Economic Indicators

The Real Unemployment Number

Good morning. Officially the February jobs number declined by 63,000. But the expansion of government jobs conceals the real damage our economy has suffered. Net out the government jobs and you have private sector employment contracting by around 101,000 jobs. Making matters even worse, average hourly wages have gone up 5 cents, fueling fears of price inflation. (The 5 cent number is actually quite typical for February and only looks high because employment fell so drastically.)
The Federal reserve announced that it would expand the Term Auction Facility, promising to keep running the auctions for six months. This is disappointing a lot of people who bought into the rumor of an emergency rate cut. And it may imply that the Fed, which took the action after it had already seen the horrible jobs numbers, feels that its hands are tied on interest rates by the threat of inflation.
Oh, and in other news Carlyle’s troubled fund was levered up 32 times, and its lenders are liquidating some of its securities. Ambac sold its shares last night at a 9% discount to the closing price.

Nothing To See In The Economic Data. Please Move Along.

The government is shutting down its online clearing house of U.S. economic data. EconomicIndicators.gov is maintained by the Economics and Statistics Administration of the Department of Commerce. It brings together data from various government agencies in one convenient place. Readers can see GDP and import-export figures, which are collected by the Bureau of Economic Analysis, and numbers for retail sales and durable goods shipments, collected by the Census Bureau.
Or, rather, they could. It seems that the government is shutting the site down “due to budgetary constraints.” This is being described by many as move to make it more difficult for the public to see just how bad the economy has become. “The Bush administration’s latest move is to simply hide the data,” Think Progress writes.
Barry Ritholtz says it reminds him of the government’s refusal to publish figures for M3, a measure of the money supply. Many suspect that this has allowed the government to inflate the money supply without informing the public. “This new development implies (by parallel comparison to M3) that the economy is actually far, far worse than previously believed,” Ritholtz writes.

Bush Administration Hides More Data, Shuts Down Website Tracking U.S. Economic Indicators
[Think Progress]
WTF? Feds Shutting Down Economic Data Site [The Big Picture]

Who Let The Dogs Out?

Beagle Kennel Club Uno.jpgWe’ve been wondering how long it would take for someone to link the surprising results of the Westminster Kennel Club Dog Show to the stock markets. MainStreet.com—the Parade Magazine of money sites—takes a stab but just comes up with an article about health insurance for dogs. Next!
Fortunately MarketBeat’s David Gaffen has discovered something far more interesting: The Westminster Kennel Club Dog Show Indicator.

Last night, at the 132nd annual dog show, Uno, a 15-inch beagle, took home the blue ribbon, the first time that breed has won the competition.
The beagle belongs to the hound group, which has only mustered three previous winners since the show’s inception. In two of three years, the Dow performed quite well, with one negative performance.
The average return in those years is 7.4%, as the average gained 20.3% in 1983, the last time a hound was victorious (an Afghan hound). In 1964, when the whippet claimed the top prize, the Dow gained 14.6%. Only in 1957, when another Afghan took home the ribbon, was the Dow weak, losing 12.8%.

For some reason, however, we like the Sports Illustrated indicator from yesterday far better.
Release the Hounds! [Market Beat]

Sports Illustrated Market Indicator

Sports Illustrated Swimsuit Issue.pngThe markets have been off to a rocky start this year but maybe the bulls can breath a sigh of relief now that the Sports Illustrated Swimsuit issue is on the newsstands with Marisa Miller on the cover. The folks over at Bespoke Investment have run the numbers and created a Sports Illustrated Swimsuit Issue Indicator. As it turns out, having an American on the cover is a bullish indicator.
“Over the last 30 years, an American has appeared on the cover of the annual Sports Illustrated Swimsuit Issue in 15 different years,” the Bespoken write. “The average performance of the S&P 500 during those 15 years is a gain of 13.9% with 13 positive years (87%). Of the fifteen years where no American appeared on the cover, the S&P 500 has averaged a gain of only 7.2% with 11 positive years (73%).”
The shorts should hope for Spanish speaking cover models. Issues featuring models from Argentina, Mexico and Spain all saw losses for the S&P 500 that year.
(Oh, and click image for a bigger version of the cover.)
2008 Sports Illustrated Swimsuit Issue: It’s Research! [Think Big via Eddy]

The Confidence & Spending Crisis: A Modest Proposal

The latest consumer confidence numbers are raising fears that the unwashed masses of the what this once American republic—convinced, perhaps, that Heath Ledger’s death portends bad signs for our economic health—might not spend their allegedly economically stimulating government checks quickly enough or in the right ways. They may, it is feared, decide to save for a rainy day or reduce their own leverage for fears that an economic downturn would reduce their earnings. Quite clearly this would undermine the government’s plans.
Here are the facts: lately, American spending has not grown as fast as our spending power. Indeed, the evidence indicates that it is being converted to saving power, which means that the benefits of the stimulus package to the consumer sector of the economy—which, somehow, means the people who take money from the consumer in exchange for stuff—may be delayed. But this is only because our great and bright have not thought this problem through. The solution was under our Christmas trees this winter, and we only need eyes to see it.
We’re talking, of course, about gift cards. Instead of sending redistribution rebate checks to the people, the government should consider sending gift cards with short expiration dates. Ninety days might do the trick. (Money unspent could be applied to, well, most likely a new round of discount cards but it’s better not to reveal that ahead of time.) It would also save precious time that might otherwise be wasted depositing checks in the bank, where they might be tempted to deposit them in a savings account rather than a checking account.
Perhaps we underestimate our government. It could be that this is exactly what government plans to do anyway. Reducing interest rates should have the marginal effect of reducing savings rates, and increasing inflation will be a multiplier on this effect. At this point, the dollar itself should probably be looked at as a gift card that ought to be spent immediately to avoid its expiration date.
New dip in US consumer confidence [BBC]

The Big “R”

Oil costs like a billion dollars a barrel now. And, according to a Bloomberg survey, 2/3 of the American public think we’re headed for a recession.
Of course, the “American public” is kind of dumb. As Barry Ritholtz says, they’ve predicted 9 out of the last four recessions. But just because you’re stupid doesn’t mean you’re wrong!

Americans Turn Negative on Economy, Expect Recession, Poll Says
[Bloomberg]
2/3rds Americans Say Recession is Likely [The Big Picture]

Jobs For Everyone!

A couple of times we’ve mentioned that many financial markets have been behaving as if August never happened. Well, in many ways it didn’t. The Fed reversed the August 7th decision on interest rates. The quant funds reversed polarity and returned to warp speed. The huge hedge fund redemptions weren’t. And now that negative jobs number has been taken back. Turns out we gained 89,000 instead of losing 4,000.
Well, you know what else isn’t happening? The October rate cut. The oddsmakers in the sport of Fedlinlogy–the folks who trade Fed fund futures–are now betting against a rate cut at the end of this month.
But don’t worry. The folks who think the Fed always needs to cut rates will find a way to ignore the new jobs numbers. They were government jobs, you see. Teachers and such. And those don’t count. These are also the folks who tell you there’s no inflation. Ever.

Update:
In the comments section, a hard working reader thinks we’re reading the rate cut signals wrong! Make up your own mind.

privateequityphonebookringing.jpgWe’ve seen some pretty crazed advertisements in phone booths. One was for a consultant who would help you learn to operate your Apple computer. Since Apple’s interface is about as user-intuitive as it gets—it just works—if you can’t operate it on your own, you probably can’t use the phone to call the consultant either.
Financial Armageddon columnist Michael Panzner, though, came across an even more memorable phone booth ad. Click here for a larger version. And click here for his reaction.
A Bell Rings in the Streets of New York [Financial Armageddon]