Lecture Notes: Economic Analysis and Job Data Evaluation

Introduction

• Temptation to react strongly to job data
• Importance of understanding the current economic path
• Future portfolio strategy
• Upcoming portfolio talk and trades discussion on Monday

Recent Job Data and Market Reaction

• Previous months' job data revised upward by 70,000 jobs
• September job data highly positive
• GDP and construction job openings also revised
• Implications for bearish economic outlook

Analysis of Job Data

• Establishment survey vs household survey
• Government jobs: seasonal adjustment changes
• Yield trends: 10-year and 2-year yields, mortgage rates
• Economic tightening due to inflating economy

Inflation Considerations

• Causes of inflation: stimulus and economic expansion
• Deflation through innovation and investment
• Example: China's economic situation

Evaluating the Jobs Report

• Current economic situation compared to stall speed on an airplane
• Analysis of people usually employed full-time
• Indicators of a potential recession

Employment Level and Recession Indicators

• Normal job creation rate: 1.5 to 3 million jobs annually
• Current job creation significantly below normal levels
• Historical job spikes prior to recessions
• Importance of October, November, December job data

Seasonal Adjustments and Revisions

• Unusual seasonally adjusted government job gains
• Potential for large downward revisions in job data

Forward Projections

• Need for strong job growth in upcoming months
• Impact on bearish and bullish economic outlook
• Evaluation of potential recession indicators

Additional Economic Indicators

• Housing starts vs completions
• Restaurant performance index
• Unemployment duration and ISM manufacturing data
• Fed beige book districts and temporary hiring

Conclusion

• Upcoming discussion on portfolio allocations and hedges
• Potential strategies: long equity with hedges or cash with hedges
• Importance of retracement levels
• Encouragement to join upcoming live stream and mastermind group

Disclaimer

• Not personalized financial or investment advice
• Operates an actively managed ETF with potential holdings in discussed securities