Blue World Jobs Report Analysis 04-06-2018

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: Friday, April 06, 2018 

Brain Surgery is not Rocket Science to a Brain Surgeon©

Cooling was expected but this was kinda weird. Once we look at all the net-nets it was a mixed report with an unmistakable positive lean even though the headline shows a substantial miss. Getting deep in the weeds and doing a lot more math than usual was key to understanding what this one really said. There are, of course, already thousands of “expert” “analyses” out there by both sides of the political aisle and financial industry with their own slants, so as always, read those for amusement and stay here for the actionable intelligence needed for strategic management decision making!

At the headline we see 103k whereas most consensus estimates called for 175k to 200k. The good news is that of the 103k, 102k were Private Sector adds which also picked up a positive revision from last month pushing the YTD 2018 average over 200k. Most of the positive developments from our go-to stats in last month’s monster report held up and wages hinted at some pressure. The work week length was steady and Manufacturing was a big winner again. The Diffusion Indexes returned from outer space but remained comfortably (and more sustainably) above 60. The table above shows annual averages back to 2014 for some of those key stats and you can see which are stubborn and which are making progress.

Concerns? A few. Retail got beaten up and that is consistent with yesterday’s Challenger layoffs report. Participation Rate and Not in Labor Force numbers continue to disappoint and there were too many Part-Time jobs but that tends to be volatile. We don’t think that this will force the hawks from their perch at the Fed so hopefully they’ll leave rates alone a while longer but they seem to look for any excuse these days.

Overall it was a good March for the economy. The Blue World Economic Index® made a nice move led by Employment and Manufacturing. Services looked good with rare and welcome tri-confirmation of strength despite slight pullbacks in ISM and PMI’s non-manufacturing reports.

From our consulting point of view the light is either Red or Yellow. We’ve never seen a pure Green light but we have perceived some blue tint coming in of late so there may be some Green out there…but we’ll never admit it!

Have a great April and we’ll see you back here in May.

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 06, 2018

Blue World Economic Index® Report for March 2018

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

Date: Tuesday, April 03, 2018

 

 

 

 

 

Analysis

The economy is still on the move according to the March 2018 readings. The index advanced led by substantial moves in Employment (no surprise considering the February Jobs Report) and…wait for it…Manufacturing where the advance was entirely from the more objective Non-fed sub-group.

There continue to be some nagging risks, economic and political, out there including, of course, the Fed, lack of inflationary pressure, trade war fears, and – – can’t believe we’re saying this – – porn stars, but the economy appears increasingly resilient in the face of all of it.

The Numbers

The table showing the March numbers is above and we can tell you that April appears off to a strong start. Let’s see if it holds!

The Blue World Jobs Report Analysis will be out Friday morning. See you there!

 

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 Tuesday, April 03, 2018

Blue World Economic Index® for February 2018

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

Date: Thursday, March 01, 2018

 

 

 

 

 

Analysis

Confirming our regular observation that stock market performance is not a good proxy for economic health, the U.S. economy remained firmly on solid ground in February 2018 pulling back .04 from its record high .18 for December to its prior record high of .14, but there were some hints at trouble. The first half of the month looked to continue an uninterrupted northerly trend, but then mid-month started getting weird with a huge downgrade to December retail, soft January readings and a sudden build to inventories at the manufacturer and wholesale levels. Retailer inventories remained low, but the obvious concern now is that the motivation to aggressively re-stock may be muted.

The Inflation composite was unchanged at a continued weak -.23. The PPI had been showing signs for months, but the CPI just never followed suit. This month it was the CPI showing a material pop and the PPI showing weakness. The Fed is signaling more rate hikes, and that has spawned “Correction Part Deux” this week. We remain of the opinion that inflation is not a material risk at present based on the inconsistent and non-confirmatory nature of the six reports that comprise the BWEI® Inflation component.

While we still consider the Fed to be the biggest risk to the economy right now, there are several other things we could talk about but only two of real note. First is that the Consumer component is still stratospheric, regularly setting new records, and showing no sign of slowing. Second is the seemingly emergent turbulence in Real Estate as (you guessed it) rates rise. We are starting to see corroboration in other subtle corners of the economy such as the wobbly performance of furniture sales in the last couple of months. 

We’ve already fielded a couple of questions regarding the downward revision to GDP. Fuggetaboudit. The downgrade was largely based on the inventory phenomenon and a blip widening of the trade gap as exports took a hit. That masked what was an otherwise 4%+ report.

The Numbers

We got a little long-winded in the analysis section, so instead of listing out the numbers we decided to just post the composite table for the month. If there are any specific questions, give us a call or ping us through the Blue World contact form.

The jobs report has been scheduled for Friday, March 9th. Our analysis will be up that morning and then Matt will go on the air in Chicago with the Noon Business Hour crew at WBBM AM780 and 105.9FM at 12:09 central time to break it down live. The podcast will post later in the day.

 

Have a great March and may your brackets be un-bustable!!

 

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, March 01, 2018

Blue World Jobs Report Analysis – February 02, 2018

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: February 2, 2018

Brain Surgery is not Rocket Science to a Brain Surgeon©

 

 

 

The ugly, the bad, and the good sums up the employment picture for January 2018. The headline looks good, but there is some real stinky stuff under the surface so here we go…

November and December were revised down a net 24k. The Not in Labor Force total and, consequently, the Participation Rate are ridiculously stubborn, having added 153k and remaining at 62.7% respectively. Weekly pay for the Private Sector, Construction, and Manufacturing all receded, and the workweek got shorter in total and for Manufacturing and Construction. That all seems reasonably confirmatory of the Productivity and Costs report released Thursday that showed productivity down but unit labor costs up in Q4 2017, as hourly pay did increase. Sounds pretty bad, right? Not so fast!

The headline boasts 200k net new hires which easily beats the consensus averages and of those a whopping 196k were added in the Private Sector. The Labor Force grew by 500k, and the Total Employed was up 400k. That’s today’s graph and we can see the lines are moving the right direction and showing some convergence. That’s good. Other anecdotal data points out there suggest some of the stinky stuff above will experience some positive revisions over the next 3 months, and we will begin to see the impact of the tax reform trickling in next month.

All in all, we are in good keeping with last month’s report describing 2017 as “mixed.” It still is. But keep in mind what an improvement that is from where we’ve been in the not-too-distant past.

To answer the three most frequent questions we field of late, ride the stock market wave, but DO NOT pull down the safety nets. Stop orders, inverse ETFs, index Put options, alone or in combination, are all good hedge vehicles depending on the structure of the portfolio. Give us a call if you’d like more detailed thoughts. In small and mid-size firms, be leaning in the direction of growth vs. cash stockpiling for rainy days, but make sure you move on quantifiable demand as opposed to getting out over the skis on speculation alone. Bitcoin? No.

 

That’s it for this month. See you at the month’s end for the next Blue World Economic Index® report, which posted a record high for January and got off to a great start for February, and the next Jobs Report is scheduled for…wait for it…Friday, March 9th. Doesn’t that sound wonderful?!?

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, February 02, 2018

Blue World Economic Index® for January 2018

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

Date: January 31, 2018

 

Analysis

What else can be said? The economy is on the move. The BWEI® made a material move to the North this month, and much of that was based on quarterly reviews of the twelve and twenty-four month trends which are more heavily weighted when calculating the index value. An upgrade of the ADP 1-year trend from -.5 to .5 was particularly impactful.  Within the Consumer Major Category, the TD Ameritrade IMX demanded trend upgrades as did Investor Confidence, while the Bloomberg Consumer Comfort Index set a monthly average record high.

We continue to feel the momentum is real but fragile and subject to political, economic, and policy risk, not the least of which is an apparent bias toward prophylactic rate increases in anticipation of inflation. The Hawks need to stand down for a while and let this thing develop. Uncertainty about the outcome of investigations is causing hesitancy as the world frets about whether the guy whose policies sparked the move will make it through a full term.

There was a great deal of anticipation regarding the Employment Cost Index report that came out Wednesday morning, but we don’t know why. This is a quarterly report which won’t take the effects of the post-tax reform wage increases into effect until Q2 of 2018. In spite of that, one can hallucinate a slightly positive trend developing already. Matt talked about the impact of tax reform on WBBM’s Noon Business Hour in Chicago on January 11th. You can follow the link, scroll down to the 11th and Matt starts at 2:20 into the podcast. 

The Numbers

The index advanced .06 to .18 (rounded) from .11. That ties the all-time record high set in September of 2014.

Employment, Inflation and Services remain painted in red ink where Employment showed material improvement, Inflation retreated fractionally, and Services were still stubbornly unchanged. Consumer, General Measures, Manufacturing, Retail, and Real Estate are positive where all padded their leads except Manufacturing and Retail, which showed fractional slips. The Manufacturing pullback was actually welcome as the Fed sub-group surveys came back down to solid yet sustainable levels of strength.

ADP was huge Wednesday morning. Let’s see if it translates to the BLS out this Friday the 2nd of February. The Blue World Jobs Report Analysis will be out before noon Friday. See you there and have a great month!

 

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 Wednesday, January 31, 2018