Today is NFP day. Readers know I have been taking the Under for quite some time now (for new visitors, that means I am betting the consensus is too high). Its been the winning bet, thanks to the stubborn refusal of many Economist’s models to recognize that a post-bubble period is aberrational.
In fact, the few times "the Over" has been the winning bet invariably occurs when a major restatement/readjustment takes place. Recall the April NFP numbers had an enormous Birth/Death adjustment, accounting for nearly all of the gains. Last month’s NFP stinker also had a huge adjustment
Prior to 2,000, the Birth/Death model was not part of the BLS modelling. Establishment Data (a/k/a Current Employment Statistics) is supposed to come off of true payroll runs — not a guesstimate of newly created or dissolved corporations. Fabrications of those sort are best left to the people who answer the Household Survey (Current Population Survey), as well as the discredited dismals who quote them. Credit for bringing this new hedonic to my attention goes to the NYP’s John Crudele.
So is there any reason not to take the Under this time? Some people have pointed out that new unemployment claims have been consistent with decent job creation. Others have said that layoffs have been running on the light side (at least before IBM’s bombshell). And last June, the B/D adjustment was fairly substantial — about 3/4 of the April and May twists. So even if the actual number is weak, we may see a helping hand from the adjustments.
All those reasons, however, now take a back seat. Thanks to Reuters, we may have another way to determine if the Under is still the way to bet: The CNBC guest list:
"Number-crunchers at Wall Street banks scrambling to get their employment forecasts just right might do well to check CNBC Television’s programming schedule for clues. Some traders have noticed that more often than not, Treasury Secretary John Snow’s appearances on the financial news network coincide with strong jobs data.
A bad number, on the other hand, is often handled by less prominent officials, like Labor Secretary Elaine Chao or White House economic advisers Glenn Hubbard or Gregory Mankiw.
"Traders here had a feeling the figure would be weak this time round," said Ranvir Singh, head of European markets at Refco Trading Services in London. "The fact that Elaine Chao was appearing on CNBC after the jobs report rather than John Snow really gave the game away for a lot of guys."
So who is on CNBC this morning? Is is Treasury Secretary John Snow?
The answer, as of 6:30 am, is no. Instead, we see (here) that Ben Bernanke, Chairman of the Council of Economic Advisers is scheduled. Bernanke replaced the likable Greg Mankiw earlier this year, and after his year in purgatory (i.e., the White House), expect him to replace Fed Chair Alan Greenspan. Incidentally, the first person who gets the Labor Department’s jobs data before release is the chairman of the Council of Economic Advisers (Bernanke), who then gives it to the President.
Reuters noted that Snow has appeared on CNBC to speak about payrolls on Fridays six times over the past 15 months. On three such occasions, job creation in the previous months was above the consensus forecast at 270,000 or higher, and twice, it was up at least 140,000.
But all this is secondary; a player on a streak has to respect the streak.
I’m sticking with the Under.
UPDATE: July 8, 2005 7:06 am
Joshua Shapiro of MFR informs us that "According to Challenger, Gray and Christmas, announced job cuts in the United States totaled 110,996 in June — the highest amount since January 2004. For comparison purposes, there were 82,283 announced layoffs in May; 57,861 in April; 86,296 in March; 108,387 in February, and 92,351 in January. Announced job cuts have totaled 538,274 so far this year, 13.9% above the tally in the first six months of last year.
Industry detail for June show that the largest total number of announced job-cuts were in the automotive industry (40.9% of the total). The next four largest categories were retail (21.7%), food (4.9%), industrial goods (4.7%), and government/non-profit (4.1%). Together, these five sectors accounted for 76% of total announced job cuts (compared to a top-five sector share of 55% in May)."
I stand corrected.
CNBC programming may tip Wall St. to U.S. jobs data
By Pedro Nicolaci da Costa and Jamie McGeever /