"The Ugly Unemployment Numbers The headlines said unemployment, as measured by the "establishment survey," was down by 190,000; and even though that was slightly worse than forecast, market bulls were cheered by the fact that the number was not as bad as last month's. It is an improvement that we are not falling as fast. Well, maybe. What I did not see in many of the stories I read was that the number of unemployed actually soared by 558,000, to 15.7 million, as measured by the household survey. The establishment survey polls larger businesses; the household survey actually calls individual households. Let's look at the real number in the establishment survey. If you don't seasonally adjust the number, the actual change in unemployment for October was 641,000, or about 450,000 more than the seasonally adjusted number. And the Bureau of Labor Statistics added 86,000 jobs that they simply guess were created through the so-called birth-death ratio. Interestingly, the birth-death ratio number is not seasonally adjusted, so it is just added to the unemployment number. http://www.bls.gov/web/cesbd.htm The total (U-6) employment rate is at a record high of 17.5% (this includes those who are part-time for economic reasons). There are now over 10.5 million people who have lost their jobs since the beginning of the downturn. My favorite slicer and dicer of data, Greg Weldon (www.weldononline.com), offers up an even more horrific number. As I have noted before, if you have not looked for work in the last four weeks, the BLS does not count you as unemployed. Quoting Greg: "Moreover, when we combine the monthly change in the number of Unemployed, with the number Not in the Labor Force, we might consider the result to be a proxy for the actual 'change' in the underlying labor market situation ... in which case, October's figure of 817,000 represents the fourth LARGEST yet, behind last month's (September's) second largest figure of 1,021,000 ... for a two-month combined figure of 1.838 million, in newly Unemployed, or no longer 'in' the Labor Force ... "... the second LARGEST two-month total EVER posted, barely trailing the December-08/January-09 total 1.955 million. "Bottom line ... basis this measure AND the 'Total Unemployment Rate,' we could conclude that not only is there NO 'improvement' in the labor market, but moreover, that it continues to DETERIORATE, intently." ____________________________________________________ So, that being said adjust the current S&P to reflect its value in the Euro or Yen. You will find that the S&P is going sideways and has been for the last 4 months, all be the same for the INDU as measured in Eruos and Yen. The Unemployment numbers reported are not True Numbers, just guess's back by Biased data. On the Front lines, the guys I deal with are telling me that their Manufacturing firms are seeing a turnaround...all be it a slight uptick. However, they do not plan on hiring any "Labor" through 2010. Of course, no body has their crystal ball and my clients are not saying that they will never hire, its just not in their forward thinking for 2010. If you read the lines with "Public Traded" companies, as I only deal with Private Business owners not CEO's of Public Companies, what you read is they are still talking about laying off. Of course, layoffs in smaller numbers. Yet, they are not looking to hire a boat load, they are hiring but the processes is long and cruel and not in numbers. The banks all look good when you look at their EPS right now. THe sheep think that the Financial System is repaired. Even with Citi looking for protection. The truth is, they are not lending in the quanity needed to stimulate growth. They are holding the "Tarp" money on their books, as a general rule. They want their EPS to look better than their LTV on Bad Dept. Banks still carry marked debt that they think is valued at .80 on the dollar when the reality is that those Toxic CDOs are worth maybe .60. Commerical RE will come to head spring 2010. Right now, I have helped to put together a medical RIET. The buildings are 100% occupied with tripple net lease. The "Lender is getting killed with their portfolio of other RE that is 100% empty. It was a battle but we created the REIT of medical buildings, sold the majority to Private Investors and one Fund. The original Lender can not find anyone to unload the Empty Commerical RE on, not even for Pennies. Smart Money is not looking for empty buildings but at least 70% full, with an Anchor and of course tripple net lease. They will not touch new construction with zero occupency. Look around your city folks, count how many NAI signs you see and count how many empty buildings, stores, etc you see. We are living in the best and worst of times. For the smart money, this is the best time to but a lot of money to work. For the average joe, this is the worst of times. We are not going to see a recovery the text books of the past have written about. We are not going to see unemployment come to a stop, but it will continue to trickle in. 1983 is the measuring stick. Sucha situation could last for 10 years or more. Hopefully, the measuring stick does not point to years befroe 1983, like 1929. But the facts are, 1929 and 2009 look very similar in factors. I don't think we are heading to a Depression of our grandfathers. What we are in and heading for, no one knows. The final cavit. The Obama Administration's Health Care, Cap and Trade, Etc. This is a cloud that sits over head, its a dark, powerful cloud that can unleash a storm so powerful that it will throw us into one of the worst economic situations in our History as a Nation. Just the fact that this cloud has that power, if it begins to storm, will kill any recovery other than a simple weak, trickle of a rebound. 2010 elections are going to be some of the most important elections in the History of Capitalism.