Mike’s Financial Pocket – May Jobs Report

The May 2013 jobs report is out, and frankly, it ain’t pretty. The economy added 175,000 jobs in May 2013. The unemployment rate 7.6%, while the U6 unemployment (which tracks people who aren’t working full time who want to be) 13.8%. The labor force participation rate 63.4%, up a bit. Construction and manufacturing jobs exhibited no growth in May. April numbers were revised downward by 16,000 jobs, meaning the economy created less jobs in April than originally thought.

This is a disappointing report, no matter how it’s spun. The economy needs to be creating around 180,000 jobs to keep up with population growth, though depending on the source, the number may be lower. For example, the Federal Reserve Bank of Atlanta suggests that approximately 102,000 will keep the unemployment rate steady at 7.5% over the next twelve months.

Regardless, without some serious job growth, we’re not going to recover from the job losses America has sustained for a very long time. Even with 175,000 jobs created in May 2013, the current rate of growth is not enough to replace the near 8 million jobs lost during The Great Recession.

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Hey, what are those MF Global customers bitching about? They are getting most of their money back, right?

Trustee Louis Freeh is stepping down because his duties as Trustee for MF Global have concluded. It is projected that customers will receive $0.94 – 0.96 for every dollar they had with the failed hedge fund formerly run by Jon Corzine.

Corzine is being sued in a civil action. Basically, former Governor and Senator Jon Corzine (D – NJ) converted client funds to use as MF Global’s funds to double down on a bet on European Sovereign debt which had gone bad. Converted is a nice, legal term for “stole.”

I find it absolutely absurd that Corzine is a free man. He stole client’s money to invest as if it was MF Global’s money. This is an absolute breach of ethics and fiduciary duty, which requires Corzine to handle clients’ finds in a diligent and trustworthy matter. Using it to double down on a failed investment in European bonds is a crime, plain and simple. The Obama Administration has yet to pursue any sort of criminal action against Corzine. This is not surprising, since Corzine was a big fundraiser for Obama prior to his MF Global debacle.

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As I write this post, the Japanese Yen has jumped in value, declining to 97.75 Yen to 1 U.S. Dollar (USD). In the last week, the Yen has strengthened from over 101 per USD down to 97.75, which is a drop of over 3%. This is a huge move in a currency in one week. Because (generally speaking) currencies move in opposite directions of the stock market, a strong yen usually leads to a weaker stock market. As you may recall, last week I discussed “Abenomics” and the potential limitation of currency weakening through Quantitative Easing, or money printing.

The result of the latest move in the Yen? The Nikkei, Japan’s stock market equivalent of the Dow Jones Industrial Average, has dropped over 900 points.

Is this a “sell in June” summer swoon, or a rejection of Abenomics? It remains to be seen.

As always, free markets are better markets.