Messin’ with Markets is More Dangerous than Messin’ with Sasquatch!

Posted on September 13, 2012 by blueworldadmin

Thursday, September 13, 2012

Ignorance is curable. Stupid is forever.©

Messin’ with Markets is More Dangerous than Messin’ with Sasquatch!

Time to Roll Up a Newspaper and Smack the Market “Experts” on the Nose!

GDP is below 2%. Claims for unemployment benefits are up and get revised higher every week. A record number of Americans are on government assistance. Social Security and Disability benefits hit record highs with a full month left in the fiscal year. Consumer comfort, confidence and sentiment are low and falling. Investor confidence is weak. Manufacturing is contracting. The Eurozone is on the brink of financial collapse. Our national debt is over $16 Trillion. Foreclosures are high and rising. Terrorists are attacking U.S. Embassies around the world and murdering Americans. And unemployment is over 8%…for over 40 months…yet, somehow, the Dow is up over 200 points on 9/13/2012 because the Fed announced QE3?

It should be of tremendous concern to everyone who has investments in the public markets that market performance has become SO dependent on government action. Do you realize that the actions contemplated by governments have become more important to the public markets than business fundamentals? Governments don’t even have to do anything. All they have to do is hint that they might do something, and the markets go crazy. It may be a suggestion that the Europeans may bail out Greece, or it may be the U.S. Fed announcing a new round of stimulus, as is the case today.

Let us explain what Quantitative Easing is in simple terms, then decide if you want your investment nest egg tied to more of it. In its simplest terms it is trading short term debt for long term debt. It is the proverbial kick-the-can-down-the-road exercise. The Fed uses our money (tax receipts) to buy back short term bonds (loans to the government) and refinance them for a longer term. The massive buy-back causes a drop in interest rates that is expected to stimulate the economy. It is the exact opposite of what they do during boom times when they think the economy is “overheating” and they want to avoid inflation by artificially raising the interest rates to slow things down.

Folks, we’re telling ya, messin’ with markets is more dangerous than messin’ with Sasquatch! At some point this will have to revert to being about economic fundamentals. When it does we recommend having the A-Team defense on the field or watch from the stands because it could be a catastrophe.

We can’t understand the exuberance at any level BECAUSE IT DOESN’T WORK, but we would think that the “experts” who get so giddy about such stupid and detrimental policies would have a learning curve that breaks off 180° somewhere. After all, we have plenty of evidence that these measures don’t work in the face of the current economic environment. You know what they say about the definition of insanity being the duplication of effort over and over yet expecting different results? O.K. the “experts” are not just morons, they’re insane.

For those of you wondering how we can make such assertions regarding the ineffectiveness of prior actions rendering the current ones “insane”…

Every effort is made to ensure accuracy of data transcription but accuracy cannot be guaranteed. Referenced sources should be reviewed. Any 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 Thursday, September 13, 2012

Employment Situation Analysis – 09-07-2012

Posted on September 7, 2012 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, September 07, 2012

Brain surgery is not rocket science to a brain surgeon©

The big question facing us this morning is “to graph or not to graph.” This is one of the worst reports we’ve seen in a while, and that’s up against some pretty stiff competition. The market silliness is always entertaining, and today is no exception. The other data-driven graphs are just striking.

The July number was revised down significantly, and that’s consistent with what we said on CBS Radio last month. {Podcast at http://owl.li/cJ3T1 – starts at 2:30 in} 96,000 net jobs is “only” about 30,000 short of the “expert” consensus, and that is just about the best news we can find no matter how deep we dive into the minutiae.

25+ with a Bachelor’s or higher are still unemployed at over 4%, which was a level unheard of since records have been kept…until the last few years.

The number of people not in the work force continues to balloon, and that’s why the unemployment rate has fallen or remained the same from time to time, not because the labor market is improving.

The work week remains flat overall, but it has fallen to its shortest duration of the year in manufacturing. That’s not encouraging. The really big news in this report, which won’t get much play but is very troubling, are the downward revisions to hourly and weekly pay totals in several sectors, including construction and manufacturing.

We’ve decided the graphs would just rub it in, and we have no desire to subject you to them.

Policy matters, folks. Policy matters.

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, September 07, 2012

Blue World Employment Situation Analysis 8-3-2012

Posted on August 3, 2012 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month
Release Site: www.bls.gov
Market Sensitivity: VERY HIGH
Management Value: VERY HIGH
Friday, August 03, 2012

Brain surgery is not rocket science to a brain surgeon©

163,000 new jobs vs. 100,000 expected! WOO HOO, right? Sorry folks, this report is the cap on a miserable month of data. Why? Here we go…

In the winter and spring we explained ad nauseum that the falling unemployment rate was an artificial improvement in the labor picture because we can’t make the labor market better by making the labor force smaller. The uptick in the last couple of months is an indication of a deteriorating market but, as always, the details not the headlines tell us why:

The Establishment Survey indicates 163,000 payrolls were added last month. The problem is that the size of the labor force fell by 150,000 workers, the number of those not in the labor force rose by 348,000, the number of employed people fell by 195,000 and, wait for it, the number of unemployed people rose by 45,000. I’m afraid this just doesn’t make for a good report but, of course, there’s more. 25 years old and up with a Bachelor’s Degree or higher remain unemployed at over 4%. The work week length, and consequently, overtime hours are not increasing and wage increases still lag inflation.

Other data for the month show GDP at a very weak 1.5%, which falls to 1.3% when we strip out inventories. The regional Fed reports all have a common theme of contracting orders and evaporating inventories validated by a dismal factory orders report . Productivity is down, unit labor costs are up, consumer comfort, confidence and sentiment are trending down, and the FOMC acknowledges the economy is slowing but isn’t ready to “act” yet.

Many institutions out there have an interest in trying to show the data in its most positive or negative light. Since our job is to help businesses develop strategy based on the realities of the economy, we have to take the data as it is…and the data is negative.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

©Blue World Asset Managers, LTD Friday, August 03, 2012

Posted on June 1, 2012 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, June 01, 2012

Brain surgery is not rocket science to a brain surgeon©

Well, we think this report speaks for itself. We find it amusing that the government summary described the unemployment rate as “essentially unchanged.” When it drops by a tenth that’s an improvement. When it rises a tenth that, apparently, is “essentially unchanged.”

Wages were flat and actually down a bit in areas like manufacturing, leisure/hospitality and utilities. The much bigger concern when added to that is the reduction in the length of the work week in manufacturing and construction with manufacturing overtime hours remaining in a narrow range between 3.1 and 3.3 hours per week. These are all well below any levels that could presage more hiring. We think that’s as deep as we need go in a report that speaks for itself.

Let’s spend a minute addressing the “why” such poor results are being reported. We can’t say it enough. Policy matters and these don’t work. Businesses are doing exactly what you and I would do in uncertain times. They would conserve cash, reduce spending to the bare essentials and wait for a clearer picture. Why are times uncertain? Because no one knows what Congress is going to do with the tax code before year end, the fate of Obama Care is unknown, an upcoming election could perpetuate or totally reverse current anti-capitalistic policy and, oh yeah, Europe is trying really hard to implode. If any of this sounds like a recipe for job creation and economic growth to you we have some real estate we’d like to offer you!

Policy matters, folks, and these don’t work.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov

Blue World Employment Situation Report Analysis – May 4, 2012

Posted on May 4, 2012 by blueworldadmin

Blue World Employment Situation Report Analysis

Release Date: Usually the first Friday of each month

Release Site: www.bls.gov

Market Sensitivity: VERY HIGH

Management Value: VERY HIGH

Friday, May 04, 2012

Gotta love those “experts!” There was a big miss, bigger than usual, on the new jobs estimates put forth by the economist community. We should all be used to the surprises when the actual data comes out i.e. no longer a surprise.

If you’ve got a little time on your hands you can engage in one of our favorite amusements. That is, watching the markets as the jobs report is released. Pull up an intra-day futures chart and you’ll be able to spot the pre release jitters, the identification of the reduced unemployment rate, the realization that the number of new jobs forecast fell well below expectations and, finally, the beginning of the read of the detail. Oh, what the heck…hold on and I’ll grab a chart.

The report is released at 7:30a CDT. The chart starts at 7:28a CDT courtesy Ameritrade’s think-or-swim site. The down trend continued through time of publishing at about 1:15p CDT.

While the rate is down to 8.1% our quick review of articles out there proves that even the “experts” have caught on to simple math. Heck, there is an article in the Journal entitled Why Did the Unemployment Rate Drop? It actually does a good job explaining what we’ve been saying throughout this artificial decline in the unemployment rate. If you’re new to our blog you can see a full explanation of this in our post Why Does Blue World Keep Saying the Labor Market is not Improving? at http://owl.li/aHzYx The short explanation is that the number of employed people has been rising while the number of people reporting as members of the available labor force has been falling. As we keep saying, you can’t improve the labor market by making it smaller. This month there is an even more troubling trend developing. The graph below based on data from www.bls.gov, will show that the number of employed people actually fell for the first time in many months. Considering recent trends that should have kept the rate stable. The trouble is that the labor force shrank by a larger magnitude than the drop in the number of employed people! That’s a very disturbing trend we would not like to see continue.

Wage increases, plus changes in weekly hours and overtime are thoroughly underwhelming. In fact, a deep dive into the data showed a backwards move in some of these key categories for production and non-supervisory workers in manufacturing and construction. Even though inflation was down a couple of tenths, the earnings are still pathetically behind and that does not bode well for consumer spending.

There were notable up-ticks in areas where we don’t want to see up-ticks, such as the number of people at work part time for economic reasons, including slack work conditions and could only find part time work. Marginally attached to the work force and discouraged workers were up. That’s no surprise after seeing the overall labor force size decline on the first page. A little-known statistic that we mention occasionally is Job Leavers. These are workers who voluntarily leave their jobs before having another one lined up because they’re confident they can find other work when they want to. While always quite volatile month to month, the decrease in their totals for April was dramatic enough to mention today.

In other data we continue to see productivity fall while unit labor costs rise. Services declined in April, and that is disturbing at any time, but a spring decline is a departure from traditional norms as is the decrease in the labor force size. If monthly data like this doesn’t provide one with a reliable sense of the quarterly GDP report then nothing will. We continue to marvel at the shock expressed by so many authors and commentators at last week’s report. A full explanation can be found at http://owl.li/aHGSG in our post The Confusion Suffered by “Experts” II – GDP April, 2012

Encourage your legislators to read Blue World’s posts! Try as they might they cannot replace supply with legislation or demand with redistribution. The laws of economics are simple. Without demand there is no need for supply. If there is no need for supply then there is no need to keep the work force you had, much less hire new employees. If people aren’t working they don’t have buying power. Now we are full circle to no buying power leaves us without demand. Anyone who tries to make it more complicated than that may be any combination of ignorant, dishonest or, of course, an “expert!”

Investors, managers, entrepreneurs and business owners may do well to keep the defense on the field for the foreseeable future.

Thanks for reading and, please, stay tuned…

Release Site: www.bls.gov