NFP - Non Farm Payroll Predictions May 2007

Consensus: 130,000
CME Derivative Auction: 121,200
ADP: 97,000

Once again the CME number is in the middle. Last month the CME was very close to the actual.

****UPDATE: Actual NFP 157K - Consensus beat CMS and ADP estimates

Conrad Black Trail Victory: The Winners and Loser

The case against Black is so lacking in evidence all but the staunchest Black haters now show open contempt toward the prosecution. Many trial followers, including the bettors at ftpredict.com, now believe this case is unlikely to result in a conviction. In anticipation of Conrad Blacks acquittal, The First Post has broken down the winners and losers and I’ve added some names as well:

The Winners:

Conrad Black – Duh! But it will be good to see a man of integrity stand up to the prosecution and get off.

Mark Steyn – The very funny writer who has been beating up on the prosecution from the beginning.

Peter Worthington – Like Mark Steyn has been in Conrad Black’s corner from the beginning, rightfully pointing out how weak the case against Black is.

www.ftpredict.com – Intrade never had volume on any of the trial contracts. FTpredict, a play money exchange, was a more active market and moved as the trial developed.

The Losers:

Eric Sussman, Julie Ruder, Edward Siskel, and Jeffrey Cramer – Patty Fitz let the rookies handle this turkey knowing there was no case. Rumor has it at least one of them will be out of a job regardless of the outcome of this trial.

David Radler – The prosecution can still throw the book at him since his deal is contingent on performance. Even with a favorable deal he ends up a lot poorer and permanently tarred as a rat.

Tom Bower – Wrote largely fictional Black biography which will be even more discredited by a Black victory.

Donna – The anon poster on the Conrad Black Trial blog whose intense personal hatred of Conrad Black has blinded her to the facts of the case. I suspect this is Julie Ruder trying to drum up support for the prosecution.

Trust Fund Baby Eliot Spitzer Loses Again

This was not unexpected but followed the pattern of previous Spitzer prosecutions. Typically, Spitzer could threaten indictments and force settlements even in dubious cases since his victims had everything to lose. But Spitzer simply could never win in a trial. Accordingly, his tactics didn’t work if there was no settlement since the cases were extremely weak to begin with. Thankfully honorable men like Dick Grasso have the courage to standup to the demagogues and prevail:

Yet another of former New York Attorney General Eliot Spitzer's legal cases flamed out yesterday, as a state appellate court dismissed the heart of his suit against former New York Stock Exchange chief Dick Grasso. We sympathize with current AG Andrew Cuomo, who now gets to pick up the pieces.

That's about all that's left after the appellate judges tossed out four of the six counts that Mr. Spitzer brought against Mr. Grasso in 2004 over a $187.5 million pay package. Mr. Spitzer, who is now Governor, had claimed authority to sue Mr. Grasso under New York's "not-for-profit law," arguing that the pay was "unreasonable." But as the court ruled yesterday, Mr. Spitzer had also done an end-run around the law, claiming authority not found in any statute. As a result, the court ruled, "the Attorney General does not have the authority" to proceed with most of the case.

Conrad Black Trial - David Radler Takes the Stand

After several sophorific witnesses the prosecutors star and former Black partner took the stand yesterday. This is make or break for the prosecution since their previous witnesses have been chewed up by the defense. The Black All.Guilty contract price at ftpredict.com has not moved in close to three weeks.

When Charlatans Believe Their Own Hype

Just like sports reporters, stock analysts primary job isn’t prediction, its narration. Much of the finance industry exists as entertainment for the elite who wouldn’t do anything lowbrow like pay attention to sports. The endless analysis of trades, players, speculations and “new” tactics serves the same purpose in sports and finance – it’s solely entertainment.

There is a large amount of data supporting the fact that analysts are literally no better than the man on the street than predicting stock prices or earnings.

This quote is from the Mr. Random Walk himself, Burton Malkiel:

Security analysts have enormous difficulty in performing their basic function of forecasting earnings prospects for the companies they follow. . . . Bluntly stated, the careful estimates of security analysts (based on industry studies, plant visits, etc.) do very little better than those that would be obtained by simple extrapolation of past trends. . .

The same argument with more mathematical rigor was made by studying 80,000 analysts forecasts over a period of 20 years,

The odds are staggering against the investor who relies on fine-tuned earnings estimates. They estimate there is only a 1 in 170 chance that the analysts' consensus forecast will be within 5% for any 4 consecutive quarters.

Analysts estimates are better a predicting other analysts’ estimates than anything else. Indeed, an analyst of any skill would move to the bigger paychecks of the hedge fund world as soon as possible.

In order to keep up the illusion of skill the analysts go through an elaborate show which typically includes; talking with management, visiting plants, and constructing exceedingly elaborate models. When their forecasts are close they can take the credit since their hard work apparently paid off. When they inevitably fumble – well…no one else got it right either.

When one of the analysts threatens to lift the curtain on the whole scheme the charlatans panic and start their denouncements. What makes this story so entertaining is that the criticism is not based on analysis – only the method, knowing full well its makes no difference.

A Wall Street analyst has raised eyebrows among competitors and customers because he did not speak to the senior management he wrote about prior to launching coverage of seven well-known pharmaceutical companies.

For decades, when compiling their initial reports, analysts have traditionally met with corporate management, such as the chief executive, or at least the chief financial officer.

Non-Farm Payroll (NFP) Betting Predictions for April

Consensus: 115,000
CME Derivative Auction: 88,800
ADP: 64,000

Last month all the estimates were low. The CME’s estimate was the closest – barely - and was still far from the actual.

****Update*****
ACTUAL: 88,000

CME was very close.