Poll of the Day Recap: 82% Don’t Trust the Government’s Employment Numbers

Takeaway: 82% said NO; 18% said YES.

Economists are expecting tomorrow’s employment report to show 210,000 jobs were added to the U.S. economy in May.


Today’s poll question was: Do you trust the government’s employment numbers?

Poll of the Day Recap: 82% Don’t Trust the Government’s Employment Numbers - medium

At the time of this post, 82% said NO; 18% said YES.


Here’s what those who voted NO had to say:

  • “First of all, the employment numbers given by the government are based on those in work or actually seeking work.  With such a discouraged labor force most no longer even seek work and after 6 months of doing so they do not even count as unemployed.  so the unemployment rate may drop but it does not mean people are getting jobs, and could actually mean the opposite.  Lets get America working again!”
  • “There is little reported today that isn't seasonally adjusted beyond recognition or hedonic adjusted to show the minimal numbers of what is really happening like CPI, etc. Don't know how much longer markets are going to be fooled, probably depends on how much more money is printed or how long ZIRP like policy is extended.”
  • “No, and neither does Mitt Romney. If you remember just before the election someone in California "forgot" to send their unemployment data thus making the number look better than they actually were. The problem with government data is that although figures never lie, liars figure.”
  • “They have no upside in telling the truth about the total lack of aggregate demand in the economy. Participation rates back to levels last seen during the Carter admin. That's what we should watch, that and median household income and inflation.”
  • “Incentives are in place for the government to lie. Plain and simple. I trust the US employment numbers only slightly more than I trust China's.”
  • “The technical note in the BLS release even tells you not to trust the data as is reported...”
  • “No, but I do trust the fixed income market's reaction to them!”

Conversely, this YES voter disagreed, saying that "while it's easy to poke holes and you are maybe right to be skeptical being correct on economic data only gets you so far. You must understand how the market will react to said economic data which gets increasingly complicated if you do not believe headline numbers the market is reacting to."


Likewise, another YES voter said, "It has been wrong all along, but as long as it's been consistently wrong. Why not?" 


Foreign Policy Risks & Market Impacts: Call with Professor Charles Hill

Foreign Policy Risks & Market Impacts: Call with Professor Charles Hill - HE MAC fprisks charleshill


The Hedgeye Macro Team, led by CEO Keith McCullough, will be hosting an expert call featuring Professor Charles Hill tomorrow, June 6th at 10:30am EDT.  Professor Hill is a diplomat in residence at Yale University where he teaches Grand Strategies. 



To gain a better understanding of the key foreign policy risks on the horizon that may have an impact on global markets.


Professor Hill is a career minister in the U.S. Foreign Service, serving in a variety of roles such as Deputy Assistant Secretary and Chief of Staff for the Middle East at the State Department, and executive aid to former U.S. Secretary of State George P. Shultz.  He also served as a special advisor to U.N. Secretary General Boutros-Boutros Ghali.




  • What's next for Vladimir Putin in Ukraine?
  • How will Putin's strategy evolve beyond Russia? Will there be a broader influence?
  • What is the most imminent threat facing the West?
  • How real is the nuclear threat from Iran, particularly for Israel?
  • The Arab Spring has come and gone, what's next?
  • What does the election of Bashar Hafez al-Assad in Syria mean for the West? 

  • How has U.S. foreign policy evolved under the Obama administration?



  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 843981#



Charles Hill is a diplomat in residence and lecturer in International Studies at Yale University. He is a career minister in the U.S. Foreign Service, serving in a variety of roles such as Deputy Assistant Secretary and Chief of Staff for the Middle East at the State Department, and executive aid to former U.S. Secretary of State George P. Shultz. Dr. Hill has been a fellow at the Harvard University East Asia Research Center, a Clark fellow at Cornell University, and is currently a research fellow at the Hoover Institution.


He served as special consultant on policy to the secretary-general of the United Nations from 1992 to 1996. Dr. Hill has collaborated with former U.N. Secretary General Boutros Boutros-Ghali on Egypt's Road to Jerusalem, a memoir of the Middle East peace negotiations, and Unvanquished, about U.S. relations with the U.N. in the post-cold war period. He is also the editor of the three-volume Papers of U.N. Secretary-General Boutros-Ghali, published by Yale University Press.


His book "Grand Strategies: Literature, Statecraft and World Order" is published by Yale University Press. His "Trial of a Thousand Years: Islamism and World Order" is published by the Hoover Press, Stanford University. He received an A.B. degree from Brown University in 1957, a J.D. degree from the University of Pennsylvania in 1960, and an M.A. degree in American studies from the University of Pennsylvania in 1961. 


Jobless Claims: Back at Best Levels Year-To-Date

Takeaway: A second week of accelerating improvement brings rolling non-seasonally adjusted claims back to best levels YTD.

Convergence Continues

Headline claims increased +8K week-over-week to 312K with the four-week rolling average declining another -3K sequentially to +310K. Non-seasonally adjusted claims, which we consider a more accurate representation of the underlying labor market trend, came in at -10.8% year-over-year (vs. -13.8% prior) with the four-week rolling average improving 160 basis points sequentially to -11.3% year-over-year.  


Jobless Claims: Back at Best Levels Year-To-Date - jobs1


The rate of change in year-over-year, rolling non-seasonally adjusted claims improved to its best level in seven weeks and is near its best level YTD while rolling seasonally adjusted claims hit their lowest level since June 1, 2007.  


We typically look at the slope of improvement as our indicator on the prevailing trend in the labor market.  Historically, however, the 300K level has served as the lower bound in seasonally adjusted claims during expansionary periods. At this week's reading of +310K we continue to converge toward that frictional lower bound and expect the rate of year-over-year improvement to slowly converge toward 0% as well.   


Jobless Claims: Back at Best Levels Year-To-Date - NSA Claims 060514


On balance, the domestic macro data has been better sequentially quarter-over-quarter, but outside of the discrete ramp in Auto Sales in May, there hasn’t been much evidence of material deferred demand from 1Q coming back in 2Q. 


The national and regional manufacturing surveys have been ‘good’ and the labor market data (ADP was soft but the trend in claims remains positive) has been stable-to-better. 


However, April retail sales were weak, consumer spending in April was particularly soft, the trade balance for April was worse than estimates (with March revised lower, taking 1Q GDP further negative), and the housing data remains in conspicuous deceleration.  


From a policy read-through perspective, the positive momentum in the labor market along with the broader, sequential improvement in the domestic macro data off the 1Q14 weather distortion suggests the inertia is still with continuing on the present policy course. 


The improvement in claims also bodes well for the May employment report.  While seasonally adjusted claims reported during the BLS survey period were less good than the most recent two weeks, on balance, the May claims data is supportive of a good nonfarm payroll print.  


*   *   *   *   *   *   *


Editor's Note: This is an excerpt of a research note that was originally provided to subscribers on June 5, 2014 at 10:29 a.m. EST by Hedgeye macro analyst Christian Drake. Follow Christian on Twitter @HedgeyeUSA


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20 Proprietary Risk Ranges

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Unfortunately, VIP is on the down slope


  • Macau VIP volume has been weakening in 2014.  On a rolling 3-month basis, May 2014 VIP RC volume growth had fallen to a mere +4%.
  • Mass, on the other hand, has been relatively stable with +35-40% growth.
  • But not everyone is having trouble with the VIP business.  Galaxy, for example, saw VIP volumes rise 30% in May and is up 32% year-to-date - riding on the tremendous strength of Galaxy Macau.
  • On the other hand, MPEL has been struggling on the VIP side.  VIP volumes fell 23% and 13% in May and year-to-date, respectively.
  • VIP could continue to drag down GGR growth, starting with June.


ECB Cut Delivered. Strong EUR/USD Call Remains as Euro-style QE Still Distant

Going into today’s call we positioned ourselves to be long the EUR/USD, positing that Draghi would likely underwhelm the market’s loft expectations for easing (see yesterday’s  Reiterating Our Long GLD and FXE Position Into The ECB Policy Statement; and (5/23) Buying the Euro (FXE). Our call appears to be the right one: the cross maintains our $1.35 support level and bounced higher following Draghi’s press conference as equities rose in tandem.


While the main interest rates were trimmed nearly in line with consensus (44 of 50 economists baked in a negative deposit rate with 56 of 58 expecting a cut in the benchmark rate), no QE was announced. Given, we think the setup portends a dovish monetary response by the Federal Reserve as growth surprises to the downside, which should continue to support our weak USD, strong EUR call.

ECB Cut Delivered. Strong EUR/USD Call Remains as Euro-style QE Still Distant   - a. eur heut


We applaud Draghi’s issuance today of a new lending program to the “real” economy, named the Targeted Longer Term Refinancing Operations (TLTRO). While we witnessed little to no transmission to the “real” economy from the former LTRO programs, if in fact the TLTROs can be conditionally strong on lending requirements, we’re bullish on them for the Eurozone’s growth outlook.  That said, we don’t see the program shifting either the European equity or currency markets in a material way. 


Draghi offered a confident tone that today’s interest rate policies moves and the TLTROs could boost the inflation rate to the target of 2.0% (his main concern going into the meeting), yet he did not rule out a potential asset-purchase program as one of several non-traditional alternatives should today’s measures not achieve inflation targets.  Interestingly, the Bank’s staff inflation forecasts see inflation only inching up to 1.5% at the end of 2016 – we expect Draghi to keep his back pocket loaded with QE should he need to manufacture higher inflation. 


What was delivered in cuts?

  • Benchmark Rate: cut from 0.25% to 0.15% (0.10% est.)
  • Marginal Lending Facility: cut from 0.75% to 0.40% (0.60% est.)
  • Deposit Facility: cut from 0.0% to -0.10% (-0.10% est.)


Draghi on the terms of the TLTRO?

  • TLTROs will begin issuance in SEPT and DEC of this year with a maturity in SEPT 2018
  • Draghi says intent is to improve credit to the private (non-financial) sector with the ultimate view of price stability that transfers to real economy
  • There are provisions that require additional disclosure on use of TLTRO funds; for example, if not compliant with lending to the “real” economy, institution will be forced to repay entire loan after 24 months
  • TLTROs not to be used for loans to households for house purchase


Draghi Hints that QE-type Program Targets Asset Backed Securities (ABS)

  • Simple (no CDS, CDS squared, CDOs etc.)
  • Real (non-derivatives)
  • Transparent (all market participants easily understand)


Updated ECB Staff Macroeconomic Projections Head to the Downside

  • Growth Projections:  in 2014 +1% vs +1.2% seen in March; 2015 +1.7% vs +1.5%; 2016 +1.8% unchanged from March.
  • Inflation Projections:  in 2014 +0.7% vs +1% seen in March; 2015 +1.1% vs +1.3%; 2016 +1.4% vs +1.5%; 2016 Q4 +1.5% vs 1.7%.


Matthew Hedrick



Ben Ryan