Summary: * Friday, November 6, 2015 * Earlier today the government released the Non-Farm Payroll Report for the month of October * I was told that this was the most import Non-Farm Payroll report ever * They were looking for 190,000 jobs and we created 271,000 jobs * Everybody now has jumped to the conclusion that a December rate hike is a lock * There is nothing in this jobs report that indicates that * The reason everybody believes that the Fed is like to raise rates is because Janet Yellen testified before Congress earlier in the week * This is what the Fed Chair said about interest rates: * If we get further improvements in the labor market and we make progress at achieving the Fed's inflation goal of 2% in the medium term * How much improvement and what kind? We don't know, because thus far, no improvements have been enough to prompt a rate hike * Yellen said that if we got those improvements, then a rate hike in December would be a "live possibility" * This does not mean it will actually happen - it means it is possible * She did not even use the word probable * I don't think the Fed is going to raise rates in December * We have one more "most important" jobs report between now and December and this month's numbers may be revised down, as others have * From my perspective, if the Fed does not know that they will raise rates by now, they will not decide on the spur of the moment after a jobs report * Even with positive economic news, the Fed still does not have to raise rates; they can come up with another excuse, real or unreal * What happens if the stock market declines after a rate hike? what would the Fed do then? * "Extend and Pretend" is working like a charm for the Fed now * Getting back to today's job's report: * This is the strongest month of the year following the two weakest months of the year * Both of those months arrived with expectations of upward revisions, and they did not happen * The three month average is 187,000 jobs * The last three months have been slower than any prior three month period this year * Last year, the 3-month average was about 250,000+ jobs * So the job market is much slower this year than it was last year when the Fed was looking for "more improvements" before raising rates * The unemployment rate did decline, but so far no positive data on unemployment rates have prompted the Fed to raise rates * The Labor Force Participation Rate stayed at 62.4% which matches the low of this so-called recovery * So we are not seeing more people entering the labor force * This is not a sudden accelleration in the pace of job growth * Let's look at the quality of the jobs: * Most of the jobs, about 200,000 of the 271,000 jobs added are low-paying service sector jobs * In second place, at 45,000, is temporary help * Third place, at 44,000, is retail trade * The fourth largest category is leisure and hospitality * Manufacturing, mining, logging, transportation sectors lost jobs * Where it really gets bad is in the demographics: * All job gains went to people 55 and older * People under the age of 55 lost 35,000 jobs * If you look at the gender, men from 25 - 54 lost 119,000 jobs * What would explain this? * Older people can no longer afford to be retired, and are supplementing their retirement incomes * Some of the older people are taking better jobs because they are more experienced * Why are more women getting jobs? * Women who were previously homemakers also need to supplement their incomes * When you look at the demographic numbers, it is further proof that the Fed's explanation of the labor force participation rate is wrong * The Fed claims the participation rate is due to retiring Baby Boomers * The people who should be buying houses are the younger ones who are not getting jobs * Freddie Mack reported its first quarterly loss in 4 years * This is with rates still at zero
