Blue World Employment Report Analysis 6-2-2017

Blue World Employment Situation Report Analysis

Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

Friday June 2, 2017

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

 

 

FOUL!

Wow, it looks bad. Usually the issues are confined to the headline, but the filth filters right through to the cave floor this time. It is hard to imagine a report that diverges more radically from every other employment measure over the last month. We’ve seen the report become politicized and lose some of its validity at the headlines, like the Unemployment Rate, but usually the details paint a different picture. Not this time.

The only two positives were the number reporting as “Unemployed.” That total fell by 195k. The other was the Private Sector total which tallied 147k, 9k higher than the headline of 138k because the government shed 9k for May. That’s some perspective on how bad this report is, 147k for the Private Sector counts as “good” news!

The balance of the Blue World key indicators including Labor Force size, Participation Rate, total Employed, and Not in Labor Force moved the wrong direction and in almost implausible magnitudes. This will likely have an impact on the Labor Market Conditions Index, which updated and revised to the North at the beginning of last month. We released an update based on that, and we will do so again next week if warranted. Hours and wages are uninspiring.

This report coupled with the inflation reports of the past month should assure a current victory for the doves at the Fed, so don’t look for any additional rate hikes coming out of the next FOMC meeting.

What does it mean for the direction of the economy? There are so many balls in the air, Russian ties, Paris Accord, Travel Ban litigation, to name just a few headliners. The ones not getting a lot of play are the regulation roll-backs occurring. If you’re wondering why the markets continue to run in all this turmoil and uncertainty we can look there. Congress hasn’t gotten much done, but restrictions and burdens on business are being reduced at a very brisk clip. If anyone in a position to impact that process is listening, we need to add the Fiduciary Rule to the list of evils that need to be vanquished.

Here is a link to our first ever podcast for the Blue World Economic Index® report released yesterday. It, also, has some interesting findings, including on employment.

Matt will be live discussing some investment ideas and market conditions on CBS Chicago’s “Noon Business Hour”, AM780 and 105.9FM, on Monday at about 12:50p Central.

Interesting times, indeed. We’ll keep an eye on it and report back here next month!

Thanks for reading, and please stay tuned…

 

Release Site: www.bls.gov

 

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

 

©Blue World Asset Managers, LTD Friday, June 02, 2017

Blue World Economic Index® for May 2017

Brief Explanation 

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the Last or First Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

Thursday, June 01, 2017

BETTER! BUT…

 

 

 

 

 

 

 

There is no doubt that the BWEI® and, therefore, the economy are moving, but in a rather unusual situation, May 2017 is a little skewed by some quarterly review and revision of the short and long term trends. Because we assign more weight to the trends than we do individual report data points, revisions here can have a seemingly dramatic effect on the Composite if there are more than the usual upgrades or downgrades in a given month. Such was the case this month. That’s good in that it means some positive trends that we just couldn’t deny any longer are developing but we should not get over excited knowing the disproportionate impact of multiple trend upgrades in a single month.

Caveats in place, let’s break it down. Real Estate took a bit of a drubbing in May 2017, dropping .17 from .31 to .14, mainly from a big drop in Construction Spending and a long-term downgrade to Existing Home Sales. The other seven reports for this category held up just fine.  For the first time since the election, Consumer measures gave a little back. This was not, however, on the backs of the direct metrics of Sentiment, Comfort, and Confidence. It was more from the indirect reports such as Vegas Strip Gaming Revenues or the Gallup ECI being less strong.

General Measures and Inflation were unchanged for the month but within Inflation, Farm Prices and the Employment Cost Index are hinting at some pressure. Good to see.

Employment, Retail, and Services all showed some gains although the bump in Retail was modest and against a very low bar after April. The improvement in Employment is certainly taken more seriously in light of today’s ADP report. Let’s hope the BLS follows suit tomorrow.

So, what’s the huge news? If you’re counting you already know it is Manufacturing! The Fed Sub Group is still ginormous and growing with some trend upgrades. But, as we’ve said, much of those are anecdotal, survey-driven reports. We need to see some movement in the hard data to validate the optimism. Well, SOME showed up last month in that three out of six current reports posted positives with a positive overall average. Folks, it’s been a long time since that’s happened! In addition, the short and long-term trends of some of the non-Fed reports, like Factory Orders, commanded their short and or long-term trends be reviewed. All this yielded a pop of .37, taking the Manufacturing composite from -.18 to +.19. That’s what vaulted the overall Composite Index to a .05 jump versus what would have been closer to a .03 advance. Both scenarios are good and leave the final reading for May 2017 at -.07, up from April’s -.12.

Blue World Jobs Report Analysis will be out tomorrow. See you back here when the calendar says July!

 

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release sites should be cross referenced.  The index assignments represent the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on the index.

©Blue World Asset Managers, LTD Thursday, June 01, 2017

Blue World Employment Situation Report Analysis

Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

Date Monday, May 08, 2017

 Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

Well, that’s a little better. The details are still weaker than we’d like to see, but last month’s train wreck does look like an outlier. While we thought there may be an upward revision to March, we saw the opposite as it moved from 98k to 79k. The Labor Market Conditions Index, as we expected, did show much stronger than the BLS headlines would have implied. So, what about April?

April looked much better at the top with the 211k. Slightly disappointing, however, is that the private sector remained below 200k at 194k. In spite of that and the mind-numbing March numbers, the Private Sector is already averaging 14k higher per month than 2016.

The Participation Rate is sub-63 with a very disappointing 162k returning to the Not in Labor Force group, BUT we may be able to start to hallucinate a flattening of that graph for the first time in many years. That’s the chart this month. Feel free to let us know if you see what we see. Total Employed and Total Unemployed both made solid moves in the right direction while the Total Private and Manufacturing diffusion indexes remain comfortably above 50. That is all wonderful to see.

Wages? Meh. The work week remains range-bound as does overtime in Manufacturing.

The Fed’s Labor Market Conditions Index won’t post until 10:00a Eastern, and we want to get this to press, so we will simply predict an improvement there as well. They do, after all, reject the “expert” analyses and read these things the way Blue World does…

Have a great month and we’ll see you here at the back end with the Blue World Economic Index® summary.

As always, thanks for reading, and please stay tuned…

 

Release Site: www.bls.gov

 

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

 

©Blue World Asset Managers, LTD Sunday, May 07, 2017

Blue World Economic Index® for April 2017

 

Brief Explanation of the Index

 

Blue World Economic Index®

Scale: -2 to +2

Release Date:  Usually the Last or First Business Day of Each Month

Release Site: www.blueworldassetmanagers.com

Management Value: Critical

Release Site: www.blueworldassetmanagers.com

Date: Monday May 1, 2017

 

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

The gulf between consumer and institutional optimism surveys, and the hard performance data continues to be the story in the Blue World Economic Index®. Consumer mood and anecdotal institutional survey data continue through the roof, although there was some pullback at the institutional level in April. Nevertheless, retail and consumer spending were bordering on abysmal for the month so the aforementioned gulf actually widened when the whole I’m-an-economics-geek world expected it to start showing signs of narrowing!

The composite index was essentially flat coming in at -.12 compared with -.11 in March. That flatness is on the back of a major surge and some trend upgrades very late in the month right up to and including Friday morning. It makes some sense to post the whole Major Category table this month in order to limit what could easily run into three pages of explanation, but we will hit the highlights and lowlights here in the text body. Let’s start with the weak, and work our way better.

Of the eight major categories, the far and away biggest losers were Services and Employment, both posting .17 drops. Yes, we said Employment, regardless of all the nonsense we hear about how great the labor market is. We still have WAY too many people in the Not in Labor Force camp to say employment is strong. Retail took a hit, and that was in large part due to a slowdown in auto sales.

On the upside, Consumer measures are on a rocket ride that just won’t slow down, and that even includes Sentiment which takes party affiliations into account. This is just bizarre when compared to consumer spending, which was the biggest hit to Friday morning’s GDP report.

As you can see above, the Fed subgroups did pull back a bit but are still strongly positive at .3, but the hard data from the non-Fed group breakout are decidedly negative and moving down.

Q2 will be fascinating to watch as this economy struggles to find a direction. In the meantime, look for the Blue World Jobs Report Analysis next Friday or Monday.

Have a great May and a happy spring!

 

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release sites should be cross referenced.  The index assignments represent the opinion of Blue World Asset Managers, Ltd. who does not warrant or guarantee predictions based on the index.
©Blue World Asset Managers, LTD Monday, May 1, 2017

Blue World Employment Situation Report Analysis 04-07-2017

Blue World Employment Situation Report Analysis

Release Date: Usually on the first Friday of the month

Release Site: www.bls.gov

Market Impact: Usually Very High

Management Value: Critical

Friday, April 07, 2017

Brain Surgery is not Rocket Science to a Brain Surgeon©

BLS

Bad at the headline and worse for the Private Sector, but usually when this happens we talk about the really bad stuff hiding deep in the weeds. For as much as we say the devil is in the details, sometimes we find an angel or two. That’s the case today and a very welcome surprise considering the train wreck of a headline we woke up to.

The published number is 98k, and that’s bad enough, but the private sector came in 9k below that at just 89k. One of the most striking things about that number is how far it deviates from the ADP report from Wednesday. We never consider ADP to be a good predictor, but it is rarely that far afield, and the Participation Rate is still at only 63%.

After that the skies start to brighten slightly. The Civilian Labor Force grew by 145k, and the Not in Labor Force number remained essentially flat. Construction and Manufacturing, while off their torrid paces of the last couple of months, remained comfortably in the plus column, and the Diffusion Indexes for total private industry and manufacturing remained above 50, indicating growth.

The real eye-popping stats, however, were the Total Employed and Total Unemployed entries, with the former checking in at +472k, and the latter falling by 326k. Those are some very pretty stats and all the more surprising and welcome in the face of the net new hire numbers. We don’t need to talk about the uselessness of the Unemployment Rate, right?

What does it all mean? Good question. Based on what we see in the deep end of the data pool, we will be curious about a revision next month, because some of these numbers just don’t line up. We also think that the Labor Market Conditions Index will show some strength on Monday. The earliest data post healthcare fail shows the consumer continues undaunted, but translation to hard spending data has not materialized yet. You can see more about that in the Blue World Economic Index® report published last week.

This will be an interesting month. Trucks are running people over everywhere, Syria is gassing its people, we gave Assad a missile shower, and a Russian war ship has set course to intercept the U.S. destroyers that provided the spray! The Senate was forced into the nuclear option, healthcare reform failed, tax reform is in question, and we effectively have three parties occupying the Congress. Of course there’s more, but that’s enough to get us started!

See you at the back end of April for the next Blue World Economic Index® report. In the meantime, may you manage your business well!!

 

Thanks for reading, and please stay tuned…

 

Release Site: www.bls.gov

 

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

 

©Blue World Asset Managers, LTD Friday, April 07, 2017