Economic Update: Jobs Report is Classic Case of Buy the Rumor, Sell the News (Unless the News Has A Hot Friend Who Likes 3-Somes)
The market bounced around a bit on Friday before closing down (something about conflict in the Middle East, spiking commodity prices, and Gabe Kaplan not showing up for the Welcome Back Kotter reunion) as investors were buying the dip, selling the rip, all while ogling the nip slip. That said, the big news of the day was the B(L)S Jobs Report which was so headliney good that after it was released dogs were seen hugging cats, Hatfields were seen dancing with McCoys, and BYU students were seen lovingly copulating in front of and with the approval of the administration. Seriously, here are actual headlines from actual reporters:
So the economy is back on track as the US added 192k jobs (until we dig in a bit) which was slightly below expectations of ~200k and well fucking below the whisper number of 250k (and as always, the only number Money McBags cares to hear whispered is 69 as long as it is coming from Danielle LLoyd), but those are just details. The other good news is that this was the fastest job growth since last spring when temporary census workers were being hired to count all of the unemployed (though not having to count themselves surely took away from some of the fun), the unemployment rate dropped to 8.9% which was the first time it was below 9% in 2 years (though with planned layoffs spiking, perhaps we shouldn’t break out the Dom just yet), and both the January and December job growth numbers were revised higher from 121k to 152k in December and from 36k to 63k in January (and we are told January’s revision was merely due to a transposition, which is much less deceiving than a tranny position).
Now look, Money McBags is happy any jobs were added to the ponzeconomy™, and while 13.7MM people are still unemployed (not counting the discouraged, the downtrodden, and Charlie Sheen who is too busy winning to give a fuck about a paycheck), it could be worse, people could be unemployed and Bree Olson’s twitter account couldn’t exist, so at least there is that. Anyway, Money McBags is here to break down the Jobs Report and look beyond the headline numbers to see what is really going on so have faith (Faith Kroll that is, and between Ms. Kroll and the melodious stylings of Chet Haze, Northwestern University is a Shannon Tweed visit away from being its own Skinemax late night movie) that we will get to the bottom of this (and if we’re lucky, we’ll also get to the bottom of this).
1. The rounding error drop in unemployment from 9.0% to 8.9% continues to be driven by clerical assumptions and semantics as the labor force participation rate remained at a 25 year low of 64.2% and the employment population ratio remained hovering around 58.4% (though to be fair, it was told Olivia Munn would be visiting 58.4%, so hover away). Had the government not employed Money McBags’ “Fuck Off” strategy by simply kicking unemployed people out of the labor force and re-labeling them as discouraged (perhaps more discouraged than Ron Paul at a congressional hearing or the English language on an episode of The Jersey Shore), the unemployment rate would have been well north of 9%.
Shit, if the labor force participation rate had just been at 64.5% like it was 3 months ago and thus 812k more people had been in the labor force, the unemployment rate would have been 9.5%. If the labor force participation rate had been at its ten year average of 66%, ~4.4MM more people would have been labeled as unemployed in the labor force and thus the unemployment rate would have been 11.8%. So see, it is all fucking semantics and as intellectually dishonest as if Joe Jackson didn’t include LaToya in the number of kids he has or if Anabel Chong included hand jobs in her record setting gang bang. If anyone in the B(L)S had a brain (well, they wouldn’t be working for the B(L)S), they would simply call the labor force participation rate 58.4% and thus unemployment would be 0% and it would be lobster tails and BJs for all. It’s just that simple.
Another way to look at it is that there are ~13.6MM people unemployed and if that is 8.9% of the labor force, that means that 153k jobs would need to be added for a .1% drop. And shit, 192k jobs were just added so shouldn’t the rate have dropped by more than .1%? Oh right, 150k assholes each month enter the labor force by graduating from college, dropping out of high school, or getting divorced from Kelsey Grammar, so for that first .1% drop, the ponzeconomy™ would have to add ~300k jobs, but perhaps we should keep this to ourselves because otherwise we may ruin a good story (like when the pages get stuck together for the conclusion of a Penthouse Forum letter).
2. The U6, which is a better measure of unemployment because it includes temporary workers and those that the labor force patricipation rate seeks to make more invisible than a Ralph Waldo Emerson protagonist, was 15.9% and that is about as healthy for the economy as just holding it in was for Tycho Brahe. Sure the rate was manipulatedly down from 16.1%, and down is good (especially if Faye Reagan is the one going down), but 15.9% of people not being able to earn a living and thus needing food stamps, charity, hand outs, or to eat away at their savings (and yes that is funny because no one has savings) to survive is about as viable of a long-term option as being the spokesperson for the Heartattack Grill.
The point is, a lot of people are still fucking unemployed no matter what number the B(L)S wants to pull out of Department of Labor Secretary Hilda Solis‘ ass (and as an aside Money McBags thought “Secretary” was no longer politically correct, so shouldn’t she be the Department of Labor “Administrative Assistant?”). 8.7MM jobs were lost during the economic downturn and at this rate, we will be back to a fictitious 5% long-term unemployment target in only 150 short months which means we truly have created a new “Lost Generation.”
3. Wage growth sucks dick, and not any dick, but Rock Hudson’s AIDS ridden dick. The average hourly earnings were unchanged at $19.33 (or better known as $.67 short of a fucking lap dance) and with inflation coming (and not just because it is sharing a dressing room with Sofia Vergara) as both commodities spike faster than Timothy Geithner’s popularity at a Kappa Beta Phi wine and cheese party and uprisings in the Middle East cause gas to rise to $4 a gallon, stagnant wage growth is not good. And this is really an important point because whether or not people are employed is irrelevant if their dollars become worth less than an Abacus CDO, and if/when that happens, the whole system will teeter as the middle class on down will be forced to survive on cock soup (and not even Jamaican cock soup) and as we know, man was not made to live off of cock soup alone (except for maybe Andy Dick, not that there is anything wrong with that).
4. The report showed 43.9% of the unemployed (better known as 6MM, or completely fucked), were out of work for more than six months and the longer someone is without a job, the harder it is to find work. Look, Money McBags doesn’t often pull back the curtain, lift the kimono, undo the gaff (choose your own metaphor) here on the award winning When Genius Prevailed but loyal readers know that even though he is one of the top four small cap analysts alive, Money McBags has been out of a job for a fucking year through no fault of his own and now he is like a fucking leper to funds out there. Seriously, being unemployed this long has made him more tainted than Sarah Palin‘s chin after hosting a teabag party.
Here is an example. As you are all aware, Money McBags has taken a few days off this week from macro updates (though he still did hit you with an interview with CRUS’ CEO and some solid small cap analysis) and that is because he had a third round interview with one of the best funds on the Street, seriously, Money McBags would chop his left nut off to work for them (and you’d all be surprised how well Money McBags’ cleans up). Anyway, the last guy he talked with there towards the end of the interview said “I don’t know how to say this nicely, but why have you been out of work for so long?“ And see, right there is the fucking problem and there is nothing Money McBags can do about it.
Money McBags keeps getting to final round interviews and then gets beat out by the employed guy coming from the bigger fund, no fucking joke. These assholes get 300+ resumes for each opening and since it is a buyer’s fucking market, it’s just easier/safer to hire the guy who is currently employed rather than give the unemployed guy a chance which is fucking insulting and more moronic than naked sledding or that Twilight book series. It’s the employment Catch-22. Money McBags can’t get a job because he doesn’t have a job, even though his work demolishes any analyst on the Street (and he has a whole year of content available to the public to prove that, including CEO interviews and a shitton of money making picks). So fuck Money McBags, really.
The good news for all of you is that it looks like he will be able to keep writing these dick jokes in perpetuity, the bad news is perpetuity might not be that long if can’t start making some money, so to the fucking pain (though if just 1/3 of everyone who reads this were to send Money McBags $10, that would be a decent start. If 1/3 of everyone who reads this were to send him $10 and Alice Eve‘s phone number, that would be a better start). And if any of you are looking to hire, Money McBags is willing to play Bar Mitzvahs and Anniversary parties.
6. 2.7MM people were marginally attached to the labor force in the same way that Mos Def is marginally attached to the Justin Beiber fan club. 1MM of the marginally attached were labeled as discouraged workers (which means they are not looking for work because they think there is no work out there, not because their wages are remaining flat while prices rise) and the other 1.7MM hadn’t looked for work in 4 weeks because of either school, family responsibilities, or there not being any fucking jobs.
7. With March Madness beginning, Money McBags is starting his research for the most important college tournament of the year where Ashley was upset at the buzzer last year. This has nothing to do with the jobs report, but it is crucial that you are all aware of it.
8. The government shed 30k jobs in what is becoming a worse trend than the Fed keeping rates low for a an extended period (the menorrhagia strategy) or that pokemon shit. And it is only going to get worse as the Federal government looks to slash the budget, states like Wisconsin and New Jersey are paring workers like they were ingrown asshairs, and perhaps the lovely Meredith Whitney’s municipal bond default call will rear its ugly head. But here is the thing about which you all need to think. And when you’re done thinking about that, you also need to think about the implications of government workers losing their jobs since they are likely less well trained than Najeh Davneport. No really, if unemployed people from the private workforce are having trouble finding jobs, what the fuck do you think is going to happen when former public sector workers try to get in to the private sector where 6 hours days and 3 hour lunch breaks happen only every other day? Shit is going to get ugly.
9. As always, the headline numbers don’t tie, so fuck Money McBags for trying to make sense of this. There were 13.9MM unemployed people in January, in February there were 13.673MM, so a difference of 227k. According to the B(L)S, 192k jobs were added and due to population growth and a flat labor force participation rate, 60k more people entered the work force. So in theory, 95k more people should have been unemployed but instead they just disappeared in a poof. But hey, what is 95k people among friends?
|Increase in Labor Force||60|
10. The headline number from the B(L)S was more misleading than this headline. The economy didn’t really gain 192k permanent jobs, shit, 15.5k were temporary and 112k were the result of the always confusing and completely unexplainable birth-death model which comes from a bigger black box than Aretha Franklin’s kids. So in reality, only 64.5k to 176.5k permanent jobs were created depending on WTF you want to do with the birth-death model, so um, yeah.
Below Money McBags breaks out Table B so you can all enjoy the art of the B(L)S.
|February Change in Jobs #|
|Govt Full Time||(30,000)|
|Private Sector Jobs|
|Education and Healthcare||40,000|
|Leisure and Hospitaility||21,000|
|Total Private Sector||222,000|
|Temporary Private Sector Jobs||15,500|
|Total Permanent Jobs #||176,500|
|Birth/Death Model Plug||112,000|
|Actual Jobs #||64,500 to 176,500|
Money McBags is glad to see jobs were added according to the B(L)S’ goal seek model, really, that is super duper titriffic, but lets not kid ourselves here about what the fuck is happening. Job growth is still slower than a conversation between Kirk Douglas and Dick Clark and more government layoffs could derail any improvements. So while Money McBags knows neither Rome, nor Pam Anderson, were built in a day, at this pace the recovery will be over sometime in the year 2025 just when the robots are starting to take over, so plan accordingly.
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