Dallas, TX
July 2, 2010, 08:00 EST		 Dr. Joe Duarte's Market I.Q.


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Employment Report Histrionics Dead Ahead
What's Hot Today:

U.S. stock index futures were slightly higher. But the employment report will change everything.

Today's Economic Calendar



News For Thought

Minimum wage for California state employees..for now. According to AP: "Gov. Arnold Schwarzenegger on Thursday ordered about 200,000 state workers to be paid the federal minimum wage this month because the state Legislature has not passed a budget. Department of Personnel Administration Director Debbie Endsley sent the order in a letter to the state controller, who refused a similar order two years ago and may try to do the same thing this time. Most state employees will be paid the federal minimum of $7.25 per hour for the July pay period. Schwarzenegger spokesman Aaron McLear said the change should be reflected in state employees' next paycheck. Workers will be paid in full retroactively once a budget is passed."

An honest Russian, who is not spying on anyone? According to The Washington Post: "Three months ago, a famously impoverished Russian mathematician named Grigori Perelman was awarded the prestigious $1 million Clay Mathematics Institute Millennium Prize for his groundbreaking work -- having solved a problem of three-dimensional geometry that had resisted scores of brilliant mathematicians since 1904. Thursday, the institute announced that Perelman, known equally for his brilliance and his eccentricities, formally and finally turned down the award and the money. He didn't deserve it, he told a Russian news service, because he was following a mathematical path set by another. "

Employment Report Histrionics Dead Ahead
What If There Are Lots Of Jobs And No One Wants Them?
Wall Street is all worked up for a bad employment report. Estimates are as low as 200,000 and as high as zero, with the average non-farm payroll number being around 125,000.

Of course, there are all the subtle permutations of what traders will do when the data is released to consider, such as what if it's zero. Will that be positive enough to rally stocks? But, isn't zero kind of a bad number? Well, not as bad as it could be right?

Yeah, it's this kind of logic that makes trading difficult, if not impossible ahead of what is becoming a monthly obsession, the jobs report.

What's a little better is to look at some of the evidence ahead of the report, and form a reasonable opinion, knowing full well that it's not likely to do you much good once the number hits and the program traders start to jerk the stock index futures around in electronic trading.

Still, if you look at some of the preceding reports from the private sector, the data isn't very encouraging. The ADP data showed only 13,000 new private industry jobs being created. And jobless claims rose this week, suggesting that joblessness is on the rise.

And even the ISM's employment index fell this month, to 57.8 from 59.8, showing expansion but at a slower rate.

One of our favorite indexes, the Monster Employment Index was more bullish, rising to 141 from 134, a 21% year over year climb. Yet, this index measures online job demand, not actual jobs created. So in that sense it shows that there is demand for work, but helps us little with predicting whether the employment report will be bullish or bearish for stocks.

And that's exactly what Monster's press release said: '“Several industries and occupations are now displaying several months of positive growth trends in the Monster Employment Index and this would indicate some fundamental strengthening in these areas,” said Jesse Harriott, senior vice president and chief knowledge officer at Monster Worldwide. “While substantial job creation has yet to occur to reduce the existing levels of unemployment and underemployment, job availability is improved from where it was a year ago.”'

So the real question is why, if there is job demand from "several industries" the numbers aren't necessarily improving, barring a big blow out on Friday that proves the bears totally wrong.

Conclusion

Demand for workers is increasing. But so far, at least as of Thursday, July 1, there is no proof that huge job growth is occurring.

Is it because people don't want to work? Or because the jobs that are available aren't appealing? Are companies not offering enough incentives, namely salaries and benefits? Or are people just happy now being on the government dole?

Who knows? And it could be a moot point if the jobs report surprises everyone with a grand slam. But, if the jobs report is terrible, then there is a huge disconnect between expectations somewhwere along the jobs chain, if we're to believe what the Monster Employment Index is telling us.

We'll be on Twitter some time today before the market closes with some updated comments.

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Market Moves - Stock Of The Day
Shares Of Monster Worldwide (NYSE: MWW) Make New Lows
What gives? Shares of Monster Worldwide (NYSE: MWW) made new lows on Thursday as the Monster Employment Index ticked nicely higher.



Chart Courtesy of StockCharts.com


The billion dollar question is why MWW made a new low when online job demand, as measured by The Monster Employment Index moved higher. Does Monster not make money if more people list their resumes online, and if those people don't get hired?

That, along with selling software, and consulting seem to be their business model. And there is no indication that Monster is having any significant trouble with its operations.

A look through the company's most recent 10-k does show that its joint venture with News LTD in Australia, Career One Pty LTD was having trouble generating revenues and income. Monster owns 50% of the joint venture with News LTD.

Monster's assessment of the joint venture seemed to be negative, although, it was unclear from the 10-k as to what the company's plans for the JV were.

We could find little else in the public domain that could account for the apparent loss of confidence in the company's shares, which is usually a sign that somebody knows something that will be a nasty surprise somewhere down the line.

It could just be that even though its Monster Employment Index is climbing, there is no one interested in actually working. And that means that all the listings in the world won't turn into anything too tangible for the company, or its shareholders.

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