Posts Tagged ‘Non-Farm Payrolls’

Non-Farm Friday – Will Jobs Report Restore Market Confidence?

Ouch, that really stings!  

They say you can't keep a good market down but it remains to be seen whether or not we have a good market with almost all of August and September's BS gains (see any of my posts for warnings and hedge ideaserased just 3 days into October.  

As you can see from our Big Chart, the Russell, in particular, completed it's 10% drop yesterday and, as I said to our Members in yesterday's live Chat Room as we neared the bottom:

/TF/Jasu – Just a bit oversold and, as noted yesterday (and above) it's completing a 10% drop from 1,200 at 1,080, so that's a very firm line for a bounce and that's 20% of a 120-point drop, so we're looking for 25-point bounces to 1,105 (weak) and 1,130 (strong) now.  Anything less than 1,105 today is a failure and, if not tomorrow, then expect more downside next week.  

SPY DAILY/TF is the Futures on the Russell 2000 index and already this morning we're back to 1,097, which is up $1,700 per contract (see how easy this is?) from our 1,080 entry and just a little shy of our expected weak bounce.  

We do expect resistance at 1,100 so this is a good time to take profits off the table and we can go long again over that line or flip to the S&P Futures (/ES) over 1,950 or Nasdaq (/NQ) over 4,000 or the Dow (/YM) over 16,800.  As long as they are all performing, we can be confident on the long side. 

As we discussed with our Members earlier this morning, there's no particular reason to get bullish – this is just a technical bounce we expect off our 5% lines per our 5% Rule™ and, if they trun out to be weak bounces, then we can expect another 2.5-5% of downside next week.  That means we can use those same index lines to go short if they fail as we would to go long if they succeed this morning – that will be all up
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Non-Farm Payrolls: US Economy Doing a Great Imitation of a Developing Double Dip

Non-Farm Payrolls: US Economy Doing a Great Imitation of a Developing Double Dip

Courtesy of JESSE’S CAFÉ AMÉRICAIN

The September Non-Farm Payrolls report was not good news.

This is a remarkably unnatural US economic recovery, with gold, silver, and other key commodities soaring in price, the near end of the Treasury curve hitting record low interest rates, and stocks steadily rallying as employment slumps and the median wage continues to decline.

The US is a Potemkin Village economy with the appearance of prosperity hiding the rot of fraud, oligarchy, and political corruption. 

As monetary power and wealth is increasingly concentrated in fewer hands, the robust organic nature of the economy and the middle class continues to deteriorate. 

This is what is happening, and monetary policy cannot affect it.   The change must come from the source, which is in political and financial reform.   And the powerful status quo is dead set against it.

The long term trend of employment has not yet turned lower which would make the second dip ‘official’ from our point of view. But the prognosis does not look good.


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Non Farm Payrolls: The Devil Is In the Adjustments

Non Farm Payrolls: The Devil Is In the Adjustments

Courtesy of JESSE’S CAFÉ AMÉRICAIN

When the US government announced a ‘better than expected’ headline growth number in its non farm payrolls report for August, a loss of ‘only’ 54,000 jobs versus a forecasted loss of 120,000 jobs, people had to wonder, ‘How do they do it? We do not see any of this growth and recovery in our day to day activity.’

Here’s one way that those reporting the numbers can ‘tinker’ with them to produce the desired results.

As you may recall, there is often a very large difference between the raw, unadjusted payroll number and the adjusted number. Seasonality plays the largest role, although there can occasionally be special circumstances. Since this is designed to be a simple example I am going to lump all the various adjustments that could be and call them the ‘seasonality factor’ since it is most usual and signficant.

Here is a chart showing the unadjusted and the adjusted numbers. As you can see, a seasonal adjustment can legitimately normalize the numbers for the use of planners and forecasters. This is a common function in businesses affected by seasonal changes. Year over year growth rates, rather than linear, comparisons, can also serve a similar function.

Quite a variance in numbers that are very large.

Since it probably is in the back of your mind, let’s address the infamous "Birth Deal Model" now, which I have advised may not be such a significant factor as you might imagine. This is an ‘estimate’ of new jobs created by small businesses. A comparison of the last few years demonstrates rather easily that this number is what is called ‘a plug.’

How can the growth of jobs from small business not been significantly impacted by one of the greatest financial collapses in modern economic history?

Certainly the Birth Death model offers room for statistical mischief. It is important to remember that it is added to the RAW number before seasonal adjustment, and that number has huge variances. So the effect of Birth Death is mitigated by the adjustment for seasonality. If it were added to the Seasonal number from which ‘headline growth’ is derived it would be a huge factor. But it is not the case, although the timing of the significant annual adjustments and additions is highly cynical, and supportive of number inflation.…
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Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number

Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number

Courtesy of JESSE’S CAFÉ AMÉRICAIN

I like Mish Shedlock. He has intellectual integrity, and even when we occasionally disagree, as I recall over the inevitability of deflation and some of its particular consequences and manifestations, I listen to his arguments carefully. He draws conclusions that are difficult to fault. Most of the time we seem to be in agreement.

In his most recent blog, he indirectly poses an interesting question.

"Hidden beneath the surface the BLS Black Box – Birth Death Model added 145,000 jobs. However, as I have pointed out many times before, the Birth/Death numbers cannot be subtracted straight up to get a raw number. It contributed to this month’s employment total for sure, but the BLS will not disclose by how much."

Mish Shedlock, Jobs Decrease by 125,000

Here are the Imaginary Jobs added to the Non Farm Payrolls from the Birth Death Model of the BLS. As Mish reminds us, (thank you Mish. I have been nagging bloggers about this for years), the Imaginary Jobs are added to the unadjusted payroll numbers, which are dramatically impacted by the seasonal adjustments, which are sometimes quite significant.

I include this second chart show the Birth – Death numbers over time to show the historical trend. It is remarkable how ‘regular’ this number has been over the past six years despite an epic recession that devastated small businesses, which is purportedly what this model tracks.

Here is a visual depiction of the Seasonally Adjusted and the Unadjusted Non-Farm Payroll Numbers. As you can see, the adjustment is sometimes very significant. Remember, the Birth Death imaginary jobs are added to the unadjusted number, which is indicated in maroon on this chart.

So obviously one can calculate the ‘seasonality factor’ using a simple formula

Seasonality Factor (SF) = Seasonally Adjusted Number (SA) / Non-Seasonally Adjusted Number (NSA)

I do this each month in the Payrolls Spreadsheet that I maintain. I like to see if the BLS changes its calculations and assumptions over time, especially when they do major revisions.

And although I have never shown it in this blog before, it is relatively…
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Non Farm, Non Encouraging Payrolls

Non Farm, Non Encouraging Payrolls

Courtesy of Joshua M Brown, The Reformed Broker 

Was I too tough on President Obama this weekend, perhaps being a bit unfair about how responsible he now is for this wreck of an economy?  Maybe.

But here’s a fact:

President Obama sandbagged The Street and many economists last Wednesday by telling us in his remarks to expect a "strong jobs number on Friday".  These comments, which other Presidents have been smart enough not to make so close to an economic release of data, encouraged many analysts to take their numbers up for the May non farm payrolls release.  Goldman went up into the 600 thousand range with the consensus in the low 500 thousands.

This sandbagging led to a 3% bludgeoning of the nation’s wealth when all major markets sold off as a result of the data being anything but an upside surprise.

The President’s off-handed comments, combined with his weaker-than-expected recovery’s job gains, were the proximate causes of this massive sell-off.

Fact.

Here’s Ex-Wirehouse, writing at the Davian Letter, with the only take on Friday’s number you need to read:

The unmitigated disaster that was the most recent release of the NFP report leaves me in such a grim mood I will skip the cute part and get right to the issue at hand. For the month we created 435,000 jobs of which 411,000 were part time census workers for a total of only about 20k private sector jobs created. The consensus was any where from 150k to 200k (note to self short anything out of VP Joe Bidens Mouth) so it was a miss by a country mile.

I say it again, stop making speeches and start giving businesses a reason to hire.

Sources:

That NFP # Is Going To Leave A Mark (Davian Letter)

Mr Obama, It’s Your Economy Now (TRB)

Picture credit: Jr. Deputy Accountant  


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Non Farm Payrolls Benchmark Revision and the Unemployment Rate as Cruel Farce

Non Farm Payrolls Benchmark Revision and the Unemployment Rate as Cruel Farce

Courtesy of Jesse’s Café Américain

Well, we ‘hit’ the projected headline number on the nose, with a loss of 20,000 jobs. No credit to us, it was as much a judgement call (aka SWAG) as any product of careful measurement.

As you may have heard, the BLS did a ‘benchmark revision.’ This is Washingtonian for ‘revised the numbers back as far as anyone might care to remember.’

Here is a simple picture of the old and new headline numbers, back to the beginning of the spreadsheet we happen to be using these days.

non farm payrolls

[click on charts to enlarge]

The change is subtle, but pervasive. One thing of note is the shoving of more job losses into the past, setting up a more solid base for great job gains in the future, without embarrassing oneself by getting out of synchronization with the actual growth of the civilian population. There will be more ‘truing up’ of the numbers in the future.

Unemployment Rate as Cruel Farce

Regarding that ‘surprise drop’ in unemployment to 9.7%, this is wholly due to people falling off the unemployment benefits radar, and is essentially meaningless, if not downright misleading.

One may as well solve an unemployment problem by shipping people to Australia. Well, that has some historical precedent. Hard to tell who has gotten the better deal on that one, at least over time.

A better measure of unemployment is the Labor Force Participation Rate, which provides information about the total number of people employed as a percent of the population, without benefit of official banishment.

That number continued to drop again in January, from 64.9% to 64.6%.

 


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Non-Farm Payrolls Report Preview for January 2010

Non-Farm Payrolls Report Preview for January 2010 

Courtesy of Jesse’s Café Américain

The markets breathlessly await the latest Non-Farm Payrolls Report for the US, which will be released tomorrow morning. January is the month in this report that contains the largest seasonal adjustments by far.

Here is a projection of what tomorrow’s numbers may look like, and their historical context. The raw number unadjusted for seasonality may be a loss of around 4,000,000 jobs.

It is no accident that the BLS does the major adjustment to its Birth-Death Model in January. Keep in mind that the Birth-Death adjustment is applied BEFORE seasonal adjustment, that is, to the raw, unadjusted number.

Given that the expected raw number will probably be around 3.5 million jobs lost, and then adjusted to a headline number much closer to zero, adding even 380,000 or so job losses to that does not result in such an enormous adjustment in January.

In other words, the adjustment is largely adjusted away by the seasonality. Nonsense, hardly connected to the real world, but quite clever bureaucratic sleight of hand really.

Saying all this, it seems almost needless to stress that any projection of the headline number is a tough call in January, because the seasonality has such enormous latitude. More in the nature of a SWAG than a proper forecast.

Then there is also the matter of the revisions to the prior two months at least, and the possibility of a revision to the whole series going back two years, which sometimes occurs.

So, we’ll look for a ‘headline number’ closer to zero than not, with a shade to the negative, maybe a loss of 20,000 or so. But we are very prepared to be surprised to the upside to a positive number, and downside to a loss of around 80,000. That speaks less to our inability to forecast, we hope, and more so to the arbitrary nature of the government’s willingness and ability to fiddle with the numbers.

With pretty colors, it may look more like a sideways chop than a plunge, especially in light of a greater negative from December which will be adjusted but not higher.

And as for the reaction of US equity markets in anticipation today?

As I have stated before, the banks and their prop trading desks are always and everywhere screwing you, and frontrunning their…
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Zero Hedge

Is The US Locking Up Its Available Male Labor Force?

Courtesy of ZeroHedge. View original post here.

A few years ago we noted an extremely disturbing trend, namely that there was never a lower percentage of white men over 20 working in America. The decline in labor force participation rate for males ages 25-54 has accelerated sharply since 1980, and we may have an answer as to why.

Here is the labor force participation rate for men ages 25-54. Although the downward trend is clear since it topped out out 97.9% in 1954, a notable accelerated decline takes place since 1980, which as of May 1, 2016 put the rate at 88.4%.

...



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Phil's Favorites

End of the UK? Poll Shows 59% of Scottish Want to Leave UK

Courtesy of Mish.

In the wake of the Brexit vote, two issues regarding Scotland have arisen.

  1. Can the Scottish parliament veto the referendum?
  2. Will Scotland seek another referendum to leave the UK?

Veto Threat

The BBC reports Nicola Sturgeon says MSPs at Holyrood could veto Brexit

Notes: The Scottish parliament is in the Holyrood section of Edinburgh, the capital of Scotland. MSP stands for members of Scottish parliament. Nicola Sturgeon is leader of the Scottish National Party (SNP).

Scotland’s First Minister Nicola Sturgeon has told the BBC that Holyrood could try to block the UK’s exit from the EU.

SNP leader Ms Sturgeon...



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ValueWalk

Warren Buffett & Bill Gates Discuss Success, Mistakes and Work/Life

By Jacob Wolinsky. Originally published at ValueWalk.

In this discussion, students from the University of Nebraska got to ask Bill Gates and Warren Buffett questions of their choosing. The questions vary widely and can be found below. Warren Buffett and Bill Gates are two of the richest people in the world and their answers and advice are invaluable to anyone looking for success.

Date: September 2005
Location: University of Nebraska

Audio is out of sync in parts.

Video Segments:

0:00 Start
0:01 Intro
3:14 Start of speech
...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Central banks ready to cooperate after Brexit result (Business Insider)

Central banks are ready to cooperate to support financial stability in the wake of Britain's vote to leave the European Union, the Bank for International Settlements said on Saturday.

Central bankers gathered at the organization's global economy meeting in Switzerland discussed the implications of the referendum.

How Americans spend their day reflects a shifting economy and population (Wall Street Journal)

Americans overall are working less and sleeping more than they were a decade ago, trends that point to an aging p...



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Chart School

Best Stock Market Indicator Update

Courtesy of Doug Short's Advisor Perspectives.

We continue to receive requests for updates to the "Best Stock Market Indicator", which used to be a regular guest post from John Carlucci. Here is an update of the "Carlucci" indicator along with a summary of John's explanation on how he uses it.

As John described it: "The $OEXA200R (the percentage of S&P 100 stocks above their 200 DMA) is a technical indicator available on StockCharts.com used to find the "sweet spot" time period in the market when you have the best chance of making money."

Latest Indicator Position

According to this system, the market ...



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Kimble Charting Solutions

2007 pattern being repeated right now? Another "Push Away???"

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The NYSE index kissed the underside of dual resistance at (1) back in 2008. Once resistance held, a big push away from it took place and sellers stepped forward.

NYSE creating a similar pattern again at (2)???

This would NOT be a good place for the Risk On trade if the broad market starts “pushing away” from dual resistance at (2).

Full Disclosure- ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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OpTrader

Swing trading portfolio - week of June 20th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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