08:30 Sep average hourly earnings 0.1% vs. consensus 0.2%; average weekly hours 33.0 vs. consensus 33.1
Aug average hourly earnings revised to 0.4% from 0.3%; average weekly hours unrevised from 33.1.
* * * * *
U.S. Sept non-farm payrolls plunge 263,000
WASHINGTON (Reuters) - U.S. employers cut a deeper-than-expected 263,000
jobs in September, lifting the unemployment rate to 9.8 percent, according to a government report on Friday that fueled fears the weak labor market could undermine economic recovery.
The Labor Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months.
Analysts polled by Reuters had expected non-farm payrolls to drop 180,000 in September and the unemployment rate to rise to 9.8 percent from 9.7 percent the prior month. The poll was conducted before reports, including regional manufacturing surveys, showed some deterioration in employment measures.
The government revised job losses for July and August to show 13,000 more jobs lost than previously reported. Preliminary annual benchmark revisions, released together with September's employment report showed that total non-farm payroll employment for March would have to be revised down about 824,000.
Stubbornly high unemployment is viewed as the missing link in the economy's recovery from its worst recession in 70 years. The economy is believed to have started growing in the third quarter.
Since the start of the recession in December 2007, the number of unemployed people has risen by 7.6 million to 15.1 million, the department said. While the decline in payrolls has moderated from early this year, companies are still not hiring on a wide scale, likely waiting for a signal that the economic recovery is sustainable.
Manufacturing employment fell by 51,000 in September, while construction industries payrolls dropped. The service-providing sector cut 147,000 workers in September, while goods-producing industries shed 116,000 positions.
Education and health services added a mere 3,000 jobs, while government employment fell 53,000.
-END-
08:36 Follow-up: nonfarm payrolls (263K) in September
Most of the deterioration in September was seen in two categories, government and retail trade. Government payrolls fell 53K while retail fell 39K, both declines were significantly larger than seen in August. Total private payrolls have been quite consistent over the past three months, falling 210K in Sep after declines of 182K and 246K in August and July. While the pace of deterioration in the labor market is much improved from early 2009, it continues to fall short of a recovery. Though the labor market is well known to be a lagging indicator, the lack of a more clear trend of improvement over the past several months will be seen by many as disappointing, albeit consistent with the stubbornly high level of jobless claims that preceded the report.
* * * * *
end
Please note the miss by everybody on the expected number. Most thought the loss will be around 150-180,000. Now the number turns out to 263000.
We are getting the plug number i.e. the B/D addition. It is a big positive number but it was not released in the body of the announcement.
However the Bureau stated that they must increase the loss of jobs by a huge 824000 for the month of March 09. That should increase the unemployment level U3 past 10%
On top of that weekly hours worked declined to 33.0 hours from 33.1. That is also comparable to a significant job loss. Note the big loss in manufacturing (53000).
This is John Williams stats revised once the jobs number was released:
Jim Sinclair’s Commentary
To know what is really happening in the US economy you need to see the real statistics.
They will guide you both ways. It is by subscription, and in my opinion worth it. There is much more to this than just one liners below.
- BLS Revision Nightmare: March 2009 Payrolls Overstated by 824,000
- Birth-Death Model Falsely Boosting Jobs Reporting in Recession Environment
- Monthly Jobs Loss of 263,000 (Payroll Survey) versus Monthly Employment Decline of 710,000 (Household Survey)
- September Unemployment Rates: U.3 = 9.8%, U.6 = 17.0%, SGS = 21.4%
We then at 10 o'clock got these two news reports:
1.
10:00 Aug Factory Orders (0.8%) vs. consensus 0.0%
Jul Factory Orders revised to 1.4% from 1.3%.
* * * * *
U.S. factory orders post first drop since March
WASHINGTON, Oct 2 (Reuters) - New orders received by U.S. factories posted their first drop in five months in August, government data showed on Friday, going against Wall Street expectations that they would rise.
Orders fell 0.8 percent after rising 1.4 percent in July, which was originally reported as a 1.3 percent increase, according to the Commerce Department. Analysts polled by
Reuters were expecting them to gain by 0.3 percent. The drop was the first since March, when they fell 1.9 percent.
Factory orders were also down when compared to August 2008, by 22.5 percent.
Unfilled orders dropped 0.4 percent in August. They have now fallen for 11 months in a row, which is the longest streak of consecutive monthly decreases on records dating to 1992, the Commerce Department said.
Inventories fell 0.8 percent. They have decreased for 12 months in a row, the longest streak since 2002.
Durable goods orders had their steepest drop, of 2.6 percent, since January, when they fell 7.8 percent. Orders of durable goods -- big ticket items meant to last -- were originally reported as declining 2.4 percent in August.
-END-
2.
U.S. September auto sales plunge; GM, Chrysler hit hard
DETROIT (Reuters) - U.S. auto sales tumbled by 23 percent in September as showrooms emptied after the government-funded boom from the "cash for clunkers" program, with General Motors Co
Sales for General Motors Co
Ford -- the only U.S. automaker to have avoided bankruptcy -- managed to hold its sales decline to 5 percent from a year earlier despite low inventories and reduced incentives for car shoppers.
Automakers had braced for a sharp pullback in September after the clunkers program and taxpayer-funded credits of up to $4,500 drove sales sharply higher the month before.
The overall result was in line with those forecasts as industry-wide U.S. auto sales dropped 41 percent from August, according to Autodata Corp.
On the annualized basis tracked by analysts, industry-wide U.S. auto sales dropped to 9.2 million vehicles in September, the weakest sales rate since April.
In a reversal of fortune that underscores how deep the decline in U.S. auto sales has cut over the four-year-long slump, China's overall vehicle sales for September were almost twice as large as the industry-wide U.S. tally, according to an estimate provided by GM…
end.
The jobs report always sees a corresponding hit on gold and gold shares. It is a rare day if gold rises on a jobs report whether good or bad.
I believe that gold advanced on only 1 day three years ago on a good jobs report.
So lets see what happened to gold and silver's trading yesterday.
Here is a Net Dania graph of the gold trading throughout the day
The PM Fix came in at $1003.50, which tells us the physical buyers were active securing supply.
Please note that the release of the jobs number comes at 8:30. Gold fell in three successive whacks down from 998.00 to 985.00 in a matter of 3 minutes.
The volume on the comex was an extimated 90,000 by then. They are off all the time by 15-20% so you can bet the farm that central authorities supplied over 100,000 by 9 o'clock
or 10 million oz of paper gold. Their goal was to counter the lousy jobs number to make it feel like everything is OK.
However something strange occurred. A powerful entity absorbed the entire onslaught catching the manipulators totally off-guard. This powerful force then succeeded in pushing the price
again past the 1000 dollar mark. Estimated volume at day end for the gold comex was 140000 and all went into the Dec 09 contract. Final volume will then be probably 160,000 with no switches.
In other words, we had a powerful outside day reversal of some magnitude. Generally these events are rare but we are seeing this occur all too frequently.
However the speed of the huge drop in 3 minutes and the large rebound in 60 minutes to say the least is unprecedented!!
I can now report officially to you that Mainland China has been talking to GATA for the past year or so. There have been extensive hour long conversations on how the cartel are manipulating the gold market. One of the areas reported to them is the constant bombardment of gold during the release of the jobs report.
I have remarked to you on several occasions that trading in gold in different in the past few months. The hits on gold and silver are shorter in duration and quickly the metal recovers.
The cartel do not wish to be short for any period.
Yesterday, the gold cartel for the first time, knew what they were up against. The cartel represents unlimited paper gold supplied. The regulators of course are still taking their extended holiday whereby they overlook the cartel's huge continued short position with no identifable gold on their books.
However they now face an enemy wih unlimited paper dollars to buy these paper gold products and attempt to turn whatever they can into physical gold. This is what we are seeing.
After the market closed, they released the Committment of Traders report and it was as I suspected in that the commercials are feeling the heat and are getting out of the game. ie.
the weaker cartel members. Here is the report:
The gold Commitment of Traders report revealed the commercials were covering their shorts on the breaks as spec traders pitched their longs, as reported in this column…
*The large specs reduced longs by 12,931 contracts and reduced shorts by 7,568.
*The commercials increased longs by 4585 contracts and reduced shorts by 7,791.
*The small specs were flushed out on setbacks as they decreased longs by 6,765 contractss and increased shorts by 248.
end.
These figures are up to last Tuesday, Sept 29.09. I can assure you that more commercials continued to cover by Friday. We will see the results next week.
Here is Bill Murphy's account on the gold trading yesterday:
Naturally, as is almost ALWAYS the case, The Gold Cartel made their move, panicking other spec longs in the process. They pummeled gold all the way down to $985.40, but A Funny Thing Happened On The Way To The Forum again. The new buyers were waiting for The Gold Cartel to do their thing and they pounced all over the suddenly cheap gold. The dollar, which upticked for a bit, began to weaken, which forced the new buyers, perhaps the Chinese, to BID UP in order to get their buy orders filled. Gold began to fly, making it up to $1007.40 when a panic-stricken Gold Cartel put the cap on, as gold was on its way to a spectacular outside day, key reversal to the upside, which would engender a good deal of excitement. While the cabal forces would suffer a defeat for the day, only those in the GATA camp will appreciate what a true victory today was. The bums wanted the gold price to tank and they didn’t get it. The weakness in silver was further evidence of their intentions. Unlike gold, it couldn’t get out of its own way as the day wore on. As we have witnessed ad nauseam, when The Gold Cartel is struggling with gold, they go after the easier to manipulate silver, which they did … and is why silver ended lower despite a weaker dollar.
While gold was not allowed to fly on the upside today, the fact it could rally from so much lower and finish higher (and above the psychologically significant $1,000 level) is a big deal … STRONGLY suggesting there is a good shot both gold and silver will do so VERY soon.
end.
Here are some numbers from yesterday's trading:
The Dow closed down by 21 points as Larry Summers and company again juiced the markets. It was down by 100 points early on the jobs report.
The yield on the 10 yr T note tanked to 3.10% before reversing course and ending the day at 3.23%.
The dollar fell .15 to 77.01. The euro rose .0060 to 1.4573. The puound and yen were little changed.
Crude oil dropped 87 cents per barrel to $69.95.
The CRB fell 2.49 to 253.06.
end
Please note the huge fall in yield on the 10 year note to 3.10% This is very ominous in that it signfies huge financial failures out there.
Actually there were no bank failures last night even though there was a report that a few banks had non performing loans in the 25-50%
I guess that the FDIC could not close on these banks because they could not gurantee depositors yet. They have not raised sufficient moneys
from other banks. It is interesting that the FDIC are loathe to loan from treasury knowing full well that they cannot return the money.
However there was a big failure yesterday:
Penn Treaty Pushed Toward Biggest Insurer Failure Since 2004
By Andrew Frye and Jamie McGee
Oct. 3 (Bloomberg) -- Penn Treaty Network American Insurance Co., the provider of long-term care coverage for 120,000 customers, was pushed by a Pennsylvania regulator toward liquidation in what may be the biggest forced breakup of an insurer in the U.S. in at least five years.
Penn Treaty and a unit “do not have the ability to pay future claims without significant rate increases,” Pennsylvania Insurance Commissioner Joel Ariosaid yesterday in a statement. “In the current circumstances, those rate increases simply would not be fair to policyholders.”
The insurer is among at least seven in the U.S. facing forced rehabilitation or liquidation by regulators this year as the recession cuts into capital, according to data collected by the National Organization of Life & Health Insurance Guaranty Associations. That compares with four in 2008. California’s regulator seized Golden State Mutual Life Insurance Co. on Sept. 30 after the company was unprofitable for five straight years.
A liquidation of Allentown-based Penn Treaty, with about $1 billion in assets, would be the largest in at least five years, said Sean McKenna, the association’s spokesman, in an e-mailed statement. “Very few companies of any size have been liquidated in that period,” he said. The association’s data was based on reports from A.M. Best.
Life and health insurers have reported losses and profit drops over the last year as stocks and bonds backing policies fell in value. MetLife Inc., the biggest U.S. life insurer, lost $1.9 billion in the first half, while No. 2 Prudential Financial Inc. posted a $1.1 billion deficit last year. Private investors withheld new funds from the industry late last year, pushing at least 12 insurers to seek U.S. bailouts.
Selling Insurers
Regulators often try to divest all or parts of insurers they seize to prevent liquidation. The Virginia watchdog is seeking to sell the group business of Shenandoah Life Insurance Co. to Assurant Inc., the New York-based provider of health and homeowner insurance. Shenandoah was seized after losing about $50 million on investments in mortgage-finance firms Fannie Mae and Freddie Mac.
Hartford Financial Services Group Inc., the Connecticut- based insurer, accepted $3.4 billion in government cash in June. Philadelphia-based Lincoln National Corp. took $950 million. New York-based MetLife and Prudential of Newark, New Jersey, shunned U.S. aid and raised money from investors.
Guaranty funds are used to pay claims when regulated insurers are unable to meet obligations. Penn Treaty policies will remain active for customers who continue to pay premiums and a state fund will take effect, Ario’s office said. The funds have the right to assess other insurance companies to raise cash. A state court will weigh Ario’s request to liquidate the company, his office said in the statement.
Penn Treaty American Corp., the parent company of the insurer, fell 15 cents, or 54 percent, to 13 cents in over-the- counter trading yesterday. A request for a statement from Penn Treaty was referred to Ario’s office.
Long-term care policies provide coverage to help pay for home-health aides or residence in a nursing home or assisted- living facility. Policyholders with questions may call 1-800- 362-0700 and dial extension 3270.
To contact the reporters on this story: Andrew Frye in New York atafrye@bloomberg.net; Jamie McGee in New York atjmcgee8@bloomberg.net
Last Updated: October 3, 2009 00:00 EDT
end.
The collapse of real estate is now killing the returns on insurance companies. This will be the first of many failures as one of the pillars of the financial world collapses
ie. the insurance companies. Say tuned to these earth-shaking news stories.
Also note that insurance failures affect Main Street, like the CIT affair.
end.
Loan Deliquencies continue on the rise with credit call defaults now hitting 5% for the first time. I reported to you on Thursday that home equity losses (second mortgages now exceed 4%/
Here is the story on the loan delinquencies:
Loan delinquencies hit record highs in 2nd quarter
NEW YORK (AP) — Delinquency rates for three key consumer loan categories hit record highs in the second quarter, according to data released Thursday by the American Bankers Association.
Rising unemployment and falling incomes were the main culprits for the higher delinquency rates for bank cards, home equity loans and home equity lines of credit, the ABA said.
Bank card delinquencies rose to a record 5.01% of all accounts. For home equity loans, 4.01% of accounts were delinquent, while 1.92% of home equity lines of credit were delinquent.
A late payment that is 30 days or more overdue is considered delinquent.
The ABA’s composite ratio, which tracks eight loan categories, also hit a new high of 3.35% of all accounts. That is the highest recorded since the industry group began tracking the rate in the mid-1970s, and tops the previous record of 3.23 set last quarter.
Here are three people talking about the economy and all of them state that the economy is very weak:
MUST SEE KEN LANGONE INTERVIEW: "GOVERNMENT IS LYING, WORST IS AHEAD OF US"
You just have to love Ken Langone’s brutal honesty. He says the stimulus package is a fraud, the government is lying to the public and that the worst is ahead of us:http://pragcap.com/ken-langone-government-is
-lying-economy-is-horrible-storm-END-
13:55 NYU professor Nouriel Roubini says the U.S. financial system remains in deep trouble -- Bloomberg
Roubini says there are signs the recession is close to being over, but warns of a U-shaped recovery, says the recovery will be anemic, and repeats that there is a risk of a double-dip recession. Roubini says conditions int he U.S. labor market are awful and overcapacity exists. Weakness in the U.S. dollar could lead to inflation. Roubini is speaking at an event in Istanbul.
* * * * *
end.
19:26 Meredith Whitney says credit is still contracting for small businesses; adds that government needs to provide more support - WSJ
In an op-ed piece in the Journal, Whitney says that access to credit is being denied at an accelerating pace. She notes that since the beginning of the credit crisis over two years ago, available credit to small businesses and consumers has contracted by trillions of dollars, a dynamic that is reflected in sluggish consumer spending trends. Whitney also points out that small business loans are hard to find and credit-card lines have been cut by 25% since last year, a trend that may only be halfway through given her expectation that another $1.5 trillion of credit-card lines will be removed from the system by the end of 2010. She argues that this trend is particularly concerning given that credit cards are the most common source of liquidity for small businesses, used by 82% as a significant portion of their overall funding. Whitney goes on to note that the government should provide incentives to smaller banks to accelerate small-business loans on a greater scale.
Reference Link (subscription required)
* * * * *
end.
Here is the report on the banks and their non perfoming loans: (Bloomberg)
Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt
Oct. 2 (Bloomberg) -- The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.Units of Frontier Financial Corp.,Towne Bancorp Inc. and Steel Partners Holdings LP are among 26 firms with more than one-fifth of their loans 90 days overdue or not accruing interest as of June 30 -- a level of distress almost five times the national average -- according to Federal Deposit Insurance Corp. data compiled for Bloomberg News by SNL Financial, a bank research firm. Three reported almost half of their loans weren’t being paid.While regulators may not force firms on the list to close, requiring them to raise capital and curb loans may impede recovery in Florida, Illinois and seven other states. The banks are among the most vulnerable of a larger group of lenders whose failures the FDIC said could cost $100 billion by 2013.
http://www.bloomberg.com/apps/news?pi
d=20601087&sid=aXZinRhF5tlA
end.
Here is Bill Holter's commentary yesterday on the jobs number and the 10 yr treasury yield:
Bill H:
To all; the winds are changing! In the past years whenever we had employment numbers come out, Gold and Silver were slaughtered without mercy. Good number, bad number, "in line" or surprise, it didn't matter, the grim reaper would ALWAYS arrive and smash precious metals. It is also of note that the COT numbers show the commercials VERY short at this point and yet Gold and Silver are both close to unchanged after an initial bungee jump immediately after the employment numbers. The commercials must be scratching their heads because the longs are standing tall and not retreating as in the past. THEY are losing control of their rig pure and simple. This action tells me that $1,030 Gold will be surpassed shortly.
Another very interesting event of the last several weeks has/is occurring in the Treasury market. The 10 year yield has come down from the 3.7% area to 3.1% which is curious considering the gross supply at the same time foreigners are backing away from our auctions. This is portraying strength in U.S. sovereign debt coincidental with our debt levels exploding and thus our financial strength becoming more wobbly by the day. The U.S. Treasury is a bankruptcy waiting to happen so who is falling over who to buy Treasuries and push yields down?
I don't have the answer to this but I can guess. The Fed has certainly been a buyer and I am sure futures have been engaged to "bull" Treasuries. Whatever or however, it cannot last. If the "deflationists" are to be believed, a huge slowdown is coming and the rush into Treasuries is safe haven buying. Maybe they are correct but again, they can't be correct for long. If further economic decline is truly the case as I believe, tax receipts that have already imploded will only fall that much further. Falling tax receipts and more fiscal stimulus together are a recipe for being more broke than we already are! The markets are fantastic "chess players" and look down the road many, many moves. Falling tax revenues is not but one move ahead and the Treasury market is missing this? I don't think so!
Unlike the Gold market where manipulating purely with paper cannot work because physical metal must eventually be delivered, the Treasury market can and I believe is being pushed around by "paper". This can and has worked for now, but think of the logic. You print paper to buy high leverage futures on your own debt to keep prices up and yields down. As this "logic" spreads and becomes known, the real buyers will dry up leaving the Fed as the sole buyer. I don't see any other possible outcome other than a destroyed Dollar, collapsing Treasury market and thus hyperinflation. The action in the Gold market looks like it concurs. We are very, very close to the wheels coming off the "rig wagon". Have a nice weekend. Regards, Bill H.
end.
In summary, we had quite a week. On Monday we had evidence that the usa had engaged in gold swaps something that has been denied over the past 20 years.
We have seen the fortunes on Wall Street fall despite the huge repo pool money filtering into the economy.
We have seen a report where Bernanke's reverse repo formula to retrieve liquidity once the economy grows is completely false. It uses the money market where Bernanke proposes to swap its toxic assets to the money market funds. This is where everybody parks their short term money searching for a place to put the funds.
The move would be highly fraudulent as the money market is not Fed money. This would kill the usa economy immediately if done.
We are now witnessing the final stages in the saga of CIT. Here is the latest on that front..press more for the complete story:
CIT’s Failure Could Threaten Financial Sector’s Overall Recovery
October 01, 2009
Daniel Harrison
Just as the financial services industry seems to have made it past the worst of the economic meltdown, one small lender now threatens to reverse that trend. CIT Group (CIT), a lender to small and medium sized businesses, appears to be on the brink of collapse for the second time this year.
CIT Group averted bankruptcy over the summer, when it secured a $3 billion loan with its bondholders, and managed to tweak a giant tender offer for debt maturing shortly thereafter. The move served as a mere stopgap however, since the lender had a $2.9 billion negative cashflow position at the end of June this year.
With the moment of truth at hand once again, insiders say that CIT is attempting to prioritize nearer-term debt holders, a move which would dilute common stock holders by around 95 percent, leaving them almost wiped out.
Wednesday, traders pushed up the cost of CIT’s credit default swaps by 4 percent, to 26 percent; the implication is that the lender has a 45 percent chance of defaulting on its debt within three months, and an 85 percent chance of defaulting on its debt by 2014.
Meanwhile, CIT is also rumored to be recommending that bondholders approve a pre-packaged bankruptcy plan in case the new debt-exchange doesn’t go through.
Whatever the outcome, it’s clear that CIT doesn’t have the financial muscle to protect all parties involved
I wish you all a grand weekend and I will speak to you on Monday.
Harvey.
