Thursday, September 1, 2016


Comes out tomorrow at 8:30 a.m. EDT.  Should anyone care?  Don't know why although we are told that it will be all-determinative as to whether The Fed hikes rates or not.  My view as I have so-oft stated is that the numbers are crap and when necessary, cooked, but the equity boys stay up all night so as not to miss its release.  Perhaps they should sleep in as the Fed was given all the reason they need NOT to raise in the date that was released today.  It was bad, really bad.  ISM came in at 49.4 which means that manufacturing output actually fell.  52 was expected.  Productivity was down 0.6%--the third consecutive quarter in which the number declined.  Jobless claims were up and just to cap off a perfect day the IMF, should anyone care, just decided that global growth is not going to make 3.2% and the U.S. is probably going to come it below 2.0%.  Great job gang.  How many otherwise out of work economists from the developing world did it take to come up with what anyone knew already.?

But the Equity markets just shrugged it off with the DOW closing up 18 after a big morning drop.  Why?  Well in the afternoon the word started to get out that tomorrow's number would be in the 180-200,000 range but the whisper number was 150,000.   Yippee Wee!  No rate rise for me!  As I said, who cares as the Fed already has their no change of policy excuse.

But if the number is good, that wouldn't be bad, especially for the administration and Hillary Rodham Obama.  Let's, therefore, keep an eye out but I keep asking myself with these lousy economic numbers how can employment be rising?  They numbers could be cooked to be sure but there might also be another explanation which ties in to the productivity number about which we spoke last month.  New hires are a hedge.  Maybe, just maybe, against all predictions the economy begins to improve in which case companies are well-positioned.  But if things stay flat, you can always fire a new worker whereas you can't fire a new piece of equipment.  And guess what?  Capital expenditures are way down and those purchases have been a big part of rises in productivity in the past.  Maybe I was wrong to criticize those who blamed the low productivity numbers on untrained new workers.  Maybe they were right but simply didn't (and don't) understand the real meaning of the data.  Today's mantra was that the ISM report was an aberration.  I'm not so sure and tomorrow isn't going to clear that up or much else for that matter.  But, I'll be up at 8:25.  The things I do for you.

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