Non-Farm Friday – Is America Working?

This has not been a good trend.

Since the ill-conceived Summer Walk-Out, when everyone decided the virus was no longer a threat.. just because…  we have been going the other way as the virus has re-asserted itself and last month we even had a net job loss of 140,000 jobs.  That's not good because Donald Trump was the first President since Herbert Hoover (-6.4M) to preside over a net loss of jobs during any term, losing 3M net jobs in 4 years.  

Keep in mind that we add about 2M people per year so we need at least 1M more jobs per year just to stay even (with 1/2 the population working) so losing 3M jobs puts us 7M jobs behind in 4 years so Biden will have to add 150,000 jobs a month to keep up with population growth AND another 150,000 a month to make up for the lost Trump jobs over the next 4 years – just to get us back to where we were before the Trump error began.

That's 14.4M jobs in 4 years but it is possible as Joe Biden was Vice-President when Obama added 10.4M jobs in his last term and Biden was a Senator when Bill Clinton added 12.3M and 11.3M jobs in two consecutive terms.  Heck, Biden is so old that he was a Senator back when Jimmy Carter and Ronald Reagan added over 10M jobs each.  So yes, we can make America great again and we started on that road yesterday as Vice President Harris cast the tie-breaking vote in the Senate to move forward with Biden's $1.9Tn Stimulus Package.  

$1,900,000,000,000 is certainly a lot of money.  In fact, it's $131,944 for each job we need to create over the next 4 years so of course the Republicans voted 100% against it as they don't want yet another instance of a Democrat turning around an economy that was wrecked by a Republican – how many Hoovers can there be before people begin to notice a pattern?  

Republicans offered amendments on cutting federal funding to states that have an active investigation into underreported deaths in nursing homes and blocking aid for schools that don’t reopen after teachers have had the opportunity to be vaccinated.  Another GOP amendment aimed to prevent Congress from raising the federal minimum wage to $15 an hour during a pandemic; President Biden’s relief plan calls for gradually raising the minimum wage to $15 an hour. The proposal would also bolster Federal unemployment assistance, send $1,400 direct checks to many Americans, and provide funds for vaccine distribution and offer aid to schools.  Every single Republican voted against this.

8:30 Update:  49,000 jobs.  That's all we added in January and that's going to be a black mark on Biden's record as he was President for 11 days during that slow growth period.  Well, that's how Fox News will report it anyway, right?  At least it wasn't negative but it's certainly not a sign that we're recovering without stimulus as we are still -7M jobs and let's say those 7M people made $35,000 a year that's $245Bn out of the economy right there which is why stimulus does make sense as the Government can borrow cheaply and fill that gap ($1Tn in 4 years) but what about the 160M people who are working but are struggling anyway?  That's why the stimulus bill is so high, unfortunately.

Today's Report also included annual benchmark revisions to employment. About 22 million jobs were lost in March and April at the onset of the pandemic and related business restrictions. Job growth, though, has slowed since the summer – which means our gap is more like 10M jobs, not 7M left to fill and 49,000/month is clearly not going to get us there.  

Late last year, many states and local governments mandated that businesses like restaurants close or reduce operations to combat rising numbers of virus cases. Some places have recently loosened those restrictions. Positive areas include manufacturing, with companies reporting increased demand for goods and new hiring, and housing, where low interest rates and the pandemic have boosted demand.

Speakig of demand, there may not be a lot of demand for oil but OPEC is keeping a tight reign on the supply and that's gotten prices back to $57 this morning.  “It looks like, at every turn, Saudi seems to want to support the market,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “If demand really picks up, we could be short oil pretty quickly, because U.S. production isn’t going to come back fast.”

That's kind of funny as that quote is like any salesman telling you that you need to hurry or they'll be sold out – even though they never are.  There's no difference between oil traders talking up their product in Bloomber or GameStop traders talking up their stock in Reddit except the Reddit crowd are being investigated while these guys just keep screwing people over with their BS that costs not only oil traders money, but every single one of us is affected when we go to buy our next tank of gas at inflated prices.

Of course the oil market is not the same as a stock like GME because the people who are buying the oil futures don't actually want the oil they are buying contracts for – they are only buying them to sell for a higher price.  So, if enough people sell (short) those fake contracts and then wait until the rollover date – the "longs" will be forced to capitulate and sell for less – or face the consequences of the delivery of 1,000 barrels of oil per contract.

There are currently 407,318 open oil contracts for March delivery (407,318,000 barrels) and traders like Mike Hiley need to unload them by the 24th in order to avoid having to pick them up in Cushing, OK – a facility that can only hold 50M barrels and is already full.  So clearly these open orders are pure BS – nothing but empty trading instruments that have no basis in reality. 

We're going to short Oil (/CL) Futures again at $57.50 or if it crosses back below the $57 line first and use tight stops (0.05) above to limit our losses to $50 per contract but hopefully we'll catch a nice 0.50 connection and make $500/contract instead.  

SCO is the Ultra-Short Oil ETF and it's going to open at about $8.50 and I like them long and we can leverage that by buying the March $9 calls for 0.65 and I usually hate to buy naked calls but these were $1.25 on the 2nd and today is the 5th so a lot can happen in the 42 days we have left to trade.

Have a great weekend, 

– Phil