Sunday, March 11, 2007

Data Headlines

How often do you compare what a headline says to what the body of the story says? For example, let's look at the headlines for Friday's "important economic data"...

From Marketwatch:

The headline for Friday's over touted non-farm payroll numbers:

Job growth slows to 97,000 in February
Unemployment rate unexpectedly falls back to 4.5%

The folks at Marketwatch want you to believe that inspite of slowing jobs growth, the unemployment rate fell. But did it really? Let's see what the "story is"...

The jobless rate fell to 4.5% from 4.6% because people dropped out of the labor force, not because unemployed workers got jobs. According to a survey of 60,000 households, the labor force fell by 190,000 in February, the biggest drop in more than three years.

Shocking! 190k fewer people had jobs in February, but the unemployment rate "fell". Hmm, me thinks based on these statistics it should have rose. Do you know why these people "dropped out of the labor force"? Because their unemployment benefits have run out, and the government no longer counts them as part of the work force. Jeeze, these people are out of work, but because the government no longer sends them a check every week...they disappear. How convenient. Moral of the story: Headline numbers seldom tell the "whole story".

While we're disecting this data, let's count how many times the weather is blamed for the numbers in this one story. FOUR times! LOL!!! It's ALWAYS the weather's fault.

Now, the headline for Friday's US Trade Balance numbers. From Marketwatch also:

U.S. trade gap narrows again in January
Fourth decline in past five months adds to sense deficit is stabilizing

Again, the folks at Marketwatch want you to believe something other than the truth. Is the Trade Balance even close to "stabilizing"? Looking closely at the story we read this:

As a result of the revisions, for all of 2006, the U.S. trade deficit amounted to a record $765.3 billion, wider by 6.8% from 2005. It was the fifth year in a row that the trade gap set a new record high.

Stabilizing? Seems to me the US Trade Balance has the pedal to the metal. Five years in a row the Trade Balance has set a record. Stabilizing? Accelerating, if you ask me. Moral of the story? Headline numbers seldom tell the "whole story".

This is just TWO pieces of goverment data that come out EVERY month and is reported by "the media". This is the news that "moves the markets" , and these misleading headlines are the tools of the Spin Doctors. This is why the daily moves in the PM markets are often so volatile. Stay focused on the "Big Picture", and don't throw away good positions in a panic following the herd. The precious metals are in a bull market that may last the next 5-7 years. Use this "daily noise" to trade a portion of your portfolio if you must, but ALWAYS keep the majority of your capital invested in the bull, and you'll never be left at the station wondering why you sold out, just as the market jumps higher.

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