The King Report – Web Post Commentary

Goldman sees a February NFP of -100,000 due to February’s snow storms.  But the Census Bureau says it has hired 56k temps in a March 1 release.  Will those jobs be slotted in February or March?

http://www.census.gov/Press-Release/www/releases/archives/2010_census/014599.html

We keep braying that tax data is the most accurate gauge of the US economy and government keeps manufacturing better than reality jobs data (also GDP & CPI).  Here’s further proof:

Mercury News: California lost far more jobs last year than the state initially reported, according to a new report that provides an early glimpse into statewide employment trends.

“The economy was a lot worse than everybody thought,” said Howard Roth, chief economist with the state’s Department of Finance. “The job market is weaker than we figured.”

According to an estimate from the state Employment Development Department, California employers shed 871,000 jobs in 2009. If that estimate holds up when final revisions are released this month, California’s job losses would be far more grim than first believed. The agency reported as recently as Jan. 22 that California employers chopped 579,000 jobs from payrolls in 2009.

That would translate into 292,000 more lost jobs…

Why are job losses so much worse than first thought? The EDD’s monthly estimates depend in part on the number of employers it believes exist in California at a given time. But the recession has erased numerous companies.  “Businesses went away and no longer existed that we originally thought were there,” said Dennis Meyers, an economist with the state finance department… [Their guesses were bogus.]    http://www.mercurynews.com/business/ci_14493421?nclick_check=1

According to UN data for 2008, manufacturing is only 13% of US GDP.  So when bonds or stocks react violently to the ISM or Chicago PMI, the market is not acting efficiently or rationally.

http://www.ourfuture.org/blog-entry/2009104323/balance-trade-and-share-global-manufacturing

Business Week’s chief economist, Michael Mandel on GDP: First, the category of “personal consumption expenditures” includes pretty much all of the $2.5 trillion healthcare spending, including the roughly half which comes via government. When Medicare writes a check for your mom’s knee replacement, that gets counted as consumer spending in the GDP stats.

At a time when we are wrangling over health care reform, it’s misleading to say that “consumer spending is 70% of GDP”, when what we really mean is that “consumer spending plus government health care spending is 70% of GDP.”…

http://www.businessweek.com/the_thread/economicsunbound/archives/2009/08/the_retail-impo.html

Reuters: PIMCO’s El-Erian: sovereign risks key issue in 2010

Investors must recognise balance sheets of governments and sovereign risks are a key issue this year, Mohamed El-Erian, chief executive officer of PIMCO, said on Tuesday.

http://www.reuters.com/article/idUSWLB889720100302?type=marketsNews

The U.S. Postal Service projects it will lose $238B over the next decade – which means it will lose more.

In yesterday’s missive we opined that the environment is similar to that of late 2007/early 2008. And now there is this bit of déjà vu: Toyota and GM have announced 5 year 0% financing.  It seems like only yesterday that GM cannibalized future sales with low financing and high incentives.

The rally that appeared in the latter half of last week was greatly influenced by February performance gaming.  This is evinced by the excruciatingly low volume.  Institutions are waiting and watching because the environment is so muddled.  But professional traders must play every day.  And with diminished liquidity, a few big trades can greatly move a market.

On Sunday night, SPHs are up 34.40 in anticipation of the usual Monday Manic rally, the latest Greek bailout and start-of the month buying.  Gold and the dollar are down a tad.  Gold is being kept from a larger decline by the 12 handle surge in copper due to the Chilean earthquake.

However, the copper rally could be fleeting because reports say the Chilean copper industry will suffer only minor disruptions.

We look for strength early in the week because traders are likely to lighten up by Thursday on fear that the inclement weather combined with the recent evidence of economic ebbing (tax receipt declines and dismal housing data) could produce a February Employment Report on Friday that might show job losses far in excess of the expected 50k NFP decline.

The Chicago PMI rose to 62.5 from 61.5; 59.7 was expected.  The strength in the headline number is not reflected in the subindexes, most of which fell. The key new orders component declined to 62.2 from 66.4.  Production, inventories and employment also declined.  But the real story is once again seasonal adjusting greatly boosted the index.  NSA the Chicago PMI is 57.1.   https://www.ism-chicago.org/chapters/ism-ismchicago/files/ISM-C%20February%202010.pdf

So before you invest based on today’s ISM, check to see what the seasonal adjustments and key components are at the ISM web site:    http://www.ism.ws/