Why I Hate the Jobs Report
- Posted by Joe Fahmy
- on March 4th, 2010
Out of all the economic reports, the monthly Jobs Report seems to get the most attention. This report comes out at 8:30AM EST on the first Friday of each month. Here are the main reasons why I ignore this report:
1) CNBC calls this report the “Grand Daddy of them all.” This is an obvious and pathetic attempt to boost their TV ratings and put fear into the novice investor.
2) I prefer to “turn off the noise” and pay attention to the price action of leading stocks and the volume of major indexes.
3) The following seems to happen fairly often: The jobs report comes out and the Dow drops 100 points by 10AM EST. The Yahoo Finance headline reads: “Market tanks due to poor Jobs Report.” By 3PM EST, the market recovers and turns positive. The Yahoo Finance headline reads: “Market rallies due to strong Jobs Report.” WELL WHICH ONE IS IT??? THE REPORT DIDN’T CHANGE INTRA-DAY!!!
4) Leading indicators (such as the stock market) are more important to me than lagging indicators (the majority of economic reports).
5) How can a number have credibility when it is ALWAYS revised the next month? Could you imagine if a company reported earnings one month and then changed it the following month? When a report is revised so dramatically a month later, it makes you wonder why people think the number is “manufactured by the government.”
6) Now I’m hearing that poor weather could affect the report. If you’re motivated, you will walk uphill both ways in 3 feet of snow to interview for a job. If you’re not motivated, you’ll wake up at the crack of noon on a sunny day, eat leftover pizza and play video games. Weather is just another pathetic excuse. By the way, the same goes for Retail companies who use weather as a reason for weak sales. I know women who would walk through a category 9 hurricane if they really wanted a new pair of shoes at the mall.
7) If the unemployment number improves, the market could rally because it’s a sign that the economy is getting better. It could also decline because of fears that the Fed will raise rates now that the economy is improving. Again, trying to analyze all these scenarios can drive you crazy!
Bottom line is this: The market is going to interpret the report however it wants to. If the market is healthy, it tends to ignore bad news. If we’re in a weaker environment, all news is bad. My best advice is to PAY MORE ATTENTION TO YOUR STOCKS and LESS ATTENTION TO ECONOMIC STATISTICS. As they say: “There are lies, damn lies, and statistics.”
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Joseph Fahmy is the managing director at Zor Capital, LLC, a New York based investment management firm. Joe has over 17 years of trading experience...More »