Maybe it is because I have 4 year old twins, or because my 15 year old was absolutely hooked when he was their age, but for some strange reason when I saw the employment report this morning the first thing that popped in my head was a song often heard on Sesame Street, "One of these things is not like the other, one of these things does not belong."

Before we play our little game, let's take a look at the numbers in the June Payroll report:

• Payrolls grew by 18K in June
• May's number was reduced from 54K to 25K
• In other words, June payrolls were DOWN 15K from May's original report
• April's number was also reduced by 15K
• The 12 month average growth is 86K per month.  We need around 125K new jobs each month to keep up with population growth
• Payrolls are 0.80% higher than they were a year ago.

I'm not sure why CNBC has the same "experts" on every time this report is released.  It was somewhat amusing to see Mark "I never saw the recession coming" Zandi's face as the number came out.  He had a hard time finding the silver lining.  Diane "the numbers are always better than you think, so keep buying and holding" Swonk tried to help him out by saying that the ADP number released yesterday was probably more realistic because the government's number does not take into account start-ups like "Groupon".

Pssst, Diane the +18K INCLUDED a government W.A.G. estimate of 131K jobs from newly created businesses.  Maybe she should read our blog as we've called out this "birth-death" adjustment after the April "McDonald's" job report and May's "transitory" disappointment.

Now back to Sesame Street........

I'm going to bring back my "expansion" charts.  These tools allow us to compare any piece of economic data to past recoveries.  The bands are the best and worst recoveries.  The blue line is the average recovery. 

Take a look at the expansion charts and ask yourself, "which one of these does not belong?"  If it helps you can sing the song:

So jobs are tracking the worst recovery on record, disposable income growth is the WORST on record, and GDP is running near the bottom of the channel.  Yet, the stock market is near the best recovery on record.

Yesterday I tried to detail the reasons the market has been rising recently.  Today's payroll report is the reason we are reluctant participants in the stock market party.  The holdings we have are TRADES, not long-term investments.

The overall trend is still up & so far the indication is that the opening sell-off is simply giving back yesterday's gains on the once again completely wrong ADP jobs report.  I fully expect the market to resume the rally next week.  Traders are already talking about this report being a reason QE3 could be right around the corner.

The weak labor market and the lackluster disposable income growth are SYMPTOMS of the underlying problem.  Policy makers around the world continue to provide pain killers that are masking the symptoms (via higher stock prices and wasteful spending projects).  The real damage will occur when the infection begins to spread.

The market will not have a real sell off until it becomes apparent that the hospitals spent all of their money on pain killers and have failed to administer any antibiotics.  Whenever that may occur (I'm on record of saying sometime by the spring of 2013) you will not want to have your SERIOUS money (money that impacts your quality of life) invested in a buy & hold strategy.

I know this isn't something we want to think about going into the weekend.  If you want to look at the bright side our Absolute Return Allocator (ARA) program, which is included in all of our ENCORE Portfolios received a signal to be net short today (makes money if the market is down).

You can also enjoy a Sesame Street spoof of a popular commercial.  (I had to include this since Grover was my oldest son's favorite character.)