I need to vent for a second…

I don’t mind going my own way.

Never have, never will.

I wouldn’t be speaking to you from this position today if I wasn’t the type to break away from the herd when I felt like the situation called for it.

But at this point, it really feels like things are getting out of hand…

Because this week, consensus projected that monthly payrolls would come in relatively weak, around 70,000. I thought they were all dead wrong, and sent out a forecast for nearly twice as much hiring. My hedge fund clients were aghast. They wanted to know what I could possibly seeing that the big wigs at Morgan Stanley and Goldman Sachs hadn’t already noticed.

Then the numbers dropped this morning, and — once again — we were right on the money. Meanwhile, Wall Street missed wide.

So today, I’d like to share a deeper look into why and how Wall Street keeps missing, and why I’m confident we’ll stay right on the money through 2026 and beyond. (Note: I recorded this video on Wednesday of this week, before payroll numbers were released on Friday).

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Video transcript:

Welcome to Moneyball Economics.

I’m Andrew Zatlin and guess what? It’s that time of the month for payrolls. This Friday, the payroll number will come out and I think it’s going to have an outsized impact on the markets, partly because there’s no other news really to trade and partly because I think it’s going to be a blowout number.

I think consensus is totally wrong.

They’re coming in with a mild 70,000- ish. I’m forecasting about double that, 133,000.

And it’s not about who’s right or wrong, but I got to tell you, I’m frustrated. I want to vent here for a second…

All week long I have been on the phone having to defend my number, having to explain why my number is so comparatively high. And my approach is very data driven. I’m looking at numbers. I’m pulling in data. I’m examining what’s really going on out there while a lot of the Wall Street pros don’t do that.

Why is, for example, consensus out there at 73,000?

Well, quite simply because that’s the rolling three-month average.

That’s right. When you hear consensus expects, it’s not because they rolled up their sleeves and these Wall Street pros are doing the homework. It’s because they’re looking at a three-month average, which is 70,000.

January, February, March average is out to about 70,000 and they go, “Well, we’re going to dial it up or we’re going to dial it down because, oh, we think healthcare might be a little soft,” or, “Ooh, we think construction might be a little strong.”

So it’s a totally top-down approach. It’s an opinion. I’m dealing with facts and that’s why last month, for example, I crushed consensus. I was the number one forecaster out there on Bloomberg with my forecast, which was about 150,000 compared to the number that came out at 180,000 and consensus, which was at 60,000.

Wink, wink, that 60,000? that was the run rate.

It’s frustrating because I see it everywhere.

I see it in jobless claims. That’s why I’m a top ranked Bloomberg forecaster for jobless claims as well, because we’ve had a lot of volatility out there and when you’re doing just run rate averaging, you’re going to miss all that volatility.

But when you’re doing the bottoms up data driven approach that I take, you’re going to see that volatility and you’re going to forecast accordingly.

Why does it matter?

Well, if you’re an investor, it’s like you’re driving in a car and in the front seat, you got your wife. In the backseat, you got your mother-in-law and you got your wife saying, “Look out, you got to turn left.” You got your mother-in-law in the backseat saying, “No, no, no, look out. You got to turn right.” And when you look at them, neither one of them’s looking at the road, they’re just looking down at their phones!

It’s crazy!

It’s bad advice left, right, and center, no pun intended.

See, I think this is why there are a lot of opportunities out there. This is why you always hear, “Oh, consensus was surprised, expectations were there and reality was here.” And it’s because they’re not doing their jobs.

Well, thank goodness we’re here and we’re doing our jobs and we’re able to give you some valuable insight that I hope has been benefiting you. So let’s talk this number/event over. Let’s talk the number.

I think Friday’s going to be super strong and we can start off high level. Last year the number was about 100,000 in April. In fact, it’s pretty much always been 100,000 or above. And why is that? Well, because you have a lot of hiring going on in April. The weather is favorable. People are out and about. And let me just do a quick sniff test.

Last year, given all the chaos that Trump brought to town, given all the craziness that was affecting businesses in April, the number was about 100,000.

Now fast forward to this year. There’s a lot more stability. There’s a lot more predictability. Companies are investing in the economy because they can see that it’s worth doing and the economy is stronger. So you have all these tailwinds.

Why would you possibly think that companies this year need fewer bodies than they need to stock up on last year? Disneyland.

Disneyland knows they need a few thousand people to man the desks to run the rides, do whatever they do. This year they expect more people. So they’re going to have at least the same number of people that they had last year. And that’s kind of the sniff test. I don’t start with that, but at least it creates some context and perspective.

I am going out with a number that is high because I see a lot of demand out there. I’m looking at individual company hiring.

This year, for example, 20% of all the seasonal hiring comes down to landscapers and exterminators. Weather’s nice. They got to start taking care of buildings. Well, guess what? Rollins, huge number one exterminator pest control company. Their hiring is up and to the right. Same with home builders.

I don’t know if you heard this, but March housing starts, home building starts and 11% month over month jump and year over year jump. Construction companies are out there building construction drives again about 15% of all the numbers for the month of April and on and on and on. Companies are hiring. The number’s going to be big and it’s going to justify the stock market growth, which as you see, has been extremely strong.

You’re going to have confirmation that the US economy is growing. That might not be good for bonds because the window of opportunity for rate cuts is pretty much going to close on Friday. But for the stock market, you’re going to have confirmation that this is a good time to be investing in America.

We’re in it to win it, folks. Oh, and wish me luck on Friday. I can use it.

Zatlin Out.