42 States Lost Jobs Last Month!

[Parsad]

Up from 29 in July.  Also 12 states now have 10% or greater unemployment, with five above 12%.  Cheers!

 

http://finance.yahoo.com/news/42-states-lose-jobs-in-August-apf-1171568305.html;_ylt=AvepGKi88X6XucfhRRKzkoi7YWsA;_ylu=X3oDMTE1Yms0aGwwBHBvcwMzBHNlYwN0b3BTdG9yaWVzBHNsawM1c3RhdGVzc2Vlam8-?x=0&.v=3&sec=topStories&pos=1&asset=&ccode=

[turar]

In the same article though: "The United States lost 216,000 jobs in August, the department said earlier this month, down from 276,000 in July."

[Zorrofan]

The jobless rate nationwide is expected to peak above 10 percent next year, from its current 9.7 percent.

 

"You are seeing the pace of job losses slow a little bit," said Mike Lynch, a regional economist at IHS Global Insight. But states "are not out of the woods yet."

 

The United States lost 216,000 jobs in August, the department said earlier this month, down from 276,000 in July. Employers have eliminated 6.9 million jobs since the recession began in December 2007.

 

To me this suggests the current rally is way over done. The next six months should be interesting.......

 

cheers

Zorro

[omagh]

Zorro,

 

Employment is a lagging indicator.  I wouldn't put too much stock in it other than to suggest that demand will be slow in some corners.

 

http://www.calculatedriskblog.com/2009/03/business-cycle-temporal-order.html (written in March 2009 at the height of the stock market panic)

 

-O

 

The jobless rate nationwide is expected to peak above 10 percent next year, from its current 9.7 percent.

 

"You are seeing the pace of job losses slow a little bit," said Mike Lynch, a regional economist at IHS Global Insight. But states "are not out of the woods yet."

 

The United States lost 216,000 jobs in August, the department said earlier this month, down from 276,000 in July. Employers have eliminated 6.9 million jobs since the recession began in December 2007.

 

To me this suggests the current rally is way over done. The next six months should be interesting.......

 

cheers

Zorro

[Guest Broxburnboy]

 

Employment is a lagging indicator.  I wouldn't put too much stock in it other than to suggest that demand will be slow in some corners.

 

 

A lagging indicator? Isn't this an oxymoron, like jumbo shrimp or military intelligence?

 

In reality unemployment is both a consequence of cyclical contractions and a harbinger of falling demand and consumer spending. Rising employment numbers is what we need to anticipate a "recovery".

[Parsad]

California unemployment at 12% is the highest in nearly 70 years.  Remember, this does not include people whose hours have been cut, or those that have fallen off the actively seeking employment rolls.  House prices and unemployment need to stabilize there...as California goes, so does most of the U.S.  Cheers!

 

http://www.nytimes.com/2009/09/19/us/19calif.html?hpw

[Guest kawikaho]

California unemployment at 12% is the highest in nearly 70 years.  Remember, this does not include people whose hours have been cut, or those that have fallen off the actively seeking employment rolls.  House prices and unemployment need to stabilize there...as California goes, so does most of the U.S.  Cheers!

 

http://www.nytimes.com/2009/09/19/us/19calif.html?hpw

 

Yes, definitely agree.  Without employment coming back, people are going to hunker down.  I just saw American Airlines release their traffic and capacity #'s.  Holy crap, those just fell off a cliff.  People are flying less, and spending less. 

 

 

[Zorrofan]

Employment is a lagging indicator.  I wouldn't put too much stock in it other than to suggest that demand will be slow in some corners.

 

Typically, it is considered a lagging indicator by economists. The point that I think many are missing is that the economy will recover slowly while unemployment recovers. The current market rally is pricing in a quick, dramtic recovery. This is a senario I have trouble believing. Further if you factor in "true" unemployment - i.e. include those who have stopped looking for work or are now working part-time because their hours were reduced - unemployment is much higher than many realize. The next six months should be interesting as the slow pace of the recovery becomes more apparent.

 

cheers

Zorro

[frog03]

 

Job situation terrible

Debt (in US especially, see the last note by Eric Sprott in markets at a glance) terrible

Peak Oil (everybody forgets about it but it is still very much happening) terrible

 

Very hard to get excited by most equity prices after the huge run up.

[gaf63]

Add to the part timers and those not looking for work  the employees of the UC system  who have been given pay cuts/furloughs that amount to 7-10% of wages.  These cuts affect admin , staff and faculty.  Not unemployed but with a lot less discretionary income. 

"Recession over" say many

Not likely, and not in Calif.

[omagh]

Zorro,

 

The 'end of recession' means that things have stopped getting worse and the opposing force for recession is growth.  The dramatic stock price drops over the last year have been a result of economic declines and uncertainty.  The "quick, dramatic recovery" is repricing to the "economic decline" and removing the "uncertainty", but earnings provide the floor for stock prices.  Earnings have stabilized in many industries and have gone up in a few stocks that I own.  Companies will start hiring soon enough and employment will start its downward descent.  The economic gloom in the US reminds me of Canada in 1991-1994 when we had gobs of foreign debt and were being threatened with credit downgrades.  This is the Baby Boom generation's last chance before they all retire, so there will be a lot of pressure on government to get its balance sheet into better shape.

 

I think that we're moving on from the Early Surge to the Surge Continues in John Train's fictional essay about market cycles.

http://web.mac.com/thebroadside/T/Broadside/Entries/1994/11/13_Twelve_Choruses_of_a_Market_Cycle.html

 

-O

Employment is a lagging indicator.  I wouldn't put too much stock in it other than to suggest that demand will be slow in some corners.

 

Typically, it is considered a lagging indicator by economists. The point that I think many are missing is that the economy will recover slowly while unemployment recovers. The current market rally is pricing in a quick, dramtic recovery. This is a senario I have trouble believing. Further if you factor in "true" unemployment - i.e. include those who have stopped looking for work or are now working part-time because their hours were reduced - unemployment is much higher than many realize. The next six months should be interesting as the slow pace of the recovery becomes more apparent.

 

cheers

Zorro

[Guest kawikaho]

I think people are over blowing the debt situation in the US.  Even after 2011, the debt load isn't going to be THAT bad.  It'll be worse than what it was 11 years ago, but it's not going to be any worse than Canada, or the UK, or even Japan.

[nodnub]

I think people are over blowing the debt situation in the US.  Even after 2011, the debt load isn't going to be THAT bad.  It'll be worse than what it was 11 years ago, but it's not going to be any worse than Canada, or the UK, or even Japan.

 

May I ask what source are you using for these figures?

[oldye]

I think people are over blowing the debt situation in the US.  Even after 2011, the debt load isn't going to be THAT bad.  It'll be worse than what it was 11 years ago, but it's not going to be any worse than Canada, or the UK, or even Japan.

 

May I ask what source are you using for these figures?

 

The Government has about 12 trillion in debt.  At 5% that costs tax payers 600 billion a year...the government has a interest coverage ratio of like 500%...its overblown! 

[Zorrofan]

Zorro,

 

The 'end of recession' means that things have stopped getting worse and the opposing force for recession is growth.  The dramatic stock price drops over the last year have been a result of economic declines and uncertainty.  The "quick, dramatic recovery" is repricing to the "economic decline" and removing the "uncertainty", but earnings provide the floor for stock prices.  Earnings have stabilized in many industries and have gone up in a few stocks that I own.  Companies will start hiring soon enough and employment will start its downward descent.  The economic gloom in the US reminds me of Canada in 1991-1994 when we had gobs of foreign debt and were being threatened with credit downgrades.  This is the Baby Boom generation's last chance before they all retire, so there will be a lot of pressure on government to get its balance sheet into better shape.

 

I think that we're moving on from the Early Surge to the Surge Continues in John Train's fictional essay about market cycles.

http://web.mac.com/thebroadside/T/Broadside/Entries/1994/11/13_Twelve_Choruses_of_a_Market_Cycle.html

 

-O

 

Omagh, a quick question. Things may not be getting worse but are they really getting that much better? How much of the recovery is due to the government's massive spending programs and how much is natural market cycles? I think that the government intervention has stopped the freefall but when the spending ends what then? I will have a look at John Train's essay. Thanks for the link.

 

cheers

Zorro

[Zorrofan]

The problem is that over the next ten years total debt rises to $24 trillion dollars. Where does that money come from? Is the government really going to be able to borrow $24 trillion at 5%? And then what about the "off-balance sheet liabilities"? If you factor in social security and medicare total shortfall rises to over $70 trillion according to the Cleveland Fed. Even WEB has expressed concern about selling off pieces of the farm. What happens to government policy when foreign creditors hold an increasing portion of government debt? It is a bigger deal than most realize!

 

Cheers

Zorro

 

 

 

I think people are over blowing the debt situation in the US.  Even after 2011, the debt load isn't going to be THAT bad.  It'll be worse than what it was 11 years ago, but it's not going to be any worse than Canada, or the UK, or even Japan.

 

May I ask what source are you using for these figures?

 

The Government has about 12 trillion in debt.  At 5% that costs tax payers 600 billion a year...the government has a interest coverage ratio of like 500%...its overblown! 

[Zorrofan]

Here is a link on the topic. i couldn't find the exact article I was looking for but this should stimulate some debate!  :)

 

 

http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf

 

cheers

Zorro

[Guest kawikaho]

The debt load is supposedly going to reach on parity with GDP.  Canada, at one point, had just as bad of a debt load, and Japan as well.  Those economies weren't exactly cratering.  They were stagnant, but not falling off the roof.

[omagh]

Zorro,

 

Government in the US (Fed) expanded its balance sheet on the order of ~$1T.  Further, there has been a stimulus package of ~$780B.  In a $15T economy, these are significant, but they're definitely not the whole picture.  Unemployment is undoubtedly crappy, confidence is crappy, but tremendous amounts of human and financial capacity sit on the sidelines.

 

Personally, I've been fully invested since March (maybe 3-5% cash) and keep rolling over companies that are being taken out (3 so far this year - TUN.TO, WEST, ORH with a fourth rejecting a low-ball offer).  Companies with strong balance sheets are taking advantage of low market pricing relative to future growth opportunities.  The opportunities to re-invest with decent margins of safety are still available, but dwindling.

 

Perma-bear James Grant has a downright peppy essay in WSJ today which questions the consensus opinion that the recovery will be slow and tepid.

http://online.wsj.com/article/SB10001424052970204518504574420811475582956.html

As if they really knew, leading economists predict that recovery from our Great Recession will be plodding, gray and jobless. But they don't know, and can't. The future is unfathomable.

...

Growth snapped back following the depressions of 1893-94, 1907-08, 1920-21 and 1929-33. If ugly downturns made for torpid recoveries, as today's economists suggest, the economic history of this country would have to be rewritten. Amity Shlaes, in her "The Forgotten Man," a history of the Depression, shows what the New Deal failed to achieve in the way of long-term economic stimulus. However, in the first full year of the administration of Franklin D. Roosevelt (and the first full year of recovery from the Great Depression), inflation-adjusted gross national product spurted by 17.3%. Many were caught short. Among his first acts in office, Roosevelt had closed the banks. He had excoriated the bankers, devalued the dollar, called in the people's gold and instituted, through the National Industrial Recovery Act, a program of coerced reflation.

 

 

Omagh, a quick question. Things may not be getting worse but are they really getting that much better? How much of the recovery is due to the government's massive spending programs and how much is natural market cycles? I think that the government intervention has stopped the freefall but when the spending ends what then? I will have a look at John Train's essay. Thanks for the link.

 

cheers

Zorro

[Zorrofan]

Omagh,

 

You are most persuasive but (you knew there had to be one) I think that the amount of leverage/debt out there means a much slower recovery than most anticipate. We still need the US consumer to deleverage significantly before global growth can resume. I don't disagree that there are bargins out there, but I do feel that this is a time for caution!

 

Cheers

Zorro

 

 

Zorro,

 

Government in the US (Fed) expanded its balance sheet on the order of ~$1T.  Further, there has been a stimulus package of ~$780B.  In a $15T economy, these are significant, but they're definitely not the whole picture.  Unemployment is undoubtedly crappy, confidence is crappy, but tremendous amounts of human and financial capacity sit on the sidelines.

 

Personally, I've been fully invested since March (maybe 3-5% cash) and keep rolling over companies that are being taken out (3 so far this year - TUN.TO, WEST, ORH with a fourth rejecting a low-ball offer).  Companies with strong balance sheets are taking advantage of low market pricing relative to future growth opportunities.  The opportunities to re-invest with decent margins of safety are still available, but dwindling.

 

Perma-bear James Grant has a downright peppy essay in WSJ today which questions the consensus opinion that the recovery will be slow and tepid.

http://online.wsj.com/article/SB10001424052970204518504574420811475582956.html

As if they really knew, leading economists predict that recovery from our Great Recession will be plodding, gray and jobless. But they don't know, and can't. The future is unfathomable.

...

Growth snapped back following the depressions of 1893-94, 1907-08, 1920-21 and 1929-33. If ugly downturns made for torpid recoveries, as today's economists suggest, the economic history of this country would have to be rewritten. Amity Shlaes, in her "The Forgotten Man," a history of the Depression, shows what the New Deal failed to achieve in the way of long-term economic stimulus. However, in the first full year of the administration of Franklin D. Roosevelt (and the first full year of recovery from the Great Depression), inflation-adjusted gross national product spurted by 17.3%. Many were caught short. Among his first acts in office, Roosevelt had closed the banks. He had excoriated the bankers, devalued the dollar, called in the people's gold and instituted, through the National Industrial Recovery Act, a program of coerced reflation.

 

 

Omagh, a quick question. Things may not be getting worse but are they really getting that much better? How much of the recovery is due to the government's massive spending programs and how much is natural market cycles? I think that the government intervention has stopped the freefall but when the spending ends what then? I will have a look at John Train's essay. Thanks for the link.

 

cheers

Zorro

[Guest Broxburnboy]

Eric Sprott's latest commentary is indeed timely for this discussion:

 

http://www.sprott.com/Docs/MarketsataGlance/09_09_MAAG.pdf

 

 

[Guest kawikaho]

I got some good news on the job front.  I might be a fluke, but I found a new job pretty fast in California.  Not exactly stoked to be going back to work, but not exactly ready to retire either.  I've only looked for new jobs for a month and a half, and today I just accepted a sweetened offer.  It's at a large life sciences company whose stock has done well these past 10 years, and even better in the past 30.  Wish I was working for them 10 years ago since I get options every year.  Anyways, here's one less unemployed casualty of the Great Recession. 

 

[omagh]

Zorro...you're spot on.  This is an awesome chart on mortgage equity withdrawal:

http://www.calculatedriskblog.com/2009/09/q2-2009-mortgage-equity-extraction.html

http://2.bp.blogspot.com/_pMscxxELHEg/SrkH4FzycqI/AAAAAAAAGYs/89aAjwjqJ-Y/s1600-h/MEWQ22009.jpg

 

I have started reducing my US$ exposure back to C$ as cash.  Francis Chou suggests that US$/C$ is a wash in the long run, but now offers currency hedging in his funds.  Who knows what Flaherty and Carney do in response to a rising C$/US$ forex ratio?  We may well see them turn on the printing press here as well.

 

-O

Omagh,

 

You are most persuasive but (you knew there had to be one) I think that the amount of leverage/debt out there means a much slower recovery than most anticipate. We still need the US consumer to deleverage significantly before global growth can resume. I don't disagree that there are bargins out there, but I do feel that this is a time for caution!

 

Cheers

Zorro

 

[nodnub]

I think people are over blowing the debt situation in the US.  Even after 2011, the debt load isn't going to be THAT bad.  It'll be worse than what it was 11 years ago, but it's not going to be any worse than Canada, or the UK, or even Japan.

 

May I ask what source are you using for these figures?

 

Kawahiko,

 

I am asking you to provide some source of data for your statement. Making unsubstantiated claims does not foster intelligent debate and is unproductive for everyone involved.

 

I honestly do not know where to find reliable "apples to apples" (comparable) statistics on federal debt for Canada and the US.  I would be happy if someone that could post some reliable information on this topic. 

 

Please note the attached excerpt from the recently posted Gluskin Sheff report. It appears to disagree with your previous assertion regarding US/Canadian relative debt levels.

 

regards,

 

nodnub

[Parsad]

Yeah, I keep hearing this also in the news, yet I'm not sure what comparisons they are using?  I think they are including provincial debt, as well as social security.  Based on simple federal debt to GDP, Canada has done a terrific job, both through the Liberal Government from the Chretien era and the Conservative Government under Steven Harper, and that ratio is far lower than the U.S.  Infact, I believe it is one of the lowest numbers of any G20 economy.  So, I'm also at a loss at exactly what numbers people are using when they say Canada's debt burden is as onerous as the U.S.  Cheers!