January Unemployment

by Larry Levin

The January Employment Report released Friday was dismal. This report revealed job losses 20% greater than expected and was also the 13th consecutive month of losses. In spite of this data, stocks soared.

January's job losses were the worst since December 1974. The unemployment rate stood at 7.6%, which hasn't been this high since 1992. However, after adding in those who are too discouraged to look for work and those who are forced to cut back their hours to part-time, the unemployment rate rose to 13.9%! Friday's 598,000 job losses set another record: it is the 1st time in history that the US has recorded three consecutive months if 500,000 or more job losses.

What's more, the BLS drastically revised prior job loss data much lower. Using revisions of updated payroll tax returns from businesses, the government said job losses for all of 2008 were larger than previously reported, at 3 million instead of 2.6 million previously reported. In its annual benchmark revision, the government said employment at the end of the year was 138.2 million, 311,000 less than it reported a month ago.

"Job losses were large and widespread across the major industry sectors," said Keith Hall, head of the Bureau of Labor Statistics (BLS). Manufacturing was particularly weak, experiencing its largest decline in 26 years.

But none of this mattered to the stock market. Investors claimed it was so bad, it was good. Specifically, the data was said to be bad enough such that it would force the Senate to agree with the massive Porkulus spending bill before Congress. To be sure, the lack of selling led to massive short covering which may continue this week, depending on the specifics of the latest planned bank handouts via Treasury.


Previous Day's Trading Room Results:

Trade Date: 2/6/09

E-Mini S&P Trades*
(before fees and commissions):

1) VA sell @ 8:35am at 845.00 = -2.00 (1 lot)

2) FT sell @ 2:20pm at 863.00 = b/e (1 lot)

3) Algorithm positions (3)...combined SofT and Algo total...-0.50


Electronic (YM) Mini-Dow:


1) No trades today



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