The US Jobs Report: Take it With a Pinch of Salt

The US Jobs Report: Take it With a Pinch of Salt

Friday’s eagerly anticipated US jobs report — for some reason the world’s most tradable data release — didn’t disappoint the bulls. According to the Bureau of Labour Statistics, the US economy added 288,000 jobs in April, far greater than expectations of a 218,000 increase. The unemployment rate dropped from 6.7% to 6.3%. Good news!

It didn’t matter that nearly one million people dropped out of the labour force, which was the driving force behind the lower unemployment figure. Nor did it matter that average hourly earnings rose 1.9%, below expectations of 2.1% growth (suggesting that the jobs growth is lower quality).

No one really cares about drilling down on the data. The headline said the economy added 288,000 jobs and media outlets duly reported it. Therefore, that’s what everyone believes.

The market liked the (headline) number. At the open, stocks rallied and gold was in the process of taking another employment data related beating. But then it all turned around. Stocks sold off, gold and bonds rallied.

After ignoring the escalating tensions in eastern Ukraine for months (the Fed will sort it out) the market decided to sit up and take notice on Friday. That’s because tensions escalated even more. Fighting in the southern city of Odessa broke out and left 42 mostly pro-Russian supporters dead.

Now there will be retribution. It doesn’t look like this situation will die down at all. Like Syria before it, Ukraine is now a plaything of the major powers. Europe and the US want Ukraine to turn West, and merge into the EU trading system. It was set to do this late last year when then President Viktor Yanukovychbaulked. Soon after he was gone… 

Russia sees Ukraine as natural part of the country. Indeed, there are many parts of Ukraine that sees itself as Russian. Hence the tug-of-war. Unfortunately, it’s the citizens that suffer the most. Expect the situation to get much worse before it dies down. Elections are scheduled for 25 May, which should be interesting. The country is already on the cusp of a civil war (if not already in one), so we doubt democracy will get a look-in. 

Just last week, the International Monetary Fund (IMF) approved a two-year loan of US$17 billion to Ukraine. This new loan follows two other failed IMF packages, which are still outstanding. The West clearly wants Ukraine in its corner, whatever the cost.

So don’t expect this to go away. Not even the Fed can get rid of it.


Greg Canavan+
for The Markets and Money Australia

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Greg Canavan

Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing.

He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’.

Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors.

Greg Canavan

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3 Comments on "The US Jobs Report: Take it With a Pinch of Salt"

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slewie the pi-rat
someone may have missed the part about the IMF telling UKR to defend the East or re-negotiate the latest blood-money ‘package’. Ivan, too smart to fail/jail, will perhaps simply suffer through the pre-election gong & gooney show, having as little to lose as NATO, in spite of the touted rhetorical ‘Russian People’ aspect. so, Greg’s much-anticipated knee-jerk ‘retribution’ MAY simply be held in check until the Fall arrives, when NATO’s atomic military-industrial bankstering bravado bluster-blaster may begin to experience a slight chill, no matter how ‘secure’ the UKR East, no matter how many homey ‘terrorists’ have been laid to rest… Read more »

A report from the Russian side about some of that defending in the East (caution – gruesome images) …

Meanwhile, more defence – or no cash – says the IMF.

On the same US jobs numbers… said to be the equal lowest participation rate since 1978.

From Thomas Pynchon’s Gravity’s Rainbow … “Whatever lip-service we pay to Reason,’ he (Jamf) told Poekler’s class back at the T.H. (Technische Hochschule), ‘to moderation and compromise, nevertheless there remains the lion. A lion in each one of you. He is either tamed – bu too much mathematics, by details of design, by corporate procedures – or he stays wild, and eternal predator. ‘The lion does not know subtleties and half-solutions. He does not accept sharing as a basis for anything! He takes, he holds! He is not a Bolshevik or a Jew. You will never hear relativity from the… Read more »
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