Here is the latest silly storyline of the month, aka media filler:

The Fed is debating tapering QE; Today we will get the very last Employment situation report before their next FOMC meeting. In case you have not been near a TV the past month, this FOMC meeting is the big one, where they decide to taper or not. Some have called it a “Mega Jobs Report.”

Yawn.

No, its not. The Fed does not make such decisions based on a single report. They are well aware of the various issues with NFP modeling. They may suffer from cognitive biases, but I doubt recency effects regarding monthly NFP is one of them.

Rather than regurgitate my usual Employment Situation laments, I am going to assume that most readers are fully aware of my thoughts on this issue. And for those of you who are not, below you will find some links that will give you the full monty on why most NFP releases are typically the most overhyped, overrated economic data point of the month.

Prior discussions of NFP

Apprenticed Investor: The Folly of Forecasting (June 8th, 2005)

NFP Day: The Most Over-Analyzed, Over-Emphasized, Least-Understood Data Point (February 4th, 2011)

An Unusually Unusual NFP Payroll Day! (June 3rd, 2011)

Predicting Jobs Data Is Hard — and Useless, Too.   (May 3rd, 2013)

THE MOST IMPORTANT EVER NFP blah blah blah (June 7th, 2013)

“What’s Your NFP Number?” [Don't have one]  (August 2nd, 2013)

That should give you some weekend reading, and a chance to reflect on what you are spending lots of time on and whether or not it is truly important.

~~~

Employment situation report released at 8:30am

Category: Employment, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “NonFarm Payroll & Taper & Fed, Oh, My!”

  1. Herman Frank says:

    To underline your point that the decision makers in the Fed are not going to base their decisions on one minute statistical point you only have to refer them to the other article you published just now about “the shadow labor force”.

    They’re all well-aware that this exercise of rebuilding the economy has to be undertaken with a clear light on all the aspects of the economy. Not just one employment number.

  2. sellstop says:

    I does seem that things are getting better, albeit slowly by historical standards. The indicator of the world economy that I have been profitably watching lately has been the Baltic Dry Index. Shipping prices have been decimated over the last few years but they have finally broke out and up from a long base. I like the indicators that don’t seem to be watched closely…..
    Check out the BDI.

    gh

  3. Angryman1 says:

    It depends on whether you are going by “raw” job growth which needs to be at 250,000 a month or “NFP” which is usually used………needs to be at 130,000 a month.

    250,000 a month in NFP is just not logical and substainable. The overall economy has been adding in raw gross, 300-350 thousand jobs a month in gross so that does indicate recovery and eventual recovery. Very similiar to the 90′s and 00′s recoveries though this one will take longer.

  4. RW says:

    Hard to see how the Fed rationalizes ‘tapering’ in the teeth of poor employment/labor participation numbers like these; e.g., Forget the unemployment rate. Here’s the chart to focus on on jobs day.

  5. A. Cy Lum says:

    I find it very difficult to keep an even keel during the media barrage that clusters around Fed/BLS data points; their meaning, veracity, and implications.

    Even if one has the skills to cut through the clutter;on a rudimentary level selecting what to read/view/listen to as a start; one must have some sort of inner faith(?), critical thinking, coin tossing luck to decide to trade accordingly.

    Depending on positions I simplify to a ludicrous level: Bad news is Good and Good news is Bad. Ignorance is entertaining bliss (lately lost in The Ashes, now ODI’s), and being part of the herd is safety in numbers unless the end terminal is the slaughterhouse… Ah, Orwell, your template was double-plus spot on.

    A. Cy Lum

    • I find it very difficult to keep an even keel during the media barrage that clusters around Fed/BLS data points; their meaning, veracity, and implications

      Which is why I try to point out how silly the entire exercise is . . .

  6. The media is the one pushing the ‘importance’ of this number and Wall streert runs with it.

    What a ridiculous game………..bottom line……..are people accumulating savings, or just making ends meet, week to week

  7. A. Cy Lum says:

    “Which is why I try to point out how silly the entire exercise is . . .”

    … and that provides a reference from which to navigate, especially from being whipsawed. Many thanks.

    To end I must also thank you for your series of links concerning investor/trader psychology because that underlies all analysis and actions.

    A. Cy Lum

    PS No need to post this as it’s really just a wholehearted endorsement of your work.