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Blue World Economic Index™ for January 2016

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Blue World Economic Index™

Released Monday, February 01, 2016 for January 2016

January was not a very good month for the economy according to the Blue World Economic Index™ which posted its worst showing since we began publishing it publicly in 2014.

The composite index came in at -.32 with deterioration in all but two (Employment and General) major categories. Manufacturing continues to get thumped and is the most notable negative at -.91, a reading we have not seen since the inception of the index.

While there is food for both hawks and doves in the individual reports, overall we are showing an economy that was, in our opinion, not ready for the rate hike and certainly not ready for more.  There is, of course, a growing chorus of voices joining our assessment in the financial media.  Let’s hope for a better February.

Watch for the Blue World Jobs Report Analysis which will be out this Friday.

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release sites 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 Monday, February 01, 2016

Blue World Jobs Report Analysis 01-08-2016

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Blue World Employment Situation Report Analysis

Release Date:  Usually the first Friday of each month

Release Site: www.bls.gov

Market Impact: VERY HIGH

Management Value: CRITICAL

Friday, January 08, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon© 

 

Stump Speech - 1-16

 

Conspiracy? No. Cynical? We’ll get back to ya.

292k net hires and 275k of them in the private sector, just where we want to see ‘em.  Not in Labor Force and total Unemployed are down, and the size of the labor force is up.  These are many of the things Blue World watches intently to take the true temperature of the labor situation, and they are all very encouraging.  Then it gets a little weird.  We have seen much smaller numbers move the Unemployment Rate very dramatically and the same for the Participation Rate.  Here we see just a .1 move for participation and the unemployment rate was unchanged.  Strange days indeed.  Wages moved backward slightly, hours were again flat, and the diffusion indexes moved in the right direction.

As usual, service providing industries were the big winners accounting for 230k of the net 275k private sector hires.  Usually we deem this area too deep in the weeds to publish, but it is worth pointing out this month because the PMI Services and ISM Non-Manufacturing surveys both reported negative results with hints at slowing hiring.  The regional Fed manufacturing reports have been in the red for quite some time.

While we are not conspiracy theorists, we are proud skeptics and even prouder cynics.  Therefore, we must include all of our observations in these analyses, because the information is just too critical to making informed management decisions.  The unfortunate truth is that the jobs and some other high-profile reports have been politicized in the last several years.  Fortunately, the shenanigans occur at the headlines, leaving the Devil safely ensconced in the details.

The majority of the data from 2015 screams economic stagnation to slowdown.  In fact, the Blue World Economic Index™ spent all but one month in negative territory, with the annual average coming in at -.11.  Without going totally wonk, suffice to say that some important information in today’s report exhibits noticeable departures from detail in other reports to a degree that is out of character.  We must also now be concerned with who is getting these jobs.  There is building evidence that a disproportionate number of illegal aliens are getting many of the new jobs, and that could have a material impact on the math applied to legal citizens counted in the reports.

Overall, we won’t look a gift horse in the mouth.  Let’s hope (we hate that word relative to business and economics) that a positive trend can take hold from these last two reports.  Will we advise clients to open the checkbook and start pushing expansion based on that hope?  No. Why not?  Because:

We just got an ill-advised rate hike which now needs some really good PR and pronto, U.S. manufacturing continues to hemorrhage, commodities are suffering a historic rout, deflation is a constant companion, the dollar is too strong, our markets are tanking, China is burning, North Korea detonated an A bomb, Iran is ignoring our nuke deal, ISIS is everywhere, Al Qaeda is staging a comeback, threats are pouring over the borders of every significant world economic power and, oh yeah, the biggest motivation to fudge, IT’S AN ELECTION YEAR.

Conspiracy? No. Cynical? ABSOLUTELY!

Have a happy, safe, and prosperous New Year and, 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 Friday, January 08, 2016

Blue World Economic Index® for December 2015 and Year End Summary

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Blue World Economic Index™

Released Monday, January 04, 2016 for December 2015 and Year End Summary

“Yellen indicated that Wednesday’s rate hike was partially defensive. If rates stayed at near zero, the Fed might not have the tools to combat a recession.”

So, we guess the Fed Chair believes that in order to combat a recession we must first cause one…?

Ms. Yellen described the rate hike as “preemptive.”  Based on the data that must mean preemptive of growth!  As Blue World has been saying, the data do not support a hike…period.  That is evidenced in the economic metric output from 2015 as viewed through the prism of business managers as opposed to politicians, economists and other “experts” like the Fed Chair.

The December 2015 BWEI came in at -.23, a .024 drop from the November 2015 reading.  The average for all of 2015 was -.11 with September being the only month to break above zero.

Of the eight major categories Consumer, General, Manufacturing, Services and Retail posted small declines while Employment, Inflation and Real Estate showed fractional improvement over November 2015.

For the year 2015, Consumer measures led the way at .51 while Real Estate, Retail and Services eked out tiny positive readings leaving Employment, Inflation and Manufacturing in the negative column.  General measures logged in at 0.00.

If you have any kind of a pulse you already know the markets came out of the 2016 gate in spectacularly negative fashion and the ISM reading is in full blown contraction…but that will factor in to January 2016.

We wish everyone a safe and prosperous New Year and when you vote please remember, POLICY MATTERS!

December 2015 Graph

 

 

 

 

 

 

 

 

 

 

 

 

 

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed.  The official release sites 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 Monday, January 04, 2016

Update to the December 2015 Jobs Release – Labor Market Conditions Index

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Blue World Employment Situation Report Analysis

Release Date:  Usually the first Friday of each month

Release Site: www.bls.gov

Market Impact: VERY HIGH

Management Value: CRITICAL

Monday, December 07, 2015

Brain Surgery is not Rocket Science to a Brain Surgeon©

Important Update to the Blue World Jobs Report Analysis

When assessing the health of the labor market the Fed knows what we know…the BLS report headlines have been rendered useless.  So the Fed directed their research department to give them a better yard stick to measure the jobs market.  What they got was the Labor Market Conditions Index. 

The Fed created this index to get a better handle on the true state of the labor market.  You may wonder why they would feel the need for a new index when we have the Employment Situation Report.  The answer shows how far ahead of the curve Blue World is! This report is “unofficial,” yet gets lots of attention from the Fed because they realize what Blue World’s reports have been saying for years; the unemployment rate is artificially low!  Wouldn’t ya know that the detail the Fed research department looks at to create this index very closely matches the Blue World analysis! (High 5 us!)  They did a lot of work for nothing…they should have just been reading us!

Note from the graph that in 2012 the index was near 12, and there was no serious talk of a rate hike then.  The index has plummeted since, only recovering to about 8 in the succeeding years, and averaging only 1.4 for all of 2015 with two consecutive months below zero.  Even the highly touted, monstrous report from October with its upward revision was only able to move the index from 1.6 to 2.2.

This is why dovish Fed principals are saying it is not time for a rate hike yet.  They’re right!  The problem is that the pressure is making it harder and harder for them to resist. We hope they can hold out.

Labor Market Conditions Index 12-15

 

 

 

 

 

 

 

 

 

 

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 Monday, December 07, 2015

Blue World Jobs Report Analysis 12-04-2015

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Blue World Employment Situation Report Analysis

Release Date:  Usually the first Friday of each month

Release Site: www.bls.gov

Market Impact: VERY HIGH

Management Value: CRITICAL

Friday, December 04, 2015

Brain surgery is not rocket science to a brain surgeon©

to: J. Yellen Wish you were here!

to: J. Yellen
Wish you were here!

 

 

 

 

 

 

 

 

Yellen says 100,000 would cover new entrants

We can’t figure out which medium sized Central American economy she’s talking about, but we think they’re gonna get a rate hike!

More later…

Mixed…again and that’s better.  There is a lot going on here including some really confusing comments from Fed Chief Yellen.  Let’s dig in.

The unemployment rate is steady again at 5%, and who cares.  We know why that is irrelevant. (If not, please review any number of prior posts from our archives)  The private sector added a net 197k with government payrolls contributing 14k to make the headline total of 211k.  The Participation Rate ticked up a tenth to 62.5.  That is still ridiculously low, but up is up.  For comparison it was 62.9 in November of 2014, also ridiculously low, but now a rate hike seems more likely than it was then.  Go figure.  The Labor Force grew, the number of unemployed grew, but the Not in Labor Force total has now fallen for two months in a row. Perhaps a hollow victory right now as the number is still 94.5M, and that is 2M higher than November of 2014, but hey, we have to start somewhere… A lot of Weird numbers to be sure, but we’ve gotten used to that.

One of the most notable figures coming out of this month, however, was the number of those at work part-time.  The BLS tracks three stats here.  Those at work part-time because they want to be, those who are part-time due to not enough work to do at their jobs, and those who want to be full time but can only find part-time work.  The latter two come under the heading of Part Time for Economic Reasons.  That number jumped by 319k in November.

Usually we’d talk about wages and hours at this point, both uninspiring, but everyone is most concerned with what the Fed will do.  We still have a lot of data to come before the meeting, and Blue World does not believe the data has or will support enough strength for a hike.  For a little more detail on that, have a look at the Blue World Economic Index™ for November 2015.  But if we are looking for anecdotal evidence of what they’ll do there is some available.  Last month on WBBM in Chicago Matt talked about the Chicago Fed President, a dove, said he didn’t believe it was time but he would not dissent at the next vote.  BUT the big one was from Janet Yellen herself, yesterday, when she said it takes fewer than 100k jobs to cover new entrants and anything above that cuts into the existing slack.  We are having difficulty deciding which statements are more absurd; the nation is at full employment with a sub-63% Participation Rate, and 94.5M Americans not in the labor force or that the United States Economy adds fewer than 100k eligible workers per month!!  Sounds like a Fed that is bound and determined to raise rates in spite of the data!  Prior to now Blue World has said we believe there is well below a 50% chance for a hike.  Based on Ms. Yellen’s comments and several other anecdotal points, we now believe we are better than 50% likely for one…and we’re not ready.

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, December 04, 2015