us employment stats

Let me state at the outset that I have missed the surge in equities the past 6-8 weeks as I've largely moved investments to cash and gold the past couple of months so I'm not going to say I've got a better crystal ball than anyone else.

However I'd make a few observations about last nights employment stats which are quite frankly a con job. Before people start having a crack I've worked in financial markets for 20 years and have some real economic understanding not that you need to to unravel such a dodgy set of numbers.

So unemployment falls to 7.7% and everyone cheers the 240k odd new private sector jobs. That's great until we dig into the numbers.

The participation rate fell to 63.5% back to the August 2012 lows and generational lows I.e. several decades. So unemployment isn't falling at all it's just less people even bothering to look for a job. Maybe everyone is so well off they don't need to have a job anymore? Or maybe the 7.7% number is a fudge?
Of the 240k new jobs 102k were from the birth death model the BLS run which is their best guess of what is happening in SME land. That number might prove higher or lower and all the monthly numbers get revised once a year at the end of January. Funnily enough the BLS estimate this number horrendously wrong almost every year and are usually too optimistic.

U6 wider measure remains up at 14.3% which is a far better guide to the situation and there are now far more low paid service jobs and part time jobs in the US economy than the higher paying jobs that have been lost.

So is the run up in asset markets justified? Maybe it is if the Fed keep printing and eventually the real economy follows the market up. I think not however. More likely it's march which markets are often seasonally strong into and things start to unravel over the northern summer. News flow shift as protests and riots take hold in Europe and US data wanes Will stocks hold the ripper start to 2013? I'd wager that this summer you'll be able to buy the Dow under 13,000, maybe 12,000 as reality bites that stuff all has changed lately.