March’s Employment Numbers Far Better Than Headlines

March’s Employment Numbers Far Better Than Headlines

Remember your geometry corollaries?

“If A=B and B=C then A must equal C”

So in looking at the markets reaction to the March jobs report we should conclude:

The numbers were bad and the market sold off (A) because it missed economists expectations (B); A=B

The economists expectations (B) are always correct (C); B=C

Therefore numbers were bad and the market’s reaction (A) was correct because economists expectations are always right (C); A=C

Am I the only one who sees the flaw? We all know economists predictions are only slightly better than those of the bearded lady who reads palms for $5 in some rat infested shit hole in Atlantic City. Yet, we see over and over people reacting, not to the actual number but to the degree it either falls short or surpasses what the palm readers in nice suits say.

There have been several pieces out that do a good job detailing how the March numbers were not “bad”. I had my take on them here.

In order to believe the “badness” of these numbers and accept the sell off  ($SPY) as legitimate we also have to believe they won’t be revised. Because, well, if they are revised, then the number reported Friday is meaningless until we know the real number……so…..

We also have to believe that the one month dip in the progress in NFP is also the current NEW trend and not an anomaly or the natural ebb and flow of market data….

Let’s look a it visually….

Here is the total # of employed since March ’09

Here is how we got there….the monthly change in payrolls over the same timeframe

Hopefully that puts March’s numbers in better perspective cause that top chart is still going up….

About the Author

Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.