The jobs report was certainly a disappointment today (as was the game last night). Nonfarm Payrolls fell by 85k. Ironically, we did finally see Nonfarm Payrolls print a positive number, but it was in November instead of December. The BLS revised the -11k November number to +4k. Hours worked held steady, and hourly wage growth on an annualized basis rose by a pitiful 2.2%.
The Unemployment Rate held steady at 10%. The manufacturing sector lost jobs – again – and construction jobs declined by a surprisingly large 57k. The construction jobs were mostly commercial real estate and some could be due to weather. On the plus side, jobs for temporary workers did rise again. We can hope that was not just a seasonal bump. But here is the really bad news in the report. The household survey showed a huge decline of 560,000 people in the labor force. This is not at all a good sign to have workers leaving the work force en masse if the economy is in fact improving.
Don’t expect the stock pundits to worry about this for more than an hour or so. Stocks are heading into earnings reporting season, and those headlines are expected to be wildly bullish for stocks as the comparisons are against a horrid 4th quarter of 2008. At least that’s the way things seem to have been set up. Over the next few weeks you’ll be reading headline after headline about how XYZ company “beat” analysts’ earnings expectations by a mile or two. This has been standard operating procedure for a while now. What I never hear anyone say is, either analysts are all doing a really bad job or they are intentionally lying in the first place. That’s exactly what this charade means though. Wall Street’s best and brightest are either not bright or liars.
I have truly grown to despise the Wall Street spin. There’s something called “talking your position,” and it’s been around for years. It’s trying to justify your position (long or short stocks or bonds) by focusing only on the merits of your argument and downplaying the faults. That’s a time-honored tradition on Wall Street. But over the past ten years I guess the potential payoff for these guys has grown so big, they have elevated spin to a whole new level. I frequently cite examples of this. I wish I had been keeping a log of this for the past two or three years. I would have a novel’s worth by now. Today, one of the CNBC regulars was spinning the jobs report. His spin, which was quickly seconded by the hosts, was that the bad job number was really good for stocks. His reasoning is that this pushes any potential rate increase even further into the future. Great… let’s never add jobs, get the UR to 20%, and then we’ll never have to worry about Fed tightening. That idiot (and I’ll try to find his name) knows he should be praying for a Fed rate increase. A Fed tightening would mean the economy has in fact recovered. Simple spinning or “talking your position” has been replaced by lying.
Here’s something to keep on the back burner for a big news story if not a market-moving story. It’s been discovered that when Treasury Secretary Geithner was the NY Fed President, the NY Fed apparently ordered AIG not to disclose to the public the money AIG paid to banks to make banks 100% whole during the meltdown. Even Democrats are demanding an explanation. As you know, I would be heartbroken to see Geithner go.