How Do You Assess the Economy amid the Shutdown?

Chris Versace

Chris Versace is a financial columnist and equity analyst with more than 20 years of experience in the investment industry.
[U.S. Capitol]

Investors rely on a ton of data to make decisions. I know I do and it has become a staple in my investment newsletter PowerTrend Profits. In fact, it is so much so that each month my subscribers get a detailed snapshot of not only the U.S. economy but also the latest data for the Chinese and euro-zone economies as well. All of that is found in the section I call Data Download. As a former Wall Street equity analyst, I know the value of reliable data not only as the latest and greatest data point is released, but also how it fits with one’s investing mosaic.

One of the problems we’re hearing about now as a result of the federal government shutdown is how it affects the economic calendar. As occurred last Friday, there was no September Employment Report issued by the Bureau of Labor Statistics (BLS). In fact, if you visited the BLS website as I did, you’ll see an announcement telling you, “During the shutdown period BLS will not collect data, issue reports or respond to public inquiries. Updates to the site will start again when the Federal government resumes operations.” This lack of information will only exacerbate concerns and uncertainty the longer the shutdown continues. If we run up until the Oct. 17 debt ceiling line in the sand, that will be the case in spades.

Potentially adding fuel to that fire, in the coming days, corporate earnings will be with us in full force for the recently completed September quarter. Against the backdrop of the government shutdown and looming debt-ceiling conversations, I would expect companies to issue conservative outlooks and forecasts when they report their quarterly results. That’s another reason to think the stock market will get a little bumpier in the weeks ahead.

For some investors, the temptation could very well be to sell everything. But that approach goes against my grain as a long-term investor. My preference is to trim back positions that are up big, exit those that could be vulnerable and look for opportunities to scale further into those whose fundamentals and drivers are on track. The first and third parts of that plan are pretty straightforward. It is the second one that can be tricky, particularly given the less timely economic data flow.

That situation means turning to other metrics, including tracking insider buying and selling, as well as economic and other data from third-party research firms like Gallup, Markit Economics, HSBC, Comscore (SCOR), Nielsen (NLSN) and others. It also means to be more diligent in digging through Securities and Exchange Commission (SEC) filings, studies, reports and polls. After all, there is no shortage of data out there, but that doesn’t mean it’s a piece of cake to find valuable information either.

A case in point is the lack of a September Employment Report from the BLS. Those in the know realize that monthly employment figure is but one assessment of monthly job creation. Some other well-recognized ones include ADP’s Employment Report, as well as Intuit’s Small Business Employment Index and Gallup’s own unemployment report. Another view on job creation is found in the ISM’s Manufacturing and Services Indices, as well as similar data from Markit Economics.

There is ample data to be had and I’m not just talking about economic data. The key is to find it and put it all in context. That is what I do each month for my subscribers and so far it’s paying off handsomely.

If all of the really insightful data was easy to find, wouldn’t everyone have it?

Cybersecurity with Leonard Moodispaw, Chairman & CEO of KEYW

Joining me today on PowerTalk is Leonard Moodispaw — chairman and CEO of KEYW Holding Corp. (KEYW), a publicly traded company that provides cybersecurity and geospatial intelligence solutions for U.S. government, intelligence and defense customers, as well as commercial enterprises.

As we move more and more of our lives into the digital frontier, we are exposed to a different set of risks. Whether you are a person, a business or a government, the way in which you need to secure yourself is far different than it was two to three years ago, let alone 20 years ago.

What I just described is the downside of my Always On, Always Connected PowerTrend.

Cyber attacks, including Website and email hacking, malware infection and targeted denial of service, are being increasingly reported by private users and government departments.

As you know just by glancing at the headlines, it is a huge and growing problem. Does it come as a surprise that the Department of Homeland Security awarded a $6 billion contract to 17 companies to protect the government against cybersecurity threats?

That’s good news for KEYW. While its list of intelligence community customers may sound like a lot of alphabet soup, it’s important to realize that its clientele includes NSA, NRO, NGA, AGC and other agencies within the intelligence community and Department of Defense (DoD). Winning business from those customers and others led KEYW to deliver revenues of $240 million last year — that’s up substantially from the $39 million in revenue it achieved in 2009.

During our time together, Leonard and I talk about what’s going on in the cybersecurity market, how KEYW has been able to deliver that great revenue growth, a new KEYW product offering — HawkEye G, the industry’s first truly active defense solution to detect stealthy advanced threats — and more.

Click here to listen to my one-on-one conversation with
KEYW Group Chairman and CEO Leonard Moodispaw

To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.

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