Friday, August 2, 2013

Employment: Only 162K new Jobs…10% below the Expected Number

“Payrolls rose by 162,000, the least in four months, and the jobless rate dropped to 7.4 percent from 7.6 percent. The workweek shrank, and hourly earnings fell for the first time since October… “This isn’t a disaster of a report but it shows the U.S. remains vulnerable to a slower economic-growth performance,” said Julia Coronado, chief economist for North America at BNP Paribas in New York… “
Full story at…

Amazing.  For many years 200,000 was seen as the number of new jobs required just to keep pace with population growth.  Now, a number far below 200k “isn’t a disaster.”  Further, the prior month was revised down 10% too!

DETAILS OF THE JOBS REPORT (excerpt from Mish Shedlock)
“The establishment survey showed a gain of 162,000 jobs.
“The previous two months were revised lower. The employment change for May revised down by 19,000 (from +195,000 to +176,000), and the employment change for June revised down by 7,000 (from +195,000 to +188,000).”
…The unemployment rate dropped 0.2 to at 7.4%.
…Were it not for people dropping out of the labor force, the unemployment rate would be over 9%. In addition, there are 8,245,000 people who are working part-time but want full-time work…A year ago there were 8,245,000. There has been no improvement in a year…

…Digging under the surface, much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage coupled with a massive increase in part-time jobs starting in October 2012.”  Analysis at…

In the morning there was some hand-wringing over the employment report on CNBC: reduced unemployment would mean sooner tapering by the FED; fewer hires and reduced worker-earnings are a risk to the economy.  The markets shrugged it off and went up anyway.

"We have been in an up market since 2009, and it's been quite dramatic," he said on Tuesday's "Futures Now." And as the market rose, "it brought more and more people to regret that they didn't get in in 2009," he added. "So yes, it does have aspects of a bubble."
"…the economist defines "speculative bubble" as "a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person…"
“…usually, bubbles burst on their own. It's like it goes too far, gets overextended and bursts. And it's not usually due to higher rates, or anything you can pin your explanation on." – Robert Shiller, Yale Professor and author of “Irrational Exuberance.”

The article mentioned that timing is the problem with this type of forecast.  Shiller testified about irrational exuberance before Congress in 1996, several years before the Internet Bubble collapsed.

Friday, the S&P was UP 0.16% to 1610 (rounded).

VIX collapsed more than 7% to 11.98.

Forget it.  Forget this blog.  Forget Hussman, Fleckstein, Saut, Doolittle, Shiller and all the rest.  The market is up 20% this year…and…it is going up FOREVER!!!!!!!

The 10-day moving average of stocks advancing on the NYSE is still dropping slightly and today’s value of the 10-dMA is 49%.  Usually a value below 50% signals additional trouble for the markets.  New-high/new-low data is mixed.  Overall, “Internals” remain negative but not by much.

Friday, the overall NTSM analysis was HOLD at the close. 
The NTSM analysis is now underperforming the 2013 S&P 500 by 11%...ouch.

VIX: It has been a month since the VIX indicator signaled anything other than “Hold” and then it was “Sell”. The VIX indicator was “Buy” Thursday and again today. 
SENTIMENT remains too bullish, so it is negative.
VOLUME is neutral.  If there is some bullish action over the next few days, the Volume indicator will switch to a “buy”.  If that happens, the NTSM system will signal a “Buy” even with the negative Sentiment reading.  The last “Buy” signal was 1 February 2013.  This the longest time I can remember without a “Buy” call.  There have been 17 “Sell” signals over that period and that has been the basis for my negative stance on the market.

I remain about 20% invested in stocks as of 5 March (S&P 500 -1540).  The NTSM system sold at 1575 on 16 April.  (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!) 

I have no problems leaving 20% or 30% invested.  If the market is cut in half (worst case) I’d only lose 10%-15% of my investments.  It also hedges the bet if I am wrong since I will have some invested if the market goes up.  No system is perfect.

I am committed to this course of action…now, I think I just need to be committed!