HedgeFundLIVE.com — Let’s rewind back to exactly one year ago on March 4, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:
(“Re”) Introducing the Quick and Dirty
After four days of boredom that goes well beyond anything the sport of curling can offer, we finally arrive at the Big One. Regardless of what number flashes across our screens at 8:30 AM, the market will move in a major way such that the S&P 500 futures will most likely break out of this week’s soporific range of 1115 to 1125. Beyond the typical high interest a Jobs Reports brings, two things make today’s data more intriguing than usual.
First, except for the report received this past December, every Nonfarm Payrolls released in the past two years has reflected negative job growth. Last month’s -20K print, however, brought us close to the happy side of par suggesting the employment picture continues to firm up providing further evidence that the economic recovery still remains on track. Any backing off from job creation given the environment of the recent poor data, especially from the Department of labour’s release of Jobless Claims, will make many people more nervous that the recovery is not a done deal and the economy sits halfway through a double dip recession.
Next, as evidenced by blogs, such as this one by Floyd Norris of The New York Times (http://norris.blogs.nytimes.com/2010/02/22/horrid-job-number-coming/), research reports, and the talking heads on CNBC, we hear whispers of a miserable report thanks to the giant snowstorm which hit the Atlantic Seaboard on February 9-10. Nonfarm Payrolls are compiled from the week which contains the 12th day of the month, such that many economists fear the weather forced employees to stay at home to therefore be undercounted in the establishment survey.
Some, including Mr. Norris, point to a sequence of releases during the winter of 1996 as proof. January’s survey from that year coincided with another Northeast blizzard which caused a significant, counter trend drop of 206K jobs only to get an eye popping 705K rebound the following month. While the data revisions eventually smoothed out somewhat to lessen the effect over the course of that year, economists are now taking notice, for despite a decent ADP report on Wednesday, consensus for Nonfarm Payrolls has slipped in the past 3 days from -20K to -68K. For completeness, ADP did produce a -20K estimate while my world famous Quick and Dirty model, which I base on Initial Jobless Claims numbers and not Al Roker, predicts -110K.
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