That Sinking Feeling: Underwhelming Unemployment Underscores the W

When a Keynesian Cheerleader says a double-dip is now 50-50, you know the recovery is in trouble. Robert Reich so opined on CNBC this morning. Clearly the recovery is not a typical V shape, and it now appears headed to a W.

Before the unemployment report, the pundits were predicting a good report, with BNP Paribas stretching to 645K. Goldman's Hatzius, whose prior predictions were pretty good, got caught touting a 600K number. It came in at 431K, below both the Goldman 600K and the consensus 536K. The key to watch is not the total, skewed by the census number at 411K, a whopping 95% of the total (see chart courtesy Innocent Bystanders), but the private payroll number, which came in at 41K, well below the consensus of 180K. 

There is evidence of systemic fraud in the census hires being hired and fired and rehired, but this should not affect these numbers as they are based on surveys. The fraud seems to be for the benefit of supervisors who must have some sort of incentive pay based on hires. What a mess. But just as the census hires should be redacted to look at the underlying strength of the economy, when they start getting laid off in droves the firings should be added back. It is the private sector trend which is critical to projecting a recovery, or not. 

The 41K private jobs is a drop from the prior month's 231K (which was adjusted down to 208K) and a reversal of five months of improvements. The moving average is around 150K. 

In addition to the 411K census, there were 31K temporary jobs, meaning permanent jobs actually came in a negative 11K. Also, the birth/death model estimated 215K jobs, meaning arguably this report should have come in a negative 226K. 

The unemployment rate fell to 9.7% because the total workforce fell from 65% down to 62.5% of the population, well below the normal level of 67% for the past 20 years. This decline comes from people leaving the workforce. Usually during a real recovery people return to the workforce and the unemployment rate paradoxically rises. We saw that last month. This workforce decline is bad news for a recovery. 

 

The best summary of the employment situation comes from Calculated Risk and the following chart. It shows how much deeper and longer our current plight is, and how the apparent bottom of the last five months appears to be rolling back down to a double-dip in employment:

 

Comments

[Michael]

Excellent summary of the jobs data!

[Hank Wernicki]

today's Transcript

2:53 pm

1064 !

2:49 pm

1066 and crashing ! wow

2:44 pm

Please Note : The New MFT URL for June will be emailed over the weekend

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Thank you ... Hank Wernicki

2:36 pm

18 point profit if you are still short the SPX via puts for today's trade

2:29 pm

hmmmmmm breaking June 2nd low !!

1070 now for the SPX

2:19 pm

Brilliant call last night ! ... Susan B

2:03 PM

1:47 pm

Scanning

11:54 am

Hank,
 
A question about your stop. By “1105.52”, I think you meant 1105.25, which was the day’s high.
 
It got taken out overnight, but it still strikes me as a good call.
 
What is your phone #?

BobP
  
From: Henry Wernicki [mailto:[email protected]]
Sent: Thursday, June 03, 2010 6:09 PM
To: Bob Prechter
Subject: TOMORROW

11:39 am

OUT and FLAT currently for today

11:31 am

Today's SPX Fractal " top tick " short trade is based on the child iteration

from 6/1 10m chart at 1:30 pm <<< Parent / Base

11:24 am

1079 ! wow

8 point profit <<<<<<<<<<< TAKE IT IF YOU WISH <

10 POINTS IS ALL WE WANT FOR A TRADE

11:20

1080 <<<<<<<<< I'm taking profits here now

OR LOWER YOUR STOP AND HOLD TODAY <<<<<<<<

11:13 am

Lowering the Stop to the short entry point at 1087.60

Break even here

OR keep the Original Stop

SPX is now trading at 1083 -------- 4 points

on the ES that's $200.00 per contract profit

10:53 am

Short and holding at 1085 now for the SPX short trade

10:45 AM

1087.60 <<<<<< SHORT THE SPX

1088.28 STOP

RISKING 2 POINTS

DAY TRADE

10:23 am

Select some SPX Put Option for a day trade

scanning and waiting

10:19 am

Today's SPX Open is similar to June 1st 10m bottom

May rally to 1096 and could be a short entry

scanning

9:52 am

Scanning

9:42 am

Scanning for a setup

9:30 am

Quick Alert 8:07 AM EDT
MFT Signals
Fri, Jun 04, 2010 8:09 am
Hank

I'M TAKING PROFITS AT 1095 FOR THE es SHORT TRASDE

IF YOU WISH LOWER THE STOP AND HOLD

8:30 am

ES IS TRADING NOW AT 1083 DOWN 20 POINTS

COVERED TOO SOON

[nspolar]

Hank, good post. Appreciate the honesty of it all and more.

There ain't no real bears around. They all got yanked around too hard on the way up. Now what is left are 'Pussy Bears'.

A while back I suggested one evaluate the Yelnick Blog Sentiment factor. It hit again.

This mother is going a long ways down into the hole!

Commodity shorts especially! HUI cracking here now, so good ole SMN will be playing double time.

ns

[Mamma Boom Boom]

>This mother is going a long ways down into the hole!<

I say, NO!

[nspolar]

Mama, look at some longer term charts, especially in some of the inverse ETF's.

ns

[nspolar]

Mama, you were so worked up you left your italics on again.

ns

[Mamma Boom Boom]

it's off now

I've 'been' looking at charts

[upstart]

I'm with Futia and Mamma in the short term. Not going into the hole until July.

[nspolar]

Yelnick, the V versus the W?

Maybe it will be a V, we're still in the first leg down possibly.

The market always messes with the majority, somehow, someway. It is a devious one, especially this one.

ns

[yelnick]

ns, this is no longer a V. Sure, GDP sometimes jinks and jives on the way up, but we have been fading since Q4 and by all the looks of it Q2 will be no better than Q1. It is not yet a W.

[Mamma Boom Boom]

Today's action satisfies my projections, going out several days, actually. Wow, what a day. Should be safe to start buying, by noon Monday.
---------------------
Upstart, if I'm right, this is going to shock everyone.
---------------------
Hank, you get a better grade than me, this time.

Mamma (A)
Hank (A+)

[Roger D.]

The USD made a new high today. This market will head lower quickly back to the March '09 lows. There's not a bullish Dow chart out there,none. Infact most have been in rising wedges since the '09 bottom. Will this market crash.....yes without a doubt.

Roger D.

[Steven_737]

Hi Duncan;

Today's price action and wave count on Globex 24 hours chart

http://steven737.typepad.com/blog/2010/06/wave-analysis-es-06042010.html

and

http://steven737.typepad.com/blog/2010/06/wave-analysis-nq-06042010.html

cheers :)

[Mamma Boom Boom]

Gold does appear to be breaking down, here. It's not totally conclusive, but getting close.

Looks like inflation will go the same way as ____________.(you fill in the blank)
Paris Hilton? Cough!

[anonymous]

"This market will head lower quickly back to the March '09 lows. There's not a bullish Dow chart out there,none. Infact most have been in rising wedges since the '09 bottom. Will this market crash.....yes without a doubt." - Roger D.

And yet you have not made one single short recommendation. Hmmmm...

[Mamma Boom Boom]

Don't forget, guys, "It's all in the waves".

Now, it's time for me to wave goodbye. I have to go Club'in.

Say, Bye Mamma! Don't do anything I wouldn't do.

[nspolar]

Yelnick;

ns, this is no longer a V. Sure, GDP sometimes jinks and jives on the way up, but we have been fading since Q4 and by all the looks of it Q2 will be no better than Q1. It is not yet a W.

I wonder if you understood.

The V ... we could be in a BIG V; we have yet to hit bottom of the BIG V. The Big V would have started in late 2007, with the leg to the bottom of the V in progress and an ABC. The bottom hits in 2011, then varoom leaves all The Bears behind and wipes em out.

In fact since you were so quick to rule it out I think I now make it my favorite.

ns

[upstart]

Bye Mamma. Don't do anything I wouldn't do.

[upstart]

Jim Rogers has stated we're in a corrective period. That certainly means it will take more time than the one-month corrections we had June-July '09 and Jan.-Feb. 2010. I think there's more to go, but a gap-down day on bad news does not sway my opinion that a bounce comes first.

[nspolar]

Paul sounds off.

http://www.realclearpolitics.com/video/2010/06/03/mccartney_bashes_bush_its_great_to_have_a_president_who_knows_what_a_library_is.html

Da Brits!

I think mama went club'in and left her italics on.

ns

[Steven_737]

test

[Steven_737]

italics fixed

:)

[Steven_737]

italics fixed

:)

[Roger D.]

"And yet you have not made one single short recommendation. Hmmmm..."

Baby needs his butt wiped too. If you have followed my charts for the last week,todays break was no surprise.

[Z-M-L]

After dipping to 1061, the SPX closed at its 61.8% retracement from the orthodox high of 1104 on May 27th. The last 5-TD has unfolded as an Irregular Flat. An Irregular Flat in the Wave-2 position indicates the upcoming Wave-3 rally will be exceptionally powerful and extended on the order of 2.618 (versus a normal 1.618) of Wave-1; which projects to 1226.

The action over the last few weeks has scared the chit out of the retail investor and released the required inventory needed to push these markets back up through the 200-day MA,50-day MA, and beyond. Quoting Don Wolanchuk, "the boyz are in complete control".

Have Great Weekend!

Z-M-L

[Shrimp Lomein]

ZML, I see the Irregular flat wave 2!

Time for the bulls to rock.

[Shrimp Lomein]

Wall street circuit breakers are supposed to start monday, the contrarian in me saying:

ES futures L-O-C-K L-I-M-I-T U-P?

[Roger D.]

"ES futures L-O-C-K L-I-M-I-T U-P?"

I'm glad you had a ? mark

JNJ is most bearish, but not the only one,the Dow looks terrible on a whole. Next week has a 50/50 chance of another 1000 pt break. The real killer will be the possibility of a high volume distribution day. If we trade 2-2.5+ billion shares early next week, the crash odds go way up.

Roger D.

http://content.screencast.com/users/parisgnome/folders/Default/media/dacf829b-f64f-4373-bbd6-2514f914c7e0/2010-06-04_1543.png

[Mr. Panic]

CRITICAL MILESTONE almost achieved!!!! It's right on the brink. It's all but assured to be achieved on Monday unless the Dow is up 300 pts which is pretty unlikely. Everything is falling into place including crucial numerology.

[Shrimp Lomein]

The Elliott waves on the chart look pretty darn bullish from a textbook view.

May 25 lows to 1104 high = 5 waves up textbook impulsive rally

Then came a textbook irregular flat ABC where wave b goes higher than previous wave 5 with final c wave selling that looks corrective not impulsive.

If ZML is right, the ES could explode higher in a fibonacci 2.618 bear crushing rally.

[Shrimp Lomein]

ES is sitting on textbook fibonacci .618 retracement as a textbook wave 2 should.

Textbook buying panic could get out of control if a textbook wave 3 shows up next week.

Textbook bullish Monday would be "down" open on textbook "Asian overseas panic" then after the open the ES does a textbook sharp reversal higher.

[Roger D.]

AAPL is a classic commodity blowoff situation. A shorting opportunity....you be the judge.

http://www.screencast.com/users/parisgnome/folders/Default/media/b09dccb3-a9c7-4bd3-99f5-0a59501e0d7b

[Shrimp Lomein]

Lets say AAPL is a 1929 RCA.

RCA stock rose 936% from 5 years into 1929

If AAPL follows RCA, From $35 5 years ago AAPL could still rally to $363.

[Chico]

Hank,

I'm a little confused by your post. Did the short recommendation make money or not? It appears the trade was stopped out for a loss. By the way, are you going to offer a free trial as you've mentioned in the past?

[PUSSY NS POLARBEAR]

There ain't no real bears around. They all got yanked around too hard on the way up. Now what is left are 'Pussy Bears'.

A while back I suggested one evaluate the Yelnick Blog Sentiment factor. It hit again.

Posted by: nspolar | Friday, June 04, 2010 at 12:06 PM

MORE ACURATE TO SAY:

THE ONLY BEARS LEFT ARE PUSSY NSPOLAR BEARS.

JA JA JA

Since the rally started there have been very few posters compared to before. Yelnick's blog always has a PUSSY NSPOLARBEAR BIAS regardless of what's going on.

If you didn't have the observational skills of a Gekko you would know that. Did you even make any money today?

I thought so, what a ball-less little pussy nspolarbear trying to act big.

JA JA JA.

[Shrimp Lomein]

Bears are everywhere

http://www.cnbc.com/id/37228003

[OracleLurker]

Earlier i compared this jobs report's effect on the market's current cycle up-phase to a boulder getting tossed in the ocean when the right analogy turned out to be an asteroid landing in a swimming pool - this up-phase has sustained some pretty major damage. Still negative sentiment has peaked and that should keep us in a choppy sideways up-phase for several weeks. But I have taken my losses and cut my long exposure by 60% - the silver lining is what this portends for the next down phase albeit still several weeks away if not more.

[the general]

I'm sure the PPT and the EU will be working overtime this weekend putting together an all out plan to light a fire under stocks for Monday morning. It may succeed to temporarily postpone the inevitable, again. I believe that finally many are coming to the to realization that they are being lied to with all the skewed data that is being reported. The emperor has no clothes. The average 401k holder will not stand by this time and again watch their savings go down the drain. They will bail. When that starts the selling will overwhelm any efforts to prop up the markets. A depressionary spiral will accelerate downward until the excesses are wrung out of the markets. There's a lot of money to be made on the short side. Down hard and fast, beyond what most believe is even possible. The flash crash was just a preview.

Mr. Panic, can you please elaborate (or direct to a site) on the milestone and numerology that you are referencing?

[yelnick]

ns, on your V read you as talking about GDP and a V shaped recovery. On the stock V, normally it would bounce hard off a 2011 bottom, but let's not presume that yet

[Shrimp Lomein]

has anyone looked at the NASDAQ monthly chart?

that is one bullish looking chart! this rally looks only halfway over on the monthly NAZ!

[Roger D.]

"SEC's Circuit Breaker Rule: Idiotic

There's dumb, and then there's criminally insane." Karl Denninger

http://market-ticker.denninger.net/archives/2333-SECs-Circuit-Breaker-Rule-Idiotic.html

Monday they start this circuit breaker crap, don't they???

If I was long I would be scared shitless.

Roger D.

[nspolar]

More BP and Oil Related Rhetoric;

Just when BP could use some encouragement for getting onto the right path, we get:

http://news.yahoo.com/s/ap/20100605/ap_on_bi_ge/us_obama_gulf_oil_spill

Are all of these DUDES (especially Obama) playing the polsters?

ns previously stated that the latest attempt by BP should yield some positive results. Too early to summarize but the initial results look promising. I have to think my compatriots in the engineering world will come through.

The BP engineers are imo taking up the slack here. The fakesters have more than likely been pushed to the sidelines.

I watched the videos the other day of the 'slicing action'. The Terminator came to mind. This is high tech stuff folks. Great stuff, but too bad it has to be a part of a big mess.

ns

[Roger D.]

he purest Elliot form....I haven't seen anybody address this current EW pattern,but in the daily $TRAN average,it just doesn't get any simpler than this. The only complex think is the 1,2,1,2 formation,but so far this pattern reminds me of 1987. Also the nested 1,2,s forecast a acceleration dead ahead.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/c6bb3db8-17c6-4a33-8206-00e7e7ce54cb

[Roger D.]

I apoligise for my spelling

The purest Elliot form....I haven't seen anybody address this current EW pattern,but in the daily $TRAN average,it just doesn't get any simpler than this. The only complex thing is the 1,2,1,2 formation,but so far this pattern reminds me of 1987. Also the nested 1,2,s forecast a acceleration dead ahead.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/c6bb3db8-17c6-4a33-8206-00e7e7ce54cb

[An Israeli A Jew]

http://www.youtube.com/watch?v=FOGG_osOoVg

[yelnick]

Roger D, nice chart - with the drop today it fits a nested 1-2. The drop was very intense, which the STU says is "exactly what one would expect in a third wave decline of multiple degrees of trend"

[Roger D.]

The $TRAN 3rd wave in progress today. Looks to be ready to gap down Monday in a 3 of 3, we shall see.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/cbb266cf-52b3-45e5-993f-4c03a583f34f

[Roger D.]

The catalyst for a crash....

http://www.screencast.com/users/parisgnome/folders/Default/media/8ea2fbe0-accc-4978-98c4-e33df1476a07

[nspolar needs a spine]

nspolar:

Are you really An Israeli also? or just a pussy polar bear that likes to post a bunch of crap no one cares for? Why not post the U-Tube video under your normal call sign? Why use An Israeli A Jew?

Just as I thought, no balls AND NO SPINE AS WELL!!

[An Israeli A Jew]

nspolar:

Are you really An Israeli also? or just a pussy polar bear that likes to post a bunch of crap no one cares for? Why not post the U-Tube video under your normal call sign? Why use An Israeli A Jew?

Just as I thought, no balls AND NO SPINE AS WELL!!
-----------------------------------------------------

Sorry, my friend - I do not know if u can hate that other guy because he is a Jew. I am not him.
Please do hate me. We are use to it.
http://www.youtube.com/watch?v=FOGG_osOoVg&annotation_id=annotation_665723&feature=iv