Archive for December, 2011

Weekly Recap & Outlook – 12.30.11

Friday, December 30th, 2011

Tower Private Advisors


  • Doug Kass’s 2012 list of surprises
  • Meredith Whitney lambasted for muni bond call
  • Mixed bag of economics



Weekly Recap & Outlook – 12.23.11 – special PIMCO edition

Friday, December 23rd, 2011

Tower Private Advisors

  •  ’Ever hear of a bond ladder?
  • Economic strong patch



Protected: More on Labor Force Participation Rates

Thursday, December 15th, 2011

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Weekly Recap & Outlook – 12.02.11 – special Sarcasm Edition

Friday, December 2nd, 2011

Tower Private Advisors


Capital Markets Recap


Top Stories

This Week

Let’s get the bad news out of the way.

Initial Jobless Claims were about 12,000 higher than expected and 9,000 higher than last week’s figure. That moved the figure back above the once-important 400,000 mark, and that uptick was enough to point the less-volatile four-week moving average higher, although just barely so. Last week’s figure was revised upward by 3,000 to 396,000, so there’s an axe to grind for everyone.  Either, it’s see the government once again manipulated the statistics (never mind that it’s the government announcing the revisions, too), or see, the increase was really only 6,000 (an increase from 396,000; not 393,000).

Speaking of axe grinders, I’ve got a bit of an axe–’guess it’d be a head instead of a bit–to grind, myself. One prominent investment pundit, Dennis Gartman, says watch the revisions, as those are just as important. The idea is that once the revisions start following the direction of the indicator they’ll reinforce the validity of the indicator. ‘Trouble is, the biggest downward revisions in the last ten years came in the midst of the 2008-2009 recession. Here’s a chart. After the chart, I’m going to lose a few of the readers of this blog and troll for some new readers by hoping for a lucky Google search.

A local radio personality, Pat Miller, who is on WOWO during my drive home when I alternate between it and NPR, took the government-conspiracy angle recently, by pointing out that the government’s earlier statistic had been revised upward (those rascals). He didn’t bother to point out that almost all of the revisions are in that direction, nor that the government provides the revisions, too. ‘Some conspiracy, when the government tells the truth a week later. In addition, the biggest revisions–ever–have been downward. If anything, the government statistics are too pessimistic. And, yes, I understand–and agree–that the employment picture is painted with too many shades of pink and that inflation might even be worse.

Aside from jobless claims, one would be hard-pressed to find a week of better economic news…

The ADP Employment report on Wednesday conspired (there it is, again) to push stocks higher, helping the 1%, while the 99% freeze in their tents, when it was released to show that 206,000 private payroll jobs had been added in November, versus economists’ expectations of just 130,000 additions; October’s figure was 110,000, but that was revised upward (the right direction, according to Dennis Gartman) to 130,000 this week. That set up expectations for a decent Nonfarm Payrolls report today from the Bureau of Labor Statistics Manipulation. In a way, the report didn’t disappoint; in a way it did. The economy was shown to have added 120,000 public and private jobs in November, according to the survey of established establishments (big, brick-and-mortar employers); private payrolls rose by 140,000 (yep; you figured it out: government payrolls fell by (-)20,000.) The Unemployment Rate, however, is calculated from a broader survey base, a survey of households (“hello, Mr. Poncherello? can you tell me how many in your household are employed? and you’re with the California Highway Patrol?”). The latter is a much bigger survey group, so the numbers are bigger. For example, the Establishment survey shows that 534,000 jobs have been created, cumulatively, over the last four months; the Household Manipulation survey, on the other hand, shows that 1,284,000, cumulatively, were created over that time. Back to the unemployment rate…it’s now down to 8.6%, closer to the 8.0% threshhold, above which a President has never been reelected over some period of time–can’t recall which.

In addition to the Trilateral Commission’s involvement, there is some fundamental trouble with the unemployment rate. It only considers the unemployed as a percentage of the Labor Force, and the labor force is determined as the portion of the working age population that is either working or willing to work. Arguably, some of the folks camped out in Fort Wayne’s Freiman Square were not considered in the labor force. The ratio of labor force to working-age population is called the Labor Force Participation Rate, and it’s presently at 64.0%. For what it’s worth, that’s as low as it’s been since early 1984, and it fell by 0.2% in Novembera rounding error, you say. Except that a rounding error on a working-age population of 237,830,000 amounts to a lot of people.

 The statistics that comprise the unemployment rate, from the Bureau of Labor Statistics are shown below. The 8.6% (“below 9%!”) will be trumpeted about. In Fort Wayne’s evening paper, in fact, the headline said this:

“Jobless rate falls to 8.6%, lowest in 2 1/2 years”

But it’s not all good, sort of a mixed bag. Yes, more folks found jobs, but it’s also true that the labor force fell, and that’s rarely a positive development. When this moribund economy kicks into gear, the labor force will rise, not fall.