Posts filed under “Employment”

NFP Day? Try Doing Nothing

While I have been busy kvetching about the weather, another payrolls report has snuck up on us. Estimates are for a 200,000 increase in nonfarm payrolls, the most since November, according to the median forecast of 90 economists surveyed by Bloomberg.

But really, I have to ask: Why do you care?

As I have relentlessly drummed into your heads, the Employment Situation report is “the single most over-hyped, over-analyzed, over-emphasized, least-understood economic releases known to mankind.” It is also of very little utility for investors, a mostly meaningless exercise, the exception being when a long-standing employment trend begins to reverse, something that occurs a few times in a decade.

Perhaps, on this philosophical Friday, we should be thinking why you as an investor spend so much time focusing on it. Unless you run a cable-news network and need ’round-the-clock filler, why should the monthly variations in a deeply flawed (but not useless) model matter to you?

This is a deep philosophical question most investors are not happy answering. There seems to be a belief that “I should be doing something, right?”

No, you shouldn’t. For the most part, you should be doing as little as possible. “Nothing” is a good start. Can you just sit there and do nothing for a while? See how long you can do nothing.

The advantage of nothing is that you, as an investor, trader, forecaster or strategist add very little. Indeed, you probably are a negative. Every time you do something, you add costs, tax bills, commissions, expenses. If what you did was only neutral, if you did no harm, then that vigorish would tip most of your activities into the red.

But you should be so lucky as to do no harm. Most of what you do is a negative — and that is before we add up the costs.

Now before you start sending in e-mails and tweets, I am not speaking to you specifically, you the residents of Lake Wobegon where, as Garrison Keillor put it, “all the women are strong, the men are good looking, and all the children are above average.” Yes, everyone who reads this is above average. You are all alpha-generating machines, none of whom engage in trading activities merely to create the illusion of value. Your activities are just fine.

Which brings us back to the Employment Situation report, out at 8:30 this morning. Why should this preliminary, soon-to-be-revised, eventually re-benchmarked single data point in a never ending series matter to your portfolios? That is the question you should be pondering.

Do you want to do something? You have all weekend to do whatever you want.

But today?

Try doing nothing.

 

Originally published here

 

Category: Apprenticed Investor, Employment, Investing

What the Federal Reserve is Doing to Promote a Stronger Job Market Chair Janet L. Yellen At the 2014 National Interagency Community Reinvestment Conference, Chicago, Illinois March 31, 2014     I am here today to talk about what the Federal Reserve is doing to help our nation recover from the financial crisis and the…Read More

Category: Employment, Federal Reserve, Think Tank

74 Months to Employment Recovery (and counting)

click for larger graphic Source: NYT   Floyd Norris discusses an upcoming milestone: A full recovery in employment to numerical (but not percentage) employment in the US: “This seems likely to be the month when a new high is finally reached, ending a period that featured the largest drop in employment and the slowest recovery…Read More

Category: Data Analysis, Employment

Category: Employment, Taxes and Policy, Think Tank

Last Chance to Blame Weak Job Growth on Weather

With Spring nearly upon us, today may be the last chance for excuse-makers to blame this winter’s awful weather for poor job creation. Consensus estimates are that Payrolls increased 149,000 in February after a mediocre gain of 113,000 in January. What is to blame for this weak ongoing job creation? Is it the Fed’s fault?…Read More

Category: Employment, Really, really bad calls

Why Is the Job-Finding Rate Still Low?

Why Is the Job-Finding Rate Still Low? Liberty Street Economics Victoria Gregory, Christina Patterson, Ayşegül Şahin, and Giorgio Topa     Fluctuations in unemployment are mostly driven by fluctuations in the job-finding prospects of unemployed workers—except at the onset of recessions, according to various research papers (see, for example, Shimer [2005, 2012] and Elsby, Hobijn,…Read More

Category: Employment, Think Tank

Why Is the Job-Finding Rate Still Low?

Why Is the Job-Finding Rate Still Low? Victoria Gregory, Christina Patterson, Ayşegül Şahin, and Giorgio Topa Liberty Street Economics Feburary 19, 2014       Fluctuations in unemployment are mostly driven by fluctuations in the job-finding prospects of unemployed workers—except at the onset of recessions, according to various research papers (see, for example, Shimer [2005,…Read More

Category: Employment, Think Tank

By John Robertson and Ellyn Terry A recent Wall Street Journal blog post caught our attention. In particular, the following claim: It’s not size that matters—at least when it comes to job creation. The age of the company is a bigger factor. This observation is something we have also been thinking a lot about over…Read More

Category: Employment, Research, Think Tank

The Rise and Fall of Labor Force Participation in the U.S.

Category: Employment, Think Tank

The Impact of Unemployment Duration on Compensation Growth

The Long and Short of It: The Impact of Unemployment Duration on Compensation Growth M. Henry Linder, Richard Peach, and Robert Rich Liberty Street Economics, February 12, 2014     How tight is the labor market? The unemployment rate is down substantially from its October 2009 peak, but two-thirds of the decline is due to…Read More

Category: Employment, Think Tank, Wages & Income