“Payrolls increased in December at the slowest pace in almost three years, indicating a pause in the recent strength of the U.S. labor market that may partly reflect the effects of bad weather. The 74,000 gain in payrolls, less than the most pessimistic projection in a Bloomberg survey, followed a revised 241,000 advance the prior month, Labor Department figures showed today in Washington. The unemployment rate dropped to 6.7 percent, the lowest since October 2008, as more people left the labor force…
…Poor weather may have played a role in depressing payrolls, especially in industries such as construction. The figures based on the government’s survey of households showed 273,000 Americans weren’t at work because of weather during the survey week…” Full story at…
http://www.bloomberg.com/news/2014-01-10/payrolls-in-u-s-rise-less-than-forecast-jobless-rate-at-6-7-.html
The December employment report was a “Huge
disappointment” – Steve Leesman, Economist, CNBC
THE “BIG MISS” EXPLAINED (Global Economic Trend Analysis)
“Once again, the stats reveal much weakness…Over the course of the last year, the number of people
employed rose by a mere 1,374,000 (an average of 114,500 a month)……The population rose by over 2 million, but the labor force fell by over a half-million. That's your declining unemployment rate in a nutshell.” – Mish Shedlock
Mish presents an extremely detailed rundown of the latest jobs report at…
http://globaleconomicanalysis.blogspot.com/
MY OPINION ON JOBS
No point getting too upset over one report. GDP has been improving and the huge drop in Participation Rate IS probably due to weather and retirements, too. The participation rate is based on how many people are still in the job market. If a person quits looking for a job they are not counted in the participation rate and many naysayers on the economy have used the poor participation rate as evidence that people have given up looking for jobs. As it turns out, a major part of the lowered participation numbers is caused by retirements. The WSJ covered this. See my comments here…REAL CULPRIT BEHIND SMALLER WORKFORCE: AGE... http://navigatethestockmarket.blogspot.com/2013_04_01_archive.html
Mish Shedlock at Global Economic Trend Analysis reported on a FED study that confirmed the lowered Participation Rate was due to retirements and not job seekers giving up. See analysis from Mish here... http://globaleconomicanalysis.blogspot.com/2013/12/fed-study-shows-drop-in-participation.html
Some of the poor numbers are simply that many people choose to retire in December.
BAD JOBS NUMBER WON’T STOP QE
TAPERING (Bloomberg)
“Fed’s [Jeffery] Lacker Says Weak Jobs Report Won’t Deter Taper Discussions Federal Reserve Bank of Richmond President Jeffrey Lacker said the slump in job growth last month doesn’t signify a major shift in the labor market, and another reduction in bond purchases probably will be considered by the Fed this month.” Story at…
http://topics.bloomberg.com/jeffrey-lacker/
“Fed’s [Jeffery] Lacker Says Weak Jobs Report Won’t Deter Taper Discussions Federal Reserve Bank of Richmond President Jeffrey Lacker said the slump in job growth last month doesn’t signify a major shift in the labor market, and another reduction in bond purchases probably will be considered by the Fed this month.” Story at…
http://topics.bloomberg.com/jeffrey-lacker/
EARNINGS SEASON HAS STARTED
“For Q4 2013, 95 companies have issued negative EPS guidance and 13 companies have issued positive EPS guidance.” – FACTSET at http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_1.10.14/view
If that is representative of the market as a whole, this will be an interesting few weeks as companies report actual 4th Quarter earnings.
“For Q4 2013, 95 companies have issued negative EPS guidance and 13 companies have issued positive EPS guidance.” – FACTSET at http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_1.10.14/view
If that is representative of the market as a whole, this will be an interesting few weeks as companies report actual 4th Quarter earnings.
FOR ALL GOVERNMENT EMPLOYEES
Most Government employees participate in the “Thrift Savings Plan” (TSP) the Government’s version of an employee 401k plan. (It isn’t a true 401k, but no need to quibble. It works the same way.) Most Government employees are familiar with the disaster that occurred when the managers of the TSP hired computer experts to make the TSP work like a mutual fund with daily valuations. (Prior to these changes an employee could only change an allocation in the 401k once per month.) The process suffered massive cost overruns and resulted in the firing of the IT contractor and lengthy lawsuits. In fact, “…virtually all of the computer code it wrote turned out to be useless, according to a report by a U.S. Senate committee." That company was AMS. AMS was acquired by CGI. CGI was the company hired to set up the Obamacare website. Today, the Government fired CGI. For details see “292-Million Down the Drain…” at ZeroHedge…
http://www.zerohedge.com/news/2014-01-10/292-million-down-drain-white-house-fires-main-obamacare-it-contractorMost Government employees participate in the “Thrift Savings Plan” (TSP) the Government’s version of an employee 401k plan. (It isn’t a true 401k, but no need to quibble. It works the same way.) Most Government employees are familiar with the disaster that occurred when the managers of the TSP hired computer experts to make the TSP work like a mutual fund with daily valuations. (Prior to these changes an employee could only change an allocation in the 401k once per month.) The process suffered massive cost overruns and resulted in the firing of the IT contractor and lengthy lawsuits. In fact, “…virtually all of the computer code it wrote turned out to be useless, according to a report by a U.S. Senate committee." That company was AMS. AMS was acquired by CGI. CGI was the company hired to set up the Obamacare website. Today, the Government fired CGI. For details see “292-Million Down the Drain…” at ZeroHedge…
MARKET REPORT
Friday, the S&P 500 was up 0.2% to 1842 (rounded).
VIX was down about 6% to 12.14.
Friday, the S&P 500 was up 0.2% to 1842 (rounded).
VIX was down about 6% to 12.14.
The 10-year Treasury Note closed at 2.86% yield as bond-ghouls
liked the bad economic news. Rates at 3% or above are considered by some
traders to be “trouble-for-stocks”.
Bond yields fell thru the floor after the jobs
disappointment as investors bought bonds. The VIX was down for the day too so
the options boys and bond market think the jobs report may slow tapering – bad
news is good news – for both the bond market and the stock market,
apparently. As noted above (BAD JOBS NUMBER WON’T STOP QE TAPERING), they are
wrong on QE. I think the markets will
show weakness after the third QE tapering by the FED, since tapering is likely
to continue.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing rose to 54%
at the close Friday. (A number above 50%
for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Friday, leaving
the spread (new-hi minus new-low) at +195 (it was +179 Thursday). The 10-day moving average of change in the
spread fell to minus 10. In other words, over the last 10-days, on average, the
spread has decreased by 10 each day. The
negative change in daily spread kept the market internals flat and overall,
market internals remained neutral on the market
Market Internals are a decent trend-following analysis of current market action, but in 2013, if I had been buying the positive ratings and selling negative ratings I would have under-performed a buy-and-hold strategy.
NTSM
The four areas of analysis, Sentiment, Price, Volume and
VIX are currently rated as follows: Sentiment remains screaming high at 82%-bulls (5-dMA of
selected Rydex/Guggenheim funds) and that’s a negative; Price is positive since
up-days have been larger than down-days over the past month; VIX and Volume
remain neutral. The most recent BUY signal for the NTSM system was 25
October. The “5-10-20 Timer” switched to
BUY from HOLD on 18 December
MY INVESTED POSITION
I am about 30% invested in stocks as of 20 December
(S&P 500-1540) because upped my stock holdings by 10% on the 20th
of December. Unless I get a SELL signal
in the NTSM system, I will continue to income-average (a little each month)
into the stocks to get my %-invested up to around 50% (max for me now) unless
there is a correction that would allow me to move in sooner and at a higher
percentage. Since that is my expectation, I have not upped my invested
percentage in one move as I normally would.
