Posts filed under “Philosophy”
Okay, so here is the deal: We have no report of the NFP data today.
The net impact of this? Nothing.
Total loss to the investment community? Nada.
Actual impact to the economy? Zilch.
There are two things we need to understand about this report: The first is what makes it significant; the second is the impact to your investments.
As we have detailed over and over again, any single monthly datapoint is hardly significant. What matters is the long term trend in employment — is the economy creating jobs or is it losing them? This refers to the trend, not any single noisy month. Most of the time, its fairly innocuous. At major turning points, it suggests either an expansion ending, and potential recession; or at the other end, a recession coming to an end and the eventual recovery. Both of these events will be reflected in consume rsentiment, retail sales and of course, corporate earnings.
The second detail is the impact of NFP on your investments. If you are a HFT, then this is a big data point, one that will give your algos a run for their money. If you are a long term investor, the monthly employment situation seems to be lots of noise, with very little signal.
So while the usual suspects will trip over themselves trying to explain the horror we face from this missing datapoint, you should be aware that it is far less important than is commonly claimed — unless you have 14 hours of airtime to fill each day.
BLS report is out at 8:30 am . . . Nope.
NFP Day: The Most Over-Analyzed, Over-Emphasized, Least-Understood Data Point (February 4th, 2011)
Contextualizing the NFP Data (April 1st, 2011)
An Unusually Unusual NFP Payroll Day! (June 3rd, 2011)
THE MOST IMPORTANT EVER NFP blah blah blah (June 7th, 2013)
“What’s Your NFP Number?” [Don't have one] (August 2nd, 2013)
Its Philosophy Friday, and I want to discuss in broad terms the same interesting conversation that keeps coming up: Over the past few weeks, I keep getting that question: Whats your forecast for the economy? Where will interest rates be at the end of the year? Are Jobs going to improve? And of course, the big…Read More
“Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.” -W. Edwards Deming Dr. Deming’s Ideas Dr. Deming’s famous 14 Points, originally presented in Out of the Crisis, serve as management guidelines. The…Read More
Well, that was a busy week, wasn’t it? The non-Taper, the Lehman anniversary, oh, and our little launch has kept your humble author rather busy. Since its Friday, the day I like to get all philosophical on y’all, let’s reflect on a simple issue: What is more important to investors, their process or their results?…Read More
This was awesome: Dear Barton: You have a man in your employ that I have thought for a long time should be fired. I refer to Sherwood Anderson. He is a fellow of a good deal of ability, but for a long time I have been convinced that his heart is not in his work….Read More
I am going to skip the my usual Friday Philosophy as this week has been enormously insane for me, out late for work every night, with lots of meetings every day (and tonight is another holiday). But I do have a few things I want to discuss/tease/show you: • There are still a few tickets left…Read More
I am thrilled to tell you about the 5th Annual Big Picture Conference coming up on October 8th in New York City. We are extremely excited about the speakers, topics, even the venue itself. And, we are expecting our largest audience yet. I wanted to personally invite you as a reader of the Big Picture to what we…Read More
Lately, the day job has been inspiring many of our Philosophy Phriday posts. (This coming Sunday’s WaPo column was also inspired by what we see int he office). Today’s post is another such example. Perhaps its because we run a somewhat different business model than is typical in the finance industry in the US. Our…Read More