8/5/2011
By Brian Sozzi, Research Analyst

The search for reasons as to why something happens in life and in the markets is always a personal quest of mine.  Applying my inquisitive self to the July employment report was a must-do exercise given the zany response by the market.  Sure, the EU lunacy is a cockroach that won't die, a weed that can't be killed without the application of a 20 pound drum of Roundup if you will.  So the threat of global contagion from the EU will be with us until hardcore action is taken.  Does that lingering stench of across the pond happenings truly explain why futures soured in the immediate moments following the jobs report, after an initial surge pre-market?  I think not considering there was a soft underbelly to the July numbers.

No doubt it was great to: (1) have job creation in July despite the economic topics of the day; (2) that the headline print flipped the bird to market mavens and traders in the pits.  However, the so-so areas underscore the anemic DNA of the current "expansion."  I use that term lightly because the market is sending a message that we may already be in Great Recession Part 2.

The Soft
* Long-term unemployed unchanged at 6.2 million
* Temporary employment unchanged at 8.4 million
* Manufacturing job growth of 24,000 was influenced by the rebound in the auto sector post Japan quake
* Government is shedding jobs; whether right or wrong, 37,000 people lost their jobs in July

The Interesting

I thought the little box below told a gigantic story.  First, the country is still shedding full-time jobs, with newly opened roles being filled by part timers at lower overall wages (healthcare etc.) and whom could be cut quicker if demand cools.  The multiple job figures are very interesting as well, and could be looked at in two ways.  One, people are working two jobs because their wages from a primary job are subpar, and yet they still can't make the extra trip to Family Dollar.  Two, people are working two jobs to rebuild savings and 401ks.  And, of course, how could I leave out the self-employed.  Do I even need to describe the barriers to entry, financially and psychologically, to opening your own business presently?

Brian Sozzi
Wall Street Strategies

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