05 August 2010

Jobs Data and the US Economy

It has been a conjecture in this blog that there is a real US recovery very gradually building, showing in USD, taking over from asset bubbles, a revolution when combined with Obama's promise of fiscal probity. If you look into the detail of the various employment reports there is some support for this.

This is a trading belief as well by the way, it is a conjecture which may be proved wrong. In either case having it give you a basis to make a move. I note the ADP figures of a growth in small business hires, plus the growth in ISM. An economic revolution tends to sweep away or change big businesses, but it begins at a fine grain of economic activity (small firms etc.). Just before the crisis I felt the hot stocks for the future would be Internet content.

It was very hard to define what this is, but the new technologies in content elaboration being developed by Google and small start ups are fascinating. Perhaps the content is just up to the users of the Internet, and that would be a revolution. That was the promises a decade ago, during the dot.com surge, but as I said true promises take time to enable. There is certainly quality activity in this area, at a fine grain view of the economy, but led by a major player as well possibly being changed itself by this activity.

Monster fell as did temporary workers, but those figures are not really about that recovery. Monster is about jobs which are as fluffy in a way as temporary jobs, jobs like those which an asset inflated economy gives. They are temporary as well, because they disappear when the assets deflate.

Remember we have just been through an asset inflation exercise, enabled by keeping $ cheap, the problems with that *is* the double dip, there was no real recovery, there was just a re-inflation of assets and an economy sunk by the crisis. I have been saying either a new way to reflate needs to be found (possibly from a housing bubble predicted on cheap $ for an extended period) or a real recovery happens. It is signs of that which I have been searching for.

Why is this important for forex ? Because very simply the fluff is for Euro and the recovery jobs are for USD. Assets inflation and emergency conduits are attractive for governments because they create jobs, but not good ones. I would add to this the comment what exactly does the euro zone have to be economically optimistic about, apart from Germany (as always) ?.

Update 8/6: I am just going on Dow Jones data, will look closely later, but those figures are good for a real recovery, asset inflation jobs have gone into oblivion !

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