The jobs report Friday was a ginned-up number but the media and algos don't look under the hood much it seems. Yes, the unemployment rate fell to 8.3% and 243K new jobs were created and perhaps the number itself will boost confidence.
My favorite book from college statistics was 'How to Lie with Statistics'. I believe the Bureau of Labor Statistics (BLS) may have ripped a chapter or two from the book. The details were interesting and little reported because the media has soap to sell. First a whopping 1.2 million people vanished from the labor force in 2011. That is a massive seasonal/consensus driven adjustment. The BLS assumes those people aged 55 and higher died from the 2010 consensus. (So much for living longer in the USA!)
This means the labor force fell to a 30-year low of 63.7%. Around 113K of the gain in employment came from low wage jobs according to CRT Capital Group. Also part-time jobs rose by 699K, the third highest in history, while only 80K full-time jobs were created. Finally, the ISM Services Report, which rose to 56.8 from 52.6, included an increase in sector employment from 49.8 to 57.3, but perhaps didn't include large sector bank layoffs. Other skeptics included PIMCO's Bill Gross who tweeted:
detailed analysis which mocks the BLS and well regarded blogger
Jesse's Café Americain.
Lack of in-depth or accurate reporting aside, the stock market loved the report as it was "dummy up" time in the media. Other data included rising Factory Orders but missed expectations (1.1% vs 1.8% previous & 1.5% consensus).
Now you probably think me a raging bear, but we're long many equity positions but also long the truth. We may rage at the machine, but we need to make money as well.
Earnings reports featured Clorox (CLX & XLP) beating $.82 vs $.69 expected and Weyerhaeuser (WY & IYR) also beating estimates $.14 vs $ $.06 expected. Market moving ETFs included: Consumer Discretionary (XLY), Financial Sector (XLF), Industrial Sector (XLI) and Energy Sector (XLE).
Meanwhile in the eurozone, there was a dust-up in Greece as three party leaders in the national unity government are opposed to new austerity measures demanded by international lenders forcing a postponement of os a new ¿130 billion bailout. Next former ECB Vice-President, Lucas Papademos now needed to form a coalition government but that effort thus far has failed. Wall Street bulls looked the other way in annoyance.
Gold (GLD) prices fell sharply as it was back to "risk on" as bulls scrambled out of the metal and into stocks. The dollar (UUP) which was higher early lost most of its gains late in the day. Copper (JJC) was higher as was crude oil (USO) with the latter more impacted by reports Israel was prepared to attack Iran soon. Bonds (IEF & TLT) were once again lower as stocks rallied.
Volume picked up and now markets are much overbought from both short and intermediate views. (See $NYMO & $NYSI) Breadth per the WSJ was quite positive.
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