Fake jobs, government stats lift stocks in Friday trading

Jack Nicholson in 1992 film "A Few Good Men." Can YOU handle the truth? (YouTube still from Columbia Pictures clip)

WASHINGTON, December 4, 2015 – After Thursday’s ECB-caused mass slaughter in U.S. stock markets, all averages are bounding back up again today, though hardly erasing still-fresh memories of yesterday’s market carnage. The reason for the Friday 180: According to CNBC,

“November jobs report beat headline expectations with creation of 211,000 and showed an increase in wages and continued low unemployment, as expected. The number of jobs created in October and September were also revised higher.”

Well, now, isn’t that handy and dandy? The storyline leads logically to this next logical plot twist via the Wall Street Journal’s “inside the Fed” man, Jon Hilsenrath:

“Friday’s employment report clears the way for the Federal Reserve to raise short-term interest rates by a quarter-percentage point at its Dec. 15-16 policy meeting, ending seven years of near-zero interest rates.”

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The problem here, however, is quite simple. This whole charade is an elaborately scripted economic fairy tale for the rubes, i.e., us. As has been true throughout the disastrous 7-year tenure of the Obama Administration, your Federal government continues to adhere to Jack Nicholson’s famous premise in the 1992 film “A Few Good Men”: “You can’t handle the truth.”

But here’s the truth anyway, from a Bureau of Labor Statistics (BLS) report the public rarely sees:

“The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 319,000 to 6.1 million in November, following declines in September and October.”

As we’ve indicated in this column many times before, this more sober assessment is derived from the broader-based U-6 unemployment figures, a more accurate measure of unemployment that the government prefers not to disseminate quite so publicly as it does the phony numbers it feeds a willing financial press. Or, as BLS puts it, U-6 accounts for

“individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.”

The accepted narrative is quite simple: “The supremely brilliant economic policies of Barack Obama are working as they have been for lo, these seven wondrous years. America has now returned to a robust, full-time employment scenario, so get ready to vote Democrat in 2016. Meanwhile, the Federal Reserve will start raising interest rates by eensy-weensy bits until after next November election, when the incoming President will get whacked with much higher interest rates, especially if he, she or it is a (shudder) Republican.” Or something like that.

Wall Street’s bullish headline traders leaped on this bogus news Friday and commenced bidding stocks up in an attempt to overcome Thursday’s across-the-boards drubbing. As of 11 a.m. EST, the three most widely followed averages are up in excess of 1 percent, with the Dow Jones Industrials jumping 231 points, a gain of 1.33 percent.

Today’s trading tips

Since it’s Friday, we’re not much interested in adding to our modest number of positions today, as Mondays in 2015 have so often turned out to be a bummed. If you’re still bullish, that’s often the best day to find marked-down merchandise.

With roughly 90 percent of individuals and indicators we trust buying in to a Fed interest rate increase announcement in the middle of December, a few long-downtrodden banks are looking tastier. Its these long-frozen midsized to large banks that will benefit most as interest rates increase though the higher profitability they crave will take what Ben Bernanke used to refer to as “a considerable period of time.”

We currently own shares of New York Community Bank (symbol: NYCB) and recently re-acquired some of KeyCorp’s (KEY) dirt-cheap shares which were battered last month when that Cleveland-based major cut a deal to acquire the moribund but decent upstate New York bank, First Niagara (FNFG).

Our own relatively local bank, the well-run, growth-by-acquisition hungry BB&T (BBT), based in Winston-Salem, North Carolina, is also a good bet, but we’d like to acquire these shares on some nasty down-day, perhaps in January 2016, when big-time selling may resume. Meanwhile, it’s “watchful waiting” for us.

Travel at your own risk. And have a good weekend.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17