Market Update 7 8 11 _ Lipstick on a pig and strategic blunders

Chaos, mayhem, disorder…my job here is done

Bloomberg reported a few weeks ago that Geithner was considering leaving the U.S. Treasury.  For his part Geithner said he’s not going anywhere, but on mornings like today it must be tempting to consider it.

Economists expected Non-Farm Payrolls to add 105,000 jobs…it only delivered 18,000.  The Change in Private Sector Payrolls was expected to be 132,000…but the private sector could only scrounge up 57,000 positions.  The Unemployment Rate increased from 9.1% to 9.2%.  Those are terrible numbers no matter what light you try to view them in.

Politics and economics

If you are on the current administrations economic team you’ve got a long weekend ahead of you.  I feel badly for them…their job is to spin the economic news in a positive way yet there’s no amount of lipstick you can put on this pig to make it look good.

Today’s numbers made me think of Christine Romer, the former White House economic chief who stood before the camera and told us that if congress passed the stimulus bill that the Unemployment Rate would not go above 8.00%.  I remember staring slack-jawed at the screen after she said it…mouth agape in disbelief…wondering why the White House didn’t have a compliance department that would keep such a statement from ever being uttered in public.  In my mind the statement ranks right up there in the history of great strategic blunders alongside statements like the following:

-          “Don’t worry…the Americans will never come here and fight.” Al Qaeda

-          “I think a frontal assault might work this time” Robert E. Lee, Gettysburg

-          “Just take out Pearl Harbor and they’ll be out of the war for good.” Someone in Japan

-          “I’m gonna look cool on the jumbotron.” Dallas Cowboy Leon Lett right before Don Bebe stripped the ball in Super  Bowl XXVII

Many of the people on this list are no longer with us…which leaves me with a picture of former White House economic advisor Christine Romer sitting in a Starbucks somewhere with former Cowboys defensive tackle Leon Lett commiserating about how things could have been different for them both if they could just have a do-over.

The Market

Market reaction to the data was sharp.  The 10-year Treasury is up almost a point, pushing its yield down to a 3.02%.  The Dow is off 121 points to trade at 12,592.  With no rebound in the employment market and a housing market that is still in the dumps it’s difficult to paint a realistic picture of where the growth will come from.  I’m reminded of the old Wendy’s commercial with the two little old ladies asking “Where’s the beef?”  Our current question is a derivative of that… “Where’s the growth?”

If you have any questions or if there is anything I can be doing for you just let me know.

Steve Scaramastro, SVP

800-311-0707