David Rosen­berg, Chief Econ­o­mist at Gluskin Sheff dis­cusses today's 'det­o­nat­ing' jobs fig­ure. We got a good laugh from the sar­casm that leads this note.

Rosen­berg, one of the most highly respected mar­ket econ­o­mists, is con­sid­ered by many to be an ultra-bear. How­ever, we found it notable that upon his depar­ture from Mer­rill Lynch, where he was the Chief North Amer­i­can Econ­o­mist, Rosen­berg said the tran­si­tion to a buy-side firm, would be an inter­est­ing change of pace for him, where the focus tends to be longer term.

"The sell-side firm des­per­ately needs a bull mar­ket and the buy-side firm really just has to be on the right side of the trade," he said.

Gen­er­ally, Rosen­berg believes that investors would be far bet­ter off from a risk reward stand­point own­ing fixed income secu­ri­ties (far­ther down in the article).

Here is today's sum­mary, but you can sub­scribe to his daily notes includ­ing the one below in order to see the com­plete note.

"OH SURE, THE RECESSION IS OVER"

Sum­mary by David Rosen­berg, July 2, 2009

Today's employ­ment report had defla­tion thumbprints all over it. And you don't have to take my word for it – have a read of San Fran­cisco Fed Pres­i­dent Janet Yellen's speech on June 30th when she dared to utter the "D" word. And that was before today's pay­roll release which con­tained dis­turb­ing signs of weak­ness on many fronts.

The head­line came in at –467k com­pared with –350k con­sen­sus and the back revi­sions were neg­li­gi­ble (+8k). At no time in the 1990 or 2001 reces­sions did we ever come close to see­ing such a det­o­nat­ing jobs fig­ure, not even at the depths of those down­turns, and yet we have a whole indus­try of 'green shoot' advo­cates today telling us that the recov­ery has already arrived. As always, the devil was in the details. In almost every indus­try, job losses were deeper in June than they were in May. The dif­fu­sion index fell to 28.6 from 31, which means that nearly three-quarters of the cor­po­rate sec­tor is still in the process of shed­ding jobs. The House­hold Sur­vey showed a 374k job decline, and all cen­tered in full-time jobs. In fact, we have lost a record 9 mil­lion full-time jobs this cycle, more than triple what is nor­mal in the con­text of a post-WWII reces­sion, with over 2 mil­lion pushed onto part-time work (and the num­ber of peo­ple now work­ing part-time because they have no other choice due to the weak econ­omy has more than doubled).

This in turn has take the total hours worked in the pri­vate sec­tor down to a new record low of 33 hours from 33.1 hours in May – in fact, what this means is that if com­pa­nies had kept hours worked at May's lev­els, then to achieve the same labour input that they achieved would have required a 800,000 job slice! Just to put the entire labour mar­ket pic­ture into a cer­tain perspective.

When we say that defla­tion has gripped the labour mar­ket, we are not exag­ger­at­ing. Aver­age weekly earn­ings – the proxy for wage-based income – fell 0.3% in June and have been flat or down in three of the past four months. Dur­ing this inter­val, they have deflated at a 1.6% annual rate – ver­sus a +1.8% trend a year ago and +5.2% two years ago.

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Here, cour­tesy of Zero Hedge are Rosie's Rules to Remem­ber, which he issued upon his depar­ture from Merrill:

Rosie's rules to remember:

1) In order for an eco­nomic fore­cast to be rel­e­vant, it must be com­bined with a mar­ket call.

2) Never be a slave to the data – they are no sub­sti­tute for astute obser­va­tion of the big picture.

3) The con­sen­sus rarely gets it right and almost always errs on the side of opti­mism – except at the bottom.

4) Fall in love with your part­ner, not your forecast.

5) No two cycles are ever the same.

6) Never hide behind your model.

7) Always seek out cor­rob­o­rat­ing evidence.

8) Have respect for what the mar­kets are telling you.

9) Be con­stantly aware with your fore­cast hori­zon – many clients live in the short run.

10) Of all the mar­ket fore­cast­ers, Mr. Bond gets it right most often.

11) High­light the risks to your forecasts.

12) Get the US con­sumer right and every­thing else will take care of itself.

13) Expan­sions are more fun than reces­sions (straight from Bob Farrell's quiver!).

And here in his note from May (a very good read in its entirety, and still highly rel­e­vant and timely — again, cour­tesy of Zero Hedge), is where Rosen­berg urges fixed income securities:

Our pref­er­ence is to stick with fixed-income securities

Be care­ful about jump­ing into the stock mar­ket with both feet after this mon­u­men­tal rally. Con­sider whether or not it would be more appro­pri­ate to take advan­tage of the run-up to reduce equity expo­sure. Our pref­er­ence is to stick with fixed-income secu­ri­ties, which we believe will work much bet­ter from a total return stand­point, as they did for years after the econ­omy hit bot­tom back in the early 1930s. When we are finally com­ing out of this epic credit col­lapse and asset defla­tion, we should expect that the trauma exerted on house­hold bal­ance sheets will have trig­gered a long wave of atti­tu­di­nal shifts toward con­sumer dis­cre­tionary spend­ing, home­own­er­ship and credit. The mar­kets have a long way to go in terms of dis­count­ing that prospect.

Read more from the author/contributor here.

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