Market Talk

- Investors would be better off ignoring today’s jobs report, FusionIQ CEO Barry Ritholtz advises, as the overall labor market trend matters much more than one month of data. A monthly number is subject to multiple revisions. And in a labor market that consists of 135M people, monthly changes are practically rounding errors, he says.

- Still, jobs data sparks best one-day gain for stocks since Feb 16. But the positive reaction to the nonfarm payrolls report and rallying stock market shouldn’t come as a surprise. “Bulls have a free pass as a bad report would be attributed to weather and a better one would show improvement in the labor market,” Peter Boockvar notes.

- “Shrinking government jobs and benefits at the state and local level is a much needed adjustment,” Mike Shedlock says. “Those cutbacks will weigh on employment and consumer spending for quite some time. Expect to see structurally high unemployment for years to come.”

- The “better than expected but still miserable” jobs report further complicates President Obama’s final push for health-care reform, former labor secretary Robert Reich writes.

- Labor market’s still suffering due to lack of job creation, but the scary thing is “it’s not obvious that this risk is factored into the crowd’s sentiment,” James Picerno says.

- Apple says iPad will go on sale April 3, a week later than expected. Were there production issues? Possibly, but the Street doesn’t care. Shares hit fresh all-time high, close up 3.9% at $218.95.

- Estimating YouTube’s financial performance is anyone’s guess. But Citi analyst Mark Mahaney predicts the web video giant will generate more than $1.1 billion in revenue by 2011.

- “The Obama team – both political and economic wings – seems to feel that their base has nowhere else to go, and all they need to do is drift towards the right in a moderately confused fashion to assure re-election for the president,” Simon Johnson says.

- “What determines confidence? The actual level of debt has some influence — but it’s not as if there’s a red line, where you cross 90 or 100 percent of GDP and kablooie,” Paul Krugman writes. “Instead, it has a lot to do with the perceived responsibility of the political elite.”

- A 10-way Oscar race has boiled down to a David-and-Goliath battle between ‘Avatar’ and ‘The Hurt Locker.’

Still a strong odor coming off that jobs report, friend.

So the February jobs report is the one that has some economists convinced that “strong” job growth is just around the corner.

Well, we think it still looks pretty ugly, so in a fit a nostalgia, we pulled up the February report from 10 years ago, just to remind ourselves what a strong employment situation really looks like.

If you remember, things were pretty hot back in those days, with the US economy coming off a 4Q with GDP growth of 7.4%. In fact, the stock market back then would actually get jittery after strong jobs numbers because they fueled inflation fears. Quaint notion now.

Anyhow, the contrast between February 2000 and last month is stark in many ways. Here’s a few:

Back then, the unemployment rate was 4.1% (it would fall to 3.9% two months later), with 5.8 million persons unemployed. Last month, the rate was 9.7% and 14.9 million unemployed.

Comparisons between the duration of unemployment are sobering, and speak to why we’re more skeptical about imminent job growth. In Feb. 2000, 45% of the unemployed were out of work for less than five weeks, and only 10.5% were unemployed for 27 weeks or more. Last month, just about 41% of the unemployed were jobless for more than 27 weeks, while 18% were out of work for less than five weeks.

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US stocks end the week with a bang, rising sharply after this morning’s snow report, we mean, jobs report, comes in less bad than the market feared (not gonna get us to write “better,”) and consumer credit rises for the first time in a year.

DJIA jumps 122 (1.2%) to 10566, up about 2.4% on the week and putting those January highs (10725) back onto the radar. S&P 500 rises 16 (1.4%) to 1139, Nasdaq Comp gains 34 (1.5%) to 2326.

Economy lost only 36,000 jobs in February, well below Street forecasts, which juices trading. And, you know, we don’t need to get into it again, do we? It’s all over this blog today. Financials, energy lead, the latter spurred on as crude briefly crosses back over $82/barrel (it closed at $81.50.) That’s something to keep an eye on, because rising crude prices are no good for a “recovering” consumer.

As for Greece, well, listen, the best thing you can say for Greece is they got through this week. They managed to get a bond offer off (paying a pretty premium, but still,) and the people didn’t tear themselves apart, although more strikes are planned for next week. But the Aegeans still haven’t gotten more than a reassuring pat on the back from their richer Europeans neighbors, and it’s pretty clear that they were expecting more in exchange for the series of harsh “austerity” measures they’re forcing on the people.

There are only two topics to get into today: the jobs report, and all the hullabaloo about that snowstorm effect, as well as Greece’s week. This is Tomorrow’s News Today, and we’re chewing on this: this recession has driven employment back to the levels it was at 10 years ago. You hope it doesn’t take 10 years to get back to where we were two years ago.

Citi (C) CEO Vikram Pandit told Congressional Oversight Panel yesterday that short sellers were to blame for the bank’s near collapse, an excuse that reeks of obfuscation.

Pandit engaged in a lively discussion with Elizabeth Warren, the panel’s chairwoman. Dealbook has the details:

“The secretary of the Treasury said you were financially healthy and within weeks you needed another $20 billion,” Ms. Warren said. “I just want to understand why Citi is special.”

Mr. Pandit responded with an attack on short-sellers. “This was not a fundamental situation, this was not about the capital we had and this was not about the funding we had at the time,” he said. “A lot of that was driven by short-sellers.”

“Short-sellers started selling stock, the stock started going down, and when it gets to that point, perceptions become a reality,” Mr. Pandit continued.

The lame excuse prompts FT’s Alphaville blog to pen a letter to Pandit and wonder how Citi’s chief could actually blame short sellers. In Citi’s 4Q08 results, when it recorded $18B in write-downs, Pandit blamed subprime losses and increasing credit costs in its US consumer loan portfolio.

“Why weren’t you calling out the shorts then?” blog ponders.

It would’ve been more accurate for Pandit to blame his “executives and risk managers [that] stood idly by as your bankers and traders piled into subprime, recklessly handed out credit cards and fell hard for CDOs?” Alphaville says.

“You know the shorts had nothing to do with it, Mr Pandit. Do fess up.”

For the rest of the letter, check Alphaville’s post.

You know what we say in the media. Once is an incidence, twice is a coincidence, three times is a trend.

Right now, we’re one loose cannon away from a trend.

First it was Joe Stack, who last month flew a single-engine plane into an IRS building in Austin, Texas, killing himself as well as one IRS staffer. Yesterday, it was John Bedell, who opened fire outside a Pentagon guard post, injuring two, and dying himself in the ensuing firefight.

Now, sadly there are plenty of violent incidents in this nation every day that don’t attract the attention that these two have. But what makes these two stand out is their purported targets: both men attacked government installations.

There are other similarities between the two incidents, also. Both were single actors, and both had long histories of what in retrospect was pathological hatred of the government.

Also, both built up their grudges over the course of years, so it doesn’t appear that their actions were motivated directly by anything going on in the economy right now. But it doesn’t take a tremendous amount of speculation to speculate that some of the things going on in the economy right now may have pushed these guys over the edge.

It’s hard to say if there’s any larger pattern here. The two weren’t attached to any groups or anything like that (at least none of which we’re aware.) Both did leave behind materials they wrote outlining their hatreds and grievances, which both centered on different elements within the government.

I don’t know that you can say these two attacks rise to the level of “terrorism,” because while the intent was clear, they weren’t driven by a network of actors. And while they certainly don’t rise to the level of the Ft. Hood shooting, or Oklahoma City bombing, the attacks are still very disturbing, and you can bet the FBI is looking high and low for any clues that it’ll tell them if this is a trend, and if there’s another killer out there. Let’s hope there isn’t.

NYT’s Floyd Norris tries to make the point this morning that the February nonfarm payroll report provided some “surprisingly strong jobs figures.”

Before we blast that idea out of the water, let’s consider his argument for a second:

1. The decline in overall employment, of 36,000, was almost certainly caused by the weather. As I have noted before, there were two sets of blizzards in the East to affect employment in the week the survey covered. The “real” number almost certainly was positive, and we are set up for a good gain next month.

2. Similarly, the fact the unemployment rate stayed steady at 9.7 percent indicates it is likely to fall next month, absent the weather effects.

As Paul just detailed, it’s difficult to determine what kind of impact last month’s snow storms had on this report. The BLS even said it’s impossible to quantify the sever winter weather’s effect on the data.

Market observers, including Norris, point to the 1996 blizzard that rocked the east coast and had a major impact on the January 1996 jobs report. Initial reading showed 200,000 jobs were lost that month, with the snow getting much of the blame. The economy then added 700,000 jobs in February 1996, proving the one-month drop was merely a minor blip.

Some folks see the same pattern playing out now and expect the economy to show substantial job growth in March. But let’s keep in mind that the current economy is in a much different place now than it was in early 1996. Comparing January 1996 to February 2010 is an apples to oranges comparison, to say the least.

We’d like to remind Mr. Norris that the economy in 1996 was already several years past the early-1990s recession. The Internet was just starting to take off and the economy was on the cusp of a historic growth spurt (followed by a historic bust.)

Anyone that thinks we’re in the same position today needs a healthy dose of reality. And as Paul just quipped in the newsroom a few minutes ago: “Unless there’s a new World Wide Web on the horizon, you can’t compare the two economies.”

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Well, I couldn't get to my job as a barista for two weeks, you know, because it snowed - for a day.

Okay, now, then, didn’t expect to go off on an extended rant about the snow-thing, but what’s done is done. Let’s move on.

What did today’s jobs report teach us? It taught us that we’re still in the same muck we were in in January, and while it’s not as deep, or as toxic, as the 2009 muck, it’s still not a very pleasant place to be.

The bottom line is this: the report was what it was, don’t buy into all the snow-hype. It wasn’t a very good report, and it didn’t show any progress on the jobs front. The trend remains that the economy is not adding jobs in any numbers that will affect the overall unemployment picture.

It’s interesting to see just how little changed from January to February. The BLS noted that the number of long-term unemployed, those out of work for 27 weeks or longer, was little changed (and presumably not affected by snow storms, but, yes, Floyd Norris, it did tick down.) The civilian labor-force participation rate and the employment-population ratio were both little changed.

The unemployment rate remained stuck at 9.7%. January saw 26,000 jobs lost; February saw 36,000 jobs lost. Interestingly, the number of people working part-time because of circumstances (involuntary part-time) rose by half a million, to 8.8M from 8.3M.

Also, the U-6 measure of unemployment, the broadest measure that includes those forced part-timers and other “marginally” attached workers, crept up to 16.8% from 16.5%. (The official 9.7% rate is the U-3.)

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All right, one more point and I’ll let this go. This is from the BLS jobs release. We report, you decide:

In the establishment survey, the reference period was the pay period including February 12th. In order for severe weather conditions to reduce the estimate of payroll employment, employees have to be off work for an entire pay period and not be paid for the time missed. About half of all workers in the payroll survey have a 2-week, semi-monthly, or monthly pay period. Workers who received pay for any part of the reference pay period, even one hour, are counted in the February payroll employment figures. While some persons may have been off payrolls during the survey reference period, some industries, such as those dealing with cleanup and repair activities, may have added workers.

Yeah, it's snowing, Jack. But I'm still at work.

The Street’s all excited because the February jobs report beat “expectations,” but don’t be fooled. The Street, prodded on by shamans from Wall Street to the White House, believed that the snow storms last month — and they were severe storms — had a measurable effect on employment, and consequently lowered their estimates.

So the BLS reports this morning that the nation shed 36,000 jobs in February, better than “Street view” of a loss of 75,000, and people get all fired up. But there’s a good chance that difference is due to nothing more than faulty logic, and the 36,000 is what it is. That means that we are where we are, and where we been: the economic isn’t puking up workers any more, but it’s not adding them either.

It’s true, as Barry Ritholtz points out, that 36,000 in a work force of about 135M is little more than a rounding error. What matters is the long-term trend. This report didn’t do anything to change that (my words, not his); we’re still treading water.

Now, as for that snow effect thing. The BLS said “Severe winter weather in parts of the country may have affected payroll employment and hours; however, it is not possible to quantify precisely the net impact of the winter storms on these measures.”

Capital Economics says the snow effect was minor. “The very modest drop in average hours worked to 33.8 last month, from 33.9, and the absence of any spike in construction layoffs suggest it was pretty modest.”

What’s got everybody on this bandwagon is that the “survey week,” the week in which the bureau does its survey (extrapolating the data for the month,) is whichever week the 12th falls in. That week this month included a big storm. But, as we noted yesterday, you have to be out of work for at least the full week to be counted as unemployed, not just a day or two. Otherwise you got into another category, but are not counted as unemployed.

BLS noted up front that jobs were lost in construction and information. You wanna blame construction on the weather? Well, okay, although there are also plenty of signs that the housing market is still slumping, and commercial real estate is dead in the water. But what about information? That’s an indoor job, and far less likely to be affected by snow storms.