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Blue World Jobs Report Analysis 2-5-2016

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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, February 05, 2016

Brain Surgery is not Rocket Science to a Brain Surgeon©

An odd twist!  Usually we have what appears to be a respectable number at the headline and much weaker indications in the detail.  This month, and we can’t remember another, the opposite is true.  We’re not saying the underlying is stellar. In fact it’s rather flat but compared to what we expected it was a pleasant surprise.

The headline says 151k.  It’s actually 158k for the private sector, as the government shed 7k jobs in January.  There was a slight uptick in the participation rate which, while still ridiculously low, is on a 2 month “winning streak.”  The quotes are because we were deriding the number a year ago and this is .2 below that, but up is up!  The labor force was essentially even, the number of those unemployed fell slightly, as did the number of those not in the labor force so all in all we’ll call it flat.  After wincing at the headline this morning, we’ll take it.

Points of concern…

While the data was better than we expected, there is some concern over discrepancies with other reports out over the month.  We won’t go through all of it but an example is manufacturing.  The Blue World Economic Index™ was published on Monday of this week, and Manufacturing set a record low for the sector and the index at -.91.  As of this morning it sits at -.98 and nothing points to any good news there, yet today’s job report shows healthy gains in all three subdivisions, durable, non-durable, and motor vehicle parts.  Motor vehicle parts is the only one that makes any sense at all.  So there are some things that don’t necessarily line up, but that happens occasionally, and they usually come back in line.

We keep fielding questions about the Fed, and we definitely feel they are suffering from “hiker’s remorse.”  The markets are tanking, the economy is slowing, and there is a lot of talk of recession lately.  All of that said we will, of course, monitor and evaluate month by month, but right now we’re pretty comfortable thinking there will be no further hikes in 2016.  We certainly wouldn’t advise any, but they haven’t asked us…yet!

 

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 05, 2016

Blue World Economic Index™ for January 2016

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Brief Explanation

 

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 Economic Index® for December 2015 and Year End Summary

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Brief Explanation

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

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

Blue World Jobs Report Analysis 11/06/2015

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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, November 06, 2015

Not stellar but better!

What does that mean?  We have by no means turned a corner, but at least the bleeding stopped for October.  The 271k total is very respectable, and the private sector number is 268k.  There were net +16k revisions to August and September for the private sector totals which, while better than a down revision, comes nowhere near making the numbers acceptable.  For comparison, including today’s data, the average add for the private sector for all of 2015 YTD is 207k while the average for the last 3 months is 181k.

The Not in Labor Force tally fell by 97k in an unusual and refreshing pause in the explosion but still leaving the number of truly unemployed Americans at 94.5M.  The Civilian Labor Force grew by 313k interrupting a three month slide, which is a plus but still doesn’t get us anywhere near the 2015 high, which was reached in May but substantially better than October of 2014.  The work week for the private sector remains flat at 34.5 hours for October, which is the average for 2015 YTD.  The big winner however is Construction, which saw a sizable jump in both hours and pay in October, which is consistent with other measures released during the month.  The Diffusion Indexes for the total private sector and manufacturing both saw significant improvements this month, especially manufacturing which eked out an expansionary 51.9 (50 is break-even) after spending the prior two months deep in contraction below 40.

So, why were the dismal Participation Rate and seemingly great Unemployment Rate essentially unchanged?  If you read us regularly you know the answer…  The Civilian Labor Force grew by 313k, and the net number of new hires was 271k.  That narrow delta just won’t move the needle that much.

Now let’s get to what everybody wants to know…What will the Fed do in December?  That is FINALLY a great question.  There is plenty of ammunition in this report for the hawks and plenty for the doves. We sit squarely in the dove’s camp, because this is just one mixed report in a pool of weak reports.  The economy is not ready for a hike.  We believe this will be the closest vote yet, and while we do not offer a prediction on the outcome we will offer this prediction:  The two most common words heard at the next meeting will be…

 

“YEAH, BUT”

 

 

Thanks for reading and, please, stay tuned…

FYI – later today we will post out first podcast of the Blue World Jobs Report Analysis.  A link will be sent when it’s up.

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, November 06, 2015