Posts Tagged ‘birth death model’

It’s More Than Just Birth-Death

It’s More Than Just Birth-Death 

a road sign saying career change ahead

Courtesy of John Mauldin at Thoughts From The Frontline 

Just how dynamic is the US job market? If I told you we created over 4 million jobs in April, would you believe me? I had a long conversation with Mohamed El-Erian of PIMCO yesterday. He is openly speculating that employment may no longer be just a lagging indicator but may also be predictive. It is an interesting insight, which we will explore as we take a very deep look at US employment. And I answer a few questions about my thought that there is a 60% chance for a recession in 2011, and why there is a 40% chance we won’t. What could change those numbers? We explore that and more, while I suffer from the injustice that LeBron will play with Wade and Bosh. Where’s a nonproliferation treaty when you need it?

First a quick commercial note. I want to let Conversations subscribers know that we will post on Monday a Conversation I recently did with Rick Rule and Marin Katusa. Rick is a decades-long friend and maybe the smartest and most successful resource investor I know of. Katusa writes a resource letter for Casey Research and is wicked smart on energy. This is a very good piece that you don’t want to miss, as Katusa identifies what he thinks are some of the really great new energy plays.

It’s More Than Just Birth/Death 

Last week, I wrote about the Birth/Death Adjustment in the Bureau of Labor Statistics monthly employment numbers. Jeff Miller took me to task in his blog for not noting that the B/D numbers are not seasonally adjusted (which I know) and a few other items. I did some research on his work on employment numbers and came away with a few new thoughts that I think are worth sharing. Miller (a former professor and a nice guy) and I spent several hours on the phone talking about the BLS data and what he sees as an unusual divergence in the data, which I agree is far more interesting than the B/D Assessment.

To get to the interesting part, I am going to risk boring you with a few wonkish background paragraphs. First, let’s look at the basic process of how the BLS does its survey. Basically, the BLS tries to count every job in…
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The Dismal Science Really Is

The Dismal Science Really Is

Courtesy of John Mauldin at Thoughts from the Frontline 

Some Really Dismal Numbers 
Unemployment Went Down? 
Earnings Take a Hit 
Money Supply Concerns 
A Central Banker’s Nightmare 
Why Don’t You Reform Yourselves?

There’s a reason economics is called the dismal science, and weeks like this just give it further meaning. In economics, there is what you see and what you don’t. This week we are going to examine the headline data we all see and then take a look for what most observers do not see. Then we’ll try to think about what it all really means. With employment, housing, and the ISM numbers, there is a lot to cover. And this letter will print out longer than usual, as there are a lot of charts. Warning: remove sharp objects from the vicinity and pour yourself your favorite adult beverage. This does not make for fun reading.

Some Really Dismal Numbers

The unemployment numbers this morning were just bad, even though the spin doctors were out in force. Of course we knew that because of census workers being laid off the number would be negative, and it was, down 125,000. But the "bright spot" we were told about was that private payrolls came in at 83,000 new jobs. Let’s look at what you did not see or hear.

First, last month’s dismal (there’s that word again) private job-creation number was revised down from 41,000 to 33,000. So in two months, total private job creation is 116,000 jobs. We need 125,000 jobs per month just to keep up with population growth.

But it is worse than that. The headline number we look at is from the Establishment Survey. That means they call up existing businesses they know about and ask them how many people are working for them, etc. One of the first things I do when the employment numbers come out is look at the birth/death assessment on the BLS (Bureau of Labor Statistics) web site.

For new readers, the birth/death assessment has nothing to do with people dying, but rather is the BLS’s attempt to estimate the number of new businesses that have been created or have "died" within the last month, and they use these numbers to adjust the employment total. They use historical, seasonal numbers to create a model from which they make these estimates. There is nothing conspiratorial about the…
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Business Bankruptcies Up 38% In 2009; BLS Birth/Death Model Review

Business Bankruptcies Up 38% In 2009; BLS Birth/Death Model Review

Courtesy of Mish

sale

Not only are personal bankruptcies soaring, U.S. business bankruptcies rise 38 pct in 2009.

U.S. business bankruptcies rose 38 percent last year, to a record since bankruptcy laws were changed in 2005, according to a bankruptcy data firm on Tuesday.

There were 89,402 bankruptcy filings by businesses last year, compared with 64,584 the previous year, according to data compiled from court filings by Automated Access to Court Electronic Records, which is part of Jupiter eSources LLC in Oklahoma City.

Personal bankruptcies jumped to 1,357,565 last year, from 1,031,562 the year before.

The data included bankruptcy codes Chapter 7, 11 and others. Consumers often use Chapter 7 to get a new start on their financial lives. Chapter 13 lets people discharge some debts. Businesses typically use Chapter 7 to relieve themselves of debt and Chapter 11 to restructure debt and operations.

The numbers have been "steadily up," said AACER President Mike Bickford. "I don’t think (2010) will be less than 2009. I think what’s going to tell the tale for 2010 is the first quarter."

US home sales plummet, personal bankruptcies soar

Inquiring minds are reading US home sales plummet, personal bankruptcies soar 

An important measure of future home sales fell far more sharply in November than economists had expected. The National Association of Realtors (NAR) index on pending home sales—contracts agreed upon but not finalized—dropped by 16 percent in November, more than three times what economists interviewed by the Dow Jones Newswires had anticipated.

The pending home sales index registered declines in every region: 26 percent in the Northeast and Midwest, 15 percent in the South, and 3 percent in the West.

The NAR report follows the release last week of a Case-Schiller report showing home prices were flat in October, in spite of the surge in purchases based on the home buyer tax credit and exceptionally low mortgage interest rates. This was not enough, a Tuesday New York Times editorial points out, “to overcome the drag created by a glut of 3.2 million new and existing unsold single-family homes—about a seven-month supply.”

“The situation, we fear, will only get worse in months to come,” the Times writes, citing increasing mortgage rates, the eventual ending of the home buyer tax, and


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TrimTabs: The Real Job Loss Number Was 255,000

The TrimTabs number is a mile (or 244,000) away from the government’s number – why the huge disparity? – Ilene

TrimTabs: The Real Job Loss Number Was 255,000

confusionCourtesy of Joe Weisenthal at Clusterstock

Just about every time the monthly jobs numbers comes out, economic research firm TrimTabs comes out and slams the government’s methodology, usually honing in on the Birth/Death model of new businesses entering the market.

This week is no exception.

Frankly, we’re not sure what to make of their arguments. We’ve been hearing about this Birth-Death issue for a long time, but unless you believe they’re changing their methodology from month to month, then that issue only goes so far.

We welcome your thoughts.

————

TrimTabs’ Estimates 255,000 Jobs Lost in November, While BLS Reports a Decline of Only 11,000

BLS Revises September and October Results Down a Whopping 45%

Something’s Not Right in Kansas!

TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November.  This past month’s results were an improvement of only 10.2% from the 284,000 jobs lost in October.

Meanwhile, the Bureau of Labor Statistics (BLS) reported that the U.S. economy lost an astonishingly better than expected 11,000 jobs in November.  In addition, the BLS revised their September and October results down a whopping 203,000 jobs, resulting in a 45% improvement over their preliminary results.

Something is not right in Kansas! Either the BLS results are wrong, our results are in error, or the truth lies somewhere in the middle.

We believe the BLS is grossly underestimating current job losses due to their flawed survey methodology.  Those flaws include rigid seasonal adjustments, a mysterious birth/death adjustment, and the fact that only 40% to 60% of the BLS survey is complete by the time of the first release and subject to revision.  

Seasonal adjustments are particularly problematic around the holiday season due to the large number of temporary holiday-related jobs added to payrolls in October and November which then disappear in January.  In the past two months, the BLS seasonal adjustments subtracted 2.4 million jobs from the results.  In January, when the seasonal adjustments are the largest of the year,


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Jobs Contract 22nd Straight Month; Unemployment Rate Hits 10.2%

Jobs Contract 22nd Straight Month; Unemployment Rate Hits 10.2%

Courtesy of Mish

This morning, the Bureau of Labor Statistics (BLS) released the October Employment Report.

The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade..


Establishment Data

click on chart for sharper image

Highlights

  • 190,000 jobs were lost in total vs. 263,000 jobs last month.
  • 62,000 construction jobs were lost vs. 64,000 last month.
  • 61,000 manufacturing jobs were lost vs. 51,000 last month.
  • 61,000 service providing jobs were lost vs. 147,000 last month.
  • 40,000 retail trade jobs were lost vs. 39,000 last month.
  • 18,000 professional and business services jobs were added vs. 8,000 lost last month.
  • 45,000 education and health services jobs were added vs. 3,000 added last month.
  • 37,000 leisure and hospitality jobs were lost vs. 9,000 last month.
  • 00,000 government jobs were lost vs. 53,000 last month.

A total of 129,000 goods producing jobs were lost (higher paying jobs). Retail and professional services contributed to to the plus side.

Last month I noted "The one cheery bit of news in the above numbers is the loss of 53,000 government jobs. Unfortunately, this trend is likely to reverse in a major way with as of yet unannounced son-of-stimulus and grandson-of-stimulus jobs packages."

On a month to month basis Government jobs were up by 53,000 even though they did not add any overall jobs. Government jobs, education, and to a lesser extent professional jobs accounted for all (and then some) of the improvement vs. last month.

Note: some of the above categories overlap as shown in the preceding chart, so do not attempt to total them up.

Index of Aggregate Weekly Hours

Work hours were flat at 33.0. Short work weeks contribute to household problems. Moreover, before hiring begins at many places, work weeks will increase.

Birth Death Model Revisions 2008

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Birth Death Model Revisions 2009

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Birth/Death Model Revisions

After the typical in January in which the Birth/Death Model revisions bore some semblance of reality, the Birth/Death numbers remain


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A Reader Asks “How Did 558,000 People Lose Their Jobs When Only 190,000 Jobs Were Lost?”

A Reader Asks "How Did 558,000 People Lose Their Jobs When Only 190,000 Jobs Were Lost?"

Courtesy of Jesse’s Café Américain

Obama Here is an excerpt from today’s Bureau of Labor Statistics Non-farm Payrolls report.

"The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade.

Household Survey Data

In October, the number of unemployed persons increased by 558,000 to 15.7 million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, the highest rate since April 1983. Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points…

The civilian labor force participation rate was little changed over the month at 65.1 percent. The employment-population ratio continued to decline in October, falling to 58.5 percent."

An astute reader noticed that the BLS press release says that 190,000 jobs were lost from payroll employment, but the number of unemployed persons increased by 558,000. What’s up with that?

The BLS report consists of two independent data samples. BLS has two monthly surveys that measure employment levels and trends: the Current Population Survey (CPS), also known as the household survey, and the Current Employment Statistics (CES) survey, also known as the payroll or establishment survey.

There is the "Establishment Survey" which is based on responses from a sample of about 400,000 business establishments, about one-third of total nonfarm payroll employment. The headline payroll number, the job loss of 190,000, is based on this data.

Then there is the "Household Survey" which is a statistical survey of more than 50,000 households with regard to the employment circumstances of their members, which is then applied to the estimates of the US population to obtain the unemployment number. This survey was started in the 1950′s and is conducted by the Census Bureau with the data being provided to BLS. It is from the household survey that more detailed information is obtained about employment statistics within population groups like gender and age, wages, and hours worked. It is this study that is responsible for the unemployment rate of 10.2%.

So which survey is correct? Neither. The truth is somewhere


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Unemployment and Government Jobs

Since it’s such big news, I will report on the latest unemployment report by the BLS, but I dislike spending too much time on it because I consider it one of the weaker or murkier sources of data, at least on a monthly basis.

Often it conflicts heavily with other private or more reliable sources of data, which have been collectively telling a grimmer story than today’s headline news release of an additional loss of 217,000 jobs for August 2009.

Regardless, here’s the news, with my analysis:

Unemployment rate jumps to 26-year high of 9.7%

By Rex Nutting

WASHINGTON (MarketWatch) – The U.S. unemployment rate jumped to a 26-year high of 9.7% in August as nonfarm payrolls fell by 216,000, the 20th consecutive monthly decline, the Labor Department estimated Friday.

Of course, 9.7% would be dream rate to teenagers who are now suffering their own quiet depression with a 25% unemployment rate, and for blacks and Hispanics, who are pulling up an uncomfortable second and third behind the teens.

U.S. payrolls have dropped by 6.9 million to 131.2 million since the recession began in December 2007, the government data showed. Unemployment has increased by 7.4 million during the recession to 14.9 million.

As you probably know, unemployment is measured in two ways:  the percentage rate is derived from the household data, while the actual number of jobs gained or lost is sampled from ‘establishments,’ meaning businesses.  In the paragraph above, we might note that there is now a 500,000 job difference (7.4 – 6.9) between the number of jobs reported lost by households vs. establishments.

The 216,000 decline in payrolls was close to market expectations of a 233,000 drop, but the unemployment rate rose higher than the 9.5% level expected. The unemployment rate was 9.4% in July.

Payroll losses have moderated in most industries in the past two months. Payrolls declined an upwardly revised 276,000 in July. In June and July, payroll losses were revised up by 49,000.

Oops.  A 9.5% rate expected, but 9.7% hit.  That’s a miss.  Also note the large downward revisions, totaling nearly 50k jobs for June and July.   Downward revisions are a sign of weakness.

Government Jobs

By way of commentary, we might also


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The June Non-farm Payrolls Report

More on the employment numbers from the Cafe, with very colorful charts showing a very discouraging picture.

The June Non-farm Payrolls Report

Courtesy of Jesse’s Café Américain

The headline jobs number came out worse than expected, and the paint peeled off the US stocks tape from its recent run into the end of the second quarter.

The trend herd had been looking at the bounce off the bottom and before today’s number had some hopes that the leveling off or even a surprise to the upside would confirm a bottom in the economy. The sharp downturn threw cold water on those happy thoughts. [click on charts for larger images]

Net Monthly Non-Farm Payrolls

The actuals came in about as expected, a little lower perhaps, and as you can see there was a strong downward seasonal adjustment.

Monthly Non-Farm Payrolls Growth

The "Birth-Death" model was in line with the usual swag that the BLS performs at this time of year. As you know this number is added to the "actual jobs number" before seasonal adjustment, so at this time of year it helps to inflate the headline number slightly.

With this regular repetition of the number without regard to the underlying economic activity over the years, and its feed into the actuals, one has to wonder why they don’t just roll this number into their seasonal adjustments? Do they feel the need to justify their tinkering with actual number beyond some limit? The Birth-Death model is certainly no viable rationale, but it does serve to employ a few analysts, and is likely some pet project of a past BLS director.

Monthly Non-Farm Payrolls Birth Death Model

And here is the only chart worth watching, the long term trend. There has been no bottom yet reached in the jobs lost. This is not so much a reflection on the stimulus because of the lag, and the obvious data showing that consumers tended to use the stimulus to pay down their immediate debt which is a worthwhile endeavor, but does not give a quick boost to jobs.

The issue might be a bit of a red herring, because the economic stimulus pales by comparison with the enormous amount of stimulus provided to the banking sector, which is stimulating some operators like Goldman Sachs to pay their employees, on average, a record $700,000 in annual pay. Now THAT is stimulus, but perhaps one that is


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Kimble Charting Solutions

Gold is Knocking on a Key Breakout Level

Courtesy of Chris Kimble.

For the past 5 years, Gold prices have traded sideways. There were plenty of “trades” to be made, but that type of price action tends to grind out long-term bulls and bears.

You can see this in today’s “monthly” closing chart for Gold (shown below).

Gold bulls caught a break recently when Gold broke out above its multi-year downtrend line at (1) and (2). This spurred a big advance in metals & mining stocks.

Can Gold bugs and bulls keep the momentum going? We should find out shortly.

Gold is currently knocking on a key breakout resistance level (3). A bullish message will be sent to bulls if Gold can breakout above the 2017 m...



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Phil's Favorites

Senator Bernie Sanders Should Be Taken Very Seriously as a Presidential Candidate

Courtesy of Pam Martens.

Presidential Candidate, Senator Bernie Sanders, Delivers a Major Policy Speech on Reforming Wall Street on January 5, 2016

On Tuesday, Senator Bernie Sanders of Vermont declared his candidacy to seek the Democratic nomination for President of the United States.

Wall Street On Parade endorsed Senator Sanders over Hillary Clinton in 2016 because Clinton was effectively running as Wall Street’s candidate and as Obama&#...



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Zero Hedge

Trump: "I Want 5G, Or Even 6G, Tech In The US As Soon As Possible"

Courtesy of ZeroHedge. View original post here.

President Trump has finally hit upon the real issue at the center of the US government's battle with Huawei: It's all about the technology. To wit, one reason why US allies and the UK and Germany have been so hesitant to cut ties with the Chinese telecoms giant is that, as its founder pointed out in a recent interview with Western media, there is no real alternative. US telecoms like Verizon still lag their Chinese rivals when it comes to 5G.

So, in a series of tweets sent Thursday morning, President Trump exclaimed that "I want 5G, and even 6G technology in the United States as soon as ...



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ValueWalk

Liquid Technology Clinches Bid To Dispose Theranos IT Assets

By Jacob Wolinsky. Originally published at ValueWalk.

Liquid Technology Provides Theranos With Post-Shutdown Equipment Processing and Recycling

Theranos [Public domain], via Wikimedia CommonsThe Company Spearheaded the Biotech Start-Up’s Task of Decommissioning and Reselling of Thousands of Unneeded IT Assets

Q4 hedge fund letters, conference, scoops etc

...

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Insider Scoop

Seaport Global Initiates Bullish Coverage On A Dozen Cannabis Stocks

Courtesy of Benzinga.

Seaport Global turned bullish on cannabis stocks Thursday, initiating coverage on a dozen names. However, some of the most popular U.S. cannabis stocks are not among the firm’s top picks.

The Analyst

Seaport Global analyst Brett Hundley initiated coverage of the following cannabis stocks with Buy ratings:

  • Aphria Inc (NYSE: APHA), $18 target.
  • Hexo Corp...


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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Thursday, 02 August 2018, 07:48:20 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: $600 BN interest payments for US gov, print baby print



Date Found: Sunday, 05 August 2018, 09:22:26 PM

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Comment: Hire FED interest rates always brings double trouble



Date Found: Monday, 06 August ...

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Digital Currencies

Cryptos Are Surging: Bitcoin, Ethereum Hit One-Month Highs As Institutions Dip Toes

Courtesy of Zero Hedge

Cryptocurrencies are surging while the US equity markets take the day off. Ethereum is up over 18% from Friday's 'close' and the rest of the crypto space is a sea of green. While no immediate catalyst (headline or technical level) is clear, increasing chatter over institutional investors dipping their toes in the space have prompted an extension of the positive trend.

A sea of green...

Source: Coin360

Ethereum is leading the charge follow...



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Biotech

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

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

 

Cancer: new DNA sequencing technique analyses tumours cell by cell to fight disease

Illustration of acute lymphoblastic leukaemia, showing lymphoblasts in blood. Kateryna Kon/Shutterstock

Courtesy of Alba Rodriguez-Meira, University of Oxford and Adam Mead, University of Oxford

...

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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

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In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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