08:30 May nonfarm payrolls reported (345K) vs. consensus (520K); unemployment rate 9.4% vs. consensus 9.2%
Apr nonfarm payrolls revised to (504K) from (539K).
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US May payrolls fall 345,000, jobless rate 9.4 pct
WASHINGTON, June 5 (Reuters) - U.S. employers cut 345,000 jobs last month, the fewest since September and far less than forecast, according to a government report on Friday that was more evidence the economy's severe weakness was diminishing.
However, the Labor Department said the unemployment rate raced to 9.4 percent, the highest since a matching rate in July 1983, from 8.9 percent in April.
March and April's job losses were revised down to show a smaller declines of 652,000 and 504,000, respectively.
Analysts polled by Reuters had forecast non-farm payrolls dropping 520,000 in May. The unemployment rate had been forecast to rise to 9.2 percent.
While the job losses in May were spread across almost all sectors, the pace of layoffs was slower than in prior months.
Payrolls in construction industries fell 59,000 after dropping 108,000 in April, likely as a result of the government's historic $787 billion stimulus package.
The service-providing industry shed 120,000 positions after eliminating 230,000 in April. The manufacturing sector purged 156,000 jobs in May, likely reflecting auto plant shutdowns in the wake of Chrysler's bankruptcy filing. The sector shed 154,000 in April.
Education and health services sector payrolls expanded by 44,000 after increasing 13,000 the prior month. Government, which in April added 92,000 jobs, mostly related to preparations for the 2010 census, cut 7,000 positions in May.
Since the start of the recession in December 2007, the economy has lost 6.0 million jobs, the department said.
-END-
On closer examination of the figures, the famous B/D (Birth Death) plug added a huge 220000 jobs mainly in the leisure industry and in the construction field. The figure of course is nothing but a phony!
This is what some commentators wrote yesterday on the release of these total bogus numbers:
from Dave (Denver):
Dave from Denver…
The jobs number joke
I suggested to some colleagues yesterday that the employment number released today would be "fixed" to be a lot better than expectation in order to squeeze the market higher. Doesn't take a genius to figure that one out. As we see, the headline jobs loss number was about 180k less than expected and the SPX futures spike up 12 points on the release.
Probing beneath the headline number, we find that the Govt's "alternative measures of labor utilization" number - the number which more closely tracks an actual bona fide count of jobs lost - shows the real unemployment rate for May is now 16.4%. Here's the link:
The birth/death model - that nefarious "plug" estimate to Government uses to "fix" the headline reported jobs loss number, added 220,000 jobs to private sector payrolls. If you really want to laugh, you can comb thru the data here:
http://www.bls.gov/web/cesbd.htm
You'll be amused to see the Govt "estimated" that 77,000 jobs were created by new leisure and hospitality enterprises and 43,000 jobs were added by new construction firms. Those estimates, of course, are completely contrary with the actual economic realities being reported by the very firms who are slashing jobs in those sectors.
One more point to keep in mind on the jobs number today
This number does not include any estimates or "seasonal adjustments" which would take into the account the massive job losses we will see over the summer resulting from the GM/Chrysler bankruptcy and dealer closings. And the media will just be looking at the number of jobs cut nominally by those 2 companies. You also have to consider all the "satellite" business which will drastically scale back or shut down (auto parts manufacturers, distribution chains, etc) AND you have to consider all of the business activity which feeds off of that economic activity - parasite businesses, if you will, which serve all the people going to work at factories and supply chain stores, etc. The GM and Chrysler situation will add millions to the jobs loss numbers, even if the Government manipulates the number to minimize the headline reports.
***
Here's some analysis I did on the latest jobs report.
The headline number was -345,000 jobs (lost) for May. Market reaction to those numbers had the Dow and the US Dollar soaring, while gold was crushed $25. On the surface the number was quite good, however the Birth/Death model grossly distorted the actual result; again. Despite job losses being most felt by smaller firms, the B/D model shows Joe entrepreneur is still cranking them out. May's Birth-Death adjustment added 220,000 to the total, otherwise the headline number would have been - 565,000. This number would have been slightly worse than the consensus of -520,000.
From a Reuters article this morning, underlines my emphasis:
"Payrolls in construction industries fell 59,000 after dropping 108,000 in April, likely as a result of the government's historic $787 billion stimulus package.
The service-providing industry shed 120,000 positions after eliminating 230,000 in April. The manufacturing sector purged 156,000 jobs in May, likely reflecting auto plant shutdowns in the wake of Chrysler's bankruptcy filing. The sector shed 154,000 in April.
Education and health services sector payrolls expanded by 44,000 after increasing 13,000 the prior month. The leisure and hospitality industry added 3,000 jobs after consistently shrinking payrolls."
Link: http://www.reuters.com/article/ousiv/idUSTRE55376U20090605
In May, -59,000 Construction payroll jobs were lost but the BLS (Bureau of Labor Statistics) says Joe entrepreneur added +43,000 the same month. We look at the Service Industry shedding -120,000 jobs yet the BLS has +28,000 created in May in the Professional Business Services category and another +77,000 in the Leisure & Hospitality sector.
BLS Birth-Death Model Link: http://www.bls.gov/web/cesbd.htm
What we have here is a continued, concerted effort to distort data to support the notion "green shoots" are sprouting all over. Unfortunately all it is doing is lulling the public into the notion everything is getting better, paralyzing them from making the decision to protect their wealth.
Best Regards,
Toby Hansen
European banks in spotlight as Baltic crisis hits Sweden
Sweden is preparing to part-nationalise banks exposed to the economic collapse in Baltic states, raising fears that a string of Western European countries could face similar fallout from rising defaults in the former Communist bloc
Finance Minister Anders Borg said the Swedish state will buy stakes in distressed banks if they fall deeper into trouble but will impose draconian terms.
"We want to be very clear so that people know what could happen," he said. "If the banks come to us with big credit losses, where they have previously earned big money on lending, then shareholders will take the consequences. We're going to be clear that insolvent banks that don't meet legal requirements will see an injection of funds, primarily through government ownership."
Swedish banks have lent more than $75bn (£46bn) to Latvia, Lithuania and Estonia, led by Swedbank and SEB.
Hakan Berg, Swedbank's head of operations in the Baltics, said his bank can cope with the shock losses from devaluations across the region. "We have tested the worst-case scenarios. We have adequate capital. It would not bring the bank down," he said.
The dramatic situation in Latvia went from bad to worse on Thursday as overnight rates reached 140pc, a sign that the country's currency peg in Europe's Exchange Mechanism is close to snapping. Credit default swaps measuring risk on Latvian debt rocketed above 750 after Latvia's treasury failed to sell a single note at a $100bn debt auction on Wednesday.
Latvian premier Valdis Dombrovskis said the country needs help "fast" from the European commission and International Monetary Fund, which has withheld the latest tranche of its €7.5bn (£6.6bn) bail-out because of the surging budget deficit. "Fears of a domino effect in the region are to a certain extent justified," he said.
The Baltic trio are all defending currency pegs at overvalued rates in a region where every other country (except Finland) has devalued by a third or so. They are each caught in a trap after allowing mortgage lending in euros and Swiss francs to mushroom out of control. However, there are ways of dealing with this as Argentina proved by passing a law that switched all dollar mortgages into pesos in 2001 – entailing a 70pc "haircut" for foreign creditors.
It is understood that Latvia is quietly exploring options to shield its homeowners from the exchange risk. This risks a bitter clash with Brussels, which has been insisting on peg discipline for ideological reasons – against the advice of the IMF. But the current course amounts to a slow crucifixion of the Baltic economies. Latvia's GDP is expected to contract by 18pc this year, and Lithuania's by 15pc.
Samir Patel from BH2 Research said the pegs are causing "monetary asphyxiation" and cannot be endured for long by any democracy. The inevitable devaluations may reach 50pc or more given the experiences of Thailand (52pc) and Indonesia (81pc) in the East Asia crisis. "Of course devaluations will unleash nasty economic and financial demons, but so will stubbornly holding currencies aloft. The demons are simply different," he said.
It is unclear whether Sweden's bank troubles are the first sign of broader strains for West European banks, which have lent $1.6 trillion to the former Communist bloc. Sweden's exposure to the region at 22pc of GDP is not the highest. Austria's exposure is 70pc of GDP, with $246bn outstanding in Central Europe, Ukraine and the Balkans.
The situation varies from country to country, with the lowest risk in Poland and the Czech Republic. Even so, Danske Bank warns that Austria could face losses reaching 11pc of GDP in an "ugly scenario". Sweden's losses would be 6pc, and Belgium's 3.6pc, the Netherlands' 2.3pc, and Italy's 1.5pc.
"The risk of contagion is serious, Nobody thought Iceland would set off a crisis in Hungary last year, but it did, and the same could happen again," said Lars Christensen, East Europe expert at Danske Bank.
Could Ben Bernanke be the worst bond trader in the history of the world?
Before the Credit Crisis started on June 3, 2007 the Federal Reserve's balance sheet included Security's Held Outright of $790B of which $277B were T-Bills and $474B were T-Notes. Over the past 2 years The Federal Reserve has admitted to buying outright and additional $394B of securities. At the same time they have extended their maturities significantly. Yesterday, the Fed reported holding $1,114B in Security's Held Outright of which only $18B were T-Bills, $540B were T-Notes, $80B were Agency Securities and $427B were mortgage backed bonds. As anyone in the bond market understands mortgage backed securities durations extend in bond bear markets as refinancing slows down. The bottom line is the worse the Treasury market performs the longer the Federal Reserve becomes. The U.S. Treasury Chart is looking more and more like a bubble top. During this topping process the Federal Reserve has gone from 35% of their holdings in short term T-Bills to almost 0%. They have gone from 0% in mortgage backs to 38% of their portfolio, which should prove to be the worst performing security's in a bear market. In a transaction which is starting to look remarkably similar to Wachovia buying Golden West at the top of the real estate market, Ben Bernanke and Timothy Geithner have taken over the largest issuer of mortgage debt in the world at the top of the market: Fannie Mae and Freddie Mac. I can only imagine the losses accumulating on Frannie's books over the past month as their durations extend. Don't worry about those losses though Ben and Tim can just print more $'s to cover their poor timing.
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In case you haven't seen this yet......
http://seekingalpha.com/article/141227-will-a-silver-bullet-finally-kill-the-metal-manipulators
"I would remind people about an event which went practically unreported last year in North America: at the time of AIG's near-bankruptcy, the European bullion-ETFs "guaranteed" by AIG briefly plunged in value – to a price MUCH lower than the nominal price of the bullion they (supposedly) held. The reason? Investors were "betting" in a clearly visible manner that if AIG was forced into bankruptcy it would not be able to honour its "custodian agreements" with these bullion-ETFs – leaving the investors in these funds holding paper and not bullion.
Thus, the outrageously expensive bail-out of AIG (over $180 BILLION, and counting)was not undertaken solely in order to secretly funnel roughly $10 billion into the vaults of Goldman Sachs. It was also bailed-out to prevent a domino-like chain of events. All it will take is for one "bullion-ETF" to default, and then the entire scheme/scam of the Manipulators would inevitably collapse."
***
http://www.upi.com/Top_News/2009/06/04/House-delays-
supplemental-spending-vote/UPI-32961244147099/
We've all heard that the gold sales have been "priced into the market" from all those great gold analysts...
So what happens if it fails to pass?
Does that mean the IMF Gold Sales are about to "PRICED OUT OF THE MARKET" and send gold skyward?!
Interesting times.
Bix...
It really seems like there is something VERY BIG coming down the pike in June. All the "perfect storms" are converging right now and their slaming the gold price to prepare for the onslaught.
Sheila Bair of the FDIC wants to put Citi on the "Bad Bank" watchlist. Last I heard Citibank had around $250B in FDIC insured deposits and $500B in foreign deposits.
And that doesn't count all the government loans, guarantees, TALF, TARP.... TICK, TACK, TOE..... etc.
And the kicker of all kickers is their off balance sheet "Special Purpose Entities" where all the dirty stuff takes place.
Somehting wicked this way comes!
As for stock valuations....insiders continue to dump stock heavily
A report is out this morning which shows that corporate insiders continued to sell stock during the last 2 weeks at a staggering rate. The ratio of dollar value of sells to buys was 27:1 - which may be an all time record high for the ratio. The outright amounts were $335 million in sells vs. just $12 million in buys. The report is here:
http://pragcap.com/despite-green-shoots-insider-selling-picks-u
FED'S YELLEN - RISE IN TREASURY RATES DISCONCERTING IF REFLECTIVE OF INFLATION FEARS
YELLEN SAYS UNCONVENTIONAL FED POLICIES BRING RISKS OF UNINTENDED CONSEQUENCES
YELLEN - UNCONVINCED BY WORRIES FED WILL FACE PROBLEMS IN UNWINDING CREDIT PROGRAMS
YELLEN - MONETARY POLICY CAN PLAY ROLE IN POPPING ASSET BUBBLES
YELLEN SAYS OPEN TO RETHINKING VIEW THAT 1.5 PCT PCE INFLATION RATE A GOOD TARGET
YELLEN SAYS ECONOMIC "GREAT MODERATION" MAY HAVE PASSED, WITH MORE VOLATILITY AHEAD
YELLEN SAYS ZERO BOUND ON INTEREST RATES MAY NOT BE AS COSTLY AS THOUGHT
YELLEN HAILS "APPARENT SUCCESS" OF FED'S LONGER-TERM ASSET BUYS, CREDIT EASING PROGRAMS
end
Please remember that JPMorgan has in excess of 400 trillion of interest rate swaps and they are long, the long bond and short the near term treasury bills.
The Gold Commitment of Traders Report was revealing…
*The large specs increased longs by 6,235 contracts and reducing shorts by 3,797.
*The commercials decreased longs by 1,994 contracts and increased shorts by a significant 15,391 contracts. The Gold Cartel is going ALL OUT.
*The small specs lived up to their reputation by decreasing longs by 5,427 contracts, but decreasing shorts by 13,780.
