problem of millions of people losing huge sums of money in, as they always say, the biggest investment of your life, a home.

 

[YankeeFan]

They were expecting a huge gains in jobs, based on recent economic gains. They came in at 18,000 non-farm payroll jobs; expectations were for 125,000.

This whole "unexpected" bad news for the economy has been a recurring theme/pet peeve on the Rush Limbaugh Show.

Here he is from a year and a half ago:

http://www.rushlimbaugh.com/home/daily/site_021810/content/01125106.guest.html

You have to wonder if the people expecting good news see actual evidence to support their predictions or if they're just seeing what they want to see. Or if they're just cheerleading for the economy.

And, because it's always easier to be wrong when you're part of a group than when you go out on a limb, there appears to be a lack of contrary opinions out there.

 

[Ben_Hecht]

They were expecting a huge gains in jobs, based on recent economic gains. They came in at 18,000 non-farm payroll jobs; expectations were for 125,000.

This whole "unexpected" bad news for the economy has been a recurring theme/pet peeve on the Rush Limbaugh Show.

Here he is from a year and a half ago:

http://www.rushlimbaugh.com/home/daily/site_021810/content/01125106.guest.html

You have to wonder if the people expecting good news see actual evidence to support their predictions or if they're just seeing what they want to see. Or if they're just cheerleading for the economy.

And, because it's always easier to be wrong when you're part of a group than when you go out on a limb, there appears to be a lack of contrary opinions out there.

Rush would love it to be 1933 . . . in a land, far away.

God help us , if that happens.

 

[YankeeFan]

I don't think so. Corporations are holding back because there is not much demand for their products or services. There is no immediate answer to the problem of millions of people losing huge sums of money in, as they always say, the biggest investment of your life, a home.

People hate the phrase, "do more with less," but that's what's happened.

Companies make hiring decisions on long term predictions. A couple of jobs reports isn't going to change anything. Meanwhile, uncertainty over interest rates and tax policy can be paralyzing. You can't make long term decisions when you can't predict long term conditions.

In the mean time, companies have made decisions to deal with the current environment. They're focusing on core businesses. They've cut or outsourced jobs. They've put off expansion. They're not updating facilities or making capital investments.

And, they won't until they're convinced the economy is on sound footing.

Hiring is a lagging indicator, not a leading indicator. Easier to have people work overtime than to hire new employees if you get busy, but aren't sure you'll stay busy.

 

[The Big Ragu]

They were expecting a huge gains in jobs, based on recent economic gains. They came in at 18,000 non-farm payroll jobs; expectations were for 125,000.

This whole "unexpected" bad news for the economy has been a recurring theme/pet peeve on the Rush Limbaugh Show.

Here he is from a year and a half ago:

http://www.rushlimbaugh.com/home/daily/site_021810/content/01125106.guest.html

You have to wonder if the people expecting good news see actual evidence to support their predictions or if they're just seeing what they want to see. Or if they're just cheerleading for the economy.

And, because it's always easier to be wrong when you're part of a group than when you go out on a limb, there appears to be a lack of contrary opinions out there.

This is not people seeing what they want to see. There is news every day. Yesterday, it was the ADP National Employment Report, which showed a dramatic rise in private employment. The stock market rallied. Bond yields rose. And there was an expectation going into this morning that the news would be way better than it was. The markets get the news and overreact on it. The stock market has been rallying, so within moments of the announcement, people took profits and got the hell out of dodge. That added to the carnage. Those sellers are out now, and by Monday the numbers will reflect true sentiment (which isn't good right now), until the next numbers come out -- those will be earnings numbers. Earnings season starts next week. And those numbers SHOULD be good (expectations are that they will), in which case the stock market would rally.

But none of this is wishful thinking. The markets are reactive. They overreact.

In this case, this was a number so far below expectations that nothing surprising happened. We lost jobs overall for the month, when they expected unemployment to stay around where it was.

 

[YankeeFan]

Rush would love it to be 1933 . . . in a land, far away.

God help us , if that happens.

Nah, come on.

But, I do think that a lot of us on the right thought Democrats -- aided by the press -- talked down the economy under Bush 43 and focused on bad news.

And, when you only focus on bad news, you risk it becoming a self fulfilling prophesy.

Dems are currently accusing the right of the same thing.

But, the press appears to be doing the opposite -- and the numbers are always "unexpected" when they don't follow suit.

Wall Street will always cheerlead for the economy. (On a whole. Certain players will always be short the market.)

CNBC took a lot of heat for eating up whatever Wall St. fed it for years.

If people are still surprised every time bad news comes out, maybe they need to do their own homework.

 

[YankeeFan]

This is not people seeing what they want to see. There is news every day. Yesterday, it was the ADP National Employment Report, which showed a dramatic rise in private employment. The stock market rallied. Bond yields rose. And there was an expectation going into this morning that the news would be way better than it was. The markets get the news and overreact on it. The stock market has been rallying, so within moments of the announcement, people took profits and got the hell out of dodge. That added to the carnage. Those sellers are out now, and by Monday the numbers will reflect true sentiment (which isn't good right now), until the next numbers come out -- those will be earnings numbers. Earnings season starts next week. And those numbers SHOULD be good (expectations are that they will), in which case the stock market would rally.

But none of this is wishful thinking. The markets are reactive. They overreact.

In this case, this was a number so far below expectations that nothing surprising happened. We lost jobs overall for the month, when they expected unemployment to stay around where it was.

Well, in the case of news moving markets, you always need to be careful. How much of that news is already built into the market/price.

The old rule, "is buy the rumor, sell the fact." Even good news, if it doesn't exceed expectations an be bad news.

When I was starting out on Wall St., this was a tough lesson to learn.

Back then, under very different conditions, good news could be bad news in other ways too. Too much good news could be inflationary, so it was actually bad news.

 

[The Big Ragu]

This is not people seeing what they want to see. There is news every day. Yesterday, it was the ADP National Employment Report, which showed a dramatic rise in private employment. The stock market rallied. Bond yields rose. And there was an expectation going into this morning that the news would be way better than it was. The markets get the news and overreact on it. The stock market has been rallying, so within moments of the announcement, people took profits and got the hell out of dodge. That added to the carnage. Those sellers are out now, and by Monday the numbers will reflect true sentiment (which isn't good right now), until the next numbers come out -- those will be earnings numbers. Earnings season starts next week. And those numbers SHOULD be good (expectations are that they will), in which case the stock market would rally.

But none of this is wishful thinking. The markets are reactive. They overreact.

In this case, this was a number so far below expectations that nothing surprising happened. We lost jobs overall for the month, when they expected unemployment to stay around where it was.

Well, in the case of news moving markets, you always need to be careful. How much of that news is already built into the market/price.

The old rule, "is buy the rumor, sell the fact." Even good news, if it doesn't exceed expectations an be bad news.

When I was starting out on Wall St., this was a tough lesson to learn.

Back then, under very different conditions, good news could be bad news in other ways too. Too much good news could be inflationary, so it was actually bad news.

After the two producer numbers this week, if this number met expectations, the stock market rally would have continued. Everyone would have assumed we are in a recovery.

Right now, I am sitting short 10 and 30 year treasuries. I am not a long-term trader. I don't trade on news or fundamentals so none of this was about anticipating news. I just look at price momentum, although on a day like this, it is difficult not to be influenced by news. Sometimes you are at the whim of a number like that.

I have taken a beating. I may sell by the end of the day, and then when yields eventually rise (unless they do something stupid like actually do a QE3), I will be kicking myself. I just can't afford losses like this. I am hoping the markets pull back a little before I sell. It already has dipped, but very often there is a dip before another rise. I am praying all the short covering and sellers are out. But right now, I am just a helpless little **** here saying my Jesus prayers. I have been having a rough time of it in general lately. I made a ton of money for about a year on what was essentially "sell the dollar, buy commodities" strategy, even though I was doing those trades based on momentum, not out of some fundamental reason.

That trade is not full proof anymore. I can't believe I actually got stuck in a trade in which I was betting on the U.S. economy and got burned, considering I have been so down on our fiscal and monetary stupidity.

**** it. :)

 

[The Big Ragu]

By the way, the stock market is shrugging it off to some extent. Down was down something like 150. It has rallied a bit. I think traders are smart enough to know it is one month and the next batch of news might be different. We'll see.

 

[Football_Bat]

If the government is playing the "expectations" game, it would be in its best interest to sandbag the predictions to make the actual numbers look better in comparison.

They didn't do that, which leads me to believe that the projections were made in good faith and that the anemic numbers were truly a surprise.

 

[TigerVols]

There is no fundamental reason for the economy to be doing well at the moment, and I, for one, am happy to see traders getting it in the shorts.

9.2 percent unemployment means that 10 percent of the consumer economy has been slashed, as the unemployed are not buying new cars, houses, vacations. The fact that Wall Street has been exploding despite this fundamental fact staring them in the face is disgusting.

Republicans like to talk about killing government by starving the beast. The oligarchs and their Wall Street henchmen better be careful because they are killing the country by starving the economic beast.

 

[Azrael]

So Wall Street thrives, but none of that wealth "trickles down" into job creation. Huh.

 

[Football_Bat]

The good news is West Texas Intermediate is down almost $2 to about $97. Oil was starting to uptick, and gas went up almost 20 cents a gallon this week.

 

[Mizzougrad96]

I thought electing Black Jesus was going to take care of this. :D

 

[Bob Cook]

I can see one reason why there is a difference in the ADP private jobs report and the overall jobs numbers -- state and local governments (including schools) are cutting jobs. Despite what some may think, they count as employees, too.

 

[The Big Ragu]

Ragu, I'm sorry to hear about your troubles. Question: If the Fed actually went ahead with QE3, will that be what finally causes the bottom to fall out of the dollar, in your opinion? This QE **** scares the hell out of me.

They work with this short-sighted idea that if they devalue the dollar they can inflate away the debt our politicians have already run up (and therefore decrease the debt load by making the dollar worth less). They also believe that a cheaper dollar will stimulate exports, despite the fact that we are an importer nation, not an exporter.

It hasn't worked that way, though, and they have devalued the dollar to ridiculously low levels.

What we have gotten hit with is higher prices, as a result. Imported goods -- and we are a nation that imports -- go up.

We have a thread about the price of gas, for example. A devalued dollar does two things. When the dollar is worth less, the price of oil goes up. Then all the goods that are dependent on oil to get here go up in price, as well.

Those higher prices have been more of a drain on our economy than any benefits. Higher prices have been a drain on our economy, and the uncertainty has small employers not hiring new people, apparently.

I wish people would see how detrimental all their fiscal and monetary "tinkering" has been. If they let the economy recover on its own, without them making short-term, politically motivated decisions that keep extending this heartache, we could get through this much quicker. Just stand aside already. We might have been in a recovery already without a second dip. Inflation hasn't been as bad as I thought it might get -- although prices of everything are up. Add QE3 and all bets are off. I don't see how we can **** all over the dollar any worse. If not for the problems in Europe, we'd be in deep **** with our currency.

I don't think they will do it hastily at this point. This is just one number on one day. They are not signalling a QE3 yet. But the chance of it went up this morning. If we start seeing relatively strong earnings, the stock market will continue to rally and they should lay off and see what happens. At least that is what I am hoping.

 

[TigerVols]

I can see one reason why there is a difference in the ADP private jobs report and the overall jobs numbers -- state and local governments (including schools) are cutting jobs. Despite what some may think, they count as employees, too.

Haven't you gotten the memo? Government employees and union workers don't spend their money elsewhere in the economy.

 

[YankeeFan]

By the way, the stock market is shrugging it off to some extent. Down was down something like 150. It has rallied a bit. I think traders are smart enough to know it is one month and the next batch of news might be different. We'll see.

That's what can making trading -- and especially exiting trades -- so difficult.

If you've got a stop order in, and you get stopped out in an over reaction to news, you want to kill yourself.

If you don't have a stop order in, and you assume the market is over reacting to news and hold off on getting out of the trade, you can really get screwed if the market keeps going against you instead of bouncing back.

Sometimes it's just easier to exit a trade before news. Though, you don't always know when news will break or when a report will really move a market.

All I can say is it's a tough business.