One Man’s Opinion: Waiter And Bartender Jobs Surge In The Land Of The Free

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By Simon Black

The headline in the New York Times today read “U.S. Job Growth Bounces Back; Unemployment at 10-Year Low”.

That’s certainly one way of looking at it.

The US Department of Labor released its regular jobs report this morning showing the official unemployment rate is just 4.4% in the Land of the Free.

That’s certainly a strong number; I’m sure plenty of people in Venezuela and Turkey would love to have an unemployment rate at even twice that figure.

But when you actually dive into the statistics, the optimism starts to fade a bit.

It turns out that the #1 driver of job growth in the United States is “Leisure and Hospitality”, which is how the Department of Labor categorizes food service jobs.

That basically means waiters and bartenders.

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ETFs On The Cutline – Updated Through 05/05/2017

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Below please find the latest High Volume ETFs Cutline report, which shows how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 366 High Volume ETFs ETFs, defined as those with an average daily volume of more than $5 million, of which currently 237 (last week 252) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line (%M/A) from those that have dropped below it.

Take a look:

The HV ETF Master Cutline Report            

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

ETF Tracker Newsletter For May 5, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/05/weekly-statsheet-etf-tracker-newsletter-updated-05042017/

TUG OF WAR: STRONG JOBS REPORT VS. FRENCH ELECTIONS

[Chart courtesy of MarketWatch.com]
  1. Moving the Markets

It was a tug of war as a strong jobs report battled for market direction against the uncertainty of the second and final round of the upcoming French elections. For the day, the on the surface positives of the jobs report were the winner as equities picked up some stream and closed higher with the S&P 500 knocking on the 2,400 milestone marker.

The jobs report showed that April payrolls jumped by 211,000 beating expectations and providing some relief after March’s disappointing revised 79,000 number. The disappointing part was that, despite strong jobs growth, hourly earnings were soft rising only 2.5% YoY vs. an expected 2.7%. So, why is it that in a labor market with alleged full employment wages simply can’t rise? The answer is clear and has to do with the quality of jobs, as most of them once again were in low or minimum-wage sectors aka waiters and bartenders.

ZH summed up today’s session as follows:

Massive liquidity issues in China wealth product liquidation, commodities crashing, oil plunging, US macro data disappointments, US earnings disappointments, and Buffett dumping Big Blue – only makes sense that The Dow just had its quietest 8 days since 1952!

US Macro data has negatively surprised for 7 straight weeks – dropping to its weakest since October…

Shown in a graph, it looks like this:

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 05/04/2017

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ETF Data updated through Thursday, May 4, 2017

Methodology/Use of this StatSheet:

  1. From the universe of over 1,800 ETFs, I have selected only those with a trading volume of over $5 million per day (HV ETFs), so that liquidity and a small bid/ask spread are assured.
  2. Trend Tracking Indexes (TTIs)

Buy or Sell decisions for Domestic and International ETFs (section 1 and 2), are made based on the respective TTI and its position either above or below its long-term M/A (Moving Average). A crossing of the trend line from below accompanied by some staying power above constitutes a “Buy” signal. Conversely, a clear break below the line constitutes a “Sell” signal. Additionally, I use a 7.5% trailing stop loss on all positions in these categories to control downside risk.

  1. All other investment arenas do not have a TTI and should be traded based on the position of the individual ETF relative to its own respective trend line (%M/A). That’s why those signals are referred to as a “Selective Buy.” In other words, if an ETF crosses its own trendline to the upside, a “Buy” signal is generated. Since these areas tend to be more volatile, I recommend a wider trailing sell stop of 7.5% -10% depending on your risk tolerance.

If you are unfamiliar with some of the terminology, please see Glossary of Terms and new subscriber information in section 9.

 

  1. DOMESTIC EQUITY ETFs: BUY — since 4/4/2016

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is positioned above its long-term trend line (red) by +3.41% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Choppy And Sloppy: Poor Macro Data; Equities Yawn; Oil Gets Spanked

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the Markets

It was a choppy session with macro data serving another notice that economic conditions are weakening, a theme I have been pounding on for quite some time. Today, things started with disappointing U.S productivity, the key to a high living standard, which declined at an annual pace of 0.6% for the 1st quarter 2017 (far worse than the expected 0.1% decline).

That was followed by another hard data miss, namely factory orders that rose 0.2%, which was half of the expected gain of 0.4%. The core orders (without transportation) looked worse, as they stumbled 0.3% the biggest drop since February 2016.

The third try turned out to be a charm as Obamacare was successfully repealed but faces serious senate bickering, which may lead to a significant rewrite of the legislation.

Equities were muted and danced around the unchanged line all day with nothing to show for. The loser of the day award goes to Oil, which was spanked at the tune of -4.87% closing below $46/barrel.

With June rate hike odds still hovering at 90%, it came as no surprise that Treasury yields rose with the 10-year adding 3 basis points to 2.36%, which is quite a jump off the recent 2.18% lows. The US dollar (UUP) slipped and has now clearly broken below its 200-day M/A. While the dollar and the S&P 500 roughly move in sync, that relationship has widened as the chart shows:

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Looking For Direction

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the Markets

It was a mixed day with the major indexes looking for a catalyst that never materialized. Equities meandered, and only the Dow managed to eke out a meager gain of +0.04%. It’s been a sideways pattern with the S&P 500 closing 2,388, 2,387, 2,388, 2,384, 2,388, 2,391 and 2,387 over the past 7 days. Hat tip goes to ZH for these stats.

The Fed’s announcement of the direction of interest rates turned out as expected and was confirmed by their decision to keep monetary policy steady, however, the odds of a June rate hike jumped to 90%.

So, what about the atrocious 1st qtr GDP growth of 0.7%? The Fed simply dismissed it as likely to be “transitory” and focused on assuring that job gains were “solid”, indicating that they would remain on track to raise rates at a “gradual” pace. We’ll have to wait and see how that turns out.

With the Fed more or less confirming their future rate hike intentions, it’s no surprise that Treasury yields headed north with 10-year closing at 2.33%; the US dollar jumped with UUP adding +0.39%, while precious metals continued with their recent downward trend with gold sinking to 6 week lows.

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