The October Jobs report was just released and in the data dependent world that we are stuck in, it sucked. If nothing else, the report showed how perilous it is to focus so much of the trading decisions on economic data. And yet, it will likely change nothing about our trading environment. An hour ago, the majority of economists and many in the trading pits were singing in unison about a much slowed economy, the “R” word was being tossed around pretty freely, FOMC rate hikes were 100% out and rate cuts were being priced in. That was before and this is now. Unemployment rate at 4.4% is strong, but what really makes everyone look dumb in being so dependent is that the August and September numbers were revised dramatically higher.

This is a two-fold problem: First, it shows they were wrong about the state of yesterday’s economy, and September’s economy, and August’s economy. The second (and more important) problem is that it makes everyone who relies so heavily on this data and the economists’ forecasts less wealthy. Before the report was issued, I heard more than a few economists tell us that “unemployment is a lagging indicator” and now that we have revised the previous 2 months of the “lagged” period, I wonder how to take those remarks. I also got a kick out of several confused economists who suggested that the report was such an anamoly that we should consider disregarding it. After all, how could he and so many other economists and traders be so wrong? As I said before, I don’t expect all this error to change what we do every day. We’ve known forever that the government’s economic data is not reliable and it doesn’t seem to bother anyone enough to affect actual behavior. We’ve also known that economists’ ability to predict the results is not reliable, but we fall into that trap also.

One of the thing that amazes me is the ignorance of the actual third quarter earnings season as it relates to the dire economic predictions. This earnings season has been fantastic so it really is not much of a surprise (at least to me) that we would have job growth during the same period. But then again, I am not an economist and don’t aspire to be one either. I refuse to become “data dumbpendent” and would really appreciate more company.