Smoke Mirrors and Spin

This blog is published by AndyWaldock. Andy Waldock is a trader, analyst, commodity broker and asset manager.Therefore, Andy Waldock may have positions for himself, his family, or, his clients in any market discussed.The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity markets.The commodity markets employ a high degree of leverage and may not be suitablefor all investors. There is substantial risk in investing in futures.This morning, (6/5/09), I started digging into the monthly unemployment numbers.First, I went to the BLS website to get the raw data and post it to our website as quicklyas possible for our customers.The Government synopsis stated :1) Nonfarm payroll employment fell by 345,000 in May. This means that U.S. LOST 345,000 jobs.2) The unemployment rate continued to rise, increasing from 8.9 to 9.4 percent. Unemployment is RISING and is the highest since July of ’83..Just to keep things simple, we’ll focus on those two points alone. Now,after posting to the website, I went to Bloomberg (www.bloomberg.com)to see their take on things. Here’s their headline, “U.S. Stock Futures Gain as Pace of Job Cuts Hits 8-Month Low .” They also posted, “U.S. Job Losses Slow, Signaling Recession Is Abating.”Meanwhile, Reuters (www.reuters.com) had posted the actual numbers and their headline was, “U.S. jobless rate hits 26-year high.”The simple point of this blog is to illustrate the power of the media. The numbers that the government reported are what they are. They are quantitative data that we have to make decisions with. The headlines that come from the data are the qualitative opinions of the reporters and their publishers. Whenever possible – GO TO THE SOURCE.As long as our local and national media outlets intend on spinning the economic crisis as “sprouting green shoots of optimism,” money will keep being pulled into the market. This action is further fueled by the, “Did I miss it?” cycle of human nature. The markets do not belong at these lofty levels. Energies are overvalued by 40% on a fundamental basis. The stock market does not have the underpinnings to hold the gains of the last two months. The platinum, near its highs, is dominated by auto manufacturing. The Dollar, as weak as it has been, is in far better shape than the Euro or, the Pound.Finally, I don’t consider myself a fundamental trader. However, I do try to stack as many variables as possible on my side when initiating a position.This includes bottom up analysis – fundamentals, commitment of traders, seasonals, technicals and pattern recognition. My own spin on all of this is that we will return to a more normal trading world where things do make sense again.Opportunities to reinvest for the long term have not passed us by and we need only be patient…….and short!Good trading,Andy Waldock.