XAO Banter Thread

[qldfrog]

if ASX goes down it means it is a good news, nowadays, market goes up on bad news as the key factor has become government stimulus, not economic factors

 

[InsvestoBoy]

Unemployment 6.2% - that's good yes ?

I really hate the way the ABS and other countries report "unemployment".

If you just completely give up on looking for a job and "exit" the workforce, then you aren't counted as unemployed.

How dumb is that?

https://www.abc.net.au/news/2020-05-14/unemployment-jobs-abs-april-recession/12247154

Callam Pickering, the Asia-Pacific economist at jobs website Indeed, said if there were jobs for people to look for, encouraging participation, unemployment would be closer to the Reserve Bank and Treasury forecast of 10 per cent.

"Had the size of the labour force held steady, with everyone losing employment shifting to unemployment, then the unemployment rate would have spiked to 9.6 per cent," he said.

Underemployment — those with a job who wanted more hours of work — surged by more than 600,000 to 1.8 million people, taking the rate to a record high of 13.7 per cent, up nearly 5 per cent in just a month.

Underutilisation, which adds unemployment and underemployment together, also jumped to a record high of 19.9 per cent.

If you calculate unemployment as 9.6%, which it should be because those people are not employed regardless of whether they are "in the labour force" or not and add underemployment, that is underutilisation of 23.3%.

 

[InsvestoBoy]

if ASX goes down it means it is a good news, nowadays, market goes up on bad news as the key factor has become government stimulus, not economic factors

Any actual evidence for this?

The ASX isn't really going up or down a lot these days, but I don't see it going up on bad news and going down on bad news.

As I have mentioned before, it's about surprises relative to participants pricing models, be they implicit or explicit. If there is bad news, but it isn't as bad as participants had priced, then that is marginally good news and you should expect prices to rise.

Nothing to do with Government "stimulus".

 

[kahuna1]

On today's unemployment number ... the job keeper numbers are masking what is the actual number.

Obviously we hope, we get past this virus via being in a great place infection wise. How many on job keeper are sent to job seeker and unemployed remains to be seen.

Market expected 8.2% but the number, was 6.2%.

What is of note is the participation rate fell 2.5% to 63.5% from 66% and as its a fraction it also understated the actual unemployment number by around 3.8% ....

USA version of this even worse. Market cant make its mind if it was, good or bad.

We do have a glimmer of hope if we can get zero for a few weeks and then the numbers and impacts will become interesting. USA, well it and the UK need to start again. The rapid test seems not to work and give 33-48% false negatives ... which is just scary. You get tested, your told your safe and instead your an infected person.

Its going to be a long 2020 and 2021.

 

[Country Lad]

Unemployment 6.2% - that's good yes ?

The number is meaningless actually. It measures the participation rate so all those who are not actively looking for work are not counted. Let's face it, in this climate what is the point in looking for work?
Actual unemployed number is way higher.

 

[PZ99]

It was measured that way last time and the time before. If this number was 10% people would be saying the "real" number was 20% or whatever. No point in changing the factors if you want to compare apples with apples.

 

[Smurf1976]

On today's unemployment number ... the job keeper numbers are masking what is the actual number.

I think the number's so far from expectations and "real" reality that it won't be seen as credible by many.

If someone's doing no actual work and their "wages" are being paid by the government then that looks like unemployment to me. That someone decided to call it Job Keeper might change it in a statistical sense but not in the real world. They're not working.

The use of such technicalities erodes public confidence in government and the information it releases when it's to the point that the distortion is blatantly obvious.

 

[InsvestoBoy]

No point in changing the factors if you want to compare apples with apples.

The point is that if you don't adjust for participation, it isn't apples to apples.

If you followed the US unemployment figures since the GFC, it seemed to be getting better and better. But each month, the BLS was kicking people out of the "workforce", i.e. participation was going down.

I don't care about what some statistician wants to model as "pure" numbers for their charts and reports. I care about reality on the ground. To me it doesn't matter if someone is looking for work or not. If they are not working, they are unemployed.

 

[PZ99]

I disagree with that last paragraph. If people don't NEED to work they shouldn't be considered as unemployed. It says zip about the state of the economy and is therefore a pointless indicator.

I find it very hard to believe the ABS would survey 50,000 people every month about their employment for the sake of spurious reporting.

If people want to change how it's measured, go right ahead. If their alternative modelling is better than the current one then presumably the ABS would adopt it. Why wouldn't they ?

But they haven't changed it for more than 20 years. Maybe they know something about labour force surveys that we don't ?

 

[Smurf1976]

If they are not working, they are unemployed.

I think a distinction needs to be made as to the detail there.

If someone is not working then they are unemployed in a literal sense that is true.

Suppose though that someone has a few $ million in liquid assets and earns an above average income through their investments in shares, property etc plus a bit of active trading.

Would you seriously count them as unemployed? That they aren't working is because they've no need to not because nobody wants to employ them - odds are they could get a job pretty easily if the money's self-made (as distinct from inherited or won the lottery etc) since they must have some ability at something to have become wealthy by their own means.

On the other hand, well government handing employers money to pay people to not only be unproductive but to not even turn up to work, at all, is probably the most obvious distortion of the statistics ever. That's not to say it's necessarily a bad idea, but if someone's sitting at home and has done zero work for their employer for the past few weeks, and hasn't been paid a cent at their employer's expense but is instead being paid by government, then it's clutching at technicalities to say that isn't unemployment.

 

[InsvestoBoy]

I disagree with that last paragraph. If people don't NEED to work they shouldn't be considered as unemployed. It says zip about the state of the economy and is therefore a pointless indicator.

huhhhh?

You think participation going down is from a bunch of people not needing to work?

The vast majority of participation going down is from people who have given up on finding work. The ABS very usefully calls this "hidden unemployment".

To me, employment is a simple measure: how many people are working.
Unemployment is therefore just as simply the inverse, how many people are not.

Regardless of how many people the ABS feels deserve to be in the "work force".

I find it very hard to believe the ABS would survey 50,000 people every month about their employment for the sake of spurious reporting.

Gee you're right, there is no way the Government would want to paint a rosy picture of the economy...

If people want to change how it's measured, go right ahead. If their alternative modelling is better than the current one then presumably the ABS would adopt it. Why wouldn't they ?

But they haven't changed it for more than 20 years. Maybe they know something about labour force surveys that we don't ?

They follow the international standard, which as I said, I hate and think is dumb.

Participation matters. That's why as recently as Feb you simultaneously have the Prime Minister goofball and his Treasurer goofball on TV saying how great the economy is while wage growth continues to stink.

 

[InsvestoBoy]

I think a distinction needs to be made as to the detail there.

If someone is not working then they are unemployed in a literal sense that is true.

Suppose though that someone has a few $ million in liquid assets and earns an above average income through their investments in shares, property etc plus a bit of active trading.

Would you seriously count them as unemployed? That they aren't working is because they've no need to not because nobody wants to employ them - odds are they could get a job pretty easily if the money's self-made (as distinct from inherited or won the lottery etc) since they must have some ability at something to have become wealthy by their own means.

heh is this a serious post?

489,800 people left the labour force in Q1 2020 and are thus not counted as unemployed. Half a million people.

How many of those am I worried about seriously counting as unemployed because they might be all people who suddenly became millionaires with property portfolios and quit their jobs?

Come on dude.

 

[PZ99]

huhhhh?

You think participation going down is from a bunch of people not needing to work?

Why are you asking me this question when I didn't make that statement?

The vast majority of participation going down is from people who have given up on finding work. The ABS very usefully calls this "hidden unemployment".

Yep, just like last time.

To me, employment is a simple measure: how many people are working.
Unemployment is therefore just as simply the inverse, how many people are not.
Regardless of how many people the ABS feels deserve to be in the "work force".

Sounds good to me.

Please explain why the ABS might reject this superior modelling when you submit it

Gee you're right, there is no way the Government would want to paint a rosy picture of the economy...

Would you rather they said the economy was going down the toilet instead ?

Because that's pretty much how the Treasurer described it in parliament.

They follow the international standard, which as I said, I hate and think is dumb.

Participation matters. That's why as recently as Feb you simultaneously have the Prime Minister goofball and his Treasurer goofball on TV saying how great the economy is while wage growth continues to stink.

Wage growth stinks because this country has been slipping further to the right on workers' rights for the last decade or more. When you have someone like Sussan Ley telling workers to hand back their last payrise before scabbing off the public purse you know you have a Govt that doesn't support wage growth - so it doesn't happen.

 

[Smurf1976]

How many of those am I worried about seriously counting as unemployed because they might be all people who suddenly became millionaires with property portfolios and quit their jobs?

Come on dude.

Nowhere did I state that I was referring to Q1 2020 or indeed any specific time.

The discussion was on the question of how to measure unemployment and I'm simply pointing out that there are many reasons why someone is not employed.

Having wealth is one reason why someone may choose to not work. It could be argued that they are unemployed, given that they are not employed, but it's not due to inability to find work.

Having wealth doesn't have to be $ millions. It could be as simple as having a husband / wife with a stable job and deciding to stay home and play with the kids or whatever. Not employed but not looking for work at least until the COVID-19 issue is over.

Anyone over 50 with modest assets may have simply concluded that searching for work is a waste of time and money since the odds of success are, depending on their skills and industry, likely to be minimal under current circumstances. So they get by on $25K a year from their investments (etc) and just live happily.

Running a business is another such reason. If you're a sole trader then you don't have an employer, at least not in a legal sense, so does that make you technically unemployed? There's a lot of people in that situation, they are not employed but nobody would seriously count them as unemployed if their business activities are generating an income.

Now what if that business has slumped? Are they now unemployed on account of the fact that the business no longer generates an income at least equal to the minimum wage?

And so on. The basic issue is that the government's definition is essentially a 1950's one that relied on the notion that virtually all jobs were full time and involved working for an employer in a fairly rigid manner. Either you had a job or you didn't, black and white, and having any job meant you could live reasonably. That world is long gone.

In practice I know 4 people currently out of work and not one of them is counted in official statistics so far as I'm aware.

One runs a business but work has almost completely dried up to the point they're effectively shut.

Two have a preference to work but no pressing need to do so. One's looking after their kids and the other's pursuing other things until they perceive it's time to go and look for another job.

One only very recently became unemployed.

None of them are on welfare so presumably wouldn't be included in any official statistics.

Now that's just one person (me) who knows 4 others who are out of work but not in the official statistics for various reasons. They won't be the only 4 that's for sure, the real number's a lot larger than 6.2%

 

[qldfrog]

Any actual evidence for this?

The ASX isn't really going up or down a lot these days, but I don't see it going up on bad news and going down on bad news.

As I have mentioned before, it's about surprises relative to participants pricing models, be they implicit or explicit. If there is bad news, but it isn't as bad as participants had priced, then that is marginally good news and you should expect prices to rise.

Nothing to do with Government "stimulus".

"The ASX isn't really going up or down a lot these days" yesterday 1.8% variation in a day?: today similar.....
What can I say @InsvestoBoy, post GFC generation no doubt..
This is NOT normality by any standard, unemployment rising means stock market boost in the US..why if not because this means more gov money..under a form or another used to prop the market

 

[InsvestoBoy]

"The ASX isn't really going up or down a lot these days" yesterday 1.8% variation in a day?: today similar.....
What can I say @InsvestoBoy, post GFC generation no doubt..

What I mean is we have been stuck in a >10% range since April started. If you just watch the close price every day then yeah it looks like 1.8%, if you are watching the overnight move and then from the open you can see the market is not doing a whole lot during trading hours.

This is NOT normality by any standard, unemployment rising means stock market boost in the US..why if not because this means more gov money..under a form or another used to prop the market

No. It just means that the unemployment number was not as bad as the market participants who care about unemployment had priced.

 

[Smurf1976]

At an international level I see markets now as being in a situation much like they were three months ago just before the big fall.

The US has a million active COVID-19 cases and rising, and now they're going to open things up. We're about to witness an historic event there - it's either going to be another shutdown or realistically the US is looking at a million deaths very likely, indeed there's already 86,000 dead in that country from the virus which makes it bigger than most wars etc.

Meanwhile there are increasing reports from real world businesses, for example airlines, which talk in terms of it being many years before there's a real recovery. One I spotted suggested 2023 could be back to 2019 levels if everything goes well. That is, of course, the best case.

Meanwhile we've got a stock market rally which is driven by relatively few stocks.

The term which comes to mind here in describing the action of the market is "denial".

 

[Country Lad]

Oops down 3%

 

[gartley]

This thing ran out of steam mid June and has really struggled up since. I think it will truncate here with a 5th wave failure to finally roll over to end the ABC upward rally from the March low. (At least for some weeks anyway)

 

[moXJO]

Been a bit quiet here. I feel like a lot of big news the next couple of months will shake things up.