Monday, May 06, 2013

Jobs and Dow 15,000!

Okay, so the market didn't hold the 15,000 level on Friday but the S&P blew through 1600 and the NASDAQ is also hitting post-bubble highs.

The catalyst on Friday was the better than expected news on the jobs front (I'll get to that in a minute) which was news itself because for much of the past two weeks bad news meant more Fed intervention which meant higher stock prices.  Suddenly on Friday good news was actually good news again :)

At this point everyone has beaten the headline to death so let's talk about what the numbers mean.

The 165k addition of jobs was slightly better than expectations but still relatively weak for this point in the recovery.  However, the upward revisions to March and February somewhat offset this concern. The trend lines have all sharply reversed (long-term unemployed, population ratio and to a lesser extent part-time) but remain at elevated levels.

My bigger problem with the euphoria over the jobs report is the breakdown of the jobs.  I've made this argument since 2001 to no avail as my argument falls on deaf ears.  We shouldn't be measuring jobs because a Walmart cashier does not generate the same level of economic activity as a software salesman.  However, in the eyes of the jobs report all jobs are equal.  Thus, when it is reported that 165k jobs were created no one cares that 103k of those jobs were in Retail, Temporary Help and Hospitality/Leisure (historically very low paying jobs).  This has been an ongoing trend for a decade and I'd love to see us include an equalizer (take a job created x its average hourly rate x its average workweek) to see if we are gaining strength as an economy.  To that end some have pointed out that despite the added jobs last month the reduction of the avg work week offset any gains in employees.  Ultimately, I'd say we have to deal with the jobs report because the computers love the headline game (note how the market opened straight up and then flatlined the rest of the day), but it is relatively meaningless in the big picture.

Side note if you're bored, watch this 5 minute video which turns 1/2 second of trading in Johnson & Johnson into a video game. Watch the barrage of quotes coming from all angles from the High Frequency Traders and then tell me if you think you stand a chance ---- remember this is all occurring one half second in the market.

Stats of the day:
Over 50% of Las Vegas new and resale home sales in March were to absentee buyers.
Las Vegas has roughly 10% vacancy rate but there was a 50% uptick in construction permits

Finally, thanks for still checking in here at the blog.  I'm going to cover a wider range of topics in the coming months as the first year of NNY Math winds down.  I'll be offering Summer Science Camps in the mall so if you know someone that might be interested drop me a note to brian at nnymath dotcom. 

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