NFP & Operation Quicksilver

Today’s Non Farm Payrolls data is due at 8:30, and the consensus is for 215,000.
(Why break the streak? I’ll take "the under" again, please).

This Payroll  report will bring into focus two elements we haven’t discussed much recently:

Good News is Bad News
We are at one of those funny junctures where the Market perceives bad news as good, and vice versa.

That implies a modestly weak payroll report will be perceived as support for the notion that the Fed has done their job in cooling the economy down just enough so that inflation is contained.

If we see a number between 175k-225, it will support those in the "Two & Through" camp; 125-175k will benefit the bettors on "One & Done." Anything below 125k, or above 225k, and its "How Rude/We’re Screwed." (The downside number would be a real unexpected surprise).

Not that type of Inflation
My take on today’s Payroll numbers? Unless its a real outlier, I don’t believe it will matter all that much.


Because the Fed is fighting at *Calais, and not Normandy.

It seems their primary inflation concern remains wage inflation — which is nowhere to be found.

I see Inflation today being driven by two factors — Asian commodity demand, and fixed structural domestic costs (insurance, health care, etc.) in the U.S. I’m not sure how much the Fed can do about either, short of causing a world wide slowdown.

So unless today’s Payroll numbers are a blow out — or a disaster — it probably won’t make all that much of a difference to the them.

* During WWII, the Allies engaged in an enormous and risky military deception before D-Day: Operation Quicksilver. Through a variety of feints and counter-intelligence, Allied Commanders made the Germans believe the D-Day invasion was going to hit either Calais, France — or Norway. While the bloody D-Day invasion met stiff resistance at Normandy, there was no counterattack from the German Panzer Units .

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  1. B commented on Jan 6

    Well, today needs to be up to be consistent with the past. We are kicking our heels! But, I tend to think today has quite a reasonable chance to finish down.

    I love the – bad news is good news – good news is good news – any news is good news – thinking. A crappy jobs report is good news for us……….because………..somehow the Fed has unlimited powers to save the economy by not implementing their final 25 basis point rise? Huh? Oh, I see. Because they will start INFLATING again as GOLD, OIL, COPPER, CEMENT, PLATINUM and on and on and on jam past new highs.

  2. Michael C. commented on Jan 6

    So, 108k vs 200k expected.

    The BLS says 253k coudln’t get jobs because of weather. The average for Dec is 148k. So that’s 105k difference.

    What I don’t get is, I thought weather has been unusually good this winter, hence the drop in nat gas prices.

  3. cm commented on Jan 6

    Michael C.: I think the answer would be, yes, the weather has been unusually good for gas prices, but unusually bad as jobs are concerned. Next question. :-(

  4. Barry Ritholtz commented on Jan 7

    The next time the NFP comes in by 100k new jobs over the consensus, will you also be posting that the overage represents a statistically insignificant number?

  5. Dan Green commented on Jan 7


    If we see a 100k upside next month, yeah — I’ll probably get real excited about it. That won’t change the economic significance of the figure, though.

    Like most drivers of the market, the psychological impact of missing estimates is large.

    [Add your own Technicals v. Fundamentals discussion here]

    Thanks for replying, Barry.

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