Blue World Employment Situation Report Analysis 12-07-2012

Release Date:  Usually the first Friday of each month

Release Site:

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, December 07, 2012

Brain surgery is not rocket science to a brain surgeon©

C’mon everybody.  Sing along.  You know the words to this song.  The economy added a net 146,000 jobs and the unemployment rate dropped to 7.7%.  I admit we were unable to be even cautiously optimistic about the headline numbers due to the details in some other reports out during the month, especially regional manufacturing data and the GDP estimate.  We had predicted that GDP would be revised lower but it was actually revised higher.  A glimmer of optimism was squelched immediately by the detail which showed the GDP increase coming on the inventory side while the demand side slid.  That indicates a data blip as opposed to the emergence of a sustainable upward trend.

November labor details tell a familiar story so here are the most illuminating.  We got 146,000 new jobs but the labor force suffered a huge 350,000 worker reduction.  The participation rate fell another .2% and the number of employed people fell by another 122,000.  The work week remained flat for all employees and the overtime hours in manufacturing are still unchanged at 3.2 hours per week.  There was some improvement in wages reported but still not enough to outpace inflation.  Additionally, pay readings have been volatile and given to significant revisions over the last couple of years so we can’t put too much stock in single-month changes.  College educated unemployment is still way too high but at least has been below 4% (3.8) for two months in a row.  That number needs to go below 2.5% in order for any real recovery to be underway.

On the news there was a vertical spike in the S&P 500 futures but it only got back to about even on last night’s close.  As the detail is digested and weak consumer sentiment numbers worked their way into the mix, the charts illustrated a retreat back toward the baseline and now (9:56a C) the S&P has gone fractionally negative while crude and corn retreat and gold is choppy and largely lateral.

So far the outcome of the election has done little to quell any of the uncertainty that has hung over the economy for the last few years.  Aggression in the Middle East, continued turmoil in Europe, fiscal cliff worries, unresolved tax policy and anxiety over the implementation of Obama Care in the face of what appear to be developing new legal challenges to the Affordable Care Act maintain their grip on those we rely on to spend, invest and hire.

The markets continue their upward trend.  While we have been happy to participate in the run we continue to be very cautious and we’re bringing the safety net up tighter and tighter.  We have significant concerns about what seems to drive the markets these days.  Government commentary, be it from our Fed or European leaders, have greater impact on market sentiment than economic and corporate fundamentals.  We believe this as a driver is unsustainable and at some point market fundamentals will have to trump. When will that happen?  If you had told us in 1995 that U.S. Ambassadors were being raped and murdered, Palestine had been admitted to the U.N., Iran was close to nukes, Israel was engaged in missile play, Syria was readying chemical weapons to use on its own people, North Korea was rattling its saber, the government owned private car companies, one sixth of the economy was being nationalized, there were only three banks left, GDP was under 3%, unemployment was over 7.5%, corporate profits were mixed as revenues begin to slip across the board and the markets are UP, we’d have recommended you seek professional intervention from a qualified mental health provider.  Historically these conditions would drive the markets to extreme lows.  Today, however, they continue to climb.  We’ll ride the wave, too, but the defense is still on the field and ready to play when reality and perception align.  Whatever defensive strategy you/your financial advisor employ, we think it prudent to keep it executable at very short notice.

This is our final jobs analysis to post for 2012.  Thanks so much for reading and commenting.  God bless you and your families.  Have a very Merry Christmas and a Happy New Year.  We’ll see ya on the other side.


Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release site should be cross referenced.  The analysis represents the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on its analysis.

©Blue World Asset Managers, LTD Friday, December 07, 2012

<> Quick Post – …but we object to water boarding

We felt compelled to comment on the events surrounding the Embassy attacks and the U.S. response.

The first and most important question we asked was “of the people who were terrorized, injured and killed, which of them had anything to do with the “offending” video?

Next, How can our gov’t have the audacity to suggest that free speech is a “global right?” Ask anyone from those countries if they have a “right” to free speech.

if “free speech” is a “global right” how could it possibly be ABUSED? This is The UNITED STATES of AMERICA GOVERNMENT”S response to INNOCENT AMERICANS being murdered and DRAGGED THROUGH THE STREETS a la Black Hawk Down in the Bakara Market? Oh, yes, it gets worse.

It terrifies us that the U.S. response was to condemn the video maker(s) first during a statement that was overall apologetic to the terrorists (whom OUR government has chosen to label “protesters”). Protestors are what we find screwing up traffic in Chicago. TERRORISTS are what we find storming embassies and murdering innocent people!

They dragged a U.S. citizen’s dead body through the street. As the government couldn’t get the photos down fast enough it is reported that Hillary Clinton (Just now repeated by President Obama) claimed that they were dragging the dead body to the hospital.  Why would anyone photograph a living man being “dragged” to safety. This is insulting and terrifying.

This story is moving fast but we had to comment on the early reports and responses. Now, Michelle, you may legitimately be un-proud of your country!