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TAKE THIS JOBS REPORT AND LOVE IT? (FINAL EDITION)
By Charles Payne, CEO & Principal Analyst

4/5/2010 10:05:44 AM Eastern Time

Wall Street was looking and hoping for a homerun on Friday and it





got a bunt single. The good news, like deprived fans of a perennially losing sports team, some will cheer this bunt single like a homerun from Albert Pujols...in the bottom of the ninth inning..in game seven of the World Series. There are pros and cons but some of the former could be the latter. The headline number of 162,000 was below the consensus of 190,000 (I think that the whisper consensus was north of 250,000), but the shortfall was mostly from Census hiring which came in well short of expectations.

The initial reaction saw equities move higher and the dollar get stronger. Considering that there will be more than one million hires for the Census everyone thought 160,000 Census jobs would be reasonable. Proof of government ineptness; I can't wait for healthcare to kick in.

Upticks

* Manufacturing: +17,000, up 45,000 in the first quarter of 2010
* Construction: +15,000 after averaging losses of 72,000 over the past 12-months
* Retail: +14,900
* Healthcare: +27,000
* Temporary: +40,200
* Census: +48,000
* Leisure: +22,000
* Government: +39,000
* Household survey: +264,000
* January revised to +14,000 from -26,000
* February revised to -14,000 from -36,000

Downticks & Negatives

* Information: -12,000
* Financial Services: -21,000
* Long-term unemployed (27-weeks+): +414,000 to 6.5 million
* Part-time because economic reasons: 9.1 million
* Discouraged workers: +309,000 year over year to 1.0 million
* Average hourly earnings: $22.47, -$0.02

Temporary, Census, and government jobs accounted for 79% of jobs created in March so while many will argue a job is a job; there is a different impact to the economy from sustained jobs. On that note, I believe that this post-recession job market will be different. I think that the transition from temp to permanent jobs will be much slower than in the past.

In fact, on Friday I asked a top executive at Adecco if there was any legitimacy to my theory and she said "absolutely." Adecco (the largest staffer in the world) is devising new programs to take advantage of the permanent demand in temp workers. I think that part of the reason for this is the healthcare law, which tries to curb businesses from taking advantage of temp job loopholes but will come up short. Yet, in the process goose higher temp workers because they have to work limited hours. The pay is limited in these kinds of jobs.

"Considered a fool because I dropped out of high school"- Biggie Smalls

Pay is an issue. Average hourly wages actually decreased year over year. Then consider this, the best improvement in the unemployment rate happened for people that dropped out of high school. The unemployment rate for that niche of Americans improved 7%; on the other end of the spectrum unemployment for college grads inched up 0.2% and the high school grad segment saw their unemployment rate increase to 10.8% from 10.5%. A job is a job, but some pay better than others...no foolin.

Summary

I'm still worried about how many people have abandoned the system, they've given up. There is a record amount of people out of work longer than 27-weeks. I just think that we are going to have a permanent underclass of formerly proud contributors to the American economy. Unemployment among men stands at 10.0% but it's 8.0% for women. So, if we strip out stuff from this jobs report that feels like gap-stops we could take solace there are nibbles in the job market. I think that employers don't have any more room to cut and will cautiously hire, but there is no sense of urgency.

Moreover, healthcare reform, cap and trade, and additional taxes (Verizon announced that it has to take a $970.0 million hit from the new healthcare law) will keep businesses sitting on their cash.

President Obama took the typical victory lap after the jobs report but tempered his celebration because he understands this isn't the kind of environment that encourages businesses to take chances. The President did give credit to stimulus and other programs which I find interesting considering at this point building a cause and effect relationship also means underscoring the terrible inefficiency of the spending program. Speaking at a manufacturing plant, in what was in effect a commercial for his programs, the Commander and Chief stumbled when a women asked why raise taxes at this time to enforce his healthcare insurance plan.

The response was classic as the question was never answered but talking points were repeated. Here they are in order:

o America is the only big country where millions don't have healthcare coverage.
o There is a moral imperative as some companies aren't big enough or generous enough to provide healthcare.
o There is no safety net as COBRA has expired for many people.
o Insurance companies are evil as they switch coverage and have lifetime limits.
o Cost of healthcare is out of control.
o Reforms protect the consumer.
o The new law will save by cutting waste, fraud, and subsidies to the insurance industry.

Toward the end he tried to return to the question:

Finally saying "it is true" that additional taxes "we think are fair" will be used, he incorporated Warren Buffett as an example of someone that should be paying Medicare taxes on unearned income. To compare a household making $300,000 to the third richest man in the world and suggest investment gains from such a household are somehow "unearned" and deserving of being taxed is silly.

There was more talk about the deficit inherited and all of the other things we've heard ad nauseum. But, the question was never answered. That's because the answer is yes, this is a terrible time to tax corporations, small businesses, and especially people with the resources to make investments that materialize into real and sustained job growth. No, there wasn't Armageddon the day the bill was signed into law but the ball got going. For the President to joke about how fears were unfounded is unfortunate and odd. The White House and environmentalists pound into our brains as they reach for our wallets every day that action must be taken yesterday. If we don't act now to stop the earth from heating up one degree in the next 100 years it will be Armageddon.

Could you imagine a cigarette commercial where a high school track star smokes a cigarette, then positions into the starting block, and dashed to an easy victory and a banner says: "Win the Race, Smoke Cigarettes."

Or how about this one. A boiler room calls up an apartment dwelling family and says they can get them in a house for $400 a month for a couple of years then the rate increases but by then the house will be worth so much it won't matter.

It took 17 minutes to evade the question and still there was no answer. That's because the law is going to be an economic backbreaker and a drag on employment for a long time to come. I watched the weekend talk shows and some described the employment report as "solid" or suggested it was like the healthcare fight and a big win for the Administration. I don't know how people that should know better continue to try and fool the public. The only thing one could say about the jobs report is that it was better but it was mediocre. After the trillions of dollars and all the programs and the promises, people expect more. The stock market doesn't care as long as it can massage the expectations game.

The implications are clear, it's going to be an uphill struggle with the press giving out pats on the back to hollow victories while Main Street remains mired in the muck.

This week there aren't many economic reports or corporate earnings releases. It's this kind of backdrop that usually reveals the true soul of the market. Stocks will trade more or less through the will and conviction of investors, unencumbered or manipulated by news that can be spun and twisted like a funhouse mirror. Ride the wave even if you see through the hype. I'm not saying, and haven't been saying, drink the Kool-Aid but just dance to the beat until it's time to hit the exits.