On Friday morning, we get the November jobs report.
You can read my full preview for BI here.
I'm swayed by Ian Shepherdson's argument that Friday's number will likely disappoint, as November has traditionally been impacted by large seasonal adjustments.
But Shepherdson has also shown some what I would call "mainstream data truther-ness" of late. He's been railing against ISM's manufacturing PMI and services PMI reports, calling out their inclusion of seasonal adjustments from the financial crisis that have made the economy look better than is probably the case of late. (Which sort of shows you how low the bar is for Wall Street economists being called "data truthers" — this isn't exactly shadow inflation we're talking about.)
And while Shepherdson is a good economist and a friend of BI, it makes me think about something David Rosenberg said on Barry Ritholtz's podcast a few months ago. Rosenberg basically railed against everything BI stands for in terms of covering all economic data points and finding some way to make (almost) all of them (a little bit) interesting. And Shepherdson, more than any other economist on Wall Street, has not just fast and incisive and commentary on every data point, but often interesting things to say about the data.
Rosenberg's complaint is that we're all sort of playing this fruitless game of trying to guess every economic data point, of which there are just a ton every month, and what it does is unsettle investors.
But that mindset also sort of assumes that Rosenberg's tactic of not overreacting to every, or really any, data points is the right way to do business, the only way to do business, the honest way to do business. I mean, what do people say about the truth, right?
It also assumes a certain way of viewing the job of a Wall Street economist (and market watcher, generally).
In that same conversation with Barry, Rosenberg talked about how he got his reputation at Merrill Lynch as being the guy the firm brought in to deal with anxious or panicked clients. Which makes sense, Rosenberg's first day on Wall Street was Black Monday. When you learn through panic like that, everything else seems like small potatoes.
And when you're brought in to calm down Merrill Lynch's biggest clients, what're you gonna do, say, "BOOM!"?
But the reality is that the market does care, a lot, about the monthly jobs report. And so just as any report, Friday's will be exciting. And while consensus is at +230,000, and most notes I came across this week said something to the effect of, "All signs point to a print that shows steady job gains north of 200,000," I give Ian Shepherdson props for finding what we call in the media a good angle.
Seasonal adjustments are fickle, and just like anything, past returns are not an indication of future results.
But I'll play that game, I buy "the seasonals," as Shepherdson calls them.
The US economy and the US labor market look like they're in good enough shape, but I'll take a chance on the data quirk for November.
(This post originally appeared on my Ello page.)
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