Wednesday, May 11, 2011

Confirming-NFP JOLTS and its momentum

Ladies... here we are again with the JOLTS. On the last data-release we came up with this analysis. Now we take a look at the March numbers.

The trend seems unchanged: improvement.
Remember that the JOLTS is released with a 1-month lag to NFP.

The NFP-like, SA, March number (Hires - Separations) looks good, like the NFP released in March.

But I'd like to look at the NFP-Like number, non-seasonally-adjusted-12-month change. The path in this number indicates the momentum in job growth, not levels. Reduced momentum despite decent levels?


The chart below is the 4-month acum, NSA, 3-month change (tough, huh?). There's seasonallity, so we'll compare apples with apples.

What is important to check on this chart is the distance between years. In late 2010 we saw a closing gap. 2010 was rising faster than 2009. The Dec-10 print was 27k higher than 2009. Great.
But since January this number came in negative and the distance to the previous year's metric has also been getting more negative/peaked, even though better than all years but 2010 and 2001.
2010 vs Aug09 (1,826) distance from last year (517)
2010 vs Sep09 (2,172) distance from last year (346)
2010 vs Oct09 (1,348) distance from last year  824 (top momentum?)
2010 vs Nov09   (628) distance from last year  720 
2010 vs Dec09     27  distance from last year  655 (peak?)
2011 vs Jan10   (134) distance from last year (161)
2011 vs Feb10   (265) distance from last year (131)
2011 vs Mar10   (424) distance from last year (159)

Again, strong NFP levels came in last Friday, revisions to the upside.
What I am worried with is the divergence between Household Survey x Stablishment (-190 x 250k~) and the recent surge in Initial Jobless claims.

If Household Survey + IJC are correct, coupled with these momentum charts above, the US 3.0% 2011 growth story is fairy tale.

*Disclaimer: charts and data are presented as I receive/see them. Sources are usually not checked for validation and my own calculations are of 'back of the envelope'-type. I am aware that some math that I do myself might be wrong and/or misleading to some extent. In financial markets the rate of change of economic data is often more important than the actual level and the perception of 'what is priced in' is more important than 'what is actually going to happen'. This is actually the way people pick entry and exit points. So... yes, sometimes you might say 'This guy is an idiot, this is way wrong!' with a high conviction, being right. Not to worry. Markets are made of expectations and the clash of conviction between its participants. Portfolio managers know that being an idiot is sometimes profitable and being smart is often a bad choice. It is all reality, sometimes good, sometimes bad. By the way: corrections to my analysis and intelligent debate is welcome. theintriguedtrader AT gmail do com

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