Vintage Jobs Poster

Vintage Jobs Poster

Jobs Are A Lagging Indicator, A Confirmation of a Strengthening Economy 

What’s in an employment report?

Last week, the U.S. Bureau of Labor Statistics’ Employment Situation Summary was full of encouraging data. Employment numbers for last November and December were revised higher which made 2014 the strongest year for job growth since 1999. However, 2015 isn’t off to a shabby start. The economy added just over a quarter of a million jobs in January. In addition, Barron’s reported:

“…Wages for private-sector workers ticked higher in January, rising 0.5 percent from December and 2.2 percent year-over-year. That sort of growth must persist to indicate a trend, but it is a promising sign, and one that could quell chatter about deflation in the U.S. The good news doesn’t end there. Low gas prices could save the average household $750 this year, and household net worth remains near an all-time high. It’s no wonder consumer confidence hit its highest level last month in more than seven years.”

Consumers are happy. Workers are happy. Who’s not happy? The answer may be companies and investors. Barron’s speculated workers’ gains could come at the expense of corporate profits.

Last week, Factset.com reported analysts are expecting to see year-over-year declines in both the overall earnings and revenues of companies in the Standard & Poor’s 500 Index during the first half of 2015. The downward revisions primarily reflect the expected performance of companies in the energy sector. While prospects for the first half of 2015 have dimmed a bit, analysts are expecting profit margins to expand and companies to have record earnings per share, overall, during the second half of 2015.


Data as of 2/6/15

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

3.0%

-0.2%

15.9%

15.2%

14.2%

5.5%

10-year Treasury Note (Yield Only)

1.9

NA

2.7

1.9

3.6

4.1

Gold (per ounce)

-1.5

3.5

-1.2

-10.3

3.1

11.6

Bloomberg Commodity Index

1.8

-1.6

-19.9

-11.1

-4.3

-3.2

DJ Equity All REIT Total Return Index

-1.4

4.7

29.7

14.9

19.7

9.4

S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.

*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.  You cannot invest directly in this index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Jobs Are A Lagging Indicator

Sources:

http://online.barrons.com/articles/jobs-report-is-this-the-shift-from-wall-street-to-workers-1423278035?mod=BOL_hp_we_columns (or go to http://peakclassic.peakadvisoralliance.com/app/webroot/custom/editor/02-09-15_Barrons-Main_Street_Wins_a_Round-Footnote_1.pdf)

http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_2.6.15

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