Unemployment stocks

Discussions on the unemployment stocks for 2009

Covers stocks UNEM.DEC08, UNEM.MAR09, UNEM.JUN09, UNEM.SEP09

This was a weird one, the UNEM.DECL stocks were massively overpriced on launch. The total value was over $1.30.

Also the contract definition doesn't make sense to me:

Quote

a) the seasonally adjusted unemployment rate is lower in the June 2009 quarter than in the March 2009 quarter; and

b) this is the FIRST quarterly decline in the unemployment rate after the December 2008 quarter.

I don't quite follow how b) can be true and a) cannot. Isn't the first decline since 2008 automatically going to be lower than the preceding month.

The purpose of b) is to signal that if some previous quarter's contract closes at $1 then this contract and all subsequent contracts must close at $0. For this contract to close at $1, it must be the first quarter in 2009 (or 2009 and 2010) to see a reduction since the previous quarter.

I was querying the purpose of a).

a) is to make clear what 'decline' means - specifically that it is relative to the previous quarter.

FYI there seems to be wording error on UNEM.DECL.DEC09, should read September 2009??

Quote

a) the seasonally adjusted unemployment rate is lower in the December 2009 quarter than in the September 2008 quarter; and

Fixed, thanks for picking this up

Ay chance of adding a option of unemployment to first decline after the Mar 2010 quarter and then bundling the stocks - would get more accurate pricing....

These stocks seem all overpriced without the inclusion of an option for unemployment to first decline any time after the June 1010 quarter and bundling the stocks.

In the absence of any stock for unemployment to first decline any time after the June 1010 quarter, perhaps we could have a stock for unemployment not to decline in any of the specified categories. This would give a definite end to the contract which my former suggestion didn't.

This might seem a bit like doubling up with just shorting the lot of them but I think to get a more accurate pricing estimate for each stock an option like this is needed. At current pricing I guess there may be around 20% chance of unemployment not declining in the specified categories which makes all the existing prices overdone.

Also bundling would be useful though not sure if this is possible with stocks dropping off every quarter if not satisfied.

Any thoughts on this? - I'm just looking at how to get more accurate pricing and forecasts on stocks like these.



Edited 1 time(s). Last edit at 06/17/2009 10:31AM by corbusian.

A bundle sounds like it will make sense.

Ok let me get that bundle added

Looks like the starting price for UNEM.DECL.NONE.OF.THESE should be about $0.10.

I would have though a bit higher say about $0.20, if June 10 is trading in the .30's though that might prove to be a little high when the bundle comes out.

The current stock buy prices add up to $0.89 - assuming they are accurate predictions, that's about an implicit 10% prediction for "none of the above".

It certainly wasn't implicit before admins announcement of the proposed bundling and "none of the above". A little bit of prepsitioning has taken place & the rest will sort itself out once the bundle is in place much as the Mayor stocks did.

I look forward to seeing it!

Looking forward to the bundle, Admin!

June unemployment stocks likely to be released tomorrow; most commentators expecting unemployment to increase by somewhere in the region of .5%-points.

I've shorted UNEM.DECL.JUN09 and UNEM.JUN09. There's only about 24c left to be made from the latter, but there's a 1% return up for grabs on the former. Unless I'm wrong.

Unemployment up 1% to 6.0%

[www.nzherald.co.nz]

Treasury is predicting surging unemployment will peak by September next year, a leading official says....

[www.radionz.co.nz]

Looks like this stock should now close at $0 for Sept Qtr

Statistics NZ

The HLFS on which this stock is judged seems to be released a couple of days later than this Employment survey so should be out Friday, so the stock would likely close at $0 then.

this is released at 10.45am tomorrow.

Results out

Stats Survey HLFS

Why has the Dec unemployment stock not been closed? Data has been out for weeks, the close date is nearly a month ago.

arbitrage Wrote:
-------------------------------------------------------
> Why has the Dec unemployment stock not been
> closed? Data has been out for weeks, the close
> date is nearly a month ago.


Excellent question! Is it related to the fact that these are a bundle?

UNEM.DECL.DEC09
UNEM.DECL.JUN10
UNEM.DECL.OTH
UNEM.DECL.MAR10

If so, does that mean that the real 'close' date is 10 Aug 2010 for all of them?

If so (again!) then can I suggest that the close date is amended to show that.

Thanks,

Alan.

Dec closed now, apologies for this oversight. The remaining three contracts are still available in a bundle. Each contract will close as they come due.

[www.stuff.co.nz]

Quote
Trade Me Jobs head Keith Muirhead
I think we can safely say unemployment is at its peak ... and it is going to reduce

March still around 50% likely and the current favorite. Next week we will know if he is right or not.

[www.stuff.co.nz]
[tvnz.co.nz]

I don't think it's safe to say at all. The trouble is that we have this echo chamber with three outfits - TradeMe, SEEK, and the Department of Labour - all reporting a rise in job ads, when none of these measures actually capture the level of employment. Job ads could just as well reflect churn within existing jobs. C'mon Stats NZ, how about a monthly employment survey like every other civilised country?

Jobs in the freight sector have had a steady increase since August09, this generally indicates there will be some positive follow through to other sectors (they were on a "no buy" for recruiting during the downturn). Still, this stock is as good as a guess with no true data.



Edited 1 time(s). Last edit at 05/03/2010 12:52PM by Ploppapus.