Let’s briefly touch on August NFP before moving on to a more important point.
The jobs report – it was a debacle. Everything about it:
The headline number was a miss (169k jobs added versus consensus of 175k and a whisper number closer to 200k).
Teen unemployment above 22%.
Most of the adds were McJobs – low wage, low productivity stuff (retail +44,000 positions, leisure and hospitality +27,000).
Construction jobs actually down!
They revised down the June and July jobs added totals by a combined 74,000!
Labor Force Participation Rate hits 63%, a low not seen since 1978. That’s 90.47 million people out of the workforce, in case you’re keeping count – that’s a larger count than the population of Germany or about four Hollands. We have nine Portugals worth of people on the jobs market sidelines. Rock n’ roll.
Steven Russolillo at WSJ gets it right: “We can’t stress enough the mediocrity surrounding this jobs report and the previous monthly revisions.”
But forget the stats, here’s the best part: We’ve now cemented the fact that nobody knows anything.
We can also conclude, once again, that monthly data points across every single data series we get – from both government and private entities – are almost completely random. They have only an occasional, accidental correlation with one another when the economy teeters on the fence between expansion and contraction, as it has been for so long.
ISM strong, new home sales weak, Philly Fed good, Richmond Fed bad, auto sales soar, retail sales decline, confidence shoots higher, so does food stamp use, and on and on. The best part about the various economic stats we all follow is how not a single one of them ever confirms any of the others ones.
Anyone pretending to have a good handle on the mosaic right now is full of shit. The Fed itself has no idea what the next week’s worth of data will bring – so believe me, the Chief Global Whatever at Morgan Stanley doesn’t either.
With that said, stocks are going up and so are bonds and so is gold.
Let me save you some time: Invest and ignore. Macro strategy has become indistinguishable from astrology.