The Big Picture

Succinct Summations of Week’s Events 2.6.15
More on Temp Help vs NFP
Looking Beyond Jobs Numbers Headlines
The Odds of Dying in America
10 Friday AM Reads
1953 Ferrari 212 Inter Vignale
RadioShack’s Strategic Confusion

Succinct Summations of Week’s Events 2.6.15

Posted: 06 Feb 2015 01:30 PM PST

Succinct Summations week ending February 6th

Positives:

1. January Nonfarm Payrolls came in at 257k vs 228k expected.
2. Eurozone retail sales were up 2.8% in December, the strongest in almost 8 years.
3. Average hourly earnings grew at 2.2% vs 1.9% expected.
4. Eurozone growth came in at 52.6, a six-month high.
5. Big revisions to the previous six months added another 102k jobs.
6. Oil stopped crashing, it finished the week up 8.5%.
7. Stocks had a strong week, mid-caps hit new all-time highs.

Negatives:

1. January unemployment ticked up a bit to 5.7% from 5.6%.
2. Interest rate sensitive Utilities got roughed up on Friday, having their worst day since August 2011.
3. ISM came in at 53.5, down from 55.1 and below the 54.5 expected.
4. The PMI services index fell in China, Japan and Hong Kong.
5. Purchase applications fell for the third straight week.
6. Nonfarm productivity declined 1.8% on an SAAR versus a 0.2% expected rise.

Thanks, Mike.

More on Temp Help vs NFP

Posted: 06 Feb 2015 12:00 PM PST

Invictus observes:

Regarding temporary help as a leading indicator, try putting the two payroll series (TEMP and PAYEMS) on separate axes; its much more informative and dramatic!

As you wish:

Source: FRED

Looking Beyond Jobs Numbers Headlines

Posted: 06 Feb 2015 10:00 AM PST

I keep telling investors to ignore the monthly frenzy surrounding the monthly jobs report (see this, this and this). It isn’t significant for their holdings, at least not in any actionable way. By the time we know for sure that the economy has accelerated or slowed, stocks will have long since reflected this in earnings and then prices. It is only partially a joke to note that economists are often the last to know.

Why should investors ignore the nonfarm payrolls numbers? Consider what must be done in order to either profit or avoid a loss based on changes in the employment situation. Investors would have to:

• Predict what the nonfarm payrolls will be;

• Guess if this will be above or below consensus (which changes often);

• Conjecture how much of this is already reflected in stock prices;

• Arrange your portfolio in light of all of the above.

To win this game, you must get each of those four steps right. And, each one is dependent upon your getting the prior step correct, then pyramiding that prior lucky guess with another. Someone usually gets this correct, but I would suggest this is a function of random luck, not skill. That isn’t an attractive basis for putting risk capital to work.

Rather than play a no-win game, let me suggest something else:

Continues here

The Odds of Dying in America

Posted: 06 Feb 2015 08:30 AM PST

Source: The Economist

Previously:
You Are Worrying About the Wrong Things (October 22nd, 2014)

You Are More Likely to Be Killed By Boring, Mundane Things than Terrorism (May 20th, 2014)

10 Friday AM Reads

Posted: 06 Feb 2015 05:00 AM PST

Is the week over already? Here are my pre-nonfarm payroll morning train reads:

• Plush Life: Why did people lose their minds over Beanie Babies? (Slate)
• Dimensions of Popularity: The Journal of Portfolio Management (IIJ)
• Diversification: From Free Lunch to Greedy Fee-Eater? (Chief Investment Officer)
• What on earth is the ECB up to? (Coppola Comment)
• You Have No Idea What Happened. Literally. (New Yorker)

Continues here

1953 Ferrari 212 Inter Vignale

Posted: 06 Feb 2015 03:00 AM PST

Source: Classic Driver