Blue World Employment Report Analysis July 8 2011

Employment Situation Summary

Release Date:  Usually the first Friday of each month
Release Site:
Market Relevance: VERY HIGH
Management Value: VERY HIGH

Brain surgery is not rocket science to a brain surgeon.©

Friday, July 08, 2011 

Blue World Employment Situation Analysis

Well, here we are.  Another month.  Another employment report.  Another batch of surprised “experts” and disappointed investors.  Why?  There are several “whys” to answer.  Another month is obvious and we know every new month brings a new report.  The only interesting thing about this one is that it occurs under the unusual situation of publishing on the second Friday of the month because the first Friday was on the first of the month in which case the data just isn’t ready, yet.  Why were the “experts” surprised?  Because instead of lifting their pointy little heads out of the cubicles and seeing the world around them they continue to rely on two dimensional data sets.  If you follow us on Twitter you know that we warn against knee-jerk reactions to the unreliable correlation between the weekly unemployment insurance application numbers, the ADP report and some other more obscure data.  Those are reasonable cursory numbers to consider but I would think the “experts” would eventually realize that they get burned by relying on them for predicting the BLS numbers more often than not.  I know we figured it out.  Wall Street is managed by its own set of “experts” who tend to follow the predications of the economic “experts” and have not yet reached the epiphany that the headlines they read after the report often invalidate  the interim prognostications with words such as “surprised” and “unexpected.”  That’s “WHY.”  Investors: There are no fundamentals to support a sustained market run and reality WILL catch up, eventually.  Play defense.  If you don’t know what that means PLEASE contact us. 

The numbers are the numbers and they are worse despite some print we’ve already seen suggesting they are essentially unchanged.  Most notably the U-5 (Total unemployed, plus discouraged workers, plus all other persons marginally attached to the labor force, as a percent of the civilian labor force plus all persons marginally attached to the labor force) and U-6  (Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force).  These are often referred to as the true un and under employed rate as the data captures more people who gave up, are on the fringes of looking for work and those employed part time because they simply can’t get full time work.  U5 has been consistently between 10.3% and 10.5% since February.  This month it is 10.7%.  U6 has remained within a .2% range of 15.7% – 15.9% for four months but for June shot up to 16.2%.  That is a staggering figure.  Our 25 year-old + crowd with a Bachelor’s degree, or higher, remain unemployed at historically reprehensible rates and the number of overtime hours required in manufacturing dropped in spite of the recent “glowing” reports in the media.

Policy matters, folks and this administration’s are absolutely destructive.  Perhaps lower taxes, fewer regulations and elimination of the uncertainty surrounding Dodd-Frank and Healthcare are worth a try…

We remain in a very defensive posture with our investment strategies and will for the foreseeable future.

Thank you for reading and…stay tuned!

Release Site:

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release site should be cross referenced for accuracy and footnoting.  The analysis represents the opinion of Blue World Asset Managers, Ltd. who are not giving advice and does not warrant or guarantee predictions based on its analysis.

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