Sunday, October 10, 2010

NFPayrolls Report Day -Friday - Review

As expected the US market rallied with pivotal jobs report even when it indicated further weakness in the US labor market, as this was perceived by the market as sending a strong signal to the Fed to prompt it for more quantitative easing ('QE2'). The US government's jobs report was indeed the main event today, and it delivered very ugly numbers:

Some 95,000 jobs were lost last month (predominantly due to the US governments laying off workers, notably temporary census employees), wage growth was stagnant, and the so-called 'U-6' unemployment number (also called the 'real unemployment' number) trended further to the upside. Specifically, September nonfarm payrolls were off by 95,000 (consensus estimate: no net change) while private payrolls showed an increase of 64,000 (consensus estimate: an increase of 74,000 private , mostly Low paying / NO Benefits temporary payrolls ). Meanwhile, unemployment remained unchanged at 9.6%. Remember 
Wall Street does not really care about the unemployed, only about taxes for the wealthy and what the Banksters will do in the future.

The broad market rose on this news (although on poor volume) as participants expect that this dismal showing from the labor market would certainly tip the scale in favor of QE2, an opinion also voiced by many market observers. 'Quantitative easing' has thus become the newest and strongest current buzzword on Wall Street. QE2 is supposed to lower the already low interest rates even further, which should reduce businesses' capital costs ( a form of lower taxation ) and stimulate lending and borrowing across the economy.What they don't tell you is that most of the manufacturers, will close in the US and open in Communist China like they have been doing for the past 30 years.

Equities rallied as the US dollar continued its slide; in turn, gold and agricultural commodities resumed their strong uptrends, with the CRB Commodity Index coming in at almost a two-year high. Meanwhile, market volatility (as measured by the VIX) was down to its lowest level in five months, suggesting market participants believe market risks will remain low and equities could remain buoyant in spite of - or, as noted, because 0f- the poor economic situation.Pump the money supply FED to the resque !Lower the taxes for the rich, even though they're not going to spend it !, very smart indeed.

The same game gets played again ahead of another long holiday weekend.The U.S Dollar Index drops and the stock market rejoices over losing 91,000 jobs in September. It is all about the U.S. Dollar and the FED ,as the dollar continues to decline on a daily basis. When the dollar declines the markets inflates and trades higher. When you see that most commodities and assets are denominated in the U.S. Dollar, what have you really gained from this rally? Most retirees and people that are fed up with the stock market games have lost 12.0 percent of their purchasing power in the dollar. So once again this economy will suffer at the hands of the inflation creators ( Republicans obssesed with lower taxes ).
Quote of the Day :   " We are putting back in Congress the people ( Republicans ) that screwed it up in the first place ! "  Mark Haines, CNBC

1 comment:

  1. Great discussion regarding the market and NFP data -- it amazes me that traders try to swing short into that announcement -- the high probability trade is to fade any weakness following the report -- all news is good news when it comes to the NFP.