Blue World Jobs Report Analysis 07/07/2017

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

Date Friday, July 7, 2017 

Brain Surgery is not Rocket Science to a Brain Surgeon©

Better, not stellar! June 2017 was a much better month for jobs than May, but that’s a pretty low bar. As Matt said on CBS Chicago last Monday, you could have knocked us over with a feather at the rate raise. Last month’s jobs report fed the doves, and we saw no chance of a hike. We were dying to see the minutes so we’d get a hint of what they saw that we didn’t. The answer is “nothing.” This raise was all on spec and what they “think” will happen with inflation considering the “strengthening” in the job market so, clearly, the consumer will start spending soon and inflation will, ya know, show up. Evidence schmevidence!

So, what about today? At the headline we saw 222k net new hires less the 35k added to government payrolls, the private sector logged 187k net new jobs. Better? Sure, but it’s kinda like a pro golfer shooting par on a par 5 under 500 yards. In other words, no damage done and yet disappointing. There were solid improvements in the key indicators we follow like the Civilian Labor Force size, Total Employed, and the Participation Rate. There was also a decrease in the Not in Labor Force number, which has remained below 95M for the year.

BUT…

The Participation Rate remains below 63% (It was 64%+ back in 2011, and we were horrified then!) While the Not in Labor Force numbers do appear to have leveled off, the chart has not started a down trend yet, and that is what makes characterizations of “full employment” ludicrous. When looking at the U-6 line of Table A-15 of the report that takes those and several other labor underutilization stats into account, the true unemployment rate is still 9%.

Weekly hours and wages also showed some life, and the workweek has now touched 34.5 hours twice in three months. It’s been a while since we’ve seen that. Hourly and Weekly wages posted 2.5% and 2.8% year-on-year gains, respectively.

Better? Yes. Stellar? No. Good enough for a rate hike? NO! The hard data to support it just isn’t there. Have a look at the Blue World Economic Index® for more detail June’s economic reporting.

We hope 4th of July was fun and safe. See you back here in August.

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, July 07, 2017

Blue World Economic Index® for June 2017

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

Brief Explanation

Date: Friday, July 7, 2017

Brain Surgery is not Rocket Science to a Brain Surgeon©

Rate hike? REALLY?

Wow, we’ve seen some speculative moves in our day, but this one is worthy of commodity speculators!! We thought either we missed something or they are betting the come. Of course, we know it’s not the former! The notes essentially confirm their decision is based on what they think will happen as opposed to what is happening. Most notably, they think with the Labor Market “strengthening” consumers will start spending soon and that coupled with wage acceleration will drive inflation. Those are some high odds bets considering nine years of flat “expansion.” Gotta love dem “experts! ”

Let’s look at what’s really happening. The BWEI® Composite pulled back from -07 to an even -.1. Deterioration was led by Employment (-.21) and Inflation (-.14) GOTTA LOVE DEM EXPERTS!! (Apologies for the outburst…) There were fractional declines in Consumer Measures and Real Estate with Manufacturing holding unchanged at the Category Composite and Fed sub-group. Minor gains were seen in General Measures and Retail, although the retail improvement was led by the Red Book weekly report which is notoriously contrarian with other retail metrics. The most substantial move to the upside was Services at a .11 pickup.

Rate hike? We think it a seriously big bet, especially as the talk of recession and market meltdowns is being broadcast from Marshall stacks.

We’ll see!

Matt will be on WBBM in Chicago to talk about the June jobs report at 12:09C. The report is up here.

Have a great month and we’ll meet back here in August 2017.

 

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 Friday, 7/7/2017

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

Material Update – Blue World Jobs Report Analysis – 5-8-2017

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©

Material Update

In the April release for March 2017 we observed that the numbers just weren’t lining up among the jobs related data sets. We predicted some revisions and they showed up today in what we considered to be material enough to append this morning’s release of the Blue World jobs analysis.

As our regular readers know, the unemployment rate as published has lost its value as an indicator of labor market health. The numbers deep in the weeds need to be reviewed to get a true sense of where we are. We are not saying the labor market is “strong” by any means but we are starting to see some movement in the right direction, especially in certain down-and-out sectors like Logging and Mining as well as the apparent flattening of the Not in Labor Force graph from this morning’s release. We also had the unique situation last month where the headline was a disaster but the detail was a bit better.

All that finally showed up today in the Fed’s Labor Market Conditions Index (Chart) which looks at similar data to Blue World to form a picture worthy of monetary policy consideration. The release was delayed at the source and we have to believe it’s because they had to check their numbers because there were up revisions to the entire year 2017 to date. This is more in line with what Blue World has been seeing and, certainly, a different picture than last month.

So, with that, consider yourself updated. May we manage May well! (Yes, we hear the well- deserved boos.)

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, May 08, 2017