Stocks continue to slip in the second quarter with only the NASDAQ holding on to a double-digit year to date gains. Since Monday, the DOW has lost a little less than 200 points or 1.4% while the NASDAQ has given up nearly 100 points or about 3%.

Today’s big news is of course the April payrolls number from the BLS. At 115,000 new jobs it missed big against expectations for 170,000. The official unemployment rate fell to 8.1% as more people leave the workforce and are no longer counted. In fact the labor force participation rate hit a new cycle low of just 63.6% while the employment to population ratio fell to 58.4%. The average workweek was unchanged at 34.5 hours; the average hourly wage increased a penny to $23.38. On a year ago basis wages are up 1.8%, less than inflation, so real wages continue to fall. Since the beginning of the year 803,000 new jobs have been added as per the BLS, an average of 200,000 per month, a decent figure that is ahead of demographic demand.

Other highlights form the report include professional and business services accounting for more than half of April’s employment gains while the Net Birth/Death Statistical Model added 206,000 jobs to the total figure. A weak report that shows once again that employment growth is stumbling and unable to support real economic recovery or expansion. Recent credit data notwithstanding the idea that the current economic recovery can continue based on the assumption of additional debt without solid employment and income growth, is wishful thinking at best.

Freddie Mac reports that mortgage interest rates are averaging all time record lows with the 30-year fixed rate down to 3.84% while the 15-year is averaging just 3.07%. With rates like this and real estate inventory as low as it is prices should be not only stable but also increasing. The fact that they are neither speaks volumes about the impact of distressed sales and the psychology of potential buyers, myself being a prime example as I live in a rented house despite having the means and the desire to buy since 2005.

A falling earnings beat rate, its currently just over 64% and mixed economic data sends stocks into the final hour with modest losses. Productivity fell .5% in the first quarter as unit labor costs jumped 2%. On a year ago basis productivity is up .5% while unit labor costs are 2.1% higher than last year.

The April ISM Services Index posted a big miss as it fell 2.5 points to 53.5. New orders dropped 5.3 to 53.5, employment slipped 2.5 to 54.2, prices plunged 10.3 points to 53.6. The ISM price indexes were some of the last to show notable price pressures with readings above 60.

HSBC Bank finds itself in hot water yet again for money laundering crimes as it was cited in 2010 for lapses as well. By no means alone it joins Wachovia Bank, now part of Wells Fargo, who got charged with money laundering in 2010 and Zions Bank that got charged last year. If the penalties either are not enforced or not sufficiently robust to deter the banks and their executives form their errant ways, nothing will change. Dallas Fed Governor Richard Fischer wants to put an end to “too big to fail” and also punish executives of bailed out banks with unemployment and claw backs. A great start, it sadly will probably end up like a lot of other well intentioned proposals, lots of talk and ultimately no action as the bankster lobbyists will be sure to kill or neuter any proposal before it sees the light of day. For the record, Fed Chairman Ben Bernanke is already against the idea.

Bloomberg is out with a list of the top 10 strongest banks globally. Canada leads with 4 banks in the top ten. Followed by Singapore with the strongest bank and 3 in the top ten. Hong Kong has 2 while Sweden has one to round out the top ten. The best the good old USA could manage was JP Morgan Chase at 13, PNC Bank number 17 while BB &T Bank came in at 22. We used to lead the world in so many positive categories, and then something changed because now our 3 biggest claims to fame are weapons, food production and fraud. As America, once a beacon of hope, freedom and democracy that the rest of the world looked up to is steadily being replaced by a fascist police state for the benefit of the 1%.

Stocks enter the final hour mixed on largely disappointing data. Factory orders fell 1.5% in March a little less than expectations but the largest decline in 3 years. This also marks yet another very conflicting report on manufacturing of late.

LPS reports that foreclosure starts increased fractionally in March to 4.14%, delinquency’s fell to 7.09%, once again no big surge in foreclosure activity.

ADP private sector payrolls came in at +119,000, significantly below expectations for 178,000 new jobs, manufacturing employment posted its first loss since September 2011

Vehicle sales came in at 14.42 million units annualized during April an increase of .7% from March and 9.8% higher than a year ago. Crude oil inventories continue rise hitting a record 2.84 million barrels last week as $4+ for a gallon of gas is crimping demand. That said despite the continued and now record inventory prices are not coming down as crude remains around $105 per barrel for a second month.

As the financial crisis unfolded in 2008 the Fed bailed out the banks with the TARP program and also appointed a special investigator, SIGTARP, to oversee the program. I will note that the FCIC report stated that the current crisis was man-made, predictable and preventable had existing rules and regulations been enforced. The latest SIGTARP report to Congress reveals that the Treasury has fully failed to implement 2/3’s of SIGTARP’s recommendations post bust. Additionally Treasury more or less ignores the special investigator according to a piece in the National Journal who interviewed Christy Romero SIGTARP inspector general. Once again its business as usual and nothing has really changed as the 1% continue to do as they please at the expense of the 99%, something we continue to allow.

From CBS MarketWatch/Chris Oliver and interview with Richard Duncan

The biggest impediment the world faces in overcoming this crisis is the broadly held misconception that we are operating in a capitalist system.

Duncan sees the global economy as having undergone a fundamental transformation during the past 43 years. Since changes in 1968 that freed the Federal Reserve from holding physical gold in reserve against dollars in circulation, total global credit has expanded 50 times, or from about $1 trillion to $50 trillion in 2007.

Underscoring the system’s dependence upon credit is the fact that there were only nine occasions in the past five decades when total system credit in the U.S. grew less than 2% annually.

In particular, the view that China will soon become the world’s biggest economy is likely to fade away, just as optimistic attitudes towards Japan did after its asset bubbled popped in the late 1980s, ending a long period of rapid growth that had lifted the Japanese economy into the global No. 2 spot.

An interesting piece from the mainstream media, the whole thing can be found here.

From the very good Blog by Charles Hugh Smith, of two minds.

Modern investing offers the promise that investors who “do their homework” and use data more intelligently than the herd can gain a valuable edge. But what if the underlying data available to the investing public is fundamentally flawed?

The federal government agencies that issue headline data and the mainstream media that reprints the data without skeptical analysis would have us believe that these indicators — the unemployment rate and the consumer price index (CPI), for example — accurately reflect economic realities.

Rather than reflecting meaningful growth, the apparently rising nominal income deceptively masks the reality of declining real income and avoids the costs imposed by a stratospheric rise in debt.
-This was largely the trigger of the current crisis, inability to service existing debt levels-Caleb Lawrence.

The recent resurgence in tax receipts can be presented as evidence of “recovery.” But just as the financial health of households can only be measured by plotting both income and debt, we must look at government debt, not just its income. Here is a chart of federal debt held by the public — that is, all federal debt excluding “intergovernmental” debts that arise from the government “borrowing” (i.e., expropriating) Social Security funds.

No enterprise can be accurately assessed without understanding its profit and loss statement and balance sheet of assets and liabilities, and why should it be any different for households and government? In looking at the income and debts of both households and our government, we have a more balanced and accurate assessment of the “recovery” than that afforded by politically expedient headline numbers.

An excellent piece with some nice charts the whole thing can be found here.

Stocks opened lower but rose late on mixed economic data. Construction spending increased .1% in March, a big miss as expectations were for a .5% gain, private construction led the advance as public construction slipped.

The April ISM Manufacturing Index increased 1.4 points to 54.8 its largest gain in 11-months, so much for yesterday’s Chicago Index. New orders, production and employment all gained, as did prices paid reaching 61. In fact manufacturing employment has steadily advanced since its nadir in late 2009 as per data from the BLS. Simply a statistical bounce following the decimation of manufacturing employment since 2001 or the start of a new trend, while much too early to tell for sure it is a trend worth watching.

CoreLogic reports 69,000 completed foreclosures in March 14,000 less than a year ago and 3,000 more than February. Through the 1st quarter a total of 198,000 foreclosures were completed, 34,000 less than a year ago so it seems that despite all the talk of a big jump in foreclosure activity this year compliments of the robo signing settlement, so far it has failed to materialize. Since the foreclosure crisis began in late 2008 some 3.5 million foreclosures have been completed. Moving to foreclosure inventory and 1.4 million homes are in some stage of the foreclosure process, unchanged from February. Slightly less than the 1.5 million figure seen a year ago.

Stocks struggled in late trade on generally disappointing data. Spain is the latest Euro Zone country to join the recession crowd as unemployment jumps following its recent financial crisis.

The latest data from the Census Bureau shows that homeownership rates continue to fall hitting 65.4% in the first quarter, a twenty-year low. Homeowner vacancy fell to 2.2% during the same period while the rental vacancy rate slipped to 8.8%. Though these numbers remain a little on the high side by historical standards the gap is rapidly closing.

The Chicago PMI hit a 29-month low as it fell to 56.2 in April, well below expectations. The Dallas Fed hit the skids in April as well falling 14.2 points to -3.8, indicating contraction. With luck the sharp reduction in natural gas prices of late will help to stabilize domestic manufacturing and perhaps spark something of a renaissance.

Personal Income gained .4% in March and is up 3.2% from a year ago as per the Bureau of Economic Analysis. Spending advanced .3% during the same period. The inflation measuring PCE Price component gained .2% and is 2.2% higher than a year ago, once again little inflation. The savings rate came in at 3.8%.

The un-official problem bank list compliments of the very good Blog Calculated Risk shows 930 institutions as of last week. Assets total 361.7 billion for the group. A year ago and this list held 984 institutions and 422.1 billion in assets a decline of 5.5% and 14.3% respectively. A total of 5 banks were closed by the FDIC Friday pushing the year to date total to 22, a dramatic improvement over recent years.

Stocks enter the final hour with modest gains on mixed data. Since Monday the DOW is up some 200 points or about 1.5% while the NASDAQ has gained 100 points or 3.25%. Earnings continue to come in on the positive side of expectations; the same can’t be said for economic data.

Preliminary 1st quarter GDP missed big at +2.2%, .59% of the total compliments of inventory building. Consumer spending was strong with the final sales figure coming in at 1.6% while, Personal Consumption Expenditures increased 2.9%. The inflation measuring price deflator increased to 1.5%. Residential investment a persistent laggard post bust advanced at a 19.1% annual rate in the first quarter. With this release the Federal debt to GDP ratio broke 100%, as an aside the Japanese are at 212% and counting.

The employment cost index came in at the low end of the range, gaining .4% in the 1st quarter. On an annualized basis, benefit costs are up 2.7%. Wages have increased 1.7%, after adjusting for inflation wages continue to show essentially no gain or contraction.

Municipal defaults continue to cost investors, increasing steadily since 2007. 2011 was another record year according to a Reuters piece, with defaults increasing nearly 5 fold to 25.4 billion. So far this year the first quarter has seen 1.25 billion in defaults more than double the year ago period as states and municipalities face continued fiscal stress. During the great depression muni defaults peaked in 1934 and 1935 some 6 years after the bust.

Despite disappointing economic data stocks enter the final hour with decent gains. The Chicago Fed National Activity Index fell .36 to -.29 in March. The 3-month moving average dropped .32 to +.05 indicating still positive economic growth despite a substantial reduction in activity.

The Kansas City Fed fell 6 points to 3 in April. Initial claims for unemployment increased again hitting 388,000 last week. Once again this is a volatile series and the weekly data is largely meaningless. The 4-week moving average increased to 381,750.

The NAR reports that its pending sales index increased 4.1% to 101.4 in March, the usual spring bounce in action, the western region jumped 8.7% and is 9% higher than a year ago.

Much has been made of the current economic recovery, the lamestream media hails its virtues at every opportunity while down on Main Street a lot of folks continue to wonder about their economic recovery. 25-months after the official end of the last recession and the economy has only recovered 41% of the jobs lost. In fact only 2 industries have reached their pre-recession peak Leisure and Hospitality is one and Mining is the other. Some notable laggards include Construction with just 1.1% of lost jobs recovered, while Financial Services have recovered 10.9%. Of the jobs that have been created post recession they tend to pay less, standard deflationary credit bust, as labor supply exceeds demand but it is a qualitative issue as well, something that shows up in the earned income data. That said Federal income tax receipts increased 5% annualized in the first quarter, suggesting a decent employment report next Friday.

Stocks opened higher and enter the final hour with modest gains on mixed data. The usual microscopic analysis of the latest FOMC statement reveals that the Fed views the economy as expanding modestly, the labor market shows some improvement while business and household spending continue to advance. Inflation has increased somewhat of late thanks to higher oil and gasoline prices. Expectations are for economic growth to continue while downside risks are increasing compliments of Europe. Once again, the Fed pledged to keep interest rates low through 2014 while extending the duration, or maturity dates of its existing debt portfolio.

The MBA reports that its activity index fell 3.8% last week as refis dropped 5.6% and purchase apps gained 2.7%. The 30-year contract rate slipped to 4.04%, the 15-year rate fell to 3.32% the lowest figures ever record in the history of the survey for conforming loans.

Durable Goods orders plunged 4.2% in March, ex-transportation orders fell 1.1%. A volatile series, that said this marks the second significant drop in the first quarter. Declines were broad based with the proxy for business spending capital goods ex-aircraft falling .8%.

The latest data from the TARP program shows that the taxpayer is still owed 119 billion at the end of the first quarter. A slight improvement over the 133 billion outstanding at the end of last year. Much of the remaining debt is owed by AIG of which Uncle Sam is a 70% shareholder; GM and its renamed finance arm Ally Bank. Another 18 billion is owed by an assortment of banks. 15 billion is found in the Public-Private-Investment program, aka the banks. Last but not least quite a number of small community banks remain in the system, be that as it may this program is not only far from breakeven it remains a long way from turning a profit despite claims of said profitability by many a pundit in the lame stream media.