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Five Things You Need to Know: Take This Job and Shove It, One Week, Silk Road, 6-0, What Would Abraham Lincoln Do?


What you need to know (and what it means)!


Minyanville's Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Take This Job and Shove It

Easy there, Johnny Paycheck, you might want to take a deep breath before you take a swing at The Man, and play that song backwards. This morning the Labor Department said nonfarm payrolls increased by 121,000 in June, much lower than the 175,000 expected. Immediately following the report bonds jumped higher. Equities futures temporarily spiked higher. The wife came back. The bank un-repossessed my pickup. My dog came back and my boss called and said, "Hey, we need you back at the plant."

  • Bottom line: here is what you need to know about this morning's employment number:
    - Average hourly earnings increased 8 cents, or 0.5%, exceeding expectations for a gain of 0.3%.
    - Hourly earnings rose 3.9 percent year-on-year... the biggest gain in five years.
    - The Birth/Death Model contributed 175,000 in adds, which means the real number was a negative 54,000.
    - Expect continued debate among the pocket-protector crowd going forward over the merits of the private ADP report, which earlier this week came in at more than 300,000 payroll adds.
    - Also note that this morning Canadian employers shed 4,600 workers in June, led by a decline in construction-related jobs (-19,000).
  • Minyanville Professor Scott Reamer quickly crunched the U.S. numbers for us and found that since the beginning of the year, 854,000 jobs have been "produced" and the Birth/Death Model has accounted for 522,000 of them or 61%.
  • Moreover, he noted, in the last three months the Birth/Death Model has accounted for more than 100% of the reported "job additions."
  • Writing on the Buzz & Banter, Minyanville Professor John Succo said, "This to us was a bad number indicating stagflation. The wage component indicates pressures at the same time that employment continues to be below expectations."
  • I'm just glad I got my truck back.

2. Exactly One Week

That is how much time before the Bank of Japan will most likely raise short-term interest rates for the first time in six years.

  • We probably sound like a broken record here - this is the second time in a week we've mentioned it - but the Bank of Japan meeting a week from now may prove to be a key turning point in the liquidity-driven equities boom.
  • Today Japan raised its annual growth forecast to 2.1 percent and said that for the first time in nine years a measure of prices may show deflation has ended, according to Bloomberg.
  • The Japanese Cabinet Office said it now expects Japan's GDP to grow 2.1 pct in real terms in the current fiscal year to March 2007, faster than the initially projected expansion of 1.9 pct, because of stronger-than-expected domestic private demand.
  • The Cabinet Office also forecast the GDP deflator - a broader gauge of deflation - to rise 0.1 pct, the first increase since 1998.
  • Earlier this week the Bank of Japan's quarterly Tankan business confidence survey showed companies this fiscal year plan to increase spending at the fastest pace in 16 years.
  • Next week, beginning July 13, the BoJ will hold a two-day meeting to discuss raising interest rates for the first time in six years, since August 2000.
  • Although the potential rate hike is not an absolute given, some officials say deflation continues to persist, the consensus according to a Bloomberg survey of economists is that the overnight call rate will be raised from near zero on July 14.
  • What is at stake? Quite a bit. It is difficult to judge exactly how much of Japan's quantitative easing has spilled into the financial assets outside of Japan as institutions and hedge funds took the BoJ's essentially free money to buy other financial assets, but as the synchronized (perhaps not coordinated, but synchronized) central bank tightening worldwide continues the effects of reduced liquidity could accelerate.

3. Silk Road

Yesterday China and India reopened an ancient Himalayan border pass, an offshoot of the original Silk Road that linked the two countries, in a symbolic gesture signaling closer trade and political ties.

  • The Nathu-la Pass was reopened for local trade 44 years after it was shut during a brief but fierce border war, according to the International Herald Tribune.
  • The Nathu-la pass is not navigable in winter as it receives heavy snowfall, but it once accounted for up to 80 percent of commerce between the two countries.
  • Trade between the two countries last year surged 37.5 percent to $18.7 billion, according to Chinese government figures.
  • In 2006 it is expected to surpass the $20 billion mark, a target both governments set for 2008, the IHT said.
  • Trade on each side of the border has been restricted to 29 items from India, the IHT said, including liquor, tobacco, cooking oil and rice, and 15 items on the China side, including wool, livestock and silk.
  • Personally, we are hoping for a boost in the trade of kitschy Pez dispensers; lightweight, easily transportable, and perfect for carrying by mule through the dangerous Nathu-la Pass.

Kitschy Pez Dispensers

4. Commander Boomer In Chief

Yesterday Commander Boomer In Chief President George W. Bush turned 60 years old. According to the International Herald Tribune, however, it seems the big 6-0 has been weighing heavily on the President's mind.

  • In June at a community college in Omaha, Nebraska, the President said: "I'm not supposed to talk about myself, but in a month I'm turning 60. For you youngsters, I want to tell you something. When I was your age, I thought 60 was really old. It's all in your mind. It's not that old, it really isn't."
  • A few weeks ago at the White House, the President said: "I'm doing all right. A little jet-lagged, as I'm sure you can imagine - nearly 60."
  • Meanwhile, a recent study of people turning 60 sponsored by AARP found that nearly 77 percent of them said they were satisfied with their lives overall.
  • Press Secretary Tony Snow said Bush's birthday gala was a low-key affair - a buffet dinner of fried chicken, Cajun shrimp, potato salad and roasted corn, plus an oversized three-tiered chocolate cake.
  • What about former Boomer In Chief Bill Clinton? He's getting up there too, right? Well, it turns out former President Clinton later this summer will turn 39.

39 and holding, baby.

5. What Would Abraham Lincoln Do?

We miss Chris Black's excellent site. Now lost in cyberspace after debuting in 2000 - perhaps a victim of the cyclical bull market - it was the first and, until now, the last Web site we know of to feature the hideous jabbering head of Abraham Lincoln. Until now.

Because we are living through such a difficult, divided time in America, not unlike the Civil War during which Abraham Lincoln was President, except for all the brother-to-brother killing and slavery and whatnot, Minyanville Senior Editor Jon Schwartz (email complaints here) thought it would be an ideal time for me to sit down with President Lincoln for an interview.

Minyanville Presents an Interview With Abraham Lincoln.

Mr. Presid...

Please, call me Rail Splitter, sonny.
I'm not going to call you Rail Splitter, Mr. President.
Why not?
It's too weird.

Mr. President, I'd like to get your perspective on the increasing division between Haves and Have Nots in our society, the apparent growing class divide and how it may compare to the problems you faced during your own administration.

Mr. President?

Ok, fine. Rail Splitter, I'd like...
There you go! That's the spirit!
Fine. I'd like to get your perspective on the increasing division between Haves and Have Nots in our society, the apparent growing class divide and how it may compare to the problems you faced during your own administration.
Good Lord, son. Because you people got a few folks that can't afford a plasma TV you think you got a damn Civil War on your hands!? I had whole states forming their own country for crying out loud! That's a Civil War.
Well, with all due respect Mr. Pre... Rail Splitter... I think the divide between Haves and Have Nots in our society is a little deeper than who can own a plasma TV.
Ha! Have you seen those things?! They're crystal clear! Crystal Clear! You watch a football game and it's like totally being there.
Well sure, they're nice, but that's completely beside the point.
Man, I would've given my right arm for a plasma TV back in my day. Imagine it, the ability to watch theater-quality entertainment in the privacy of your own home! But no, I'm stuck going to Ford's Theater watching Our American Cousin. What a drag.
Maybe this wasn't such a good idea.
I'll tell you what's a good idea... home DVD rentals. That's a good idea.
Right. I don't think I have anything else then.
Yessir, DVD rentals. Let's look at the pros and cons of the theater versus DVD rentals. Let's see, the theater has assassins. That's a pretty big con. You go to the theater and you can get shot. That's another pretty big con in my book. DVD rentals, on the other hand, come without assassins and they don't freakin' shoot you
. Hmmm, late fees? No problemo. Where do I sign?
I have to go now.
Don't be so squeamish.
Seriously, I have to go.
Call me?

No positions in stocks mentioned.

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