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Non-Farm Friday – Is America Working?

700,000 jobs.  

That's how many they expect to have created last month.   That would be up a bit from 559,000 in May (if it isn't revised – these numbers are wildly inaccurate) and that would leave our Unemployment Rate at 5.6% – still kind of high, actually.  According to the Congressional Budget Office, we are on track to recover all of the jobs lost during the pandemic in about 12 months – but what about the jobs that should have been created during those two years?  Usually we create 3M jobs per year to keep up with population growth – we are still woefully behind the curve.  

The forecasters expect economic growth to continue at a strong pace in 2022, hitting 5% in real terms. But they see it declining quickly in the years to follow, as the labor force grows more slowly than is typical. Budget office officials said that reflected, in part, the effects of more restrictive immigration policies adopted under Trump. By 2023, the office predicts, growth will slow to 1.1%.

Ingram Pinn illustration of Ruchir Sharma opinion story ‘Dear Joe Biden, deficits still matter’After already running a $3Tn deficit in FY 2021 (15% of our GDP), Biden is currently pushing Congress to approve as much as $4Tn in spending and tax cuts meant to create jobs and aid growth by improving the productivity of workers and the broader economy, like repairing bridges and subsidizing child care costs to help more parents, particularly women, work additional hours.  Biden’s rescue plan included direct payments of $1,400 each to low- and middle-income Americans, $350 Billion to help states and municipalities patch what were expected to be budget shortfalls and hundreds of Billions of dollars to accelerate vaccines and more widespread coronavirus testing. It also extended supplemental federal payments of $300 a week to unemployed workers through September, a benefit that Republican governors across the country have ended early as business owners complain of difficulties finding workers. 

That's where our 5% "growth" is coming from – not because the economy is actually doing great.

For instance, 370,000 restaurants applied for $75Bn in funding from the Restaurant Revitalization Fund, nearly three times what the program had available. Around 105,000 businesses were approved for grants, which averaged just over $272,000.  The Small Business Administration, which runs the Restaurant Revitalization Fund, told unsuccessful applicants in an email that it was unable to fund all qualified applications because of “overwhelming demand.”  Not because the money wasn't needed – just because there wasn't enough of it.

Too little or too slow aid is why 18.7% of all office space in Manhattan is unleased (as well as people still working from home – so this might not go away).  In downtown Manhattan, 21% of the offices have no tenants.  In the East Village, 30.4% of the the available commercial space is emply – and you can really feel it walking around there – with 1 out of 3 business closed.  Asking prices have come down almost 10% since last year but, at $74.06 average per square foot – it's still shockingly high to most of the world.  

June Payrolls Big Beat: 850K Jobs Added Smashing Expectations As  Unemployment Rate Rises | ZeroHedge8:30 Update: 850,000 jobs were added in June but the unemployment rate ticked up to 5.9% as some people who were "not in the workforce" decided to look for work too.  9.5M people are still out of work, about 5M more than when the crisis began last March.  At 146M people working, we're still way down from 154M people pre-pandemic and, again, that's without expecting any growth.  Labor Force Participation Rate is 61.6% and that's why unemployment doesn't look so bad – a lot of people aren't bothering (hence the labor shortage).

4.6M people are Employed Part-Time for Economic Reasons (not by choice) – they don't count as unemployed but they are not in jobs that pay them enough money.  Overall, the Employment/Population Ratio stands at 58%, 3% lower than last March out of 330M people is – 9M people – that's what they call a check-sum.

In June, 6.2M people reported that they had been unable to work because their employer closed or lost business due to the pandemic- that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic. This measure is down from 7.9M in May. Among those who reported in June that they were unable to work because of pandemic-related closures or lost business, 10.0% received at least some pay from their employer for the hours not worked, little changed from the previous month. Among those not in the labor force in June, 1.6M people were prevented from looking for work due to the pandemic.

9M less people working and earning the US median salary of $50,000 ($100,000 is AVERAGE but above-average workers aren't the ones who can't find jobs) is $450Bn worth of lost wages so there's where that stimulus goes.  Given a money multipler of 3, those lost wages ding out GDP for $1.5Tn(ish) – that's pretty catastrophic if not for the $3Tn in stimulus (so far) this year, right?  

Still, we don't worry about deficits – that's our children's problem!  Make sure you tell them that this weekend at the family barbeque…

Have a happy holiday weekend,

- Phil


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  1. Good morning! 

    Headline on NFP is a beat but, on the whole, not too exciting.


    Such a thinly traded market today – can't draw any conclusions but I'll be surprised if we go up – should be a bit of selling to flatten things out.

  2. Good Morning.

  3. Family BBQ – You'll soon be talking to yourself, so No politics, No religion, and definitely, No scary deficit talk…. ;)

  4. It is not only NYC that has one out 3 businesses closing. We went out for spouse's birthday dinner in Bayfield and on every block of the town 3-6 business'es were closed. Our favorite ice cream shop and all of our favorite restaurants were not open at all or closed. We were absolutely amazed but the local book seller was open and she said the restaurants cannot find anyone to work (the ones not shuttered). With the town packed with tourists we were utterly amazed. Even the pizza shop was closed! We tried to find strawberry's which are now in, but no flats were available at the berry farms. We settled for the two quarts we found. Finally came back closer to home and found 4 restaurants in the Northern most town, Cornucopeia open! It makes you really wonder if things will bounce back, ever ! And we are very rural in Bayfield county.

  5. OH and my sister-in-law, the nurse with the Dr. husband is still in the hospital and still on oxygen. Been there since June 21st. and still fighting for her life at 75 years old. No shots of course for prevention as that is "just another hoax."

  6. Midtown NYC is very busy. Downtown, on the other hand… I was near the WTC yesterday. Trains empty, stores empty (but open), and the couple of Federal offices I had to visit were all empty except for staff. Noone on the streets, a ghost town. And then a 2 block line outside the Chick-fil-a on Fulton Street….

  7. RUT selling off 1% but the rest are still green.  So fickle.



    Talking to myself/1020 – Way ahead of you there!  

    Ah, life was so simple in the 80s!  

    Closings/Pirate – You can't read statistics like 4M homes 90-days+ behind on rents and not expect it to affect business as well.  We'd be in a depression if not for $10Tn of stimulus dumped on the economy to pretend there isn't one but mostly we just delay the inevitable, as I noted during this week's webinar before we realized the sound wasn't working (recording also no sound).  I'll give it another shot next week but what's happening is some businesses are staying open in hopes of stimulus and getting more and more in debt (needing more stimulus).  At a certain point they give up so, unless the unstimulated economy comes back for real – it's going to be very ugly when the stimulus music stops.  

    Pin on funny things

    NYC/Rn – Very strange distribution in Manhattan.  In a normal recession rents drop until people find them compelling and move in and the neighborhood's profile may change but it allows for great prosperity down the road as low-rent businesses hit better economic times and benefit from the spread.  The stimulus screws that up by allowing landlords to hold buildings empty waiting for richer tenants, which then puts pressure on the surviving stores as 1/3 empty is kind of depressing for shoppers (we've all seen malls like that).  Another factor that keeps rents high are chain stores that don't care about ridiculous Manhattan rents – even if that particular location is losing money – that drives up prices for everyone else and makes rents unaffordable to start-ups.

    Vacancy Crisis: Empty Storefronts Blanket Upper East Side | Upper East  Side, NY Patch


    Jamie Forshaw was recently able to do something he hasn’t been able to do for more than a year.

    The executive producer of Madison Wells’ live enter­tainment division attended a dress rehearsal for “Seven Deadly Sins,” one of the company’s first post-pandemic theatrical forays.

    “It was electric,” Forshaw says.

    In the case of “Seven Deadly Sins,” this wasn’t your typical run-through. The show doesn’t unfold in a single theater. Instead, it plays out as a series of roughly 10-minute mini-plays, performed across a number of empty storefronts in New York’s Meatpacking District. Each work touches on a different sin, putting a Manhattan twist on gluttony, envy, lust and the like. It’s another sign that the city’s cultural pulse is resuming after a season in COVID-induced purgatory.

    Gotta love NY!  If the Apocalypse comes and Satan rises – someone will shove a mike in his face and book him a club date…

  8. AVGO – this I kinda big

    AVGO : Broadcom dips as FTC charges it with illegal monopoly • 12:08 PM

    Broadcom (AVGO -0.4%) has dipped into negative territory after the Federal Trade Commission charged the company with illegally monopolizing markets for chip components.

    Developing story …

  9. Phil / AVGO – thoughts on thsi?

    AVGO : Broadcom dips as FTC charges it with illegal monopoly • 12:08 PM

    Broadcom (AVGO -0.4%) has dipped into negative territory after the Federal Trade Commission charged the company with illegally monopolizing markets for chip components.

    Developing story …

  10. AVGO/Batman – Interesting who they end up going after.  

    Hopefully they get nice and cheap so we can buy them again.

  11. PHIL:  IBM down as much as $7 today on President's departure.  I closed my position around $152.  Any thoughts on establishing a new trade, or would you wait to see how the market shakes out over the summer?  Thanks.

  12. Florida’s ban on vaccination proof requirements complicates U.S. cruise line comeback

  13. IBM/John – Our target for IBM in the LTP was $125, this fall only takes them to $140.   It wasn't the CEO, just the President changing but it doesn't take much to spook people in an over-priced market and, of course, where are you going to find buyers on a slow day?

    Whitehurst’s departure is one of several management moves IBM announced on Friday. Whitehurst “decided to step down,” IBM said, and he will continue working as a senior adviser. IBM didn’t announce a replacement. IBM shares tumbled 4.8% to $139.83 on the news.

    He was the Red Hat CEO and they threw him a bone for the transition – now they are moving on.  The worry is that Red Hat is IBMs best-growing segment, so why let Whitehurst go?  

    Krishna has made a series of changes as he restructures the company. He announced sweeping job cuts in Europe late last year as he prepared to spin off of IBM’s business that manages corporate computer systems so it could focus on the boom in demand for cloud services. Krishna said he expects IBM to return to growth this year.

    Year End 31st Dec 2015 2016 2017 2018 2019 2020 TTM 2021E 2022E CAGR / Avg
    Total Revenue

    81,741 79,919 79,139 79,591 77,147 73,620 73,780 74,269 75,199 -2.07%
    Operating Profit

    15,944 12,330 11,400 11,342 10,166 4,638 5,593     -21.9%
    Net Profit

    13,190 11,872 5,753 8,728 9,431 5,590 5,370 9,784 10,693 -15.8%
    EPS Reported

    13.6 12.4 12.0 11.7 10.7 6.26 5.86     -14.4%
    EPS Normalised

    15.1 14.8 13.6 13.5 13.7 12.1 11.0 10.9 12.1 -4.32%
    EPS Growth

    -10.6 -1.69 -8.41 -0.518 +1.61 -11.9 -22.5 -9.64 +10.5  
    PE Ratio

              12.2 13.4 13.5 12.2  

                  1.28 1.55  

    Can be yours for $130Bn!

    • IBM – I love our Trades of the Year!  This one is miles in the money but we should have covered at $150 as that was silly.  Let's sell 10 2023 $140 calls for $16.50 ($16,500) and buy back the short puts ($8,200), not because I'm worried about them but because I think we can resell higher puts for more money on a pullback.  That leaves us with 10 at $25,000 and 10 at $40,000 for a potential $65,000 and net $50,950 on the positions with $14,050 left to gain.  

    See, playing PROPERLY with a 50% cover made us an extra $16,500 rather than being greedy.

  14. Have a very happy holiday everyone!  

    - Phil

    • The first half of the trading year has concluded, and investors can briefly look at what has happened and what is to be expected in the second half of the year. As it pertains to this week, investors saw that the S&P 500 closed in positive territory as it made a new record close.
    • In this week’s Refinitiv Lipper U.S. fund flow insight report for the week of June 30, 2021, it illustrated to the trading community that market participants of both conventional funds and exchange traded funds pulled -$3.3B in net outflows from the financial markets.
    • SPDR S&P 500 Trust ETF (NYSEARCA:SPY) finished the week in the green +1.53% and is +15.13% YTD. See below a breakdown of the eleven sectors of the S&P 500 and their weekly performance. Additionally, see how the accompanying SPDR Select Sector ETF performed from the open on June 28th to the close of July 2nd.
    • #1: Information Technology, +3.22% and the Technology Select Sector SPDR ETF (NYSEARCA:XLK) +2.65%.
    • #2: Consumer Discretionary, +2.05% and the Consumer Discretionary Select Sector SPDR ETF (NYSEARCA:XLY) +1.78%.
    • #3: Health Care, +1.99% and the Health Care Select Sector SPDR ETF (NYSEARCA:XLV) +1.92%.
    • #4: Communication Services, +1.87% and the Communication Services Select Sector SPDR Fund (NYSEARCA:XLC) +1.61%.
    • #5: Industrials, +0.84% and the Industrial Select Sector SPDR ETF (NYSEARCA:XLI) +1.07%.
    • #6: Materials, +0.79% and the Materials Select Sector SPDR ETF (NYSEARCA:XLB) +0.59%.
    • #7: Consumer Staples, +0.33% and the Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) +0.29%.
    • #8: Utilities, -0.05% and the Utilities Select Sector SPDR ETF (NYSEARCA:XLU) -0.37%.
    • #9: Real Estate, -0.06% and the Real Estate Select Sector SPDR ETF (NYSEARCA:XLRE) -0.13%.
    • #10: Financials, -0.15% and the Financial Select Sector SPDR ETF (NYSEARCA:XLF) +0.24%.
    • #11: Energy, -1.11% and the Energy Select Sector SPDR ETF (NYSEARCA:XLE) -0.74%.
    • Below is a chart of the eleven sectors' year-to-date performance and how they have fared against the S&P 500. See how they matched last week's performance.

  15. Lax Enforcement Let South Florida Towers Skirt Inspections for Years

  16. Gold Regains Shine After Central Bank Buying Drops to Decade Low