Crazy numbers–do you all believe the employment numbers released earlier today–353,000 new jobs. I am highly skeptical of the numbers, but in the end both equities and interest rates react so we have to work with the cards we are dealt.
The 10 year treasury yield is up a strong 15 basis points–now back above 4%, at 4.02%. As has been the case in the last month preferreds and baby bonds are NOT following the 10 year yield. You might expect a 1% giveback on your portfolio–but at least my account is down just the tiniest of amounts.
Yesterday I added a small nibble to my position in the CHS 6.75% perpetual preferred (CHSCM) at $24.95. As we all know by know this was originally a ‘reset’ issue–it has now been deemed a fixed rate issue by CHS based upon prospectus language. I note that this is the lowest coupon CHS issue outstanding–but I am not going to pay a giant premium above $25 on the other issues–it is possible that holders of some of those issues will get a giant surprise later this year if interest rates fall. I added this to my ‘laundry list’.
January was a good month–a gain of about 1.5%. Certainly it would have been much better if I didn’t have so many CDs etc. I will be more than happy with gains 1/2 of this amount.
OF COURSE IT DOESN’T MAKE SENSE, IT’S BUREAUCRACY. “The employment data published on Friday 2nd February by the US Bureau of Labor Statistics (BLS) reminded me of this story:
‘“During World War II, [Nobel laureate, Ken] Arrow was assigned to a team of statisticians to produce long-range weather forecasts. After a time, Arrow and his team determined that their forecasts were not much better than pulling predictions out of a hat. They wrote their superiors, asking to be relieved of their duty. They received the following reply, and I quote ‘The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.’
Welcome to government work 🙃
AB, Are you still traveling in Eastern Europe? When will you go by NYCB? Please share your informed NYCB friend’s thoughts as he was positive and it would be helpful to have an informed opinion rather than opinions. TIA
Hi TN, yes I am still traveling in Europe as I extended my trip until some time near months end. I’m looking to buy some property in Italy. It’s magnificent here, but everyone moves so slowwwwly, I flew my son here for a few days (got the Dental School allow him to take a few days off) to see which property he likes the most as he will have it one day. I am following the NYCB drama/saga and am curious to see just what other banks will be exposed and how NYCB deals with this adversity. The Federal Reserve Board announced that the Bank Term Funding Program (BTFP) will cease making new loans as scheduled on March 11 and will the king($) 👑 be caught swimming with no clothes on…
AB. Thanks. Are you still traveling with friend that thought well of NYCB. If so what are his or her current thoughts. When will you visit NYCB?
Looks like a lot of folks don’t understand how the BLS survey works. They initially get about a 75% response rate to the survey. Then further responses trickle in over the months.
The late responders tend to be companies with the biggest changes to payrolls. When the economy is expanding fast than expected, the late responders are companies with more hires than average. Revisions tend to be positive. When the economy is slowing down, the late responders are the people with layoffs. Revisions tend to be negative.
So, it’s not improbable that you would have 11 negative revisions in a row. Just means the economy has been slowing down consistently.
“The estimate of employment change is based on a
monthly survey of about 560,000 worksites, selected
to represent the millions of businesses throughout the
country. (For simplicity, we will refer to worksites as
businesses even though many individual businesses
provide data for multiple worksites.) In the survey sample,
businesses report the total number of people who worked
or received pay during the pay period that includes the
12th of the month. Although BLS uses a variety of methods
to gather these reports as quickly as possible, many
businesses do not have their payroll data ready to report
by the scheduled date that BLS initially releases the data. In
2012, for example, the average collection rate at the time
of the initial release was 73.1 percent.
The initial estimate of job change for a month is based
on the growth or loss of jobs at the businesses that have
reported their data. Generally, BLS assumes that the
employment situation at businesses that had reported is
representative of the situation at those that had not yet
reported.”
https://www.bls.gov/opub/btn/volume-2/pdf/revisions-to-jobs-numbers.pdf
I’m in the “no politics” crowd.
Also sympathetic to “We were just responding to Tim’s question – do you believe the numbers?”
Anyhow, back to the markets….
Powell’s Sunday speech, written before the jobs report release, about his doubts that rate cuts will start in March, has increased the Sunday 8pm 10T another 6 bps to 4.07%.
Kinda makes all our to-fros about the Jobs numbers above irrelevant.
Mr Market rules, regardless of the reason for the reaction.
Be ready Monday morning for the latest environment regardless of your opinions about the Jobs report..
A few comments on employment numbers:
1) The Payroll survey consists of two components:
a. A sample of large employers are asked directly, “how many employees did you have on x/y/z date? This number if based on factual data with one caveat. The survey response rate has been falling which inherently makes the data more uncertain. Pure statistics if say 25% of the companies you ask respond, but 75% do NOT, you are making the assumption that the non-responders added/lost jobs just like the 25% that did respond.
b. Small employers are NOT sampled directly. The BLS uses a model based on historical data about how many companies added how many jobs.
c. For calendar 2023, 100% of the net job creation was from the small employer model. Stated differently, large employers reported a net loss in jobs.
d. For the 11 months preceding the Friday 2/2/24 report, the BLS revised downward the reported payroll number. Statistically this indicates that the model(s) they are using is poorly modeling reality. The model revisions should be a Gaussian distribution centered on zero. I.e, the number of upward revised months should roughly equal the number of downward revised months. The odds of 11 consecutive months are about the same as the odds of you correctly calling a coin toss correctly 11 times in a row. You have a much higher chance of being struck by lightning than doing that.
2) The household survey is totally different from the payroll survey. The BLS picks a sample of real households and contacts them to ask how many members were working on x/y/z. The response rate on this has also been falling, so it also has a higher degree of uncertainty. The BLS takes that sample and scales it up to the entire population of the US. Since this uses actual data, it does NOT rely on a model which might be flawed.
Hi Tex2- Why are numbers revised at all?
One doesn’t need to believe in political conspiracies to consider the wage and jobs numbers from BLS suspect. For example, as a consequence of the pandemic employers now routinely advertise an open position in multiple US markets which exaggerates the number of open positions available. Another example is how an increase in the average hourly wage can be exaggerated by a decrease in the average number of hours worked. Economists routinely complain about the poor data that goes in to these reports, including a number of members of the Federal Reserve itself. Ironically, even the survey respondents say they are less inclined to answer questions citing privacy concerns and a general distrust of government. 😉
Reporting from the trenches.
We have been trying to fill a $20 per hour PT job, as a receptionist/secretary in our Tax/Insurance office for weeks.
3 worthy applicants had no SS# 😣 (they use LLC’s as a go around.)
We did hire a tax client at the last moment.
Anyway, I’m in my last year preparing taxes.
Analysis of 50 completed returns done in our office shows increases in wages, interest income and cap. gains.
This 2023 tax year will have more people owing taxes, than in the last 15 years.
BTW, I tried catching the falling knife of NYCB, I still don’t have feelings in one of my fingers.
Last months was adjusted upwards. Do you think literally hundreds of folks involved can rig that number and keep it quiet over the decades? 10 folks can’t keep a secret long. It seems any time the number don’t match one’s perception, they call them rigged. With so many folks involved, it is not possible to rig. If it is, please give me a proven example. Thanks and good luck to all.
It was a crazy number, but these are crazy times.
Do you think literally hundreds of folks involved can rig that number and keep it quiet over the decades? Yes Doug. Yes I do.
I never believe any of those reports. Often fake propaganda but even if not faked it’s last months news the sharks already played it. Daily news blurbs move the market temrorarily, I’d rather wait and then play against them.
With the Fed looking at holding rates for higher for longer we may see some decent preferred and BB coming to market instead of these questionable offerings as companies that have been holding off waiting for rates to drop have to refinance issues coming due. Even if they try bringing issues to market at a lower rate the market will price them lower.
Charles – these are exactly my thoughts as well. a 4% 10Y is closer to the long-term statistical norm. In the years since 2009, rates had been kept artificially low and now people think that 4% is EXTREMELY high, or at least HIGH. Not the case. As long as we don’t kick off a severe recession. 3-5% 10Y would be a fine metric going forward is my take. Would love to hear other’s thoughts.
Yaz, I agree and am positioning for a normalization of rates. The short rates might take a while though to come down, they seem anchored at 5-5.5%. If we see inflation 2-3% range, if I can get 5-6% on ultra safe money now in income instruments and at least 5% on corp stock giving me some div growth potential, I am ok w that. On pfds/bb’s I’d still want 7%+ for a buffer and risk premium. Looks like it will be another volatile year. Bea
Bea – yup – very similar strategy here. I just retired on Jan 12 and am now kicking in an income strategy I have been “practicing” since 2017 (been investing much longer – since 1984). In 2017-2022, I would have never thought I could EASILY get 5% on short-term, risk free return on cash. That adds a new and excellent dimension to the retirement portfolio strategy for me.
Like you, I target 7%+ for preferreds and BBs. I mix in investment grade corporate bonds (where I am adding duration), laddered treasuries (only out to about 12-15 months for now) and CDs out a year. I think at last check, my portfolio overall had like a 6.7% yield on cost and 6.2% current effective yield. I have upwards of 50 different investments so limiting to roughly 2-3% exposure to a singular “bad event” (i.e., a bankruptcy or such).
So far, so good, I am fortunate enough to have a decent pension and SS (decided to go ahead and take it) that I can easily live off so the investment side of things are for back-up emergencies but, more so, for leisure ‘play time’! It’s definitely different cutting the cord for the 9-5 job but I’m liking it so far.
Congratulations on your retirement! I did so at 55 in 2014 and have not looked back although I loved what I did. A little adjustment. My situation is a little different mom has modest income from dads EQT pension and SS, we use that as much as possible for our needs and charitable donations. Should I have her longevity (90) I am building capital and reinvesting for the long haul. She is my bene, I am hers for the most part so it is ‘our money’. Good years like last yr I make a large donation to the Food Bank here in Pittsburgh. Our expenses are low thankfully. Best to you in the years ahead!
Bea, What does EQT stand for ?
Never mind, I found their bonds. A little too rich to my liking, I prefer under par.
The four reports on Wednesday and Thursday tell a different story. So which are right and which are wrong or is the truth somewhere in the middle. Wasn’t it about 10-12 weeks ago that the same report proved a shocker?
“Fake” is strong language.
When your numbers were adjusted downward 11 months in a row, it seems very apropos
Doomers gonna doom.
Oh no doubt those employment numbers are fake and will be adjusted downward just like they were for the first 11 months of 2023. You can not trust anything these days coming from DC
But people will see this number and act accordingly
Remember that BLS counts any job even if you do it 2 hours a week as a job. Someone with 4 jobs working 50-60 hours a week, counts as 4 jobs, not 1 job or 1.5 jobs.
Yeah, you are correct , dive into the numbers and all the gains are due to part time jobs and changes in methodology. Likely people adding a part time job to survive in this economy. There were loads on analysts this morning calling out and blasting the game playing that went into this number
If anyone is interested in reading more, I will leave one link that hits some of the major points
https://www.zerohedge.com/economics/inside-most-ridiculous-jobs-report-recent-history
As well as this link, from the former advisor to the President of the Dallas Fed Reserve
https://x.com/DiMartinoBooth/status/1753456311793066066?s=20
with one relevant quote from the first article
the latest divergence between the Establishment (payrolls) and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 353K payrolls were added, the Household survey found that the number of actually employed workers dropped again, this time by 31K
As I said just the other day in another thread, Bureau of Labor Statistics is run by a political appointee, so it should come as a surprise to nobody that they keep changing methodology, under/over reporting then revising, etc. to make things look better for that appointee’s boss. Its an election year. If you can remember back to 2012, labor and treasury depts did similar things to make Obama look better. We have just become immune to hearing about it.
Surprisingly, I don’t remember a lot of it under Trump. I may have missed it. If suspect there was probably less not because Trump was more “pure” (a laughable idea), but (IMHO) because he didn’t have the 200+ years of “machine politics” behind him that the heirs of Tammany Hall have. I may be way off base here – just anecdotal.
I personally think we are seeing why George Washington warned us about party politics. Sad that we can’t learn from our own history.
Apologies if this is too political.
Yes, you are way off base. The BLS people who actually compile the numbers are “career civil servants who have churned out reports for both Republicans and Democrats”. Here’s an article that explains it in more detail:
https://www.nytimes.com/2016/11/04/business/economy/unemployment-labor-department-data-politics.html
And no, they don’t change the methodology. That would make the numbers useless.
David,
As Mark Twain is popularly quoted as saying – there are “lies, damned lies, and statistics”.
I read that 7 year old article when you posted it before. There was certainly no possibility that there might have been a political reason for it being published less than a week before the 2016 election (not that the NY Times was strongly backing Hillary, or anything).
The person interviewed sounds very dedicated, but she makes BLS sound mechanical and doesn’t really talk about the underlying methodology or ongoing revisions (what is a job? what do we count as “employed”? How are part time jobs counted? etc. etc. Those parts of the methodology can change the reported statistics more than the actual “count”.
However, if you read the article Mav posted, and the info from BLS itself (like their “employment situation” announcements, including the technical notes), BLS says they change the methodology pretty regularly. It isn’t a static monolith.
Because they change parts and pieces of the methodology with some regularity, I agree with you that changing the methodology “would make the numbers useless”.
You are correct – the head of BLS is appointed by the President
But the more important fact is it is no secret that the majority of workers populating these government bureaucracy positions are Democrat. Ask anyone who knows DC or works in DC and they will tell you that is the case. Hell just look at the voter registration data. So they know what side of the table they favor when it comes to playing games with the reports
My daughter worked 3 years in DC from 2017-2020, had friends who worked in Government including the White House. In fact she went bowling with them in the White House a few times. One of the main reasons she left is she said the dating pool was terrible – a bunch of either wishy washy far left idealists or self absorbed idiots. She said I need to get out of here if I am going to find a normal, middle of the road, down to earth guy. Low and behold she did 4 months after moving. Now happily married for several years
Back to some real data, read this link and chart
https://x.com/JeffSnider_EDU/status/1753454436758835402?s=20
oh wow we are dripping politics in here again..maybe you’d like me to share mine..of course out of respect for Tim who has been so good to me on his sites thru the years I won’t. BeaPelosi
For the record, it was TIM who asked the question “Crazy numbers–do you all believe the employment numbers released earlier today–353,000 new jobs. I am highly skeptical of the numbers”
I gave my opinion that those employment numbers are fake and will be adjusted downward just like they were for the first 11 months of 2023.
I then provided some links to articles pointing out the fallacies in these numbers with actual data, etc. that it seemed some ignored
So in my last post, I was simply responding to a false statement made by someone here that tried to insinuate that BLS people are apolitical. and would not play with the numbers / assumptions That is not true. Every individual has their own political bias, I don’t care who you are, and the political leanings of the DC gov’t bureaucrats is well known If anyone found that too political, not sure how you address Tim’s question and respond to false information posted otherwise
I will leave it at that
Mav. You’re actually blaming Tim for your transgression? LOL. For the record, zerohedge , which you have linked to here and i believe other times is one of the most far right and highly political rags out there…they just pretend to focus on business. A quick Google of who Tyler Durden, ZH’s founder, is (a pseudonym BTW) and that will tell you all you need to know. The rest of your post also smelled of far right talking points. You even brought your daughter into the discussion to try to condescend on the Democratic party. So your smugly coy response is very hollow. My own leanings are left of center socially and right of center fiscally. Anything far-anything is ripping this country apart and folks like you that espouse those views are part of the problem … and BTW, I’d say the same if someone came here and posted links to far left loonie sites. The bottom line is, and none of this banter would have occurred if that were followed, is that this site has always been a haven of apolitical commentary and it’s been refreshing as such, I would hope folks continue to honor that. I’ll use your words, “I’ll leave it at that” and go back to lurking. Ciao
What Maverick said might have been questionable, but what yazzer said really opened Pandora’s box. In the words of our President “ don’t “.
Zero Hedge has some useful analysis for investors not always covered by the cheerleading financial media. They also have a lot of politics most of which has nothing to do with investing. Pick and choose which articles to read for maximum benefit without raising your blood pressure. I read there often and skip most of the political clickbait though foreign stories can be useful because our media doesnt cover them broadly enough..
Yazzer
Read again what I wrote. I said Tim asked the question “do you all believe the employment numbers” I simply gave my opinion like lots of others here and I backed up my thinking with multiple links to data, etc
And in fact multiple people weighed in with similar feelings that the data can not be trusted while others disagreed – as to be expected. We all have our own opinions. If you want to trust the data, have at it.
You may want to dismiss zerohedge out of hand but they post some excellent financial and economic data you don’t get in the mainstream financial media. No one has to read their political commentary to take advantage of reading their financial analysis. I myself prefer to read a variety of sources covering a wide spectrum of viewpoints. I would never dismiss any out of hand.
As to any transgression, IMO there was none (well except in your response) unless you are taking offense to me giving a personal anecdote about my daughter. Sorry but people post personal stories and anecdotes here all the time. Excuse me if I one time posted about my daughter’s actual personal experience that she lived, not you nor I.
I won’t address the rest of your post as it would not be productive to this forum.
Mav – AGAIN – way too political and anecdotal at that. That’s the extent of my comments lest the debate devolves further.
Private – Too political…I’ll leave it at that. Hopefully, we don’t devolve into these types of debates here – one reason I love this site is the way comments are pretty agnostic to specific political opinion.
I have decided to become a lurker again, I don’t need this shit. Maybe someday there will be a mute button on here. Bye bitches! Bea
Bea, agreed. And I vote for the ignore button Tim!
1. I’m old enough to realize that my opinions may be useful or useless and the same with other’s opinions. If someone’s opinion is political and different from mine, but has investment implications, I’d like to hear it since it could effect an investment decision with information I hadn’t considered.
2. Ignore buttons can be useful and a good idea to reduce conflicts and frustrations.
Bea, for me, your post is among the best in this thread. If I want to read fantasy conspiracy theories, I’ll follow Q or some other such BS, that’s not what I come here for. I don’t mean to imply that there are not problems with the numbers, but government surveys always have revisions to some degree.
And if they were being manipultated wouldn’t we hear from some trusted whistleblowers dying to do the right thing, or mabe even make a name for themselves?
Bea,
I apologize both to the group and to you personally if I have offended. Certainly not my intention. I hope you will not stay away long. Your input is always very valuable.
I think people are looking to take offense. I see nothing wrong with the posts here. When presented with data and the host questions how accurate it is that means discussion surrounding it is ok which can enter into the “political realm” within reason. It is like stating that most teachers are democrats. That is not an opinion. It is a fact. So when data is collected and presented by a group who leans mostly one direction it is only normal to examine possible biases in the whole process. That is not political. That is intelligent discussion.
I agree with you Fc. The question is how reliable the numbers are. Evidence and comments were presented on the issue, which were interesting to review. Everyone is free to determine what weight or credibility to give the numbers. Some people don’t seem to like an argument counter to their beliefs and resort to name calling which seems rather intolerant.
Everything in the world is shades of gray. During WWII, you had Ford and Standard Oil and others selling to Allies and the Axis. Throughout time there are examples of times government agencies have lied and/or misled the public – MK Ultra by the CIA, all the Cointelpro programs and more by the FBI, the Army chemical/biological testing on the poor in St. Louis in the 1950s. The list goes on.
Always good to view things with a healthy dose of skepticism and consider the biases.
Hi Bea, we may not agree on anything politically, but we can agree that lurking is a great way to be. I’ve found it very easy to skip the posters that don’t interest me or skip through threads that are hijacked, but there’s too much information here for me to pass on.