Three things happened on Friday: The Labor Department reported a big jump in employment; the financial markets responded like kids on Christmas morning; and — with a few hours lag — level-headed analysts deconstructed the jobs report and found it to be mediocre at best.
To take just a few of the high (or low) points:
• Americans are still leaving the labor force
• Most of the new jobs created are part-time
• The vast majority of those are in services, which is to say waiters and bartenders and such
• Most new hires are over 55
For readers who want the whole depressing story, consider the following from Mish’s Global Economic Trend Analysis and Zero Hedge, which can generally be relied upon for this kind of quick-turnaround debunking of government pronouncements:
Employment Report Much Worse Than It Looks
Americans Not In The Labor Force Rise to Record 93,194,000
In April There Were 26 Waiters And Bartenders For Every Manufacturing Job Added
Payrolls Pump Deja Vu All Over Again
Old Workers Hit New All-Time High As All April Jobs Go To The “55 And Older”
Money managers can of course do this analysis and reach the same conclusion, which is that the US labor market remains a mess, with a predominance of old and/or low-paid service drones where well-paid factory workers and bankers used to be. So why did the financial markets pop on this news?
Because mediocre is the now the new perfect. The best-case environment for stocks and bonds is an economy that is growing just enough to stave off a collapse in corporate profits but not fast enough to goad the Fed into tightening. This report fit the bill. The bad statistics cited above are all the ammunition monetary doves need to justify taking the dreaded interest rate increase off the table in June and maybe even September. So low interest rates, rising corporate buybacks and pension funds with nowhere to go but equities and junk bonds are here for as far as the eye can see.
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About The Author
DollarCollapse.com is managed by John Rubino, co-author, with GoldMoney’s James Turk, of The Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street (Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He currently writes for CFA Magazine.