The Labor Department’s Non-Farm Payroll report was released this morning, and the numbers surprised the market. According to the Labor Department, the United States lost 11,000 jobs versus and expected loss of 119,000 while the unemployment rate fell 0.2 percent to 10 percent even. The numbers are being touted in media reports as a sign of hope “for a sustained economic recovery”, but does anybody really believe the Labor Department? The underlying data still paints a difficult picture for job seekers. The number of people unemployed for at least six months rose last month to 5.9 million. The average length of unemployment is now more than 28 weeks, and there are still 15.4 million unemployed people.
On Wednesday, ADP released their employment report which is a stark contrast to the Labor Department’s report posting a lost of 169,000 jobs. Deviations between the ADP data and the Labor Department’s data are common but this is one huge deviation.According to ADP the services sector lost 81,000 jobs while the Labor Department reported a gain of 58,000 jobs. Manufacturing jobs were similar with ADP reporting a lost of 44,000 an the Labor Department reporting a loss of 41,000 jobs. The Labor Department counts 7,000 government sector jobs that ADP does not.
The market’s reaction to the Non-Farm Payroll data is the most interesting I’ve seen in a long time. Initially the reaction in the equity markets was predictable with futures shooting up and equities up over 100 points in early trading, but the Dollar was bought aggressively during this equity rally which in my opinion is counter intuitive. If the market was truly adverse to risk in the wake of positive job numbers I would expect to see Dollar sold against the risk pairs such as AUD, NZD. As it turned out, Dollar rallied and the Dow is currently trading in negative territory.
I think the initial rally was a knee jerk response. I don’t think anybody believes the Labor Departments numbers. Anybody that doesn’t realize the government routinly cooks their books worse than Enron should spend some time reading what qualifies as “non-farm job”, but this report in particular has left a lot of traders scratching their heads. I think the market is generally not as confident in the so called “path to recovery” as the government and media is, and opted to take profits this morning instead of pushing higher.
What do you think? Share your comments and let me know.
Ryan
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Wow…. new look.
GOOD Comments Ryan. I really think the jobs data gave some hedge funds and big bandk traders and excuse to take profit on these pairs….they needed an excuse before the end of the year to put some cash into the books for clients and the like and they took this and ran with it. No way that many much money on different pairs could move so much without a MAJOR play by the big boys. Pretty sure we will see a HUGE rebound Sunday/Monday. I think the next 2 weeks we are going to see voltility in the major pairs as the Big Boys position themselves for 2010 and still keep looking for ways to cash out and close with real money in the books. My opinion. I was SHORT asbout as heavy as you can be and still keep your account a float on the EUR/USD betting on just such a move…and it closed out dead on. I was stacked…so it just was the gift that kept on giving for one hour on Friday. Hope to get more on the rebound. Keep typing and posting…love your stuff…can’t wait to read your book!
Hey Guys,
@Peter – Appreciate the comment, I hope you like the new site. I’m about to add a bunch of educational videos so stay tuned for those.
@Doug – I knew you would be short and stacked EUR/USD on Friday, I think you are right about volatility. The big guys need to hand a profit to their customers after the beating they took last year so I suspect there will be some profit taking in December. Work the edges, and look for bargains!
The minute I saw that number I didn’t believe it. I was in a meeting at work with a few collegues. My blackberry vibrated, took a look at the numbers, and I yelled “WTF” Lucky enough, it was a meeting with only associates and no supervisors. Of course everyone turned over to me and ask what was wrong. When I told them what happened they all were like “whatever”, they didn’t care at all (they don’t trade so I don’t blame them).
My thought (and still is) was that it was a typo, it was meant to be 111,000. I hope someone didn’t make this mistake. Like Ryan cited, the deviations with the ADP reports is way out of order. I sincerely HOPE someone didn’t mess up. This could get ugly. I will believe this number when I see the December NFP #s.
I am actually done trading for the year. Right now I am just rounding up and cleaning shop. I have one or two equity options that I will probably close by the end of the week. Besides my USD.JPY trade that I am planning on holding for a while, I am flat and don’t plan on trading much (if any) until sometime in January.
Good stuff Ryan.
Happy holidays,
Kulu