The 'headline number' is the seasonally adjusted net change in jobs. The drop out of the range that was held in the prior years is obvious on this chart.
This is the (in)famous Birth Death Model from the Bureau of Labor Statistics in which they add jobs as a 'plug' to account for new jobs being generated by the economy from smaller business. The trend is very regular as can be seen on this chart. So regular in fact that it is exposed as imaginary, useless. They do not even bother to trend it with the overall economy and jobs market. The only good thing that can be said about it is that it is added to the non-adjusted jobs number first, so its effects are swallowed up by the seasonal adjustment in many months.
This chart shows the drop off in jobs growth was precipitous. We believe that it was much less precipitous ex government fudging. The recessionary decline was masked by the government. Well, its obvious now.
It always good to remind ourselves of the huge swings in jobs numbers before the seasonal adjustments. It is those adjustments, and the huge revisions made to the series both in the prior month and in whole sections of the numbers, that hide a multitude of statistical sins.
This chart shows the peak in the economy, and the beginning of the decline. As one can see it was not the sudden onset of the housing collapse that brought down the economy. Rather, it was the rot underneath the foundations of the economy that triggered the housing collapse, and all the other Ponzi schemes that are now collapsing.
Fixing the 'housing problem' will not fix the rot in the economy, which was papered over by the Fed's reflation starting in 2003. But there is a lot of money to be made by a lot of people in that fix, so we can expect a signficant amount of graft and waste before the real work begins.
Here is another view of the Jobs Trend that nicely demonstrates the rise off the bottom of the economy as a result ofthe Fed reflationary efforts, first under Greenspan and then Bernanke. It was a parabolic bubble which has now collapsed and is declining in a nicely defined parabola. That's a sixth order polynomial describing the trend.
09 January 2009
The December Non-Farm Payrolls Report: Portrait of a Ponzi Economy
08 January 2009
Charts in the Babson Style for Midweek January 7
It looks like a pivotal moment on the charts.
Pivotal: being of crucial importance; central, key. By pivotal is meant a key decision point on the chart.
The rally which we have had so far is within the bounds of a 'technical bounce.'
What the market does tomorrow after the Jobs Report will help us to decide if it was indeed just a technical rally, or if it is something else, up to and including a trend change into a more sustained bear market rally that might be substantial.
The Jobs Report number tomorrow in combination with how the market will react to it, is almost a coin flip at this point with a shading to bearish only because of the trend. The number should be 'bad.' We'd estimate north of 500,000, perhaps higher.
It is our estimate that any number less than 550,000 is discounted in already and will be fuel for a short covering rally with cries of 'bottom.' Any number over 710,000 will be a shock and probably will bring the market lower.
And in between is a gray area. We do not believe for one minute that the recession is at its bottom, and that blue skies are in sight.. But that may mean little when hot, restless money comes off the table, aching for higher returns and risk, eventually to be consumed by beta.
The gambler jumps in, the trader waits. We have only hedged positions on the table as of the market close, not including our long term holdings, none of which are related to equities at this time. Our goal is not to give up any money by overtrading.
