Baltic Dry Index and Related Shipping Problems with Greece/Phony Jobs report,1.2 million jobs seekers removed from BLS

Good morning Ladies and Gentlemen:

The price of gold fell by $24.20 to $1735.80.  Silver fell by 48 cents to $33.73.
The bankers, true to form decided to carry out a raid surrounding the jobs report. I highlighted to you on Thursday that the crooks always monkey around by orchestrating a raid surrounding a  jobs report and again they did not disappoint. Do not worry, gold and silver will rise again come Monday.

There were no bank failures to report last night.  Let us head over to the comex and assess trading, amounts of physical standing, inventory changes and positions held by various players.

The total comex OI rose by 3278 contracts on Thursday, from 430,094 to 44,372.  The rise was enough fodder for the crooks to fleece.  The front delivery month of February saw its OI fall from 1783 to 1201 for a loss of 582 contracts.  We had only 241 delivery notices on Thursday so we lost another 341 contracts to cash settlements as Blythe must have paid a handsome premium to these longs.  Once they received the cash they would roll to April and hope that they can play the game again.  The next delivery month of April saw its OI rise by a little over 1,000 contracts to 239,062.  The estimated volume today happened to be very large coming in at 203,876.  The confirmed volume on Thursday was 155,683.  No doubt the increase volume was due to the massive shorts, and the influence that this had on the high frequency traders who accentuate the downward draft.

The total silver comex OI continues to trade in a narrow band and Friday saw its reading of 103,409 a gain of 1488 contracts from Thursday.  These longs are in very strong hands but the price of silver is susceptible to large swings.  The front options expiry month of February saw its OI fall from 191 to 86 for a loss of 105 contracts.  We had 146 delivery notices on Thursday so we gained 41 contracts or  205,000 additional silver oz standing.  The front delivery month of March is less than 4 weeks away and here we saw the Oi advance a tiny fraction to 46,622 from 46,000.  No rollovers yet.  The estimated volume at the silver comex was much higher Friday than of late coming in at 55,538. The confirmed volume Thursday was 62,207.  It seems the HFT traders are flocking into the silver arena.

Now let us begin with February inventory movements opening balance in Gold


  February 4.2012                               :

Gold	Ounces
Withdrawals from Dealers Inventory in oz	103 (Brinks)
Withdrawals from Customer Inventory in oz	199 (HSBC,JPM)
Deposits to the Dealer Inventory in oz	nil
Deposits to the Customer Inventory, in oz	nil
No of oz served (contracts) today	54 (5400)
No of oz to be served (notices)	1147 (114,700)
Total monthly oz gold served (contracts) so far this month	2224 (222,400)
Total accumulative withdrawal of gold from the Dealers inventory this month	3781
Total accumulative withdrawal of gold from the Customer inventory this month	31803

We had no gold deposits by the dealer and no gold deposit by the customer.
The dealer had only one withdrawal:

1. Brinks  withdrawal  103 oz

We had the following customer withdrawal:

1.  Out of HSBC  98 oz
2. Out of JPMorgan; 101 oz

total withdrawal 199 oz.

we no adjustments.
The total registered gold rests today at 2.473 million oz or 76.92 tonnes.

The CME notified us that we had 54 notices filed for 5400 oz of gold  The total number of notices filed so far this month total 2224 for 222,400 oz.  To obtain what is left to be served upon, I take the OI standing for February (1201) and subtract out Friday's deliveries (54) which leaves us with 1147 notices or 114700 oz of gold.

Thus the total number of gold oz standing in this delivery month is as follows:

222400 oz (served)  +  114700 oz (to be served)  =  337,100 oz or 10.48 tonnes.

we lost 34100 oz of gold to cash settlements as the huge burden of deliveries during the past 3 months has put a toll on the comex. I strongly believe that the settlements were done via the paper route ie. GLD for gold and SLV for silver.

end


Now let us see inventory movements for silver and deliveries for the February month:   Feb 4.2012

Silver	Ounces
Withdrawals from Dealers Inventory	nil
Withdrawals fromCustomer Inventory	181,735(HSBC Brinks,Delaware)
Deposits to theDealer Inventory	nil
Deposits to the Customer Inventory	867,826(brinks)
No of oz served (contracts)	73( 365,000 oz)
No of oz to be served (notices)	13 (65,000 oz)
Total monthly oz silver served (contracts)	333 (1,665,000 oz)
Total accumulative withdrawal of silver from the Dealersinventory this month	2,287,779
Total accumulative withdrawal of silver from the Customer inventory this month	1,641,523

Less movements today.

We had no dealer deposit of silver and no dealer withdrawal.

We one had deposit by the customer:

1.  Brinks:  867,826 oz

We had the following customer withdrawal:

1. Out of Brinks;  106,245
2. Out of Delaware;  70,589
3. Out of HSBC :  4901 oz

total customer withdrawal 181,735 oz
we had one adjustments whereby a customer leased silver to the dealer over at Delaware to the tune of 50,678 oz.
The total registered silver rests this weekend at 35.39 million oz
The total of all silver rests at 130.86 million oz.

The CME notified us that we had 73 notices filed for 365,000 oz.  The total number of notices filed so far this month total 333 for 1,665,000 oz.  To obtain what is left to be served upon, I take the OI standing for February (86) and subtract out Friday deliveries (73) which leaves us with 13 notices left to be served upon.

Thus the total number of silver oz standing in this non delivery month is as follows:

1,665,000 oz (served)  +  65,000 oz ( to be served)  =  1,730,000 oz.

as promised, the amounts of silver standing continue to rise.
It looks to me that Blythe is having no such luck with fiat money enticing our silver longs to roll instead of standing for physical.

end

Let us now proceed to our ETF's SLV and GLD and then our physical gold and silver funds:

Sprott and Central Fund of Canada.

The two ETF's that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.

There is now evidence that the GLD and SLV are paper settling on the comex.

Thus a default at either of the LBMA, or Comex will trigger a catastrophic event.

Feb 4.2012:

Total Gold in Trust

Tonnes:1,277.13

Ounces:41,061,167.24

Value US$:71,171,802,925.37

Feb 2.2012:

TOTAL GOLD IN TRUST

Tonnes:1,277.13

Ounces:41,061,167.24

Value US$:71,870,620,610.85

with such a fall in gold today one would have thought that the gold oz would have declined. No such luck.

And now for silver Feb 4 2012:

Ounces of Silver in Trust	310,227,234.000
Tonnes of Silver in Trust	9,649.15

Feb 2.2012:

Ounces of Silver in Trust	308,935,049.700
Tonnes of Silver in Trust	9,608.9

we  gained 1,292,000 oz of   silver late Thursday night into the SLV.  

end.

And now for our premiums to NAV for the funds I follow:

1. Central Fund of Canada: traded to a positive 4.2 percent to NAV in usa funds and a positive 3.9% to NAV for Cdn funds. ( Feb 4 2012.).

2. Sprott silver fund (PSLV): Premium to NAV rose  to  9.61.% to NAV  Feb 4.2012 :
3. Sprott gold fund (PHYS): premium to NAV fell to   2.46% positive to NAV Feb 4. 2012). 

It is great to see that the Sprott silver fund has returned to a decent premium. today at 9.61%

Also notice that the central fund of Canada is also returning to a good premium to NAV.

The Sprott gold premium fell due to Sprott going after more gold.

end

Let us now head over to the COT and see position levels of the various players and see what we can glean from this report:  First the Gold COT

Gold COT Report - Futures
Large Speculators			Commercial		Total
Long	Short	Spreading	Long	Short	Long	Short
197,478	26,119	22,607	147,555	357,417	367,640	406,143
Change from Prior Reporting Period
23,999	-5,137	-6,911	-16,493	13,601	595	1,553
Traders
183	56	71	52	47	265	149
	Small Speculators
	Long	Short	Open Interest
	57,493	18,990	425,133
	-2,494	-3,452	-1,899
	non reportable positions		Change from the previous reporting period
COT Gold Report - Positions as of				Tuesday, January 31, 2012

The large speculators:

Those large speculators that have been long in gold continued to pile into the metal to the tune of a monstrous 23,999 contracts.

Those large speculators that have been short in gold did not like the lay of the land and they covered 5,137 contracts from their short side.

Our commercials:

Those commercials who are long in gold and are very close to the physical scene, pitched a huge 16,493 contracts.

Those commercials who are perennially short in gold like JPMorgan and friends, added a whopping 13,601 contracts to their short side.

The huge 16,493 pitching of longs by some commercials could also be the short commercials who have bought some contracts long which they held as a way of covering some of their shortfall.  The bankers knew a raid was forthcoming so they pitched these to go net short in a big way.

Our small specs:

Surprisingly in the small spec category, we saw a net pitching of 2,494 contracts as these guys guessed a raid was forthcoming.

The small specs that were short in gold, covered a large 3,452 contracts.

Conclusion:  the commercials went hugely net short and thus a big raid was imminent.  The big raid occurred yesterday.

And now for our silver COT Silver COT Report - Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 28,465 9,374 19,604 33,693 62,422 81,762 91,400 1,414 -1,560 -916 -1,590 2,118 -1,092 -358 Traders 70 30 40 37 44 125 99 Small Speculators Long Short Open Interest 19,985 10,347 101,747 -186 -920 -1,278 non reportable positions Change from the previous reporting period COT Silver Report - Positions as of Tuesday, January 31, 2012

Those large speculators that have been long in silver decided to tip their toe into the water and add a rather large 1414 positions to their long side.

Those large speculators that have been short in silver probably knew that physical silver was in desperate
short supply so they covered a large, 1590 contracts.

Our commercials:

Those commercials who have been long in silver and are close to the physical scene covered 1590 contracts from their long side.

Those commercials who have been short in silver and subject to class action lawsuits for manipulation of silver decided in their great wisdom to add a monstrous 2,118 additional short positions to their shorts.
There is no question that one of the primary reasons for the raid yesterday was to try and remove these new silver leaves from the tree.

Small specs:

those small specs that have been long in silver pitched a tiny 86 contracts from their long side. Most stayed
and enjoyed a run up in the silver metal price.

those small specs that have been short in silver, saw the tea leaves and covered a huge 920 contracts for them.

Conclusion: a little more bearish and thus the reason for the raid on Friday.
In all probability the raid on both silver and gold will prove futile.

end

Now let us now see some of the major stories which will effect the physical price of gold and silver.

Before the jobs report, Europe was greeted with a huge downfall report on the Baltic Dry Index.
Yes, there are more ships built in the years 2008 to 2011, and this surely has an effect on the shipping price that moves commodities.  However shipping is the biggest income for Greece and thus you can imagine the troubles that they are having with low volumes of commodities that each ship carries.  The banks are vulnerable to huge losses if the Greek shipping companies fail:

The following is an important read for you:

(courtesy zero hedge)

Greece, The Baltic Dry, And... Oh My

Submitted by Tyler Durden on 02/03/2012 07:34 -0500

• Baltic Dry
 
• European Central Bank
 
• Greece
 
• non-performing loans
• United Kingdom
 
• Volatility

Just when it seemed that nothing could possibly surprise about adverse Greek bank exposure, as these are beyond insolvent already relying on the ECB for day to day operations as is, here comes one more development, this time courtesy of the one index that has been in literal freefall in the past two months, and recently hit a 20+ year low - the Baltic Dry.

OpenEurope explains:

Another Exposure Which Could Sink Greek banks

An interesting but niche issue has come to our attention recently in relation to the on-going troubles in Greece. The 'Baltic Dry Index' (a measure of global shipping demand/prices) has fallen for a month straight to record lows. When this index falls it suggests that there is trouble in the shipping industry, raising questions over the stability of shipping firms. As it turns out many of these firms have secured their financing from Greek and other European banks – meaning if they start defaulting on their loans these banks could take losses. This raise further questions over the bank recapitalisation plans and whether such contingencies have been thought of in the second Greek bailout (which sets aside €20bn for Greek banks).

As a recent NYT article noted:

“Basil Karatzas, the chief executive of Karatzas Marine Advisors, a ship brokerage and finance advisory firm in Manhattan, estimated that European banks hold about $500 billion in shipping loans on their books and face nearly $100 billion in losses to restructure them.”

Furthermore, not only does global demand seem to be faltering (although the index may not be the best judge of this), there is also a massive over supply of ships – due to orders put in during the boom period in 2008 which are only just being completed now (the equivalent of 22.7% of the cargo shipping fleet is due be produced this year alone). This suggest a combination of supply and demand issues which means this could become a lasting problem and will not just be tackled with a boost in growth in Asia.

Data on exposure to shipping loans is scarce, but in 2010 Greek banks had a portfolio of $16bn just on Greek owned shipping. Other European banks had about a $50bn exposure. Of this the 4 largest UK banks had $16bn and 10 German banks had $18bn.

The volatility of the index should be kept in mind but it’s an interesting fresh angle on the problems in Europe. If things keep going badly in the shipping sector, which it seems almost certain they will, some banks could face an increase in the level of non-performing loans on their books. Given that capital buffers already seem to be spread pretty thin this could cause problems. Of course this could take time to have an impact, if it does at all, but worth keeping an eye on.

end


The Greek team is demanding that the Public sector( e.g. ECB) take a haircut like the private sector.
Germany has refused to listen to the Greek demands.  It surely does not look like we are going to have a PSI  (Private Sector Involvement) deal:

(courtesy zero hedge)

Germany Refuses Greek Demands For Public Sector Debt Cuts As It Is "Shouldering Everything Anyway"

Submitted by Tyler Durden on 02/03/2012 07:25 -0500

• Central Banks
 
• Creditors
 
• European Central Bank
 
• Germany
 
• Greece

Yesterday, Greek finmin Venizelos did his best to exude confidence when he, of all people, decided to give the ECB, and thus Germany, a virtual ultimatum demanding that public sector creditors are also impaired (supposedly only some, while excluding Greek pension companies). Kathimerini has more on this in "Never mind PSI, OSI is all the rage." And the only reason why Veni needs this critical step is because the hedge fund holdouts among the PSI creditors demand it. Alas, Germany does not deal well with ultimatums, especially from fiscal vassals. As OpenEurope notes, Die Welt reports that Greek Finance Minister Evangelos Venizelos has called for Greece’s official creditors, such as the ECB and national central banks, to take part in the restructuring of Greek debt, something German Economy Minister Philip Rösler insisted was “not currently on the agenda”. It gets better. According to Goldman, German Finance Minister Wolfgang Schäuble said that "no additional contributions from the public sector are necessary.”  German finance minister against public sector participation in Greek debt restructuring. Speaking to news channel n-tv finance minister Schäuble said that "Greece needs a reduction in private sector claims of 50% … It does not need an additional contribution from the public sector because we're shouldering everything anyway". When asked whether he thinks that the composition of the Euro area would be the same at the end of the year as today, Schäuble replied: "I hope so". So there you have it: Greece needs further concessions, which Germany will give, if and only if Greece concedes to previous German demands of abdicating fiscal independence. The only question is how badly Greece needs German help. Everything else is smoke and mirrors.

end
Greece refuses to cede to further austerity measures.As we stated above, I doubt that a deal with be forthcoming:
(zero hedge)

Greece Draws The Line As Unity Government Leaders Refuse To Cede To Further Troika Austerity Demands

Submitted by Tyler Durden on 02/03/2012 13:02 -0500

• Bond
 
• default
 
• European Central Bank
 
• Eurozone
 
• Fail
 
• Finland
 
• George Papandreou
 
• Germany
 
• Greece
 
• International Monetary Fund
 
• Italy
• Netherlands
 
• ratings

It appears that Greece will not even have to wait until the dreaded March 20 funding D-Day. As was earlier reported, Greek PM Lucas Papademos may resign if he is unable to persuade his coalition unity government to agree to further Troika demands for additional austerity. It now appears that there will be no agreement, and thus the primary demand from the Troika for further cash disbursement will not be met. The FT reports: "All three party leaders in Greece’s teetering national unity government have opposed new austerity measures demanded by international lenders, forcing eurozone finance ministers to postpone approval of a new €130bn bail-out and moving the country closer to a full-blown default. Representatives of the so-called “troika” – the European Commission, European Central Bank and International Monetary Fund – have demanded further cuts in government jobs and severe reductions in Greek salaries, including an immediate 25 per cent cut in the €750 minimum monthly wage, before agreeing the new rescue. But representatives of all three coalition partners, including centre-left Pasok of former prime minister George Papandreou and the centre-right New Democracy of likely successor Antonis Samaras, said they were unwilling to back the government layoffs." Now we have been here before, and as a reminder the last time Greece threatened to pull out of Europe with the G-Pap referendum threat back in the fall, G-Pap was promptly replaced with the Trilateral Commission member and former ECB Vice President, Lucas Papademos. The problem is that for him to obtain power, he needed to form a coalition government. Well, that now appears to be in tatters, as not one party is willing to break to the Greeks that the minimum wage of €750 will be cut even further. The question is who will blink first this time, as it is quite likely that neither the Troika nor Greece want an out of control default. Unless, of course, this was Germany's plan B to the imposition of a Greek commissar all along...

More from the FT:

In addition, a Greek government official said the EU and IMF negotiators rejected a counter-proposal that would have frozen Greek wages for three years and cut social security contributions by 10 per cent.

Without approval of the new bail-out within a matter of days, Athens is at risk of defaulting on a €14.5bn bond that comes due on March 20. Many eurozone officials fear such a default could reignite panic in European bond markets, pushing Italy and Spain back into danger.

The standoff in Athens has angered officials in eurozone creditor countries, particularly in those that have retained their triple A credit ratings and will be leant on most heavily to provide new Greek aid.

Finance ministers from the four remaining triple As – Germany, the Netherlands, Finland and Luxembourg – met in Berlin on Friday where they agreed that Athens must move quickly or they would withhold assistance.

“We want no further delays,” Jan Kees de Jager, the Dutch finance minister, said after the meeting.

Eurozone finance ministers had hoped to meet on Monday in Brussels to sign off on the new bail-out, but officials cancelled the gathering on Friday. Jean-Claude Juncker, the Luxembourg prime minister who serves as chairman of the group, issued a statement saying only that the meeting “may be scheduled later in the week”.

Kathimerini with the pre-story:

Papademos is expected to meet PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Giorgos Karatzaferis of the Popular Orthodox Rally (LAOS) on Saturday. The three politicians will have to agree on measures that will satisfy Greece’s lenders and pave the way for a new bailout.

However, a number of sticking points remain. One of the main issues on which the party leaders are finding it difficult to agree is the private sector wage reductions that are being demanded by the troika of the European Commission, European Central Bank and International Monetary Fund.

Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness.

Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.

Papademos needs the agreement of the political leaders so the prospect of Greece receiving a new bailout can be discussed at the meeting of eurozone finance ministers on Monday.

Greece will have to set out the measures it plans to take over the next two years to reform its economy and create a primary budget surplus as well as the framework for the debt restructuring agreement with its bondholders.

Skai TV and radio reported on Friday that should the leaders fail to agree a deal, Papademos will tender his resignation on Monday.

And so on. To say that by now the market may well surge, however briefly, out of pure delight that Greece has finally defaulted, may not be a stretch. Of course, the "however briefly" period will shortly thereafter end, leaving Europe with few things to look forward to aside from complete disintegration of the union and its currency. But at least US banks will be fully insulated to that "contingency" which is increasingly looking like a "certainty.

end



Yesterday, saw the release of the non farm payrolls and to the surprise of many, the number of jobs increased by a huge 243,000  and the unemployment rate fell from 8.5 to 8.3%.  You will see that the report was nothing but a phony.  First, I will give you the official release courtesy of zerohedge followed by many reports to indicate the real nature of the unemployed in the USA:


First:  zero hedge on the official release:
(zero hedge)

Non Farm Payrolls Soar By 243K, Unemployment Rate Drops To 8.3%

Submitted by Tyler Durden on 02/03/2012 08:32 -0500

• Non Farm Payrolls
 
• Unemployment

Whopper of a NFP number, which prints at 243K, higher than the biggest forecast of 225K, on consensus expectations of 140K, the biggest jump since February 2009. The devil will certainly be in the revision details.

From the report:

• Total nonfarm payroll employment rose by 243,000 in January. Private-sector employment grew by 257,000, with the largest employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment was little changed over the month. (See table B-1.)
• Professional and business services continued to add jobs in January (+70,000). About half of the increase occurred in employment services (+33,000). Job gains also occurred in accounting and bookkeeping (+13,000) and in architectural and engineering services (+7,000).
• Over the month, employment in leisure and hospitality increased by 44,000, primarily in food services and drinking places (+33,000). Since a recent low in February 2010, food services has added 487,000 jobs.
• In January, health care employment continued to grow (+31,000). Within the industry, hospitals and ambulatory care services each added 13,000 jobs.
• Wholesale trade employment increased by 14,000 over the month. Since a recent employment low in May 2010, wholesale trade has added 144,000 jobs. 
• Employment in retail trade continued to trend up in January. Job gains  in department stores (+19,000), health and personal care stores (+7,000), and automobile dealers (+7,000) were partially offset by losses in clothing and clothing accessory stores (-14,000). Since an employment trough in December 2009, retail trade has added 390,000 jobs.
• In January, employment in information declined by 13,000, including a loss of 8,000 jobs in the motion picture and sound recording industry.
• In the goods-producing sector, manufacturing added 50,000 jobs. Nearly all of the increase occurred in durable goods manufacturing, with job growth in fabricated metal products (+11,000), machinery (+11,000), and motor vehicles and parts (+8,000). Durable goods manufacturing has added 418,000 jobs over the past 2 years.
• Employment in construction increased by 21,000 in January, following a gain of 31,000 in the previous month. Over the past 2 months, nonresidential specialty trade contractors added 30,000 jobs.
• Mining added 10,000 jobs in January, with most of the gain in support activities for mining (+8,000). Since a recent low in October 2009, mining employment has expanded by 172,000.
• Government employment changed little in January. Over the past 12 months, the sector has lost 276,000 jobs, with declines in local government; state government, excluding education; and the U.S. Postal Service.
• The average workweek for all employees on private nonfarm payrolls was unchanged in January. The manufacturing workweek increased by 0.3 hour to 40.9 hours, and factory overtime increased by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours. (See tables B-2 and B-7.)

end



Now let's dissect the report.  What stuck out like a sore thumb was the huge 1.2 million people that fell out of the labour force. The non institutional civilian population according to the BLS increased by 1.7 million people to 242,269,000.  Thus as the labour force increased by 243,000, a huge 1.2 million souls left the labour force  (87.9-86.7) and thus we now have a extremely low labour force participation rate of 63.9%.  The historical average is around 66%.  Many of these people are seeking work especially in the 55 years and up category.  It is highly unlikely that they have decided not to work to earn some money.  Thus the real unemployment rate using just the BLS figures is closer to 11%. 

(courtesy zero hedge)

Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30 Year Low

Submitted by Tyler Durden on 02/03/2012 08:51 -0500

• BLS
 
• Bureau of Labor Statistics
 
• Unemployment
 
• Withholding taxes

A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that's not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 1.7 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.

Chart below shows it all - that jump is not a fat finger!

And Labor Force Participation:

This is the largest absolute jump in 'Persons Not In Labor Force' on record...and biggest percentage jump in 30 years.

5

end
On closer look at the numbers one finds that we see a huge increase in the part time workers which rose by 699,000 jobs. The ratio of part time gains to full time gains was in the order of 9:1.  Part timers do not get benefits etc so this is not a sign a good economy:
(courtesy:  zero hedge)

Final Nail In Today's NFP Tragicomedy: Record Surge In Part-Time Workers

Submitted by Tyler Durden on 02/03/2012 10:52 -0500

It appears the record surge in people not in the labor force is not the only outlier in today's data. For the other one we go to the Household Data Survey (Table 9), and specifically the breakdown between Full Time and Part Time Workers (defined as those "who usually work less than 35 hours per week"). We won't spend too much time on it, as it is self-explanatory. In January, the number of Part Time workers rose by 699K, the most ever, from 27,040K to 27,739K, the third highest number in the history of this series. How about Full time jobs? They went from 113,765 to 113,845. An 80K increase. So the epic January number of 141.6 million employed, which rose by 847K at the headline level: only about 10 % of that was full time jobs: surely an indicator of the resurgent US economy... in which employers can't even afford to give their workers full time employee benefits. We can't wait for Mr. Liesman to explain how this number, too, is unadulterated hogwash, and how it too is explained away to confirm economic strength. Incidentally this is not the first time we have discussed the issue of part vs full time workers: for more see here: "Charting America's Transformation To A Part-Time Worker Society, Following 6 Straight Months Of Full Time Job Declines"

end
The correct unemployment numbers is the stats posted by John Williams.Here, he states the following:
Using the government's own figures, the old way of calculating unemployment, U6 is not 8.3% but 15.1%If you include the long term layoff workers who were removed from the labour scene but really want to work, and the underemployed who seek a full time job, the SGS real unemployment rate is still 22.5%.
(courtesy Jim Sinclair/John Williams of www.shadowstats.com)

Jim Sinclair’s Commentary

Here is the latest from John Williams’ www.ShadowStats.com.

- Basic Economic Outlook Unaltered by Stronger Labor Data
- January Jobs Reading Still at Levels of 11 Years Ago
- January Unemployment: 8.3% (U.3), 15.1% (U.6), 22.5% (SGS)
- Money Supply M3 Growth Is Picking Up

No. 416: Payrolls, Unemployment and Revisions, M3, PCE Deflator
http://www.shadowstats.com

end


Lee Adler does a fine job dissecting the jobs report:

 
Here Adler looks at the withholding taxes and they were up but concluded that it was Christmas bonus money and not new jobs. However in the Gummit survey showed the actual job losses in January came in at a decrease of 2.6 million jobs.  From the height in 2008 to today, the loss in jobs equates to 7.4 million souls ( from 119.3 to 111.9).  This is hardly a recovery!!
(Lee Adler of Wall Street examiner)

Deconstructing The "Massive Beat" in Employment Data

Courtesy of Lee Adler of the Wall Street Examiner

The headlines are blaring of a massive surge in January employment that blew away analysts expectations. Frankly, I find it hard to believe that any analysts would not have expected this "news." The real time Federal Withholding Tax daily data for January, which I dutifully cover each week in the Treasury updates, showed a massive surge beginning in late December. Since everybody didn't get a 10% raise, the analysts might have inferred that more people were working. Whether that's a sustainable trend or not is another question, but for January at least, there should have been no mystery.

I like to look behind the headlines at the real unadjusted, unmassaged, unmanipulated numbers to get some idea of what's really going on. Here's where things get strange. Total reported employment and full time employment plunged in January, as is normal for that month. So the Gummit survey data doesn't square with the tax collections. Had we based our forecast for the headlines (which is the only thing that matters to the market in the short run) on the withholding data, we would have gotten it right, but for the wrong reasons. It's a head scratcher that suggests that the Gummit's employment numbers shouldn't be trusted, which isn't news. What we do know for sure is that there was a gigantic surge in withholding taxes from late December to mid January, and that surge disappeared completely in the last week. 

 

 

So there's no question that things were fantastic in January, although why and how that happened is a mystery. Last week's action suggests that the good news may not persist in February. We also know that the big beat in the headline numbers was an accident. The seasonal adjustment fudge that the Gummit adds to the mix grossly overstated what the actual survey data showed. Here's a picture. The red line is the actual survey numbers. The blue line is the fake seasonally adjusted number. 

 

Remember: Red... actual. Blue... fake. 

 

Just so you know your eyes aren't playing tricks on you, let's zoom in to just the past 13 months.

 

 

There you have it. The headline, fake, number was up by 243,000, purportedly the biggest increase since 2006. But what's this? The actual survey number showed a decrease of 2.7 million jobs. In the world of seasonally adjusted government data, down can be up.

 

To be honest though, that's a good number for January. Last year the drop was 2.9 million,, in 2010 it was also 2.9 million, and in 2009 it was 3.7 million. This year also compares well with the bubble years of 2005 (-2.7 million) and 2006 (-2.7). So looking at the top line, the bottom line is that it was a good report, just not the blowout positive number that the headlines reported. It wasn't a gain, but it was a much smaller loss than in the worst years of the slump, and about as good as any non-recession year.

 

I like to look at full time employment. There again the seasonal fudging overstated the case. The numbers were not good. Full time jobs declined by 1.2 million in January. That's worse than last year at 834,000, and 2010 at 1.1 million. But it is better than the 2.6 million drop in 2009 and the 1.7 million drop in 2008. Does that mean this year was just right?

 

The year to year gain was 1.5 million or just under 1.4%, which was a little less than last year's 1.5%. Is that a good thing?

 

 

To put this in perspective, the actual survey data says that 111.9 million people had full time jobs in January. That compares with a peak level of 119.3 million in January 2008. They call that a "recovery?" 

I wonder whether these numbers can be trusted at all, given the huge surge in withholding taxes in January. From that perspective, the BLS data would seem to understate the gain. But was the gain in taxes really about more jobs, or something else? What was behind that surge in tax collections is a mystery. Apparently, it may have had more to do with bonuses and sales commissions than a big increase in the number of jobs.

There may be a hint of that in the average weekly earnings report which showed a jump of 1.8% between December and January. Apparently some people got big paychecks during the period. I wouldn't attribute it to a sudden increase in inflation, at least not yet.   

In the end, it's hard to give any of these reports much credence. The blowout headline numbers are misleading, although the tax withholding data showed that some people clearly enjoyed a windfall from late December through the latter part of January. But then that disappeared last week. The chances are that these employment numbers will be heavily revised, and if last week's tax data is indicative of what's ahead this month, the "good news" won't be sustained.  

Given the confusion inherent in these numbers, the proof of whether there's any real improvement in the employment trend may not come until this summer when peak employment levels are normally reached. In 2009, 2010, and 2011, peak full time employment stalled at about the same level each July. This year and last year the seasonal lows have trended upward. So if the economy really is growing, given the running head start off the lows I would expect full time employment to leap past last year's highs in May or June. If that does not happen, then we have gained nothing. The initial indications will come in the rate of growth in February and March. Those are numbers to watch. If the growth rate holds up, then the economy is growing, but if those growth rates slow, then we're probably running in quicksand. 

Meanwhile, the government's own survey data show that 7.4 million fewer people have full time jobs today than was the case 4 years ago. Those 7 million jobs were the fake jobs spawned by the housing and credit bubbles. Those jobs were vaporized when the bubble economy collapsed. They are NEVER coming back. The "new normal" is just the old normal without the added froth. What we are left with is the bitter reality of fewer people carrying the tax load and more people needing government assistance. We have yet to see any real proof that the trends are improving enough to ameliorate those burdens on the economy.

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And now Trim tabs who follows daily tax receipts cannot explain the job growth during the past 2 months.  Actual non adjusted jobs data from the Bureau has December with a real loss of 230,000 jobs and the loss in Januaryof 2.7 million jobs for a real loss of 2.9 million.  How they adjusted this to a gain is beyond Mr Biderman of Trimtabs.  This video is a must for you to see.
(courtesy  Charles Biderman/zero hedge)

TrimTabs Explains Why Today's "Very, Very Suspicious" NFP Number Is Really Down 2.9 Million In Past 2 Months

Submitted by Tyler Durden on 02/03/2012 15:01 -0500

• BLS
 
• Bureau of Labor Statistics
 
• Charles Biderman
 
• Congressional Budget Office
 
• Federal Tax
 
• SIFMA
 
• TrimTabs
 
• Unemployment

We have examined the nuance of the euphoric jobs data this morning from every angle and by now there should be plenty of 'information' for investors to make their own minds up on its credibility. However, the avuncular CEO of TrimTabs, who despite channeling Lewis Black lately, likely knows this data a little better than the average Jim on the street having collected tax witholdings data for the past 14 years, is modestly apoplectic at the adjustments. In one of his more colorful episodes, and rightfully so, Charles Biderman notes that "Either there is something massively changed in the income tax collection world, or there is something very, very suspicious about today’s BLS hugely positive number," adding, "Actual jobs, not seasonally adjusted, are down 2.9 million over the past two months. It is only after seasonal adjustments – made at the sole discretion of the Bureau of Labor Statistics economists – that 2.9 million fewer jobs gets translated into 446,000 new seasonally adjusted jobs." A 3.3 million "adjustment" solely at the discretion of the BLS? And this from the agency that just admitted it was underestimating the so very critical labor participation rate over the past year? Finally, Biderman wonders whether the BLS is being pressured during an election year to paint an overly optimistic picture by President Obama’s administration in light of these 'real unadjusted job change' facts. Frankly, in light of recent discoveries about the other "impartial" organization, the CBO, we don't think there is any need to wonder at all.

TrimTabs believes the job growth picture lies somewhere in between TrimTabs estimate and the BLS’.  Looking forward to February and March, we will have a much cleaner picture of job growth as we move away from the effects of tax law changes, bonus season, and enormous seasonal adjustments.

A comparison of TrimTabs’ real-time withholding tax based employment results versus the BLS’ preliminary and revised results from January 2011 through January 2012 are summarized in the following table:

and from details from his blog (for the press corps to perhaps dig a little deeper):

Obviously I am quite suspicious of the numbers that I see in today’s BLS press release.  Remember most financial journalists and even stock market strategists do nothing more than rewrite government press releases. So do not expect very few others to question the good news.

For those of you who care, look at Table B-1, Total Nonfarm Employment in today’s BLS press release. Start with the non seasonally adjusted table that shows that in November 2011, there were 133.172 million actual jobs. Actual jobs dropped by 220,000 jobs in December and actual jobs dropped an additional 2.7 million in January. Only as a result of unknown seasonal adjustments, could the BLS report 243,000 new hires in January.

Yes, the labor market contracts during the winter and expands in the spring and summer.  Could this number be manipulated? Of course it could. Is it? I don’t know. Am I the only suspicious soul out here? Hope not. Certainly feels lonely right now.

Finally, and this is a repeat of what we said prior using SIFMA data (so originating at the US banks themselves), for the US unemployment to be declining, Federal tax withholdings have to be rising: there is no way around it! Instead, as the chart below shows, trailing quarterly collections have just turned negative.

Q.E.D.

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It looks like the foreclosure settlement is not to be as the NY Attorney General has just launched a big suit against our favourite banks over the use of MERS:

(courtesy zero hedge)

Kiss The Foreclosure Settlement Goodbye: Bank of America, Wells And JP Morgan Are Sued Over Use Of MERS

Submitted by Tyler Durden on 02/03/2012 11:57 -0500

• BAC
 
• Bank of America
 
• Bank of America
 
• Fannie Mae
 
• Freddie Mac
• JPMorgan Chase
 
• Mortgage Industry
 
• New York State
 
• Wells Fargo

A little over a year since the day that the world first learned about robosigning and the broader problem of fraudclosure, which is merely the functional equivalent of infinite rehypothecation of an underlying asset between a daisy-chain of lien holders, we get the first legal incursion into this farce. From Bloomberg we learn that:

• BANK OF AMERICA, WELLS FARGO, JPMORGAN SUED BY NEW YORK OVER MERS
• NY AG SUIT CITES FRAUDULENT FORECLOSURE FILINGS

In other words, kiss that foreclosure settlement goodbye. In the meantime, the  electronic momos keep taking BAC ever higher even as this news confirms that the bank is about to suffer a multi-billion impairment shortly.

From the AG office:

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  
Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as "MERS certifying officers," have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.

The lawsuit further asserts that the MERS System has effectively eliminated homeowners' and the public's ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.

“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the "nominal" mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a "nominee" (or agent) for most major lenders, it remains the "mortgagee" in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.

MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.

MERS' conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.

The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:

• MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
• MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and "robosigned" by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party's inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
• MERS' indiscriminate use of non-employee "certifying officers" to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an "Assistant Secretary," "Vice President," or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer's own employer. Moreover, as a result of the defendants' failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
• MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS' role with respect to their loan by providing inadequate disclosures.
• The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.

The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices.

The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

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This is interesting from the Washington Post:

Obama administration to move forward with closing Fannie Mae, Freddie Mac

By Brady Dennis, Published: February 2

The Obama administration plans to push forward this spring with efforts to wind down government-backed housing giants Fannie Mae and Freddie Mac and attract more private funding to mortgage markets, Treasury Secretary Timothy F. Geithner said Thursday.

Geithner told reporters that administration officials have begun more intensively exploring legislative options for overhauling the nation’s housing finance system with lawmakers on Capitol Hill, as well as with academics and outside advocacy groups.

Still, he said that concrete changes won’t come soon.

“It’s going to be a complicated process,” Geithner said. “We don’t expect to legislate this year.”

Since the financial crisis, the country’s housing finance system has relied almost exclusively on federal support for funding new home loans. In a white paper last February, the administration outlined three options for a long-term overhaul of the housing market.

Each of those proposals retained the Federal Housing Administration, which focuses on loans to borrowers who can’t afford sizable down payments. Each option also proposed the elimination of Fannie and Freddie but offered different approaches on how — or whether — to replace them.

Republicans in Congress also have advocated shutting down the taxpayer-backed mortgage giants but generally on a faster timetable than the administration has proposed.

“We’re in a much earlier stage on housing reform” than with some other financial regulatory changes, Geithner said. But he added: “What we’re going to try to do is lay the foundation for consensus.”

In the meantime, he said, “Our immediate obligation is to repair the damage to homeowners, the housing market and neighborhoods caused by the crisis.” He referenced new measures proposed by President Obama this week that would make it easier for struggling homeowners to take advantage of record-low interest rates in order to lower their monthly mortgage payments.

Geithner on Thursday also said that the administration has made significant progress in implementing key elements of the financial overhaul legislation passed in 2010 — from creating a new consumer watchdog bureau to imposing tighter risk limits on big financial firms — and rejected GOP claims that the new regulations have overburdened banks and created paralyzing uncertainty in markets.

“We are taking the necessary time to get the substance right,” Geithner said. “This is a critical year for financial reform. . . . We still have a lot of hard and complicated work .

Well that about does it for today.

I will see you Monday night

harvey