- Jobs report wows, but a nation starved for good economics is easily pleased.
- Stocks indecisive whether jobs news was good or bad, but closed higher for good measure.
- Irony's sense of humor: Administration claims jobs victory on the day it is announced China is now the world's largest economy.
- 'Tis the season . . . for seasonal workers.
- Gaining ground? Participation rate holds steady.
- Factory Orders down for third month.
- First BAC said card sales were down and consumer credit shows a huge drop in credit card use.
- Some turning a bit more bearish at year end just because. But little tax loss or profit taking selling this year as funds still play catch up.
Good news good news? Good news bad news? Was it good news? Market a bit indecisive after purportedly great jobs report, but the same leaders win out.
At 321K non-farm payrolls, jobs topped expectations by 40% while October and September were revised higher to 243K (from 214K) and 271K (from 256K), respectively. Best reading for jobs since January 2012. In addition, hourly wages rose 0.4% versus 0.2% expected (0.1% October), the best reading since 1/2013.
Truly prosperity has returned to America. Yes, you can detect just a hint of sarcasm. Definitely better news but as has been the case, better news in numbers but not the kind of improvement that is leading to a better standard of living in the US, certainly not back to the levels experienced prior to the recession. As Rick Santelli, the closest at guessing the number of all the CNBC pundits, put it, it took six years to get what should have been accomplished in 2 years.
It took six years to get this jobs print?
But Mr. Santelli's comments pertained only to the overall numbers. He did not have the benefit of looking at the details, those same details that each month show the top line is mostly illusory. Yes there are more jobs, but the jobs are not 'American' jobs, i.e. the kind of standard of living improving, breadwinner jobs that are the hallmark of all prior US recoveries. Indeed, strikingly, the US LOST 150K full jobs in a month creating 321K jobs. That tells you the quality of jobs right there.
Indeed, the market was uncertain of the meaning when the news hit. Stocks jumped, stocks sold, investors laughed, investors cried. It took awhile, and there was never any heavy selling, but stocks did move higher on the day. Again.
We felt that would be the case, i.e. the trend continuing after the news hit. Moreover, the same stocks in the lead continued to lead Friday after digesting the Jobs Report: chips (SOX), small caps (RUTX), and . . . industrials (DJ30).
SP500 3.45, 0.17%
NASDAQ 11.32, 0.24%
DJ30 58.69, 0.33%
VOLUME: NYSE -5.5%, NASDAQ +3%
A/D: NYSE 1.1:1. NASDAQ 2:1
Jobs for everyone! Well, not really. And not a permanent job either.
321K non-farm, best since 1/2012.
Unemployment: 5.8%, in line and steady from October.
Hourly wages: 0.4% versus 0.2% versus 0.1% October. Best since 1/2013.
Workweek: moved back up to 34.6 hours after falling to 34.5 hours in October.
U6 (underemployed added in): 11.4%, down from 12.7% in November 2013.
Those are the headlines, the trumpeted, heralded, bragged about headlines. 'Fate, it seems, is not without a sense of irony.' As all the President's men and the President himself took time from their busy golf schedules to proclaim victory, it was announced that China is now the world's largest economy, 2 years ahead of the schedule.
'Fate, it seems, is not without a sense of irony.' Morpheus from 'The Matrix'
Now, as the great Paul Harvey would say, the rest of the story.
321K jobs in a month. Compared to the prior six years that seems impressive. But, this is America. Used to be you had BETTER have 300K+ jobs a month in recovery or it was just an uptick.
Reagan: 23 months of 300K+ months of jobs. And we are not talking just 300K but 400K, 500K, 700K, and yes, even 1M PER MONTH.
Bush 1 and Clinton: 27 months of 300K+ over 10 years
1960's: 8 months of 300K+ with three over 400K.
Bush 2: That jobless recovery produced seven 300K+ jobs months.
Obama: 2. 2? In six years? But I suppose that makes sense given this 'great' economy as Jason Furman, head of the President's Economic Council called it on Tuesday has produced just three quarters of 4+% GDP growth in six years.
That's all we got? One G** damn hit?
You can't say G** damn on the air.
That's alright, nobody is listening anyway. - - 'Major League' 1989
Also consider the size of the labor force. In the 1980's it was 29% smaller, and thus 300K jobs was a MUCH LARGER proportion of jobs than today. There needs to be 500K jobs per month now to even come close to those levels.
Household survey versus Non-farms: flat jobs, temps not full-time.
The 300K+ jump in non-farm jobs didn't see a similar jump in jobs reported per the household survey used to calculate the unemployment rate.
Indeed, the household survey showed just +4K net jobs after taking out the 150K fulltime jobs LOST in November. 77K of the jobs were part-time.
What the hell? Are we relegated to creating copious amounts of low paying crap jobs here in the US?
This is Where the Jobs Are?
Friday morning just after the jobs release and before we could dig into the numbers I said likely the numbers reflected a large increase in seasonal jobs, i.e. retail. With Amazon and others attempting to avoid a fiasco such as last year and announcing they would hire tens of thousands of seasonal helpers, that was a pretty safe conclusion.
Indeed, 50K of the jobs were in retail. Leisure and hospitality 38K. Professional services (secretaries) 63K. Temps 22.7K.
Participation: Steady at 62.8%, matching the 1978 low. An additional 69K were 'not in the labor force.' More jobs we are told, but also more people leaving the workforce.
Match that with unemployment holding at 5.8%. Participation rate flat, 69K more out of the work force. Are there all of these new jobs? Sure there is some discrepancy between the two reports; always is. But this is not clearing up, and when viewed in conjunction with the other data, yet again you see the same old trends that show a weaker overall jobs market.
Jobs by age: 'No young workers, thank you.'
Grey boom: 55 and over moved to an all-time high employment level at 32.8M
Under 24 NNA (Need Not Apply): -169K in this demographic as again the younger generation is unwanted. Go ahead, get that school loan, load up on the debt, then go live a Mom and Dad's house while you work in a part time job at the Gap or as a secretary. Four years of college goes a long way.
The headlines trumpet the most jobs created in 2014 in the new millennium. 278K/month for the past three months. Yet, as we have discussed each month for now 6 years, the jobs created are low end that not even the younger workers can work. It may have taken six years to get to this level, but what level is it? Do we just look at the numbers and give the thumbs up? Are we that starved for good news that millions of low paying, low-skill, dead end, standard of living decimating jobs are good enough for America? It is not enough to say we have produced the jobs. We have to produce jobs that are commensurate to the US being and, now sadly, retaking, the number one spot in economics in the world.
Factory Order in a mini-recession.
October: -0.7% versus 0.2% expected versus -0.5% prior
October is typically a slowdown month. People save some money in order to prepare for the holiday spending spree. October economic reports thus often suffer the fate of existing at the wrong time of the year.
This October, however, followed two months of lower orders, September (-0.5%) and August (-10%). Holy cow, after surging into July, Factory Orders have reversed those gains.
Take out defense spending ant orders drop further, down to -1.2%.
Business investment: Not surprisingly, it is no better, coming in at -1.6%.
Oil's decline accounted for some of the drop as the price drop attributed for the lower cost of refinery feedstock orders. Some silver lining in there, but too few.
Consumer Credit: Student loans, no credit card debt, and Automobiles
Smallest growth rate since 11/2013 and the first 3-month decline since the great crash and the 2012 string that took QE3 to correct.
Student and auto loans account for 93% of the total growth.
Credit Cards? As BAC reported early last week, sales from credit cards are lower. Indeed in October they plummeted 66% year/year.
Friday continued the recent trends, i.e. SP500 holding gains but going nowhere, SOX surging, RUTX continuing a solid recovery, NASDAQ recovering the Monday loss, and DJ30 continuing to plow upwards.
SOX: Another solid 1% advance capped a Tuesday to Friday run. SOX is riding a three week run from the breakout over the July and September peaks and thus far showing no signs of relenting.
RUTX: After the 2-day plunge to the 200 day SMA, RUTX is on a steady recovery, up Tuesday, Wednesday, and Friday. It is still below the November peak as well as the August and July peaks, but it is working steadily. Not flashy but doing the job.
DJ30: A good week, rising off the very flat lateral move over Thanksgiving. Steady trend up the 10 day EMA. Not spectacular, but steady. MACD is starting to lag the move some. Still moving up but now MACD is added to slower volume. Something to watch, but it is a year end move that doesn't need a lot of trade to work.
SP500: Up on the week and just cracking to a new closing high Friday. Still over the 10 day EMA, working slowly higher, and sliding along the upper trendline to its long uptrend channel from 11/2012.
NASDAQ: Up to close out the week, but unable to recapture the pre-Monday drop highs. Still solid but lacking help from some big names such as GOOG.
Biotechs: Large and small enjoyed another solid week. PTCT, ACHN,
Techs: Outside of some big names continuing to lag, there is some great action. ACXM, ENPH (chips), SWIR, SWI, SIMO, OCLR, PLNR, BSFT.
Retail: GPS, LB, COST, ROST, TJX. Not all is steady: BIG, AEO, FIVE.
Internet: Showing signs last week. LLNW, TRLA, BIDU, NTES
Stats: +11.32 points (+0.24%) to close at 4780.76
Volume: 1.724B (+2.95%)
Up Volume: 1.07B (+393.51M)
Down Volume: 679.28M (-350.72M)
A/D and Hi/Lo: Advancers led 1.94 to 1
Previous Session: Decliners led 1.51 to 1
New Highs: 155 (+35)
New Lows: 111 (+12)
Stats: +3.45 points (+0.17%) to close at 2075.37
NYSE Volume: 755M (-5.48%)
A/D and Hi/Lo: Advancers led 1.1 to 1
Previous Session: Decliners led 1.76 to 1
New Highs: 186 (+15)
New Lows: 134 (+18)
Stats: +58.69 points (+0.33%) to close at 17958.79
VIX: 11.82; -0.56
VXN: 14.37; -0.61
VXO: 11.15; -0.79
Put/Call Ratio (CBOE): 1.03; -0.03
Bulls and Bears:
Bulls: 53.4% versus 56.5%. Backed off considerably after that month-long move toward 60.
Bears: 13.9% versus 13.8% versus 14.9%. Ticked up but still well off the 14.9% three weeks back.
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
56.5% versus 56.4% versus 55.5% versus 54.6% versus 47.0% versus 35.3% versus 37.8% versus 45.5% versus 47.5% versus 48.0% versus 52.5% versus 57.6% versus 56.1% versus 52.5%
Background: Last undercut 35%, the threshold for bullishness, in early June 2012.
13.8% versus 14.9% versus 14.8% versus 15.1% versus 16.3% versus 18.2% versus 17.3% versus 14.1% versus 15.1% versus 15.3% versus 15.2% versus 14.1% versus 13.3% versus 15.1% versus 16.2%
Background: Over 35% for bears is the threshold to be really be a good upside indicator. The best indication is when bears cross up through bulls as the two merge. Right now bulls are coming back down from the 60 level that has consistently marked market tops over the past two years. The rapid decline in progress is pushing the bulls/bears lines toward one another. Still far from a cross with bulls falling faster than bears are rising, but bears are warming up to the notion of market weakness.
Bonds (10 year): 2.31% versus 2.24% versus 2.29% versus 2.29% versus 2.22 versus 2.17% versus 2.21% versus 2.24% versus 2.26% versus 2.30% versus 2.31% versus 2.34% versus 2.35% versus 2.32% versus 2.34% versus 2.32% versus 2.35% versus 2.36% versus 2.36% versus 2.30% versus 2.38% versus 2.34% versus 2.33% versus 2.339% versus 2.33% versus 2.31%
Oil: 65.84, -0.97. So much for attempting to bounce. Monday was up but the rest of the week was a slow fade to a slightly lower closing low.
Gold: 1190.40, -17.38. After rallying to the 50 day EMA on Monday, pausing for a new move, the jobs data pushed gold back down from the 50 day EMA.
$/JPY: 121.42 versus 119.78 versus 119.81 versus 119.21 versus 118.36 versus 118.63 versus 117.58 versus 117.93 versus 118.27 versus 117.73 versus 117.96 versus 118.00 versus 116.98 versus 116.47 versus 116.29 versus 115.74 versus 115.53 versus 115.32 versus 114.86 versus 114.60 versus 114.98 versus 114.64 versus 113.60 versus 113.73 versus 112.32 versus 109.23 versus 108.89 versus 108.16 versus 107.83 versus 108.13 versus 108.17 versus 107.20 versus 106.88
Euro/$: 1.2289 versus 1.2379 versus 1.2313 versus 1.2383 versus 1.2473 versus 1.2452 versus 1.2509 versus 1.2477 versus 1.2442 versus 1.2386 versus 1.2549 versus 1.2543 versus 1.2532 versus 1.2455 versus 1.2520 versus 1.2486 versus 1.2432 versus 1.2480 versus 1.2421 versus 1.2455 versus 1.2387 versus 1.2486 versus 1.2456 versus 1.2493 versus 1.2525 versus 1.2610
The Thanksgiving hiccup is out of the way along with the most recent Jobs hype, SOX and RUTX along with DJ30 reasserted themselves, and the rest of the market recovered off the two days of selling. Now can they push the rally into Christmas?
Looks as if they can, but then there are stories from Barron's discussing NASDAQ's ascent once again toward 5,000. Barron's this weekend says that the approach is raising fears of another overpriced bubble destined to pop. Barron's notes, however, that this time it is different at the same time acknowledging when you say things are different they never really are different. Okay, I guess that is the same as saying it with your fingers crossed.
No doubt stocks are getting a bit lofty and as the weekly bulls show, there are fewer the past week even as stocks continue to trend higher. Perhaps part of the fear of flying crowd?
We are not saying that stocks will just keep running. No, we are playing a yearend move that may possibly continue into January. Not trying to make anything more out of it than that. We identified the season pattern (the 'pat' scenario) back in September and early October, said it could very well play out as your classic selloff into an October bottom then yearend run, and thus we were ready when October bottomed when many experts were saying not to trust the market. It was a pat seasonal play, right down to the pundits getting scared. The rebound ensued, and now it is pushed by the fund managers that allowed themselves to be scared out of the two big rallies of the year and must make up lost ground.
That is all. Nothing more than that. If we get more, great. Kind of a play off of the old 'those who expect nothing are never disappointed' line, but that is kind of how you have to look at the market. Be ready, take what it gives you, and if it wants to give a bit more, take that as well. There are too many times IT is taking and not giving, so when it is there, pony up.
That said, with SOX and RUTX still looking solid, we intent to keep playing the move. There are many stocks out there with big, long bases in place, foundations for new, strong moves. This weekend we are looking at several of those that are what we call turning the corner, i.e. coming up off of long bases, making that first run and testing it. If the test holds, they are good to go, and of course that is when we want to move in.
Maybe it is an oversimplification of what is going on, but it has worked and nothing has really changed. The employment data came, it rattled around the market for the morning, then the market moved higher. If the international shenanigans are kept to a minimum, the market has a good shot at closing out the year with a continuing of the current run off the October low.
Have a great weekend!
SUPPORT AND RESISTANCE
NASDAQ: Closed at 4780.76
The 20 day EMA at 4710
4650 is some support
The 50 day EMA at 4615
4610 is the September 2014 post-bear market high.
4566 is the lower gap point from late October
4486 is the July 2014 high
The 200 day SMA at 4383
4372 is the March 2014 high
The August low at 4321
4316 is the lower gap point from October 2014
4289 is the July 2000 recovery high
4277 is the March lower gap point
4246.55 is the January 2014 peak
4185, the May lower gap point
4131 is the March 2014 low
4104 is the lower gap point from 12/20/13
4070 is the series of highs from late November/early December
S&P 500: Closed at 2075.37
2076 is the all-time high from November
2085 is the December 2012 up trendline
2027 is the lower trendline from 11/2012
The 50 day EMA at 2017
2011 is the September prior all-time high
1991 is the July 2014 high
The 200 day SMA at 1942
1905 is the August 2014 low
1902 from early May was the intraday all-time high.
1897 is the prior all-time high hit in April 2014
1883.57 is the early March high.
The December and January highs at 1848
The April 2014 low at 1814
1808 is the November and December 2013 twin peaks
1775.22 is the October prior all-time high
Dow: Closed at 17,958.79
The 10 day EMA at 17,842
The 50 day EMA at 17,392
17,351 is the September 2014 all-time high.
17,152 is the mid-July post bear market high
17,068 is the early July 2014 peak
16,970 is the June 2014 former all-time high
16,946 is the June 2014 peak
The 200 day SMA at 16,818
16,736 is the penultimate all-time high from May 2014
16,632 is the April 2014 all-time high
16,589 is the December 2013 all-time high
16,506 is the March 2014 peak
16,341 is the May low
16,334 is the August 2014 low
16,257 is the January 2014 low
16,179 is the November 2013 peak.
15,739 is the December 2013 low
15,696 is the September 2013 peak
15,659 is the August 2013 peak
December 5 - Friday
Nonfarm Payrolls, November (8:30): 321K actual versus 230K expected, 243K prior (revised from 214K)
Nonfarm Private Payr, November (8:30): 314K actual versus 228K expected, 236K prior (revised from 209K)
Unemployment Rate, November (8:30): 5.8% actual versus 5.8% expected, 5.8% prior
Hourly Earnings, November (8:30): 0.4% actual versus 0.2% expected, 0.1% prior
Average Workweek, November (8:30): 34.6 actual versus 34.6 expected, 34.5 prior (revised from 34.6)
Trade Balance, October (8:30): -$43.4B actual versus -$42.0B expected, -$43.6B prior (revised from -$43.0B)
Factory Orders, October (10:00): -0.7% actual versus 0.2% expected, -0.5% prior (revised from -0.6%)
Consumer Credit, October (15:00): $13.2B actual versus $16.5B expected, $15.5B prior (revised from $15.9B)
December 9 - Tuesday
Wholesale Inventories, October (10:00): 0.2% expected, 0.3% prior
JOLTS - Job Openings, October (10:00): 4.735M prior
December 10 - Wednesday
MBA Mortgage Index, 12/06 (7:00): -4.3% prior
Crude Inventories, 12/06 (10:30): -3.689M prior
Treasury Budget, November (14:00): -$59.0B expected, -$135.2B prior
December 11 - Thursday
Initial Claims, 12/06 (8:30): 295K expected, 297K prior
Continuing Claims, 11/29 (8:30): 2350K expected, 2362K prior
Retail Sales, November (8:30): 0.4% expected, 0.3% prior
Retail Sales ex-auto, November (8:30): 0.2% expected, 0.3% prior
Export Prices ex-ag., November (8:30): -0.9% prior
Import Prices ex-oil, November (8:30): -0.2% prior
Business Inventories, October (10:00): 0.3% expected, 0.3% prior
Natural Gas Inventor, 12/06 (10:30): -22 bcf prior
December 12 - Friday
PPI, November (8:30): -0.1% expected, 0.2% prior
Core PPI, November (8:30): 0.1% expected, 0.4% prior
Michigan Sentiment, December Preliminary (9:55): 89.5 expected, 88.8 prior
By: Jon Johnson, Editor
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