How About That Jobs Report! "Figures lie and liars figure" by Art Doglione, President of Alpha Fiduciary

That sound you're hearing is a gigantic exhale of relief

, as the August jobs report came in better than expected. The private sector actually added 67,000 jobs.

We here at Alpha Fiduciary have been focused on the jobs picture since 2008 for clues to the overall health of the economy. Please read the last statement again, notice that I did not say that we have been focused on the jobs report for clues to the overall health of the stock market.

We will comment on the US Stock Market later in this blog post, after we first discuss this morning's jobs report. Like most things in economic life, while it may be more convenient to sum it all up in one reportable number and look at aggregate performance, utility of that information can only be found by digging through the details to understand what is really happening.

The details of today's report reveal that while many measures of the jobs picture are either still deteriorating or are stalled out, the total number of workers unemployed for an exceptionally long time, is showing signs of improvement. The civilian employment to population ratio, a critical measure which has declined sharply from its 2008 level of nearly 63% to its 2010 level of roughly 58.5%, a staggering move for a metric whose changes are usually measured in fractions of a percent has begun to register a fractional gain. Average weekly hours of all employees has remained in a dead stall.

If you have been to a mall (not likely I know) you may have noticed that the total number of people employed in the retail trade has dipped slightly, a sign that the retail industry has little confidence in the consumer. The best news I see in todays report is that the median duration of unemployment has declined from roughly 25.5 weeks to 20 weeks; this of course is tempered by the fact that many of those workers finding jobs are making less than their historical wages. Construction employment which has fallen roughly 26.5% since 2008 has been flat lined in 2010 as this industry still has excess capacity both in labor and inventory of new construction and existing homes and commercial buildings for sale. As expected Government employees shrank in number from roughly 23 million to just under 22.5 million reflecting Census as well as constrained local governments.

The hard hit financial industry has continued to shed jobs in 2010, a trend likely to continue as this sector adjusts to regulatory changes. Average weekly hours worked for transportation and warehousing workers has also been flat lined of late, however for all of 2010 hours worked for this group has increased from 37.8 to 38.5 hours.

So let's address the"figures lie and liars figure" thought that many who read the government released statistics as it relates to jobs may be assuming. If you don't believe you have seen any improvement in your local community you are probably correct; two factors must be understood when reading this data. (1) There is seasonality in payroll data that the government attempts to normalize by"tinkering" with the numbers trouble is they don't use the same seasonality adjustment profiles each year, and they frequently revise backward after the number is no longer in the public eye. (2) Restatements of prior months, and sometimes years of data are geared toward a preoccupation with the short term solutions that often hold instant analysis over substance and progress which should be built on strong foundations.

Please be careful as you make decisions based on assumptions drawn from any of these numbers, they should not be relied on absolutely, rather they are best viewed in relative terms, somewhat the way wall street sells its performance to the public.

TheUS stock market has seen tremendous volatility both upside and downside as technical patterns continue to evolve into a picture that we believe will underscore the need for a tactical approach to wealth management which diversifies investors portfolio's across ten asset classes. Technicians have noted six"Hindenburg omens" in the past thirty days which have historically represented a precursor to significant stock market declines.

While we don't expect the market to simply fall of a cliff, we do believe the rally wave this past week has likely run its course and expect a 2-3% decline next. What you can expect to see are future waves of declining and appreciating stock prices that can be very harmful to investors who do not understand the macro picture.

Shockingly, I have seen many so called experts on TV advising investors to sell safe low yielding, low duration investments in favor of higher yielding stocks at a time when I believe the risks of owning stocks is quite high. The media is doing its job presenting the blow by blow details of the stock markets and economic data points; investors should be focused on what they can control having their wealth managed in a thoughtful manner which does not simply allocate only to stocks, bonds, and cash based on fear, greed, or the need for income, rather one that allocates risk toward all ten asset classes in a directional, tactical approach.

Be Well.

www.alphafiduciary.com

How About That Jobs Report! "Figures lie and liars figure" by Art Doglione, President of Alpha Fiduciary

By: Arthur Doglione

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