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So, Friday was “jobs” day. The first Friday of every month brings us the “non farm payroll report”. This piece of data is watched by every market participant, because the labor data is correlated to monetary policy such as interest rates.
The Fed’s have been sitting on their pedestal telling us how wonderful the recovery is and that the labor markets are so hot that they’re worried about overheating. For months now they’ve had a smug attitude about how many jobs there are, and that their monetary policy has indeed saved the world.
By the way, the new edition of the Financial Intelligence Report is now posted, and in that letter we discuss the jobs report, and we try and explain the real reason we can have such a lousy report, while the market flirts with all time highs.
The non farm payroll report just hit and estimates were for a gain of 160 - 190K. Well get this...we got a whopping 38K. But it was much worse than that. The last two months were revised DOWN by 59K jobs, the labor force participation rate fell and the Household report posted just 24K. Shall I go on? Sure...the Fed's Birth/death model added 224K jobs to the report. Jobs that don't exist. So without that addition we'd have just 180K jobs.
The Wednesday edition of the Financial Intelligence Report is up, and in it we look at the incredible changes between the 50's and today. Because of our busy lives we often don't see the changes, sort of like boiling a frog. But they are indeed profound. Stop in and give it a read, I think you'll be fascinated.