Establishment Job Losses at (-216,000)

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The chart reveals the following points. First at the end of last year and the beginning of this year the economy was bleeding jobs. Four months ago the rate of job losses decreased from roughly 610,000 on average to about 225,000 on average. In other words, the pace of job losses is still decreasing which is good. However,


The unemployment rate increase .3%. The reason is illustrated in the following chart:



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The unemployment rate comes from the household survey which shows in increase in the civilian labor force of 73,000 and an increase in the number of unemployed of 466,000.

The above chart also shows that the rate of decrease in various job sectors is moderating. Note the month over month losses are -80 for service industries and down -136,000 for goods industries.

There are three other interesting data points.


The number of people working part-time for economic reasons has leveled off since the beginning of the year.

The number of people marginally attached (These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months.) is increasing. And

The number of discouraged workers (Discouraged workers are persons not currently looking for work because they believe no jobs are available for them) may have topped out for this cycle as well.

Overall I'd call this a lukewarm report. I don't like the increase in the unemployment rate, but it's not surprising. The overall rate of job losses are still moderating, the rate of individual losses in various industries are decreasing and two measures of labor under-utilization (part-time for economic reasons and discouraged workers) appear to be topping.

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Forex Fridays

The weekly chart is interesting. While prices have been dropping, there are three elements to this chart possibly pointing to a rebound. First, the MACD is approaching a buy signal. Secondly, the RSI is at low levels (although it could still move lower). Finally, prices aren't moving lower in a solid line. Instead, they're moving lower in price groups, forming triangle consolidation patterns on the way down. However, arguing against this theory are the EMAs which are in a very bearish configuration -- all are moving lower, the shorter EMAs are below the longer EMAs and prices are below all the EMAs.


There is a huge divergence between the MACD and prices. Prices have been moving lower since June, but the MACD has been increasing. This type of technical divergence is something that traders look for in a reversal. In addition, note that prices are currently in a triangle formation with a rising base. This tells us that the low price where traders find value in the dollar is increasing. In addition, prices and the EMAs are in a very tight pattern indicating an overall lack of direction.

In short, there are many signs that the market wants to move higher. Will it is another story entirely.

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In Denial

Alistair Darling has rejected claims from the Organisation for Economic Cooperation and Development (OECD) that the UK economy will not pull out of recession until 2010.

The OECD claim that the UK economy will record zero growth in the final quarter of this year, while the eurozone and the US will score two quarters of growth.

Darling, on Radio 4, said:

"The OECD has made predictions in the past ... Some have turned out not to be spot on

My prediction in the budget was that this country would come out of recession around the turn of the year. I hold to that view."

The trouble is that this government has been remarkably inept in "predicting" this crisis, in reacting to this crisis in a timely manner and in ensuring that there were sufficient reserves to manage this crisis.

Why should their predictions be any better than the OECD?

Why should we believe them?

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Gerson Lehrman News

I write articles covering business issues for Gerson Lehrman News, and am an Accounting & Financial Analysis Council Member (AFA Council Members include CFOs, former top regulatory body officials, partners from the world's leading accounting firms, academics, forensic accountants, and other financial executives).

The news articles can be accessed via this link Gerson Lehrman News.

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Today's Markets

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The main price action for the day was in the morning when prices fell to yesterday's support. But prices moved higher from there and eventually ended up .85%. However, the real issue is tomorrow's jobs report; that is where the rubber will meet the road, as it were.

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Gold and Silver Break-Out

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OECD Report on the Global Economy

The OECD issued a new report today where they upped their predictions for global growth. The report contains some good information about the current state of the US economy. Consider the following charts (click on all for a larger image):


Note the jump in export orders -- they're back in positive territory.




Business confidence has increased


Trade volume has stabilized

Inventories are still dropping. But at some time, these will have to be restocked.




The rates of GDP decline are clearly slowing. In some countries we are seeing positive GDP prints.




Both corporate and money market spreads have come down. In addition,


Although banks are still tightening credit, the percentage of banks doing so is decreasing.

Bottom line: the stage is being set for growth.

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Thursday Oil Market Round-Up

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The question on the weekly chart is still whether or not prices are forming a double top. To that end we clearly have a second top forming and a weaker RSI reading on the second top -- although the MACD is still rising. Also note the 10 and 20 week EMAs are still moving higher as well which is also bullish.



On the daily chart, prices are right at a trend line. In addition, prices are now below all the EMAs and the MACD has given a sell signal. In addition, the RSI is dropping.

There are cracks forming in all the charts, but there has not been a definite price move lower. That is the main thing the bears need right now. There are several reasons to set-up into a bearish position but then it's a waiting game.

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Lagging Behind

It should come as no surprise to learn that the Organisation for Economic Co-operation and Development (OECD) has predicted that Britain will lag the other leading industrialised countries as they come out of recession.

The OECD expects the UK economy to contract by 4.7% this year, compared with a predicted Euronzone contraction of 3.9%.

The OECD predict that Canada will contract by 2.5%, and the US by 2.8%.

The OECD predicts that the US and eurozone will return to economic growth during the third quarter of 2009. However, the laggardly UK will not return to economic growth until 2010 next year.

This poor performance is somewhat "embarrassing" for Grodon Brown in the run up to an election.

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Today's Markets

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First, note that the Treasury market is breaking out. It has moved through upside resistance and has now crossed the 200 day EMA -- a move into bull market territory. But, considering the massive supply issues that are coming on line this is a bit hard to believe.



The SPYs were a bit anemic today -- which is actually a good thing considering their drop yesterday. Notice that at the end of the day prices attempted a sell-off. But despite increasing volume prices just didn't move lower by a large enough amount.

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