There Ain’t No Employment “Whisper” Numbers

OK, kids, listen up: There ain’t no such thing as NFP whisper numbers.

This oddity seems to come up now and again by the usual tin foil hat types. Let’s explain what a whisper number actually is, and why an Employment whisper # is nonsense.

Back in the bad old days before Reg FD and Sarbanes-Oxeley, there were several numbers that investors had to pay attention to when it came to quarterly earnings:

1. Official Guidance: The first was the company’s official guidance. It was given a quarter in advance, typically at the prior quarters conference call. It tended to be very conservative, and was therefore easy to beat.

2. Analyst Consensus: The second number was the analyst consensus estimates for the quarter. Take all of the analysts who officially covered that name, take the average, and you get the consensus estimate.

3. Whisper Number: The third number was the “whisper” number. The CEO, or more often, the CFO or head of Investor Relations would pull aside a favored analyst or two, typically from the biggest iBanks.They would, sotte vocce, whisper wast the actual earnings number was going to be privately.

Yes, this was material non public information. Yes, it was in all probability illegal. And yes, it was extremely profitable very all involved. The analyst generated some commissions, by revealing it to favored (read large commission paying) clients — typically, hedge funds. That “First Call” went to the firms that spread the most love around the Street. And the company got a nice pop when the earnings beat the artificially low guidance and consensus.

Now, apply this process to NFP report.

Who has access to this info before Friday at 8:30 am? The BLS, the White House, and the Fed the days before, and the sequestered reporters at BLS the hour prior to its release. Yet the supposed whisper number circulates before event he Fed has access to it.

Who profits from whispering it? Why would anyone take the career risk of sharing this heavily revised and often meaningless single data point?

Last week, I actually heard someone declare: “Sure, 192k isn’t terrible, but its far below the 250k whisper number for NFP.”

These people are not only money losers, but a fools. Steer clear of them . . .

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