JUNE EMPLOYMENT DATA

The Bureau of Labor Statistics (BLS) came out with the June labor report and was incredible for numerous reasons. It showed 4.8 million jobs created in June, which is a phenomenal amount of jobs. This comes as businesses open up that had been shuttered including bars and restaurants. The unemployment rate itself was officially at 11.1%, which is also outstanding relative to the April.  I have studied the BLS data and found some reason to be somewhat skeptical of the data.  The news is good the optics are misleading.  The market won’t see through this ruse.  Happy market, happy Droopy Don.

The Household Survey unemployment data collection and reporting since April has been irregular in the following ways:

1. The survey normally taken in person is being mostly conducted by phone due to the virus.
2. Data was taken for the period of June 7^th through June 13^th only.
3. There were fewer respondents to the survey – close to 70% of normal.
4. Questions were asked on the survey that considered whether the individual was paid by their employer, even though they were not working as a result of the virus.  This concerns me, if the company was paid to keep workers on the payroll under the PPP program when normally they would be unemployed the unemployment data is worthless.  Are taxpayers paying for the optics of low unemployment numbers? 
5. The page 5 notes on adjustments, considers the unemployment number may be in error by as much as 1%. Making the number 12.1% which is close to my 13% I had predicted.

The second wave of the virus may create another April rate of close to 15% unemployment with lock downs and closures. The unemployment rate will go up this time without another PPP program, with layoffs in lieu of paying not to work.  With another closure the 4.8 million jobs gained will disappear. The 21 million unemployed as of April has been reduced by 7 million in the last two months.  That still leaves 15 million unemployed.  With a severe trend in new cases new closures will occur and the rate will go up again.  Great news but has the other shoe been let go?

CHINA AND DROOPY DON

As a result of the Covid-19 virus the trade talks with China were scaled back. These talks were to resolve issues of trade and tariffs. In the tariff wars with China, Xi ate the Dotard in Chief’s lunch.  According to the Bolton book, Trump was said to all but beg Xi to help him with his reelection in their meeting.  Trump, continually requiring a scapegoat is using blame toward China as the cause of the virus, even so far as to accuse China of manufacturing the virus without any hard evidence.

It now looks like the administration is going to attempt to punish China for not cowering to Droopy Don’s demands. Is he getting even by having the FCC ban Huawei and ZTE  companies from selling their products in the U.S.?  Trump is going to accomplish this by using the designation of a national security threat to the United States.  This has the effect of deleting any money for federal assistance for purchase or maintenance equipment used by small rural U.S. networks that use their products.  Small rural carriers don’t have the cash to maintain their networks and will not be able to buy spare parts and maintain the equipment.

This action by the FCC to ban these Chinese companies has been on and off since the tariff wars started by the dealmaker himself last year. Is Droopy Don using this as a tool for trade?  Since the trade talks in January, it looks like Droopy Don did not get his way with Xi.  So Droopy Don will show him up by virtually eliminating rural U.S. Internet networks that purchased Huawei and ZTE network equipment.  The equipment was reliable 5G and cheap. Much cheaper than other producers network products. 

The security threat is laughable in today’s environment where your phone has all the same security concerns and vulnerabilities as the equipment by these companies. The man child wants to take his marbles and go home, since he didn’t  get his way and someone else ate his lunch?