Please enlighten me. Thanks.Totally agree that the 13% unmployment doesn't make sense in relation to 40+m initial claims..... I'm betting that the BLS numbrs are jacked.
I wonder why.
Do you think Dow 18,000 was the bottom?
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brewer12345
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Do some reading. Zero hedge has some interesting write ups this morning. Basically bls has a wonky process that they try to compensate for with statistical adjustments. The wonky process and the models are both larger than usual sources of error
I would guess that the real unemployment number is closer to 17 to 20 percent.
I've never heard of an unemployment adjustment of even 1%, much less 4-7%. I'll believe the markets.
This makes my head spin:
"Coronavirus (COVID-19) Impact on May 2020 Establishment and Household Survey Data
Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. In the establishment survey, approximately one-fifth of the data is collected at four regional data collection centers. Although these centers were closed, about three-quarters of the interviewers at these centers worked remotely to collect data by telephone. Additionally, BLS encouraged businesses to report electronically. The collection rate for the establishment survey in May was 69 percent, slightly lower than collection rates prior to the pandemic. The household survey is generally collected through inperson and telephone interviews, but personal interviews were not conducted for the safety of interviewers and respondents. The household survey response rate, at 67 percent, was about 15 percentage points lower than in months prior to the pandemic.
In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs. Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits.
The estimation methods used in the establishment survey were the same for May as they were for April. However, after further research, BLS extended the modifications that were made to the April birth-death model back to March, which accounted for a portion of the revision to March data. For more information, see www.bls.gov/cps/employment-situation-covid19-faq-may-2020.pdf .
In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (May 10th through May 16th). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. In May, a large number of persons were classified as unemployed on temporary layoff.
However, there was also a large number of workers who were classified as employed but absent from work. As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified. BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue.
If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.
More information is available at www.bls.gov/cps/employment-situation-covid19-faq-may-2020.pdf . "
https://www.bls.gov/news.release/pdf/empsit.pdf
"Coronavirus (COVID-19) Impact on May 2020 Establishment and Household Survey Data
Data collection for both surveys was affected by the coronavirus (COVID-19) pandemic. In the establishment survey, approximately one-fifth of the data is collected at four regional data collection centers. Although these centers were closed, about three-quarters of the interviewers at these centers worked remotely to collect data by telephone. Additionally, BLS encouraged businesses to report electronically. The collection rate for the establishment survey in May was 69 percent, slightly lower than collection rates prior to the pandemic. The household survey is generally collected through inperson and telephone interviews, but personal interviews were not conducted for the safety of interviewers and respondents. The household survey response rate, at 67 percent, was about 15 percentage points lower than in months prior to the pandemic.
In the establishment survey, workers who are paid by their employer for all or any part of the pay period including the 12th of the month are counted as employed, even if they were not actually at their jobs. Workers who are temporarily or permanently absent from their jobs and are not being paid are not counted as employed, even if they are continuing to receive benefits.
The estimation methods used in the establishment survey were the same for May as they were for April. However, after further research, BLS extended the modifications that were made to the April birth-death model back to March, which accounted for a portion of the revision to March data. For more information, see www.bls.gov/cps/employment-situation-covid19-faq-may-2020.pdf .
In the household survey, individuals are classified as employed, unemployed, or not in the labor force based on their answers to a series of questions about their activities during the survey reference week (May 10th through May 16th). Workers who indicate they were not working during the entire survey reference week and expect to be recalled to their jobs should be classified as unemployed on temporary layoff. In May, a large number of persons were classified as unemployed on temporary layoff.
However, there was also a large number of workers who were classified as employed but absent from work. As was the case in March and April, household survey interviewers were instructed to classify employed persons absent from work due to coronavirus-related business closures as unemployed on temporary layoff. However, it is apparent that not all such workers were so classified. BLS and the Census Bureau are investigating why this misclassification error continues to occur and are taking additional steps to address the issue.
If the workers who were recorded as employed but absent from work due to “other reasons” (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff, the overall unemployment rate would have been about 3 percentage points higher than reported (on a not seasonally adjusted basis). However, according to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify survey responses.
More information is available at www.bls.gov/cps/employment-situation-covid19-faq-may-2020.pdf . "
https://www.bls.gov/news.release/pdf/empsit.pdf
Dash man
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Dangerous words. There are many things that could bring the market down! Don’t jinx this!
Bill McBride runs the blog “Calculated Risk” and provides very good and easy to understand analysis of major data releases. It’s a great resource for people that don’t have a financial or economics background and want to know what some of this data means.
Here’s his take on the BLS announcement https://www.calculatedriskblog.com/2020/06/comments-on-may-employment-report.html
Here’s his take on the BLS announcement https://www.calculatedriskblog.com/2020/06/comments-on-may-employment-report.html
Montecfo
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These are estimates which is why they are able to get them out so quickly. Hand-wringing about the birth/death adjustments are certainly nothing new. The CV has certainly raised challenges to estimation, since you have multiple types of employed people who are nonetheless not working.
The "real" number is never known but we can all guess.
mckittri2000
Recycles dryer sheets
The markets numbers are base on future projections, not current numbers only. The numbers are positive so the market views things are on the rebound. Any number of things can happen in the near future to bring it down and vice versa to keep it going up. Seems like a lot of people on this board are very pessimistic.
street
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I couldn't agree with you more! That is exactly how the market numbers works and thanks for bringing that to our attention.
I for one am an optimist and I see boom and even if gloom I try to see the best in everything.
Thank You.
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Montecfo
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Yes. Pessimism is very high, here and elsewhere. Cash levels are elevated. Interest rates rock bottom. Oil cheap. Demand pent-up.
All of these are bullish.
Agree.
Dtail
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Eventually the Fed could take their foot off the gas with pressure from Main St vs. Wall St and the delicate house of cards could tumble.
In the meantime, celebrate 13% unemployment....
Historically, the unemployment rate was defined by people who couldn't find jobs. Because of the special circumstances, "unemployment" was expanded to include people who were displaced because their business/employer had to shut down temporarily. It also didn't help that the government offered incentives to file for unemployment by increasing payments, which exaggerated the situation. (This btw was the right thing to do because it was the fastest way to help people who got displaced).
So IMHO I think the unemployment rate has been artificially too high. A better question is what's the true unemployment rate (whether or not to include the underemployed) and how does that compare to pre-covid days? I don't believe that this number is anywhere near 13%, as I think the majority will go back to work. I could believe ticking up to as high as 8% but we won't know until we have a vaccine.
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Dtail
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Fair enough.
Perhaps if permanent jobs lost could truly be identified, that could be another metric of comparison.
Yes, if they had enough time to create a "temporary displaced" category then what'd you see is a sharp rise in this category during the shutdown, followed by a sharp decline when they opened up the economy, which began to occur in May. And when businesses permanently closed, people would then be categorized into "unemployed".
Again, they unfortunately didn't have the time because they were in a mad rush to help displaced people, but it would have brought a bit more clarity and less sensationalism, and perhaps there would be a tad less pessimism.
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brewer12345
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Laughable, but have at it. By most every measure I can see, the market is now overvalued more than it was at the peak of the dotcom bubble. Bon chance.
DAYDREAMER
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+1
I disagree. The fed is there 1) to provide liquidity, including as the lender of last resort and 2) to mitigate against economic stock through monetary policy. How well they do this is reflected in confidence in the stock market, but they don't "prop" the stock market directly. Rather than these vague accusations, can you list what specific actions they have taken that are counter to #1 or #2 or actions where they bought stocks directly to increase stock prices?
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SecondCor521
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I thought I saw on CNBC or somewhere about two weeks ago that about 88% of the unemployed were in this "temporarily displaced" sort of situation rather than permanent job loss. I thought they said that this number came from the government jobs report, and the implication was that these people might snap back to work quickly since they're sort of in a limbo state or furloughed rather than indefinitely put out of work. Unfortunately, I didn't save the cite or link, sorry.
CNBC today (I watch at the gym while doing treadmill) said that about half of the net job gains in today's report were in hospitality and leisure, which makes sense - as places reopen there are people who are starting to eat out, shop, go on trips, etc. I know there will be a period of time where a large percentage of people will still be wary. Historically I think the polio situation would be a good comparison - as the Salk vaccine was rolled out, people probably took some amount of time to decide it was safe enough to go to swimming pools etc. I'm not saying anything here about a COVID vaccine, just that there will be some sort of decay function as people decide things have gotten "safe enough" to do stuff, whatever that level is for each individual and state (and it obviously varies tremendously).
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Freedom56
Thinks s/he gets paid by the post
Many of my 2021 and 2022 corporate bonds/notes have moved up so far above par that the YTM is now .52%. There is no point in holding those to maturity so I will be unloading those next week. I have a high yield note from Advanced Micro Devices (August 2022 7.5% coupon) that I bought in March for $98 and it closed today at $113.25. No point in holding that one either as it will depreciated to $100 over the next two years.
The most heavily shorted stocks were spiking today. Even Hertz Global Holdings who filed for bankruptcy and their bonds are trading at 30 cents on the dollar as they re-structure but their stock jumped as much as 155% today before closing up 71%. I guess the buyers of the stock fail to realize that bond holders get paid first and the stock will end up worthless after they restructure.
The most heavily shorted stocks were spiking today. Even Hertz Global Holdings who filed for bankruptcy and their bonds are trading at 30 cents on the dollar as they re-structure but their stock jumped as much as 155% today before closing up 71%. I guess the buyers of the stock fail to realize that bond holders get paid first and the stock will end up worthless after they restructure.
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brewer12345
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The muppets chasing hertz.speaks volumes.
Freedom56
Thinks s/he gets paid by the post
The muppets are also chasing near bankrupt retailers, mall operators, airlines, energy companies. Even Chesapeake energy popped 75.6% today and their bonds are trading at 3-5 cents on the dollar. The company even warned that they may not be in business too much longer a couple of weeks ago:
https://www.wsj.com/articles/shale-...ergy-warns-its-future-is-in-peril-11589204463
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