NFP is . . . -345k
The number is . . . a much better than expected loss of 345,000 jobs.
Let’s put this into some perspective, both good and bad:
• Its the best NFP release since the crisis exploded in September 2008;
• Average hourly earnings advanced $0.02 to $18.54;
• Temporary workers continue to loss jobs, but seem to be moderating, losing only 7,000 jobs;
• Unemployment rose to to 9.4%, a 25 year high;
• Unemployment rose by 787,000 in the month to 14.5 million;
• Total job loss sine the recession started is now over 6 million;
• The broader U-6 unemployment hit 16.4%.
While many view the decelerating job losses as signaling the end of the recession, they appear to me as signaling the end of the panic period of the credit crisis. We are now in an ordinary, as opposed to historic, recession.
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June 5th, 2009 at 8:38 am
It’s UFB. Take the market on that!
June 5th, 2009 at 8:41 am
So we expected a loss of 525k and headline of 9.2%.
Instead we got a loss of 345k and a headline of 9.4%.
Color me puzzled.
June 5th, 2009 at 8:49 am
U6 up to highest yet. Meaning? Or just to be expected.
June 5th, 2009 at 8:50 am
B/D +220, U-6 jumps to 16.4%.
All is well, nothing to see here………….
June 5th, 2009 at 8:50 am
yea, what Zack said….
June 5th, 2009 at 8:58 am
Another ROARING UP day …
… so back in the dawn of time … back when markets were markets and not some sort of rigged crap game (if there ever was any such time) … how was a monthly job loss figure of 345K received by the markets?
Was that a good thing?
June 5th, 2009 at 9:01 am
600K new filings each week and records levels of continuing claims, 9.4% unemployment rate, a U-6 of over 16.4% and they post 345K lost. Who the hell is running the show at the BLS? Baghdad Bob? They just nuked their last shred of credibility with even bozo the clown. Utterly worthless their releases are now.
June 5th, 2009 at 9:06 am
Look at the yield on the 10y Treasuries…
3.83%
The BV’s are going to start stepping up to the plate now…
The market may be up this morning on a little “short squeeze”…I’d say it could get aas high as 966 if they want to pump it hard (Andy T could probably give a better number)…
But they’re going to start doing some work on the long bonds here or BB is going to lose all his credibility…
I’m moving $$ from 2-10′s here…
June 5th, 2009 at 9:15 am
While your eyes were averted to the “green shoot” of less bad unemployment numbers, the little ol’ US Treasury market is doing its own shooting. Ten Year @ 3.82%, according to latest Bloomberg. And mortgage rates at their highest this year (about 5.5% for 30 year fixed). Now we just need some fertilizer to spread on the shoots…but that would be expensive, since ag commodities are also shooting…my isn’t “reflation” a wonderful thing? Green shoots everywhere.
June 5th, 2009 at 9:19 am
More good news. Employers trimmed only 345,000 jobs and the unemployment rate is only 9.4%, the highest since 1983. Time to buy stocks. I hate to be a wet blanket (actually, I love to be a wet blanket. It’s my thing). Please look at the old birth/death adjustment chart. According to the BLS model, small businesses added 220,000 jobs in May after adding 226,000 jobs in April. Isn’t that precious. In the midst of the worst recession since 1930 our beloved government agency is telling us that small businesses are hiring like crazy. In two years they will adjust this data when no one is paying attention, because it is WRONG!!!!!!
Small businesses are going out of business in record numbers. I can guarantee you that small business subtracted at least 220,000 jobs in May. Therefore, the REAL TRUTHFUL losses are 345,000 + 220,000 + 220,000 = 785,000. Do you think the market would be rallying if that number was reported?
June 5th, 2009 at 9:21 am
To put this in a different perspective…
Since last October, the economy has lost between 3.5 million – 4 million jobs…Foreclosures are on the rise…a HUGE wave of ARM resets are coming in a couple of months…the US Government is now running a $2 trillion deficit (most of that paper has yet to be brought to the window)…Oil prices are back up (and predictions are for further increases)…
Yet the S&P is at the exact same level as last October…
That’s a heck of a lot of optimism for a recovery…
Quick, cash on the sidelines, GET IN b4 it’s too late!
June 5th, 2009 at 9:24 am
If the FOMC doesn’t come in here and do a rate increase sometime this summer, they will lose any credibility they even THOUGHT they had in the first place…
Come on BB, this jobs number gives you cover to hike…
June 5th, 2009 at 9:25 am
Curm: the Ten year was actually at 3.9% at one point. I’m pulling for it. Want some decent CD rates before the next panic and the fed pegs than a ridicuously low returns again for an even longer period.
June 5th, 2009 at 9:31 am
The Chinese laugh at Geithner, now the bond market (and anyone else thinking clearly) laughs at the BLS.
The destruction in credibility is epic.
June 5th, 2009 at 9:32 am
America! What a country.
Fed should start the process, that begins the discussion, that gets market participants ready for teeny-tiny future hike in rates… a small, but a necessary one.
And the GOP should start looking for their sacrificial lamb for ’12.
June 5th, 2009 at 9:34 am
my guess- the top is in- don’t sell any shorts now
June 5th, 2009 at 9:34 am
Something fishy about the disconnect beween the monthly reported job loss number and the 9.4% rate, why?
Any changes in methodology?
Maybe CA and MI forgot to report? LOL
June 5th, 2009 at 9:40 am
jqui: link to the small business model?
June 5th, 2009 at 9:42 am
Wait until later this afternoon. The pump will return and the market will end with another predictable sharp increase right before the close. According to the flotsam available to sort through, this is still a professional’s market. Mom and pop are sitting this out. Me too. It’s all about preservation of capital. Where’s the upside from here without the pump? Multiple expansion?
June 5th, 2009 at 9:44 am
In the “you gotta be kidding me…” category…
Fed Intends to Hire Lobbyist in Campaign to Buttress Its Image …
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZjQKyLci1AM
June 5th, 2009 at 9:47 am
This 200,000+ increase from the addition of new companies (B/D) is a joke. And I am sure all these new companies have a ton of business, great cash flow, are paying their employees great wages (and bonuses), and are throwing off great earnings to their owners. And of course they are debt free with no onerous financing costs. OR… Are they selling products on the internet, after watching an infomercial on TV. Or maybe selling Avon door to door.
June 5th, 2009 at 9:47 am
Did they release the hours worked?
If these numbers are accurate, this is incredibly news (didn’t Rosie say when it gets into the -400k range, we’d be ready for recovery?).
It’s kind of weird though, since all of the states are cutting and we have automakers entering massive shutdown periods…
June 5th, 2009 at 9:51 am
Keeping perspective: Graphs in this post.
http://www.calculatedriskblog.com/2009/06/employment-report-345k-jobs-lost-94.html
June 5th, 2009 at 9:52 am
Didn’t you write a book about this or something? Why would anyone want to buy your work if you’re not even going to examine what the real numbers are?
All that’s going on is what technically counts for “unemployment” is incredibly disconnected from reality, an article about April’s number explains it:
-The 8.9 percent April unemployment rate was based on 13.7 million Americans out of work. But that number doesn’t include discouraged workers or people who gave up looking for work after four weeks. Add those 700,000 people, and the unemployment rate would be 9.3 percent.
- The official rate also doesn’t include “marginally attached workers,” or people who have looked for work in the past year but stopped searching in the past month because of barriers to employment such as child care, poor health or lack of transportation. Add those 1.4 million people, and the unemployment rate would be 10.1 percent.
- The official rate also doesn’t include “involuntary part-time workers,” or the 2 million people like Noel who took a part-time job because that’s all they could get, plus those whose work hours dropped below the full-time level. Once those 9 million workers are added to the unemployment mix, the rate would be 15.8 percent.
http://news.yahoo.com/s/ap/20090605/ap_on_bi_ge/us_becoming_a_statistic
~~~
BR: Also, Kennedy was shot.
Dude, you are 3 years late to this party.
I’m the guy who advocated using the U6 over U3 in this report, as well as mercilessly mocking the B/D report.
June 5th, 2009 at 9:53 am
From Big Picture almost 2 years ago
B/D is why we are smelling fish!
The Accelerating BLS Birth/Death Adjustment
Tuesday, July 10, 2007 | 07:20 AM
in Data Analysis | Economy | Employment | Real Estate
I’ve mentioned the B/D adjustment over the years, and how its become an increasingly large portion of the reported BLS new jobs.
What I haven’t previously mentioned is that over the past year, it is accelerating: the Birth/Death Adjustment has become an ever-large portion of the reported NFP payrolls.
How much larger? Well, consider the following data points: Over the five month period ending in June, BLS B/D adds was a total of 922,000 new jobs. During the same period, the actually head counted Non-farm Payrolls (NFP) job creation was 709,000.
That’s right, fictional Birth/Death job adds have been outpacing actually measured job creation by some 30%.
As they do every year, BLS Net Business Birth/Death Model deleted jobs in January — in 2007, it was 175k. That means that year-to-date, the net fabricated BLS new jobs was 747k — versus NFP growth of 871k — that’s 85.58% of NFP job growth.
Example of the absurdity of the new Birth/Death model — in place since 2001 — can be found in the specific employment sub-sectors. Construction jobs are an obvious error (housebuilders added 12,000 workers), big jumps in education while school is out for summer is another, ‘Leisure & Hospitality’ B/D jobs are a multiple of the net category jobs created.
Prior to 2001, the B/D adds were less than 20k per month. Now, they dominate the Non Farm Payroll report.
Beneath the headlines, we see a far different reality. The FT noted:
“Wall Street economists, meanwhile, were surprised by continued hiring in the construction sector seen in Friday’s figures as despite a prolonged housing market slump…The bulk of the hiring was in the service industries, as employers such as banks, insurance companies, restaurants, added 135,000 workers last month after hiring 199,000 workers in May. But they also pointed to signs of potential economic weakness, as the retail sector cut 24,000 positions.”
Economists also said an unwelcome percentage of last month’s hiring was attributable to state and local governments, which added 40,000 staff and are not viewed as good indicators of economic activity.”
I mentioned my incredulity over the fawning WSJ page 1 headline this past weekend (How Good Was NFP Really?). That is the soft prejudice of low expectations in action.
My favorite skeptic on BLS data is Bill King; Bill is even more incredulous over the reaction to what was by all measures a mediocre jobs report:
“And once again, The Street and their fin media stooges bray about how bullish 132,000 NFP jobs are (CSFB’s chief economist called the report ‘excellent.’) even though just a few years ago Street Conventional Wisdom held that the economy must generate about 175,000 jobs each month just to absorb demographic growth.
Lehman’s economist said, “The labor market is one of the stronger parts of the economy right now.” This is a Clintonesque, qualified statement. It could imply that the rest of the economy really sucks.”
Sucks, indeed.
Here’s Bills’s chart of the past few decades NFP growth:
NFP with 1-year (12 month), 10-year and 40 year (480-month) moving averagesNfp_20_years
Source: M.Ramsey King Securities
>
As the above chart clearly shows, the June NFP number is hardly ‘excellent’ or indicative of economic strength. With NFP yearly average of 167,333, how can a release ~35,000 or > 20% less than the yearly average be ‘excellent’?
The 40-year average NFP growth is 150,600 — and that is with a national population considerably less than 300 million people. Anyone asserting a NFP number ~15% below the 40-year average as ‘excellent’ or a sign of strength is a shill who has failed to do the math . . .
UPDATE 3 July 11, 2007 8:20am
June 5th, 2009 at 9:56 am
OH I love it…
Not the fact that our labor conditions are still disgusting… I dont like that.
But I LOVE that the bond market is finally calling out the bullshit this morning. Just love it.
They can only spin and shine the data for so long, and then the clear coat is gone.
June 5th, 2009 at 9:56 am
This is a fairly dramatic reversal across the board: DX, Energy, equities…
As leftback has pointed out and is clear to most traders….it’s all ONE trade: the US$. Can we keep artificially juicing “assets” by debasing our currency, or will the credit contraction once again take hold and cause the $ to rally?
Right now the US$ looks to be breaking out of the severe downtrend channel from 87 to 78.35 and is producing a hammer bottom on the weekly chart–a hammer bottom that began from a 61.8% retracement (just about near perfect retrace) of the entire move…
Still another 6 hours of trading left in the week, but right now that is one bullish looking development in the DX.
June 5th, 2009 at 9:59 am
As I predicted yesterday, Dollar is up ($UUP), Oil is down ($DUG). Indicative of a reversal day in equities today?
June 5th, 2009 at 9:59 am
As usual, the bears are on the losing side of the macro picture here. The problem is that the bears are committing the same sin as the bulls committed during late 2007/early 2008: the sin of ignoring the data.
January: -741,000
February: -650,000
March: -652,000
April: -504,000
May: -345,000
Green shoots, comrades…green shoots!
@Barry:
You asked: I have these questions for the green shoots crowd: Are firings decelerating? Has Housing and construction stabilized? When will hiring commence?
Yes, the data above shows firings are decelerating. Housing and construction has stabilized–construction spending is surprising to the upside, and construction job losses dropped by 50% m-o-m (108k in April, 59k May). The unemployment rate will peak in July and contract to 5% by 2012.
Green shoots, y’all! Green shoots!
June 5th, 2009 at 10:00 am
OK, here are the “AVERAGE WEEKLY HOURS OF PRODUCTION WORKERS” (seasonally adjusted version):
Year Jan Feb Mar Apr May
2009 33.3 33.3 33.1 33.2(p) 33.1(p)
OK, so that looks like a decline to me. The not seasonally adjusted number came in with an increase, but that’s probably due to the seasonal hiring by the government.
“Temporary help services EmploymentSeasonally Adjusted” also showed a decline.
2009 1965.7 1892.7 1835.4 1780.7(p) 1774.2(p)
These forward looking employment indicators aren’t looking so good. I’m not sure what to think. “Hold cash,” comes to mind.
June 5th, 2009 at 10:02 am
Jack Welch must be running that numbers machine behind the scenes. Or at least working as a consultant.
June 5th, 2009 at 10:02 am
@Matt:
Sorry to burst your bubble, but: “Even the government reduced employment — by 7,000 — after bulking up by 92,000 in April as it added workers for the 2010 Census.”
http://finance.yahoo.com/news/Jobless-rate-hits-94-percent-apf-15449251.html?sec=topStories&pos=main&asset=&ccode=
June 5th, 2009 at 10:04 am
@franklin411: I know several people who are just hanging onto their jobs for dear life. You’re living in a fantasy land, my friend.
Heard from a buddy that stealth layoffs are happening at Oracle. Two groups in his area (sales) got cut yesterday. Thankfully he and his group were spared…for now, but he’s already talking about getting ready to leave the Bay Area if/when it happens.
June 5th, 2009 at 10:06 am
In our bizarro world, a sell off will happen today. Better than expected may finally be all priced in.
June 5th, 2009 at 10:07 am
The NFP data results do not reconcile with the household survey data, the pace of a rising U-3 rate or U-6 rate as well as the continuing claims data let alone the specific employment data points within the ISM results nor do they reconcile with state payroll reports which are more consistent with the household data. Yes, the sign of ignoring the data, willfully is…. well sinful.
June 5th, 2009 at 10:10 am
Forget the B/D adjustment, the official margin of error was +/- 275k? Did anyone else hear that correctly? If so, this report is statistically meaningless.
June 5th, 2009 at 10:10 am
Prior to 2001, the B/D adds were less than 20k per month. Now, they dominate the Non Farm Payroll report.
So with the population approximately the same as 2001 the estimated monthly job creation (220K) is 11X what it was prior to 2001 and generally larger than the counted new jobs sniff sniff
June 5th, 2009 at 10:14 am
When was the last time there was a divergence between jobs lost and the unemployment rate?
June 5th, 2009 at 10:15 am
jc: to be fair, Birth/Death model has only contributed 338k jobs so far this year. If they stay on track, the will be about 530k for the year by the anniversary date of Barry’s article.
Still doen’t mean this is great. I still don’t put a lot of faith in any of these figures because they are adjusted so much. They are more of a very rough guide and maybe a trading item. I think figures released by big businesses and retail sales figures are a much better guide to how we are doing.
June 5th, 2009 at 10:15 am
BR offered:
We are now in an ordinary, as opposed to historic, recession.
reply:
———–
Agreed the panic is gone. Now, can anyone come up with reasonable scenarios that describe the economy over the next 6 to 12 months and why it will behave that way? Thoughtful analysis should provide insight into the real economy.
(This is opposed to the stock market and other leveraged investments, which will go boom and bust again over a time that can not be predicted at this moment, but will be well within 12 months; the boom will be more of a boomlet compared to 2008, but still be significant)
I disagree with the ‘ordinary recession’ characteristic. Thoughtfully rebuilding inventories and adding a little stimulus will not fix anything this time. Supply will not create it’s own demand, in spite of the power of Kudlownomics, the Laffer Curve, or Say’s Law.
I’ll go first.
I’m still predicting a future that corresponds to a balance sheet recession. Too many people owe money and have concerns about being able to pay it off. Foreclosures are still significant and will remain this way. Thus, Consumption will deteriorate and tend towards low end substitutions over high end discretionary vendors. Actual job loss will continue for a while and indicators of expansion, such as temp help increases and a lowering of underemployed workers, will not show improvements. Savings rates will improve, causing Consumption to take another hit.
Oil prices will continue to rise because of leveraged positive feedback loops of asset bubbles. Gasoline will take a larger part of disposable income and create uncertainty about whether or not normal life will be affordable in a couple of years. This will also hurt Consumption -ex oil products. Second round effects will cause high oil prices to permeate the economy, creating inflation that the Fed will ignore.
Pundits will claim oil prices last year and before were this high with little ill effect. They will change the subject if you remind them that oil prices were a concern, but that concern was offset by asset bubbles in the stock market and in real estate. Thus, the higher prices could be ignored by most people because of the wonderful money machine called their house and the personal ATM it provided. This does not exist today, will never again exist, and thus cause higher oil prices to hurt a lot.
The coming stock market crash will create another credit freeze throughout the economy. Liquidity is driving the markets now and when defaults occur due to idiotic investments, it will again vanish, putting Uncle Stupid in an embarrassing position. How should he fix the fix in progress, due to problems caused by morons he can’t control? Who will be too big to fail for the 2nd time in a couple of years?
Nothing of note will occur that will promote real Investment that would create actual private sector job growth. Maybe a few hedge funds will place help wanted ads on Careerbuilder, but that’s about it. 1 million census workers will be hailed as a green shoot.
June 5th, 2009 at 10:15 am
Deutche Bank says the workweek decline from 33.2 to 33.1 is the equiv of 350K jobs (lost).
So that doubles the counted job losses to 700K plus 220K B/D imaginary jobs and it’s -920K jobs equiv
I wonder if DB or someone else does a monthly number accounting for these factors, I’m sure somebody must.
There obviously have been changes made to the B/D since 2001 and maybe there were changes made this month. Thats my suspicion.
June 5th, 2009 at 10:18 am
I was being facetious above explaining the B/D increase as an increase in Avon representatives. But here is the proof
http://www.forbes.com/feeds/ap/2009/05/05/ap6382372.html
The number of these “independent representatives” has increased more than 10% in the past year. Of course, at the same time, ” Avon announced a restructuring that incorporated a freeze on salaries and hiring. They have already cut jobs and closed some operations and moved some work to countries where labor is cheaper.” This is REALLY good news for the U.S. economy. GO CHINA GO!!!
June 5th, 2009 at 10:18 am
I said
(This is opposed to the stock market and other leveraged investments, which will go boom and bust again over a time that can not be predicted at this moment, but will be well within 12 months; the boom will be more of a boomlet compared to 2008, but still be significant)
Damn I hate not being able to edit on line …..
I meant Bust, or boom as in KABLOWEE. I don’t know if 685 will be tested or surpassed, but a down vertical line is in our future if the pumpers remain successful.
June 5th, 2009 at 10:22 am
@Mike
Agreed that they’re not fantastic, but it’s getting less and less bad. I would consider it a tremendous victory if some of the tinfoil hatters in the comments section (the ones who advocate investing in “guns, gold and God” in anticipation of the “next big leg down”) would admit this fact.
When a person has the flu, they start off well, get a little sicker, then more sick, then very sick, then less sick, then kind of sick, and then they’re well again. We’re still very sick and we have a ways to go, but we’re definitely over the hump.
June 5th, 2009 at 10:26 am
@Franklin: “Sorry to burst your bubble…”
I’m not sure how that bursts my bubble. The bottom line was that hours worked were down, seasonally adjusted.
June 5th, 2009 at 10:30 am
There is variation from month to month in the calculation of civilian labor force. This can vary U% by a few tenths of a percent.
MoM civilian unemployed has been growing by an average of about -5.5% monthly YTD. Projecting forward with favorable “second derivative” slowing to -4% MoM thru Q3 and -3% for Q4 we will be right around 12% unemployment by year end. Tweak that to -3% slowing to -2% and you’re at 11% by year end. In a very optimistic case you might project, say, a very dramatic slowing to only -2% MoM thru Q3 and level (0%) U thru Q4 giving a mere +2.5% annualized increase to U for 2009, i.e., from 7.6% to 10.1%.
So annualized unemployment growth of 2.5% to 4.5% added to the 7.6% Jan starting point certainly seems within the realm of possibility. I think those are pretty conservative projections, don’t you?
Considering that it’s not even Q3 and we’re already past the 8.9% U “adverse case” of the stress test for 2009 . . . wow.
June 5th, 2009 at 10:31 am
From DB, via acrossthecurve:
“The -345k decline in May nonfarm payrolls was significantly better than
expected, and the prior two months were revised higher by 82k. However,
the details of the report were not anywhere near as upbeat as the headline
suggests. In particular, the weakness in hours and earnings are reason for
concern.
The length of the workweek declined by 0.1 hour to 33.1 hours,
which is the aggregate hour equivalent of an additional loss of about 350k
jobs.
More importantly, the manufacturing workweek also declined (39.3 hrs
vs. 39.5 previously)?this is a negative sign for inventory restocking in
the current quarter, because inventory rebuilds have historically been
accompanied by a rise in manufacturing hours worked. Average hourly
earnings rose 0.1% in the month, lowering the 3- and 6-month rates of
change to 1.7% and 2.2%, respectively. In short, wages are rolling over
and this is likely to continue in light of another large jump in the
unemployment rate to 9.4% from 8.9% previously. The unemployment rate is
now at a 25-year high.”
June 5th, 2009 at 10:33 am
Anyone claiming the bears are missing something isn’t paying attention to the fact that on almost any measurement you look at, right now, there are more bulls than bears. In fact, some things are even getting close to the bullish extremes we saw in October 2007. I would argue it’s the masses that are flipping bullish that are the ones missing something.
There has become an idea that bearish means you are ultrashort the market. This is false. Bearish just means you think the trend of prices will be down for some period of time. Right now, all the pressure is on those that are bullish to be right IMO. It is the bulls that are grasping at straws, not the bears. It also seems to me most people that are still very bearish haven’t been really short for a while now, rather, they are just holding more cash, what CNBC might refer to as under-invested. Some, or many should be sucked in right at the very top of this countertrend rally, which I don’t think has happened yet. I think most that were bearish before have either recognized the current trend, which is now months old btw, and are trading or they are waiting for real proof things are getting better, not green shoots that are spun into misleading headlines that indicate things are turning, or have already turned.
We are going to need to see the savings rate drop pretty big here in order to know the consumer, which drives our economy, though there are far less consumers when using U6, is spending again. If that does happen, can we really even be happy about it? People need to be saving more, personal balance sheets are still far too levered. But hey, green shoots right?
UUP trade is looking better today but it’s only 10:30. That seemed to me a pretty nice set up to getting long.
June 5th, 2009 at 10:33 am
I said
The coming stock market crash will create another credit freeze throughout the economy. Liquidity is driving the markets now and when defaults occur due to idiotic investments, it will again vanish, putting Uncle Stupid in an embarrassing position. How should he fix the fix in progress, due to problems caused by morons he can’t control? Who will be too big to fail for the 2nd time in a couple of years?
addendum:
—————–
Since Uncle Stupid is very likely supporting the stock market pump, directly or indirectly, this would put him in the position of being renamed Uncle Double Stupid. Where’s Ross Perot and his observation of pointy headed bureaucrats when we need him most?
June 5th, 2009 at 10:38 am
@Franklin (9:59)
Franklin…
In cinema & screenwriting they use a technique known as “suspension of disbelief”…In other words, REASONABLE people, when they go to see a movie, know that the whole thing is concocted, but they are willing to SUSPEND their disbelief for a couple of hours to enjoy a show…
After the show is over, reality sets back in…
That is what has been happening in the equity markets over the past 3 months now (and could, perhaps, go on even a few more weeks, or all summer for that matter)…But eventually reality is going to set in and the show is going to be over…
Last week I posted about the BOND VIGILANTES, and you laughed at the idea as if it were just some “bear talk” nonsense…Last week, when the yield on 10 year treasury notes spiked up to 3.77, the S&P sold off rather hard…I mentioned that it was a “shot across the bow”…Subsequently, yields came down for a few days (and equities rallied a bit more), but after this NFP number, the BV’s were out in full force again…(The 10y note hit 3.9% “pre-market” this morning)…
I don’t know what’s going to happen, but it is HIGHLY LOGICAL to assume if the 10year note gets up over 4%, then anything related to a recovery in housing is TOAST…Which means a RECOVERY from RECESSION is toast (in fact it portends more of a “double dip” scenario)…
Things change…For 2-3 months now, the market has been able to exist in this “idyllic” world of HOPE, OVERSOLD CONDITIONS, and BETTER THAN EXPECTED data releases (because the bar had been set so low)…Add to that the fact that they’ve basically let the banks off the hook with regards to accounting rules…
All of that is coming to the end of the movie right now (the credits are starting to roll)…
So I’d caution you that you can’t live your life as if the movie were still running…You seem to want to live in this PERFECT CHOREOGRAPHY world where your SAVIOR in OFFICE comes in and saves the economy and the world in 3 short months and everyone lives happily ever after…
You’re setting yourself up for 3 1/2 years of bitter disappointment…
June 5th, 2009 at 10:48 am
More like reality.
http://4.bp.blogspot.com/_H2DePAZe2gA/SiktImTmzVI/AAAAAAAAJMg/VzyVT_i7CPQ/s1600-h/unemployment.JPG
June 5th, 2009 at 10:51 am
945 on the S&P is going to be an interesting number…
This morning, the S&P retraced 61.8% of the move from the 923 support to the high this morning…
It bounced off that fibonacci, and 945 will be a 61.8 retracement back to the high…
There is a line in the sand right as we speak here (at 945)
June 5th, 2009 at 10:59 am
prediction-
continued job losses as far as the eye can see- there comes a point where there just is not enough people to lay off once you have cut back substantially- does not mean we will see growth- outside of the federal government- where will the new growth come from??- nowhere- I predict continued contraction and continued deflation- people simply are not spending money- hopefully this is the new America- not the fat stupid – let’s go shop to amuse ourselves America-
contrary to what those dumb fucks in Washington want- also-
current equity/commodity rally will fail and reverse course south- soon
June 5th, 2009 at 11:02 am
@deadhobo: predictions for next 6 months
Let’s see if I can channel F411:
(going into trance)
1. Green Shoots
2. Green Shoots
3. Green Shoots
4. Green Shoots
5. Green Shoots
6. Green Shoots – Obama declared living god by US Senate.
(Sorry F411. Couldn’t help meself.)
MHO:
Employment figures continue to be bad. They should bounce around more as in graphs from prevous downturns, but BLS smoothing distorts data, so you have to just look at the trend and see all the qualifications to get an idea of what’s really going on.
Unemployment at 9.4% now. Bank stress test assumed worst case scenario of 10.3% at end of 2010. As Mish says, we will likely hit that by August 2009. People once again realize banks are severely undercapitalized and there is distress in the markets and in DC. Arrogant bankers will be back for more bailouts saying it wasn’t their fault. More acronyms of expansion of existing ones. Fed prints more money, but still no real inflationary effect as it sits in vaults.
Home prices crash as rates rise, mortgages reset, and REO’s get dumped onto market. CRE continues to deteriorate, taking down small banks that funded stripmalls and have just been ignoring delinquencies.
Another liquidity squeeze at some point as we sink to the bottom and commodity bubbles pop when everyone realizes there really, really is no demand for all that stuff and with leveraged players have to cover bets.
See last quarter of 2008 for endgame.
P.S. AAPL collapses back to 80 :)
June 5th, 2009 at 11:10 am
The BLS has a new spokesperson.
http://www.youtube.com/watch?v=p9w03r5inWY&eurl=http%3A%2F%2Fwww%2Etickerforum%2Eorg%2Fcgi%2Dticker%2Fakcs%2Dwww%3Fpost%3D97717&feature=player_embedded
June 5th, 2009 at 11:11 am
In Census land, of the 69K which were hired a few months ago, 60K have been terminated in the last couple of weeks. Since many of these folks “expect” to be called back in October or December, if they haven’t applied for UCB they’re not in the count, yet…
June 5th, 2009 at 11:12 am
LB says good morning but is experiencing market-related cognitive dissonance.
The Spinmeisters responsible for generating the employment numbers and Mr Market’s reaction this morning have simply combined to blow LB’s neocortical circuitry. Now the team on the desk at Schadenfreude is having trouble remembering its positions and why we have them. We think we are long cash (aka “underinvested”) and short gold. Normal service will be resumed soon.
Mike, that looks like a good summary, once we have recovered normal cognitive function we will read it again.
June 5th, 2009 at 11:14 am
This is as good a place as any to raise this issue: 401(k) loans. We’ve all been very focused on HELOCs, but no doubt these bad boys have also contributed to over-leveraging. According to this Harvard study, 18% of 401k participants had 401(k) loans in 2006. I had forgotten about the whole 401k debit card thing from a few years back.
http://www.hsph.harvard.edu/pgda/events/seminars/2009/Loans_Madrian_Fall2008.pdf
This report was prepared pre-crash and takes a neutral stance on the impact of these loans.
June 5th, 2009 at 11:16 am
@all,
I’m stepping out to the gym and regret not being able to fully reply. But I had to post…anyone watching Steve Liesman DESTROY that libertarian wacko on CNBC right now? It was very, very sweet–the libertarian snarkily asked him “How did we live before 1913 when the Fed wasn’t around?” and Liesman replied–”we had a lot of panics and bank failures!” Ha! Exactly…you go Steve!!!
@Cvienne
I repeat again that I’m not interested in daily market movements. 99.98% of the real world lives in the broad economy, not in Wall Street’s microcosm. I care about where the real economy is going, and it’s definitely on the road to recovery. I have money in the market, and long term I see the capital markets following the economy rather than leading it.
@Mike
I don’t mind…especially when the data is going my way! “In war, resolution; in defeat, defiance; in victory, magnanimity” — Winston Churchill :)
June 5th, 2009 at 11:25 am
@Mike in NOLA (11:02)
IMHO (if we’re on this subject)
Summer ’09 (June/July)
- S&P reaches some kind of ‘technical’ crescendo (I still like ben22′s 965-1k call)
- Obama throws Netanyahu & Israel under the bus (I predicted this last week, it’s already happened)
- Oil peaks at $85 in July
- Bond Vigilantes take 10y note yield over 4% next week
- FOMC ratchets up rhetoric about raising interest rates
- S&P finally sells off (4-5 days trading wipes out all the gains from May 1st on)
- Another push upwards (for S&P), but the “high” for the year has already been printed
(August/September)
- Any ‘rally’ in S&P on very light volume (still no FEAR in market)
- Mid August sell-off takes out technical levels
- Traders come home EARLY from Hamptons vacation (before Labor Day)
- Market is in full SELL mode until the end of the quarter
- A hurricane or two bears down on the US…(one actually threatens New York)
- The world stays ON ALERT for an Israeli strike on Iran’s reactors
(October/November)
– Seeing the FEAR in September, Joe Retail cashes out his remaining positions in stocks (he’s had enough)
- Fund managers are forced to liquidate due to redemptions
- Money pours back into Treasuries & US Dollar
- S&P hits low for the year in October (possibly around 560)
(December)
- a bounce off the bottom, and then some ‘window dressing’ until year end.
January ’09
- Obama replaces Bernanke with Larry Summers
- On that news, the dollar collapses, Treasuries sell-off, and the real “inflation” starts to pick up
- Gold, after reaching a “low 800″ handle in the fall, spikes to a new ALL TIME HIGH…
- Option ARMS start to kick in to high gear (taking financials down)
- CRE finally collapses
June 5th, 2009 at 11:25 am
@cvienne:
@4% 10 year Treasury, the housing green shoots all whither and die. The crash of housing prices, temporarily abated by massive cash infusions, resumes. Mortgage rates are already higher now than they’ve been all year. When the 10-year hits 4.5%, the dollar/T-bond crash will be irretrievably underway. It’ll hit terminal velocity about time for mid-term elections. And there’s not a damn thing all the kings horses and all the kings men can do about it. The end game to this experiment begun in September is about to begin. It’s going to get ugly from here.
But in my view, that’s a green shoot. Flaming out and blowing up what we’ve got is the only way to make room for something real.
June 5th, 2009 at 11:31 am
Boy, not having good preview and editing in WordPress really sucks. Sorry about the typos.
To see the Fed’s assumptions about unemployment in the stress tests, check out page 9 of the white paper:
http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20090424a1.pdf
I’m sure some enterprising blogger will plot acual unemployment alongside the assumptions. (Hint, hint)
June 5th, 2009 at 11:35 am
@franklin411 said:
“How did we live before 1913 when the Fed wasn’t around?” and Liesman replied–”we had a lot of panics and bank failures!” Ha! Exactly…you go Steve!!!”
So, what has actually changed pre-1913? I suggest you reflect a little more on your points BEFORE you post them.
June 5th, 2009 at 11:36 am
What’s quite amusing is that we are told that China has supposedly been snapping up the short end – 2yrs and less while selling the long end, to the benefit of those of us who had the steepening trade on. Of course China doesn’t look so smart today, as we now see the yield curve suddenly begin to shallow – typically a sign that the economy is LESS robust than people think (a steepening yield curve typically indicates a stronger growth potential).
It’s not out of the question for a modest curve flattening trade to continue here, along with a stronger $ – so sell the short end, providing insurance against rate hikes or other forms of tightening by the Fed – while simultaneously buying the long end, providing a stable 4% yield over the summer months.
June 5th, 2009 at 11:37 am
Nice work on those fibo’s this AM cvienne…
June 5th, 2009 at 11:43 am
@Mike in Nola:
As I suggested at 10:30 a, minimum 10.1% U at year end 2009 seems a virtual certainty. That’s with a very favorable “second derivative” for Q3 and Q4 ’09.
The actual charts, when they are written, will probably not look like the gently rolling Appalachian hill curves of the Treasury assumptions. ;)
June 5th, 2009 at 11:43 am
I’ve been a longtime reader, first time poster and thought I would contribute with a little insight on the status of the legal profession. While it had been the general consensus that being a lawyer is a recession proof occupation, I can safely say that is not the case in the current crisis.
On a personal level, I was laid off a few months ago from my firm. I went to a top 5 law school, and worked at a leading global, diversified firm. Contrary to all of the green shoot stories I hear about every day, I can tell you that the picture at the multinational law firms is very bleak. Thousands of legal personnel have been laid off in the past year and there are no prospects that these jobs are coming back. Like the rest of the economy, law firms levered up during the boom and overhired big time. Now, they are feeling the effects of the downturn and are cutting workers and reducing wages by 10% or more across the board. In addition, new attorneys that typically start in the fall are being deferred for up to 6-12 months and are getting a pittance of the income that they had expected upon their graduation. From an economic standpoint, salaries at these firms start at 160K for a new associate, so you can understand the large multiplier effect when these jobs go away.
As alluded to by dead hobo, the balance sheets of most lawyers is horrible as most are vastly in debt. I left law school with over 150K in loans, and have thanksfully paid down a large portion of them, but many of my friends were not as fortunate and thought the good times would last forever. From the perspective of the legal profession, this downturn is not ending anytime soon, and I full expect to see further wage deflation as the year progresses
June 5th, 2009 at 11:46 am
@ leftback
When do you think the FED will hike rates?
June 5th, 2009 at 11:47 am
@I-man
Thanks…
Man those hit right on cue…
923 was support earlier this week…Then we hit 951.69 this morning…S&P sells off exactly 61.8 to 934 and bounces hard…That retraces 61.8 upwards to 945…All by 10:30…
So now I’d say we hover north & south of 945 all day…It seems like it’s doing a little more GAP COVERAGE from the other day…(that GAP from 945-937)…
Probably what’s more important is what the DX does…It’ll probably be a yawner from now until 3:30
June 5th, 2009 at 11:49 am
@LB (11:36)
I’m with you on that brother, I said so this morning…
http://www.ritholtz.com/blog/2009/06/nfp-is-4/comment-page-2/#comment-179585
June 5th, 2009 at 11:54 am
People,
You gotta think BB is between a rock and a hard place right now…
If the ‘mandate’ is employment & price stability…and with a NFP number like this (coupled with oil prices going to the moon again on “easy money” speculation), HE’S GOTTA CONSIDER RAISING RATES AGAIN…
But if he raises rates, then the stock market SELLS-OFF…then “confidence” drains, Obama replaces him with Larry Summers come January ’10…
Tough spot…
June 5th, 2009 at 11:56 am
franklin411 Says:
“99.98% of the real world lives in the broad economy, not in Wall Street’s microcosm. I care about where the real economy is going, and it’s definitely on the road to recovery.”
_________
Put the bong down, franklin 411. There is no credible, realistic, fundamental, or anecdotal data or information that would support your assertion. None.
BTW: where do the other .02% of the world live?
June 5th, 2009 at 11:58 am
Stuart: Thought they choose Joe Isuzu as spokesman.
I forgot that he already works for the Fed.
http://www.youtube.com/watch?v=R8H-D_KP3x8
June 5th, 2009 at 11:59 am
@lawyerguy
Don’t worry…WALMART is hiring 20,000 workers I hear!
PS…Sorry man…that was meant to be a silly joke…It’s a tough crowd around here…
In all seriousness…thank you for that input…and I hope you recover soon and find something…we’re all just trying to make it through these times as best we can…
June 5th, 2009 at 12:05 pm
lawyerguy @ 11:43
Probably a great time to be a bankruptcy lawyer.
Also, I wouldn’t think that trial lawyers who work on contingency would be hurt by the downturn.
June 5th, 2009 at 12:06 pm
@cvienne: Nice one. Outstanding contrarian thinking.
@ Pat G asked: “When do you think the FED will hike rates?”
Not any time soon, in fact.
What I have been thinking is that BB will simply cease and desist from the more outrageous monetizing the debt comments [that were clearly designed to scare money out of Tsys into equities and commodities in order to prevent a deflationary price spiral], and we will now see a reversal of that trade as the $ firms up a bit. For my money, the short end was the true panic trade from September to December and that is now unwinding, as is gold. The 10-year, having sold off from 2% to 3.8%, now represents greater value – but only in the medium term.
So my call is: BB to cease QE jawboning, talk about improving conditions and have Timmy say Strong Dollar.
June 5th, 2009 at 12:09 pm
“While many view the decelerating job losses as signaling the end of the recession, they appear to me as signaling the end of the panic period of the credit crisis. We are now in an ordinary, as opposed to historic, recession.”
Agreed.
June 5th, 2009 at 12:12 pm
cvienne @ 11:54
“If the ‘mandate’ is employment & price stability…[etc.]”
Depends what one means by “price stability”. As the Fed sees it, this criterion is met if the “core” CPI is tame.
IOW, expect much higher oil prices for the next 2-3 years.
June 5th, 2009 at 12:13 pm
lawerguy-
hang in their dude- when one door closes- another one opens
June 5th, 2009 at 12:15 pm
Re: raising rates. I noted this @ acrossthecurve earlier this morning.. “Someone just related to me that the futures contract in Fed Funds implies a 16 percent probability that the Fed will tighten in August, a 33 percent chance in September and a 50 percent chance in November.”
and the follow up was this: “Someone just pointed out that typically the Federal Reserve does not raise rates and unravel an ease until there has been at least six months of job growth. So any possibility of the FOMC raising rates this year is virtually nil.
The trade today is about position management. The entire world is (was) long the yield curve. Profit taking began and forced more profit taking as investors and traders dis not want to watch profits evaporate. As I write this post,the market is turning and the back end is losing ground. Ar one point today the 10 year note and the 2 year note were down even ticks. That has reversed and the 10 year is down over a point.”
I would definitely counter that we are not in typical times, however.
June 5th, 2009 at 12:18 pm
No way BB can raise rates here… thats the nature of being “painted into a corner” or “between a rock and a hard place”… your logical options are removed due to decisions you already made without regard for the consequences. Gotta love the law of unintended consequences… these guys have been on a hope and a prayer that they can achieve the historically impossible and keep walking the tightrope… but the longer you’re on it, the higher the prob that you will misstep.
They made their bed a year ago, and now they have to fitfully sleep in it.
I said it a few weeks ago, and I maintain it now, the buzz word of the summer will be Bond Vigilante.
June 5th, 2009 at 12:19 pm
lawyerguy,
Sorry to hear of your troubles and I hope they go away soon.
With your legal background, and your probable high degree of people skills, why not look into human resources. All medium and large companies rely on legal resources for just about every operational hiccup involving something or other. Even the best managed companies have managers who screw things up. There’s opportunity in pure legal and in HR operations. The pay won’t be as high, but can still be pretty good. The hours would be a lot better, I bet.
June 5th, 2009 at 12:21 pm
The historic “recession” will be back. It is a mathematical certainty. Claims on the productive economy by the unproductive (see FIRE economy) ensure it. See debt/GDP, wealth polarization stats, income vs. asset prices, equity prices vs. dividends, monetary ponzi scheme growth vs. production growth.
The only uncertainty is timing.
June 5th, 2009 at 12:21 pm
Meanwhile… yet another triangle pattern emerges on the 5 min charts…
June 5th, 2009 at 12:22 pm
@DL (12:12)
If you use 2-3 years as your timeframe on oil, I’d tend to agree…
In the SHORT TERM, however, after you see this “classic” PUMP into summer, I think oil prices will peak and then retrace hard into the fall & winter…
It seems to me like it’s the SAME TRADE as ’08…(only last year it was “hedgies” & leverage money speculating – this year, it’s taxpayer bailout money speculating in oil)…
I think you are about to see the reversal…Spec money will come out of oil and flow back into long bonds…You’ll probably see the PEAK in oil prices hit right about when you see a 4% yield print on the 10 year Treasury…
Goldie will keep it’s $90 oil call on (and re-iterate it) as it’s unloading it’s oil position…
June 5th, 2009 at 12:23 pm
“We are now in an ordinary, as opposed to historic, recession.” Hardly, with this trajectory, employment rates will start increasing in August/September. The stimulus plan is working and the recession will be over in Q3!
June 5th, 2009 at 12:23 pm
DL is correct, the Core CPI is the target, which means that we will have inflation (ex-inflation) for some time.
A perfect complement in the statistical sense to employment (ex-unemployment). The B/D adjustment is insane.
No hikes here. The less the Fed does at the moment the better. We need to have normal dynamics restored to the market. That means no more free candy. As Barry says, we are in the recession now, the Depression is off the table. Sell in June and Watch it Swoon.
June 5th, 2009 at 12:23 pm
@ leftback
Thanks for your input. So, your call is all about jawboning, nothing substitive. Until I see a “real” action taken by BB or Timmy to back up their rhetoric, nothing changes as talk is cheap. And I believe the rest of the world is catching onto that now as well. Your thoughts?
June 5th, 2009 at 12:24 pm
Raising interest rates? Who is talking about raising interest rates? Are you a Commie, I-Man? INTEREST RATES OVER 2% ARE ANTI-AMERICAN.
I suggest we put all the unemployed to work on waste disposal for the new nuclear plants my Republican Party wants to build. We can give them a bonus if they will store the spent nuclear fuel rods in their homes.
June 5th, 2009 at 12:27 pm
cvienne
You mean there’s no easy way out of this? No way to avoid all the pain after decades of irresponsible behavior?
Gosh, that’s just no fair! ;) The hubris of Bernanke and other economists that think we can manage the global economy just so, is palpable. And those who lulled the public into a false sense of security about deficits and spending excess over the last couple of decades should go to their graves feeling shame. Many out there are just realizing the enormity of what’s happened and feel very betrayed.
As for the market, well who the fork knows at this point. Given the irrationality of the oil market that was displayed last year I’d be scared to death to get in front of that train. And nat gas still searches for a bottom here with spurts of speculative frenzy. Nice trades if you got on the right side. I’m playing it mellow on the long side with a handful of pipeline MLPs owned from 30-40% below these levels, hedged with some short S&P500 exposure.
It’s still a bloody casino out there; low volume with thinly traded issues being tossed around like hot potatoes; short squeezes and speculative run ups. Somebody’s gonna take a bath on those junk stocks some day.
June 5th, 2009 at 12:28 pm
Spammer alert: GREENER
Don’t take the bait.
June 5th, 2009 at 12:29 pm
Talk IS cheap… and the bond market has been calling the fed’s bluff since the day they announced QE… March 18th.
All they did was give a bunch of peeps an outstanding opportunity to reload on TBT… which I’m sure pissed the fed off something fierce. As an aside… that trade looks a little spent here, but my top calling skills havent appeared that sexy lately so its probably good for another 10%. (snark engaged)
Now we have the yield on the 10 at 4% and rates on the 30 year fixed mortgage up a shitload in… a week.
So much for QE… but I cant knock their hussle.
June 5th, 2009 at 12:32 pm
GREENER… you’re the same douche bag who was on here yesterday posing as “aptld” or some shit like that…
Now, please GTFO of here… bumbaclot.
June 5th, 2009 at 12:32 pm
@CNBC Sucks
Yeah, isn’t that interesting (and why isn’t anyone talking about this)?
Obama wants to let Iran go nuke, yet he doesn’t want the USA to go nuke…
Instead, he wants to build solar & wind power here…
If Iran needs the electrical power so bad, why can’t we help them build solar & wind farms?
June 5th, 2009 at 12:33 pm
@ karen
Thanks Karen, that info was helpful….
June 5th, 2009 at 12:34 pm
@cvienne: Our devious minds think alike!
“I think you are about to see the reversal…Spec money will come out of oil and flow back into long bonds…You’ll probably see the PEAK in oil prices hit right about when you see a 4% yield print on the 10 year Treasury…”
Sounds like a very reasonable scenario. Could be now, could be after July 4. It depends on how many knobs the brokers can suck in to this market in the meantime. As usual I prefer to be ahead of the crowd than behind.
@ PatG: “We have a Strong Dollar Policy”. LOL. We usually do in the summer, b/c we need to go to the beach.
June 5th, 2009 at 12:35 pm
As for economic recovery. Here is an interesting article on VoxEu, which compares the current recession to the Great Depression using global economic data, not just US data.
http://www.voxeu.org/index.php?q=node/3421
According to this, the trajectory of the current global recession has been similar or worse than the one of the Great Depression regarding economic output and global trade. I don’t think it means it is certain that the current recession will continue on this trajectory. However, note the wobbles in the data from the Great Depression. Franklin411 and the likes would have celebrates each of the wobbles as proof for the impending recovery. So much for the wishful thinking that draws far fetched conclusions from a few months of “less bad” data that could be nothing more than some statistical noise at this point in time. We just don’t know yet. We know, though, that the total credit market debt to GDP ratio has reached about 375% nowadays. It’s a enormous mountain of debt. It had reached 175% or so at the start of the Great Depression and 250% or so at its maximum back then, before it collapsed. How far up can it go this time until the day of reckoning? These are definitely interesting times.
rc
June 5th, 2009 at 12:36 pm
Oil and the broad market up now with the dollar still up on the day. Seems that the speculative urges are overcoming the dollar play for now. Interesting. Or maybe we really are on our way to strong growth in the economy! TIC
And nat gas continues on it’s little roller coaster. What a ride.
June 5th, 2009 at 12:39 pm
@onlooker
Forget about trading the spot markets people (re: oil & nat gas)…
What everybody SHOULD be doing is something I did last year…Re-fit your auto or truck to be able to run on NAT GAS (the conversion only costs about $2,000 and then your car [or truck in my case] basically runs on either – you just flip a switch)…
Now that NAT GAS prices are coming down, I went to AMERIGAS and got a huge container that sits in my backyard…many people already have one of these whose homes run on nat gas generators…
Anyway – you can “lock-in” nat gas supply contracts from Amerigas…
It’s a GREAT HEDGE that will serve you in a REAL WAY if gasoline prices spike in the future (and there are shortages & gas lines – as I expect we’ll see in a few years)…
With this system, you can basically fill up your car AT YOUR OWN HOME for half the price of gasoline, and you have your own supply…
June 5th, 2009 at 12:44 pm
Re: Bernanke and rates
I don’t think Bernanke will tighten anytime soon as he is a student of the Great Depression and it is conventional wisdom that premature tightening in 1938(?) caused a downturn. The caveat on this is he has spoken about a zillion times and may have changed conclusions. You are welcome to read his speeches here:
http://search.newyorkfed.org/search/search.jsp?template=BOARD&type=adv&who=patx&directory=pwall&text=bernanke
June 5th, 2009 at 12:46 pm
“While many view the decelerating job losses as signaling the end of the recession, they appear to me as signaling the end of the panic period of the credit crisis. We are now in an ordinary, as opposed to historic, recession.”
Or…..we’re just taking a breath before the grand finale….a 2 1/2 twist triple lindy….into an empty pool.
June 5th, 2009 at 12:47 pm
I think the news today was interesting. This is really the first news that I would label a green shoot.
The bond at 3.84…..now that is interesting…I wonder how this will affect home purchases…
June 5th, 2009 at 12:47 pm
Good plan cvienne, for those who drive enough to make it worth the investment. We put so little mileage on our cars that it wouldn’t be worth it though.
Interesting nugget on the junk stock fiesta:
http://sentimentrader.blogspot.com/2009/06/surge-in-lottery-ticket-trading.html
Seems that the traders are getting bored with all the “regular stuff” and are looking afield for other crap to throw around and feed their speculative juices. I’ve heard others say that the feel of this is very much like the market’s late bull stage in ’07 (Mark of Trader Mark fame, for one, http://www.fundmymutualfund.com/, excellent blog by the way) . I wasn’t watching it so closely then so I can’t say.
June 5th, 2009 at 12:50 pm
I noticed the change in the number of unemployed derived from household survey data, draws a much darker picture than the change in nonfarm payroll numbers derived from establishment survey data. Why do the nonfarm employment change and the unemployment number change differ so much? Looking at the BLS website, I found following explanation for sources of this difference (in addition to statistical uncertainty in the data and pending revisions):
Differences in employment estimates. The numerous conceptual and method-
ological differences between the household and establishment surveys result
in important distinctions in the employment estimates derived from the sur-
veys. Among these are:
–The household survey includes agricultural workers, the self-employed,
unpaid family workers, and private household workers among the employed.
These groups are excluded from the establishment survey.
–The household survey includes people on unpaid leave among the employed.
The establishment survey does not.
–The household survey is limited to workers 16 years of age and older.
The establishment survey is not limited by age.
–The household survey has no duplication of individuals, because in-
dividuals are counted only once, even if they hold more than one job. In
the establishment survey, employees working at more than one job and thus
appearing on more than one payroll would be counted separately for each
appearance.
(Source: http://www.bls.gov/news.release/empsit.tn.htm)
rc
June 5th, 2009 at 12:51 pm
@ cvienne: Walmart is expanding. . . yes. More green shoots people. I actually hope they open one in NYC.
@ call me ahab – thanks for the kinds words
@ DL: Bankrupcy lawyers and litigators are still in high demand. I have a corporate background, but am junior enough that I can switch easily. It all depends on whether an employer wants to train someone fresh out of law school or “re-tool” an experience attorney.
@ dead hobo: Thanks for the input. I never thought I would be a career corporate attorney and believe my skills are transferrable into a variety of jobs. While looking, I am really learning a lot from the many posters here and appreciate all of your guys and gals insight.
June 5th, 2009 at 12:55 pm
cvienne – you actually missed the deep cynicism and antipathy towards my own party in that comment. Sometimes my sarcasm is over the top. Nuclear power is an ideological reactionary joke as far as an energy solution.
I have to hand it to leftback, I-Man, Steve Barry (is he here?), and the other smart, veteran traders on this blog, for maintaining discipline in appearing to pay attention* to macroeconomic statistics that are so fudged, spun, generally inaccurate and imprecise in real time, and micromanageable by monetary policy that they are utterly meaningless in terms of investment decision-making. The “recession” is over; the jobless recovery has begun; there will be no “inflation”. Millions of Americans will be underemployed for eternity, their real wages will dive, but who cares because they will buy the next iPhone at the earliest opportunity. We will pay for our goods with freshly printed greenbacks and the rest of the world will not blink. “Happy” days are here again, as long as you work three jobs and can identify with either emo or indie.
*By the way, I know you guys don’t really pay attention to the useless numbers so much as gauge how the market will react to the useless numbers.
June 5th, 2009 at 12:55 pm
@onlooker (12:47)
what fascinates me about these “lottery tickets” is that I’ll bet you a certain number of them come out as winners when the economy finally does bottom out…
If you look back 20-30 years, a large portion of what makes up today’s S&P or DOW were companies nobody ever heard of back then…
In the turmoil that exists today (and will exist for sometime), a premium is going to be put on companies that have a great innovative idea, yet no real overhead in terms of employees, rents, etc.
It’ll be your classic Bill Gates working out of a garage scenario…
Now if we could only FIND the winners…
I’ve held a few of these “penny stocks” all through the downturn…Interestingly, because the positions are so small, they’re the only ones I don’t feel compelled to DUMP on a moments notice…So I’ll hold on to a few of these…If they go to zero, so be it…
June 5th, 2009 at 12:59 pm
Dollar up, and other markets (stocks, commodities) hanging in there well. This could be the divergence which may last a few weeks (lower probability of months) before a breakdown. The longer the divergence goes, the bigger the fall.
This divergence will be seen as a Huge confirmation of the return of good economic times (dollar up and stocks up). Actually, it will be called indisputable evidence. Retail tools will panic into the market, and it will actually catch professionals by its hypnotic moves up. Then, yikes, look out.
Otherwise, crash II is probably off the table for a while for now. Boring bear market moves up and down.
June 5th, 2009 at 1:00 pm
“Agreed that they’re not fantastic, but it’s getting less and less bad. I would consider it a tremendous victory if some of the tinfoil hatters in the comments section (the ones who advocate investing in “guns, gold and God” in anticipation of the “next big leg down”) would admit this fact.”
F411…can you provide a link of that quote on this forum?? Or anything remotely close even??
Fridays slow in the ivory tower?? Time to break out the hyperbole and sticks??
June 5th, 2009 at 1:02 pm
@Onlooker: I bought UEC and GMO as my “lottery tickets” at the bottom and they did 200-300% of business for me, and people are still piling in to them. Remarkable. It does feel like it is getting very very late for this rally. The pump in oil has been remarkable to overcome this very significant reversal in the $. I am selling my last longs.
June 5th, 2009 at 1:03 pm
Bruce, a half point more on a 30 year mortgage doesn’t increase the payment by much… ($61 on a $200k loan at 5.5%) actually, the rate increase could be completely negated with a reduction in $gaso.
with a loan amount of $500k, the difference between a 5% and a 6% on a 30 yr fixed is only $313… again, lower $gaso could cancel that out..
i suppose my point is, rates are still at historic lows.. i expect to see the 10 and 30 stabilize soon, a bit higher than where we are today…
June 5th, 2009 at 1:06 pm
No doubt cvienne re: the lottery ticket stocks. It’s always a matter of finding the right ones. And we all know that the small cap stocks perform best out of the bottom of the market because they’re trashed in the downturn because of uncertainty about their viability through the worst of the recession.
So that’s undoubtedly affecting performance as some are really buying the idea that we’ve seen “the bottom.” But the risk is very high from here because any serious market watcher will tell you that a retest of the bottom will likely occur and the ride down won’t be pleasant in that sector.
But it’s also clear that the speculative crowd is just roaming here and there to find more low priced stocks to toss around. And luring in less experienced traders no doubt at this point. Who do you think is going to be left holding the bag? (rhetorical, I think you know)
June 5th, 2009 at 1:06 pm
@LB
Here was a post I made from earlier this morning…
http://www.ritholtz.com/blog/2009/06/nfp-is-4/comment-page-3/#comment-179660
That was two hours ago and we still haven’t budged off of 945…
It’s RAINING in Southampton…
Are the “B” traders at the desk eating Chinese takeout and watching porn? Or are they just keeping the ‘A’ Team’s seats warm until 3:30?
June 5th, 2009 at 1:06 pm
@ evienne
ie penny stocks…
Like GM?? LOL
I kid….
RGUS has always struck me as a possible game changer….if it does every break out I know who’s gonna be a happy man.
:)
June 5th, 2009 at 1:09 pm
cvienne,
For years I have been promised the BVs were lurking around every corner. Its taken on the mantle of an urban legend. The BVs are one of the longest running themes that just never seems to play out. Its like my grandmother talking about the comet of 1910 and how she got scared and put too much bluing in the wash.
June 5th, 2009 at 1:10 pm
@ CNBCS @ 12:24pm:
Am I a commie???
Here at Dread Capital, we na check fi no ‘isms’. We na check fi no politricks. We only stand firm fi uprightfullness… and trading profits.
JK… I love your sarcasm bro.
June 5th, 2009 at 1:12 pm
Kass is saying he thinks we’ll trade in a 890-950 range for the near future. Pretty tight range for such uncertain times, it seems to me. And I seem to remember hearing exactly the same thing back in January before the market just started inexorably going down. I just can’t see such a small range when the future is so uncertain.
The tug of war between deflationary and inflationary forces, combined with the speculative investing world we live in, tells me that the range will probably be much larger. Dr. Hussman has talked about a 25-35% range since January. Seems more likely to me.
June 5th, 2009 at 1:13 pm
Someone posted about the 5 minute triangle forming on indices. Looks like they broke down.
June 5th, 2009 at 1:13 pm
@karen (1:03)
The thing about it is karen is that most of the re-fi requests that have come in over the past 2 months are interested in ADJUSTABLE rates not FIXED rates (or so my friend, who is a loan officer is telling me based on his & his partners traffic)…
I asked him…”are people crazy”…don’t they know that we are printing money and that these low rates won’t really last for very long if we continue the policy of monetizing our debt?
He says all they care about is lowering their monthly payments right now…80% of requests are for yet another ARM…
So even if we get out of the crisis now…We’ll be back in one again in 5 years unless the government stops borrowing money…
June 5th, 2009 at 1:16 pm
@Pat G.
Quite a lot has changed in the trajectory of American economic history since 1913 vs before 1913. From approximately 1870-1913, the American enconomy was marked by cycles of “boom and bust”–dizzying bubbles followed by horrifying panics. The Federal Reserve introduced an element of stability to the US economy, particularly in the post-WWII era.
@Marcus
The other 0.02% live in the make-believe world of Wall Street. I was referring to the whole “Bond Vigilante” bogeyman.
@Rootless
This economic crisis isn’t remotely comparable to the Great Depression. Not in the slightest. For one thing, we didn’t have to suffer through 3 years of Hooverism. For another thing, the Federal Reserve is not stocked with incompetent Republican cronies as it was under Coolidge and Hoover. Third, American workers aren’t nearly as heterogenious as they were in the 1920s and they won’t accept massive layoffs on the scale of the Depression. Fourth, there is no more World War on the horizon. Fifth, we much more accurate tools to take the temperature of the economy now than we did in the 1920s and 1930s. Sixth…shall I go on?
June 5th, 2009 at 1:16 pm
This one is for franklin411. Just got back from a PACKED Costco near my house but it’s always pretty busy and today IS Friday. On another note, just passed our little town center where the annual Art Fair is taking place. Very busy there. Not sure anyone buying anything but a lot of people out. Feels like a Saturday. Are all these people just taking the day off or is it something else entirely? Just feels weird out there today. A lot of people out and about for a weekday, although I do know Fridays are different.
June 5th, 2009 at 1:18 pm
@thetanman
It might not take the 10y yield to go to 4% for the BV’s to come out…
Obama just gave Congress the signal that he wants the HEALTHCARE PACKAGE on his desk by the August recess…
Wait to see what comes out of that (and how they expect to PAY for it)…The details in that ought to wake the BV’s up (as it did in Clinton’s first term)…
June 5th, 2009 at 1:19 pm
I-Man, I love the intricate analytical arguments of the smart peeps on this board, but CNBC / NYSE stock sales courtesan Becky Quick probably has a greater effect on market movements than the NFP on Squawk Box.
God, I am particularly bitter today.
June 5th, 2009 at 1:20 pm
Who is John Galt?
Who is Franklin411?
June 5th, 2009 at 1:23 pm
LB remains brain dead after a rather torrid evening encounter followed by the mind boggling NFP spin…..
June 5th, 2009 at 1:24 pm
@Bruce N Tennessee
Unemployment going from 8.9% to 9.4% a green shoot?
June 5th, 2009 at 1:29 pm
Maybe this chart is what Ben & friends mean by “green shoots”? Talk about ugly. A lot of green though. Let’s face it, this is all just hiding the trash long enough so the taxpayers end up eating it for breakfast, lunch, and dinner, while bankers go buy some hookers and blow with their bonuses……
http://1.bp.blogspot.com/_FM71j6-VkNE/Sik7CKZto7I/AAAAAAAADFc/Rv0s4X2MB2E/s1600-h/Fed+Balance+Sheet+6.3.jpg
June 5th, 2009 at 1:29 pm
In other news, the last TWO major plane crashes have resulted from the fact that airplanes have to fly at a certain speed in order to stay up in the air and this speed seems not to have been exceeded. Is Moody’s rating pilots now? LB feels like quizzing the pilots of any plane now concerning the relationship between air speed and stalls.
June 5th, 2009 at 1:30 pm
LB, that was a bit of a tease on this particularly boring day, following yesterday’s particularly boring day. You have me on the edge of my seat… lol.
June 5th, 2009 at 1:30 pm
USD will rally $UUP near term high $25, $DUG will follow suit as oil trade is over in the short term.
June 5th, 2009 at 1:30 pm
Mannwich Says:
June 5th, 2009 at 1:16 pm
Not sure anyone buying anything but a lot of people out. Feels like a Saturday. Are all these people just taking the day off or is it something else entirely?
comment:
——————
I noticed the same thing last weekend at a similar type of event. One explanation offered to me was going to art fairs and the like is a downsized way to relax. Costco loaded up is not a good indicator, although an empty Costco would be very interesting. Is Talbots, or Borders, Or Word Market, or Best Buy, or Marshalls bustling or empty? What about a garden supply store? All will have customers, but do they look as busy as you remember and is parking easy or hard to find? In the stores you visit, are they crammed with merchandise or is it spread out to look full, but is really not very dense?
Where I live, gas prices are converging on $3 and will be there in a week or two if prices keep going up. That has to make a difference.
June 5th, 2009 at 1:31 pm
LB – good one on airplane speed.
June 5th, 2009 at 1:34 pm
@F411
As you dismiss the idea of BV’s my friend, keep something in mind…
There is a high probability that the phenomenon will be contained in somewhat of an orderly fashion over the next 6 months or so (if you’ve been reading into what LB has been saying)…
That is…
- The yield on the 10 year Treasury has gone from 2% to almost 4% now in six months (a signal that the BV’s ARE, IN FACT emerging)
- Phase two is the notion that, after this run-up in equities, equities will sell-off into the fall, and that money will pour back into the 10 year…Rendering the BV notion “unfounded” for awhile…
So the ONUS is on the economy itself to actually show some life come January ’10…
All the stuff over the past 2-3 months has not meant a thing…
Obama was voted into office on November 4th (and took office in January)…
He campaigned on the following:
- He said his stimulus plan would CREATE 3.5 – 4 million jobs (so far the economy has LOST that many jobs since last November)
- He vowed to close GITMO within a year (that idea is getting tougher by the minute)
- He promised a HEALTHCARE PACKAGE (we’ll see in August)
- He promised to pull us out of Iraq (the timetable has been pushed farther into the future)
- A “surge” has actually been implemented in Afghanistan
All of the above has COST the taxpayer over $2 trillion in the form of stimulus allocation slush funds, omnibus bills, bailouts, guarantees, etc.
So far it has produced SQUAT…It’s going to be a TOUGHER SELL in January ’10…You’d better hope Apple sells some phones between now & then…
June 5th, 2009 at 1:35 pm
@hobo: We ent to our local nursery for our annual flower purchase a few times recently (and am planting tomotoes for the first time this year) and it was very busy each time (especially on the weekend) but we do live in a fairly affluent area. These folks in this neighborhood and the wealthy suburb right next to it love their flowers and tend to do a lot of gardening. We don’t spend nearly as much as others do, but some of these folks go hog wild every year. It’s a great nursery though. Very well run with an awesome selection.
June 5th, 2009 at 1:37 pm
@dead hobo
all those FAIRS & FLEA MARKETS are all the people setting up stands to sell all their worldly goods after they just filed for Chapter 7…
June 5th, 2009 at 1:38 pm
Tranzor Z posted an interesting link on that Air France flight that I doubt anyone but me saw…
http://wattsupwiththat.com/2009/06/03/air-france-flight-447-a-detailed-meteorological-analysis/
June 5th, 2009 at 1:40 pm
David Rosenberg’s comments on today’s numbers is up. Would not be F411′s liking, but he’s well reasoned as usual and puts them into perspective.
https://ems.gluskinsheff.net/Articles/Coffee%20with%20Dave_060509.pdf
You have to register if you haven’t already, but it’s free.
June 5th, 2009 at 1:42 pm
here is an interesting look at gld if anyone is interested:
http://stockcharts.com/h-sc/ui?s=gld&p=D&yr=0&mn=5&dy=0&id=p38298062762
June 5th, 2009 at 1:50 pm
@LB: See my post at the end of the Open Thread from the other day re: AF447. Link to a site where pilots and flight meteorologists do an armchair post mortem on the event. Bottom line factoid I didn’t know: the protocol is to dramatically reduce flight speed when flying into T-storms because a strong updraft can rip the wings off a commercial jet flying at the normal ~Mach .8 cruising speed. So if those poor pilots had to slow down and their instruments were giving them an inaccurate speed . . . very sad.
@lawyerguy: First, I’m really sorry you lost your job. Somehow I signed myself up for this JDJournal daily email thing that reads like a daily casualty report. When I saw that Skadden deferred ALL 2009 summer associates for a year . . . yikes.
If you’re willing to move out of NYC, there are jobs out there, but the bad news, as I’m sure you realize, is that most likely it will be a few years on a new path until you see six figures again. There are in-house compliance positions and government positions posted pretty regularly. If you’re lucky, you might only take a 50% hit from where I’m guessing you were before the layoff. And who knows? It really might be a new door opening for you as someone said above. Good luck!
June 5th, 2009 at 1:53 pm
“Although the Fed is looking for exit strategies, I don’t think anyone at the Fed is anywhere near contemplating raising rates,” said Gavin Friend, a markets strategist in London at National Australia Bank Ltd. “There is no evidence so far that quantitative easing is fueling inflation.”
Plenty of room below for gold. No panic, no deflation, no inflation (yet), $ rally = BIG gold sell off coming*
*Disclosure = long DZZ.
June 5th, 2009 at 1:53 pm
“Third, American workers aren’t nearly as heterogenious as they were in the 1920s and they won’t accept massive layoffs on the scale of the Depression. ”
HAHAHAHAHA- that’s a good one- like they have anything to say about it- HAHAHAHAHA- my guess is-if you used the same analysis they did back then- unemployment would be much closer to 20%-
are you really in college dude- or are you just funnin’
June 5th, 2009 at 1:57 pm
Everyone not watching CNBC is missing out. Larry’s not there, but the question under discussion is
“IS THE RECESSION OVER?”
June 5th, 2009 at 1:57 pm
Re: Rates.
No way in hell the Fed starts raising rates any time soon. Anyone thinking this, imo does not understand how real credit deflation already is.
On another note, thank god we have “more accurate tools to take the temp. of the economy” than we did during the depression. I never thought of that, that right there is reason enough that the depression is off the table…. that’s the funniest thing I’ve heard in a while.
As for no war, I could be wrong but have we not had a war following virtually every major stock sell-off in the last 150 years? Was North Korea not doing missle tests a few weeks ago? Did I imagine all of that?
June 5th, 2009 at 2:00 pm
Prediction:
By October the long dollar trade and no inflation will look like it should have been the easiest thing to see, much like a bet against real estate or the banks in 2008 looks now.
June 5th, 2009 at 2:01 pm
Mike in Nola Says:
June 5th, 2009 at 1:57 pm
Everyone not watching CNBC is missing out. Larry’s not there, but the question under discussion is
“IS THE RECESSION OVER?”
reply:
—————-
Absolutely!!! But the recovery will be murder.
June 5th, 2009 at 2:01 pm
@ karen:
Nice… but I prefer the Oceanic Flight 815 explanation…
June 5th, 2009 at 2:03 pm
Last time I looked we were in the middle of a war with operations in two countries and a standing armed forces that is now #1 and not #16 as it was during the GD. But WTF do I know?
June 5th, 2009 at 2:04 pm
more rate hike talk coming from the futures market: (don’t forget the fed really only controls the fund and discount rate… the real rates are determined by the market and QE.)
Fed funds futures pricing in rate hike by year-end
1:55 PM ET 6/5/09 | Marketwatch
SAN FRANCISCO (MarketWatch) — Investors in interest-rate futures are now betting the Federal Reserve will hike rates by year-end, taking into account a surprising reading on the state of the U.S. job market as well as some hawkish comments by Fed officials.
Taken together, these investors find greater conviction in the case for tighter monetary policy.
The December fed funds futures contract is now pricing a federal funds rate of roughly 0.5%. A week ago, it priced in an approximately 0.3% fed funds rate.
As it seeks to get capital flowing, the U.S. central bank has kept its fed funds target rate near zero, at a range of nil to 0.25%, and has employed a new set of tools to depress interest rates, from handing out cheap loans to institutional investors, to acting as the buyer of last resort for certain securities.
But signs of improvement in the economy, plus some comments from Fed officials, have encouraged some to bet the Federal Open Market Committee will start to tighten credit in coming months.
Coming just in the space of a week, the jump in expectations for higher rates — even by the FOMC’s November meeting — “is a pretty dramatic change,” said Max Bublitz, chief strategist at SCM Advisors.
June 5th, 2009 at 2:07 pm
The silver lining of higher mtg rates: (dovetails with my previous post about rates and the price of $gaso.)
Rising mortgage rates could spur undecided buyers
1:59 PM ET 6/5/09 | Marketwatch
Don’t miss these top stories:
Mortgage rates’ big jump
Overlooked recovery signs
Mortgage-modification frustrations
Mortgage rates took a big leap this week, causing many to wonder if the days of extremely low mortgage rates are coming to an end.
The 30-year fixed-rate mortgage averaged 5.29% this week, up from last week’s 4.91% average, according to Freddie Mac’s weekly survey of conforming mortgage rates.
Rising government debts and hopes of economic recovery are pushing up long-term interest rates on government debt, said Brett Arends, in a recent piece for The Wall Street Journal. And that pushes up rates on other long-term loans, he added. The rise in rates could continue, and that will affect those searching for a new home.
The rate jump could very well be a deterrent for those buyers on the fence. Or it will motivate people to make a move, instead of waiting for financing costs to grow more expensive.
“If they’re reading the same reports I’m reading, they’re seeing that rates will go up more than they will go down,” said Eric Mangan, spokesman for ForSaleByOwner.com. “That may motivate buyers to get off the sidelines,” he said.
Read more about mortgages in this week’s real estate pages, as well as an audio report from an economist who believes that home sales probably bottomed earlier this year.
There’s no way to know for certain the direction mortgages are headed in the short term. But those in the market for a mortgage should think about acting soon, because when rates stay near record lows for months, eventually the only direction they can go is up.
– Amy Hoak, Real Estate writer
June 5th, 2009 at 2:07 pm
Karen-
stupid move if done- but maybe by rasing it neligibly they will send a signal to the rest of the world that they are serious about inflation
June 5th, 2009 at 2:11 pm
Karen,
You know, mabye I should take my statement back. We could get a few Fed officials that really believe we will get some terrible inflation due to a month or two of numbers, they raise rates too quick and then credit deflation destroys us.
this would be fitting from the Fed and all of their superior decision making skills.
Really though, why would you read into something like that article so much. Investors in interest-rate futures are now betting on a rate hike by year end. Could that have anything to do with the fact that now 90% of economists are predicting a second half recovery and the market has gone up 40% in the last few months. Should we believe that interest-rate futures traders don’t suffer from herd mentality?
I don’t even really get the article. They are expecting an increase in the rates due to signs of improvement in the economy and comments from Fed officials??? Is credit flowing somewhere I don’t know about?
for me, just another sign too many people now think the last 18 months was just a bad dream and we are getting very close to the top of the countertrend rally.
June 5th, 2009 at 2:18 pm
@karen: If that’s true, then people are even more irrational (and have less of an understanding of simple math) than I thought. They can buy my home if they want it. If it’s true that rates are going way up, wouldn’t that also push home values/prices down as well? Is a home purchase really that an emotional thing that people forget to think a little first? Good grief.
June 5th, 2009 at 2:18 pm
@ben22
I didn’t say they were going to raise or not going to raise…
All I said was that this NFP number put BB squarely in the crosshairs (with his job up for re-appointment in 6 months – and – I’d imagine – the DECISION to go one way or another coming long before that)…
Personally, I don’t think they’ll RAISE rates…Instead, I think they’ll jawbone the thing and start waxing ‘hawkish’…
In the end, I’m in the same camp as you (and have been all along), DEFLATION is the issue here, and the dollar will rally in the next 3-4 months…Moreso if EQUITY MARKETS start breaking down…
What’s “fascinating” though is the fact the GAME IS OVER in terms of trying to paint a rosy picture of the economy…I mean, if the NFP number is to be believed, and the price of oil and steep yield curve are signals that a RECOVERY is on the way…The FED WOULD HAVE TO START RAISING RATES…
The fact that they WON’T, is an automatic “tell” that nobody believes a RECOVERY is on the way (despite the cheerleading efforts)…Well, at least FRANKLIN believes them!
June 5th, 2009 at 2:18 pm
@ Left, Karen:
On GLD… so is this a range trade? Are you just trying to catch a move down to 85 or so on GLD?
June 5th, 2009 at 2:20 pm
@Franklin411:
“This economic crisis isn’t remotely comparable to the Great Depression. Not in the slightest.”
It is comparable. The article I linked just did. Industrial output on a global scale, world trade, debt to GDP ratio are comparable. Please disprove these data. Or explain why they don’t matter to assess the trajectory of the economy today compared to the Great Depression. Or why the debt to GDP ratio doesn’t matter.
“For one thing, we didn’t have to suffer through 3 years of Hooverism. For another thing, the Federal Reserve is not stocked with incompetent Republican cronies as it was under Coolidge and Hoover”
In what way have Bernanke and Co. at the Federal Reserve proven their high competence regarding understanding economy? In 2007, they didn’t even see the recession coming. Besides that, this argument is based on the assumption that the Fed can control capitalist world economy and its crisis trajectory. I think the assumption is already faulty.
“Third, American workers aren’t nearly as heterogenious as they were in the 1920s and they won’t accept massive layoffs on the scale of the Depression.”
I don’t see the relevance of this point for the data of world industrial output, world trade, or for the debt to GDP ratio. How does this point change these?
“Fourth, there is no more World War on the horizon.”
We are talking about the world economy in the time period from 1929 to 1932. What does WW II have to do with this? WW II started in 1939. The economic development in the 1920s that lead to the Great Depression is relevant. And one of the important features was the debt bubble back then. The one today is even bigger. It’s at about 375% now. How much can this debt bubble expand further nowadays before the day of reckoning? What will happen then? The basic principles on which the capitalist world economy works today are still the same as the ones in the 1920s or in the 19th century (as already analyzed by Marx). The difference is, it’s even more a world economy than back than, more interwoven and tightly coupled.
“Fifth, we much more accurate tools to take the temperature of the economy now than we did in the 1920s and 1930s.”
I don’t understand what is supposed to follow from this point.
Sixth…shall I go on?
Yes, please. Especially, I would like to see
1. How you want to disprove the data regarding world industrial output, world trade or debt to GDP ratio. Or how you want to explain why latter is not relevant for the coming trajectory of the world economy.
2. How you want to prove the statistical significance of the data you cherry pick when you claim the economic recovery is impending and everything will be almost as it was not long ahead (5% unemployment rate in 2012?). This is my main point of criticism. You cheer data that just could be a wobble in statistically noisy time series. Your cheering of the BLS data release shows that you cherry pick. You take the 345,000 nonfarm payroll decrease to prove your point, but you ignore the increase of the unemployment number by more than 700,000. Why is former relevant, but not latter?
rc
June 5th, 2009 at 2:20 pm
ben, i’m just putting the articles up for discussion… who said i read much into them? I review all news and commentary with skepticism.. the only opinion on rates that i have at the moment is that they are still historically low and should move up more, then trade in a narrow range..
June 5th, 2009 at 2:31 pm
I-Man, I’m playing it by ear.. my gold short is still slightly red, btw.. gold sell 0ffs can be so wicked.. I haven’t figured it out yet to be truthful.. and it’s even harder now that i’m playing on both sides of the fence…
June 5th, 2009 at 2:33 pm
interesting quote from CNBC-
“On one hand it took less bad data to rally the market (previously). Now investors are getting used to that. It will take more than that in the months ahead.”
so I guess we are back to bad and good- “less bad” just won’t cut it anymore
June 5th, 2009 at 2:36 pm
@RC
Don’t waste your time with Franklin…
He’s convinced that BIG GOVERNMENT is the solution to all problems…And now that his “flavor” of government happens to be in office, he’s content to cherry pick numbers to support his ideaology…
By the time he sees the error in his thinking, he will be long gone from this blog…
June 5th, 2009 at 2:37 pm
both sides of the fence, Mistress? like swinging from both sides of the plate??
June 5th, 2009 at 2:39 pm
Sold 1/2 my positions in gld and slv for a profit. Still have a good cushion on the rest.
June 5th, 2009 at 2:39 pm
@call me ahab (2:33)
And isn’t it AMAZING that that “quote” and that REALIZATION comes at a time where the market is reaching technical resistance to the upside…
So when all the trades of the past 3 months get reversed…All this crap will have been a simple TECHNICAL bear market rally all along…
June 5th, 2009 at 2:41 pm
Cvienne,
didn’t mean to imply you said anything about rate changes, just commenting on it in general.
karen,
also, didn’t mean to direct that at you, you know I think you are the smartest trader on here, but…, I think those two marketwatch articles are a joke.
The move in the long bonds has actually been fairly orderly this year, imo.
June 5th, 2009 at 2:44 pm
@ben22: Prediction: By October the long dollar trade and no inflation will look like it should have been the easiest thing to see, much like a bet against real estate or the banks in 2008 looks now.
Agreed. No rate hike. No inflation (yet). No bond vigilantes (yet). No more equity rally.
Panic trades are finally being unwound from Depression levels of fear to a more normal Recession level.
June 5th, 2009 at 2:44 pm
@LB
I think you made a good play on DZZ there…
Take a look at the DZZ chart on an “hourly” basis and slap a 55 EMA on that…
What had been weakness (going all the way back to April 20th), has finaly broken to the UPSIDE and then confirmed a test of that upside break…
June 5th, 2009 at 2:47 pm
@LB
“No bond vigilantes (yet)”
I agree with you that as the dollar strengthens and equities & oil sell off, there will be no imminent need for the BV’s…
However, I’d like to see how Congress expects to PAY for the Healthcare package (that is coming to vote in August)…I think they’ll have a say in that if the pricetag looks too high…
June 5th, 2009 at 2:48 pm
Rising mortgage rates will no doubt spur some people into taking the plunge for fear of even higher rates down the road. Kind of like somebody waiting on a stock price, wanting to get it lower but then jumping on it if it ticks up a few percent for fear it’s hit bottom and they’re missing the rise.
But I think that even more people will be priced out by the smallest of rate rises due to extremely tight household budgets (not that Americans have been known to operate on a budget :) .) And the reduction in buyers combined with the increasing rates will help put continuing downward pressure on home prices. No surprise there for readers here.
The anecdotal evidence of people still looking at ARMs vs. fixed further strengthens that perspective. They’re squeezing every possible dollar out even with the longer term risk it poses. I’m wondering if there’s some good national data on recent ARM vs. fixed mortgage originations out there. It would be interesting to see vs. historical data.
June 5th, 2009 at 2:48 pm
RE: Gold short
I haven’t actually looked but I have to think that there are some good opps to short metals stocks/or stocks in that sector for a large profit if you are in the no inflation, dollar strength camp.
Lots of names, like NEM for example, have had a huge move up since last Nov.
June 5th, 2009 at 2:52 pm
After all…
This is going to be BHO’s one and only shot to get this Healthcare Package passed…
If it fails this time, it will be hard to resurrect…They wouldn’t be able to do it until next year…By that time, the market will have sold off, confidence will be down again, and 2010 middies will be on the horizon…
So by 2010 if the economy hasn’t REALLY recovered, a lot of DEMS are going to dump BHO and get hawkish about saving money so they can get their own butts re-elected…
June 5th, 2009 at 2:53 pm
Housing in CA and FL, cheap but everyone broke, BK or unemployed. This small rate rise crushes the market.
Housing in NY NJ and CT. Still too expensive. Fuhgeddaboudit.
Home prices to go lower. What a shocker.
June 5th, 2009 at 2:54 pm
cvienne
Isn’t is kind of perilous to do TA on leverage ETFs? Seems like you should use the underlying as the leverage can skew things in longer periods.
karen
Curious about the choice of MAs on that chart. Why 13 & 34? To my admittedly untrained eye there doesn’t seem to be any particularly informative trend info there. But I could easily be missing something. Just wondering.
Gold sure went into a power dive there for a bit today, didn’t it?
June 5th, 2009 at 2:55 pm
@ben22
re: Gold miners short
The problem is Ben…Gold may only “correct” to 850 or so (and oil may come down harder)…As such, the margins will still be pretty good…
But I can’t say anything “quantative” about that because I haven’t been following the PRICE action on stocks like NEM relative to their cost of production…
June 5th, 2009 at 2:56 pm
“China’s investments in the US are safe” (although they plummeted today). :-)
Tiny Tim’s phone will be ringing off the hook. The broker-dealers will soon sell the Spoos and buy the 2s.
June 5th, 2009 at 2:58 pm
@Onlooker
you use numbers like 13, 21, 34, 55, 89, 144, 233 on MA’s because they are fibonacci numbers
June 5th, 2009 at 3:00 pm
Today’s Wells rate alert. This puppy hits high 5′s/six and it’s game over again for the housing market……
Today’s Rates: JUNE 05, 2009
40-year fixed1 6.625% 6.827% 1
30-year fixed1 5.625% 5.846% 1
20-year fixed1 5.625% 5.922% 1
15-year fixed1 5.000% 5.368% 1
5-year ARM1 4.500% 4.305% 1
FHA – Loan limits vary by county.
30-year Fixed FHA1 5.500% 6.170% 1
June 5th, 2009 at 3:04 pm
@Manny
It’ll only be GAME OVER until the equity markets take a dive again and money pours back into Treasuries (this fall)…
They’ll get another bite at the apple…but they better TAKE IT and TAKE IT FAST next time…There might not be a 3rd bite…
June 5th, 2009 at 3:04 pm
@ f411 @ 10:22 a.m.
“When a person has the flu, they start off well, get a little sicker, then more sick, then very sick, then less sick, then kind of sick, and then they’re well again.”
The course of an illness can depend on…
– the disease, is it actually the flu (avian, swine or just regular seasonal flu) or something else, e.g., measles, against which many today are not vaccinated? Apparently, it’s not ebola. Counting our blessings, so far.
- the patient’s general health at onset; were they a debilitated alcoholic, diabetic or HIV+?
- was the disease correctly diagnosed? is the treatment appropriate (e.g., treating massive credit destruction with more massive credit) and efficacious, or just palliative?
June 5th, 2009 at 3:06 pm
Onlooker, that might be my most important chart template. I use 13 and 34 EMAs to confirm a trend. They also give off fairly reliable buy and sell signals..
LB, you are on ignore.
June 5th, 2009 at 3:07 pm
@RC
This is a drive by post, so fair warning.
Herbert Hoover was an advocate of voluntarism, which held that government should limit itself to encouraging private efforts to achieve public policy. Example: The midwest suffered from a horrific drought from 1930-1931. Americans were literally starving. Hoover’s answer? He encouraged Americans to donate drought relief fund. When this fund failed to collect anywhere near the amount of money required, Congress attempted to enact a program to relieve the hunger. Hoover stopped this effort dead in its tracks, arguing that the government had no role in helping starving people with basic foodstuffs. That’s Hooverism; the idea that government should not play a role in addressing economic problems.
WWII started in 1931, with the Japanese invasion of Manchuria. Later, the Italians invaded Ethiopia, the Germans fomented civil war in Spain, they occupied the Rhineland/Austria, and then the invasion of Czechoslovakia. All these occurred before September 1939. The point is that the world was living under the gun from 1931-1939, which certainly had a depressing effect on the investment outlook.
Having better economic data reduces the liklihood of making significant policy mistakes.
Sixth, Q1–You miss my argument completely, which is that the political situation now and in the Depression is critically important. Q2. I don’t cheer a wobble; in fact, I established that the trend is towards reduced levels of job losses. The number of lost jobs has dropped precipitously since the peak in January.
@batmando
Well, I think we can all take death off the table. The bears can’t even bring themselves to concede that point!
June 5th, 2009 at 3:09 pm
Take a look at this pattern in GLD… if it fails, it will be ugly for gold longs and a tremendous buying opportunity.
http://stockcharts.com/h-sc/ui
June 5th, 2009 at 3:11 pm
@Franklin
“The point is that the world was living under the gun from 1931-1939, which certainly had a depressing effect on the investment outlook.”
yeah Franklin…I guess Americans were getting ALL DEPRESSED watching MSNBC & CNN report about the world events on the TV’s that they didn’t own…
June 5th, 2009 at 3:11 pm
@ K-
For some reason it pulls up a DJIA chart…
June 5th, 2009 at 3:14 pm
@karen
I’ll second that…Take a look at this chart on GLD “hourly” 55EMA
http://www.freestockcharts.com?emailChartID=e8d42bee-404c-4c52-bef3-2e09b89f9699
June 5th, 2009 at 3:15 pm
cvienne Says-
“However, I’d like to see how Congress expects to PAY for the Healthcare package (that is coming to vote in August)…I think they’ll have a say in that if the pricetag looks too high…”
that is really the trillion dollar question
and cvienne Says-
“80% of requests are for yet another ARM…”
have to disagree cvienne- I live in Mertro DC- not low rent by any means and almost %100 of business is for high balance conforming loans and FHA high balance loans- all fixed rate. For those loans above the high balance limt of $729,750- folks still lean toward fixed- although there are a smattering of 5/1 and 7/1 ARM’s. Keep in mind that any ARM that is less than 5 years at the 1st adjustment is qualified a 2% over start rate- so doesn’t help in qualifying for a mortgage. Lastly- there is not enough of a spread between ARM’s and fixed to make it worthwhile-
not sure what price range your friend is in re mortgages he is providing but don’t see an advantage for an ARM in any case
June 5th, 2009 at 3:17 pm
I-Man, you are right… sorry not sure how to fix that… it was a weekly chart of gld showing the 18 month R H&S pattern. today is putting a brutal red mark on the right shoulder… not broken but not nice…
June 5th, 2009 at 3:17 pm
@Karen, Leftback
http://www.321gold.com/editorials/hoye/hoye052709.html
3rd week of June.
June 5th, 2009 at 3:18 pm
Karen said: “LB, you are on ignore.”
LB is bereft. LB is also contemplating a change of nationality – England are about to lose to Holland at cricket.
Meanwhile the USA was spanked at football (“soccer”) by Costa Rica, as the Ticos ran out 3-0 winners in a World Cup qualifier on Wednesday in San Jose. LB noted that a young man called DaMarcus Beasley occupied the critical left back position and performed adequately – except in the areas of ball control, tackling, marking and positioning. LB notes that a trash can placed in the appropriate spot would have been more useful defensively. Midfielder Pablo Mastroeni distinguished himself in front of the back four, but only in the areas of falling over and passing the ball to Costa Rica. In fact, other than Tim Howard and Landon Donovan the whole team was completely pants.
June 5th, 2009 at 3:19 pm
More consumer deleveraging. Credit report latest
Consumer Credit – M/M change
Previous $-11.1 B
Consensus $-7.0
Consensus Range B $-11.0 B to $-4.7
Actual B $-15.7 B
Bad news for consumer-oriented stocks, specially the high priced ones, like….AAPL. :) How many people pay cash for Macs?
June 5th, 2009 at 3:21 pm
@ahab
That is my point…THERE IS NO REAL BENEFIT IN ARMS…but idiot people are looking that way anyway…(Which proves they don’t understand anything)…
In any case, you know as well as I do that it is irrelevant the nickles & dimes saved on re-fis…
If you’re on the MD side of DC, O’Malley is going to kill you with taxes…plus, Montgomery County (& neighboring Howard County) have high real estate values that kill you on property tax…
June 5th, 2009 at 3:21 pm
$-15.7B ??? That’s not a green shoot….
June 5th, 2009 at 3:21 pm
Stuart, thanks, years ago that site used to be one of my stomping grounds… interesting analysis… i was thinking 880 would hold but hoye may be more accurate..
June 5th, 2009 at 3:24 pm
The 2-year at 1.31%.. someone was over-leveraged on that curve steepening trade, I guess.
June 5th, 2009 at 3:27 pm
Mike in Nola-
Apple’s expensive? please- they are worth their weight in gold- in fact- better than gold
also- was in New Orleans in March- wild town- stayed at the Royal Sonesta on Bourbon St
June 5th, 2009 at 3:27 pm
@Stuart, Karen, Leftback:
Hoye has a weekly audio show answering question from listeners and there is a lot of info on his opinions to be gleaned. You can access them from here:
http://www.institutionaladvisors.com/whats-new.htm
Somewhere on his site there is a speech that he recently gave, outlining his methodology, which is basically comparing this recession to prior depressions going back to the 1800′s. His opinions are similar to lefty’s at this point.
June 5th, 2009 at 3:28 pm
cvienne-
I am on the Virginny side
June 5th, 2009 at 3:28 pm
And I bet next week’s revision shows *accelerating* consumer de-leveraging from last week to this.
Confirms that the American people really do have brains. There’s a true sentiment indicator right there.
June 5th, 2009 at 3:29 pm
@ahab: You not making fun of greg are ya?
Haven’t been back in a couple of months, but if you read http://www.nola.com, you will see how wild it really is. Currently murder capital of the US.
June 5th, 2009 at 3:31 pm
Here’s a chart on consumer credit. Not looking “green shooty”……
http://2.bp.blogspot.com/_pMscxxELHEg/Silul63XCyI/AAAAAAAAFdQ/EXMKaQReM4Q/s1600-h/ConsumerCredit.jpg
June 5th, 2009 at 3:33 pm
I like Hoye
June 5th, 2009 at 3:34 pm
Karen,
Re: “I use 13 and 34 EMAs to confirm a trend. ”
Do you use a cross-over (one ema crosses the other)? Both rising? What do you look at to confirm a trend? The price crossing one of the EMAs, the price above both EMAs?
June 5th, 2009 at 3:35 pm
thanks, Mike, put a bookmark on it.. i’m familiar with him but there’s only so much time.. will give it more attention over the weekend… might help unmuddle my view.
June 5th, 2009 at 3:36 pm
@Transor: I also think a backlash is hitting the credit card companies, as people are waking up to the scoundrels they really are.
My brother, who runs a small CPA/Financial Planning firm in the Sac area told me that his high limit AMEX (that they’ve had since ’91 and have never been late on paying and their biz is still very strong, in fact, they just acquired two small firms, one in Tahoe and the other in Burbank) was cut down one day as he tried to fill his gas tank. Apparently AMEX, without any notice, cut down his limit. He and his wife called to complain and they reinstated their limit, but this is the kind of thing that’s pissing people off everywhere. I think it will have a bigger effect on their business going forward than they think. The backlash is palpable.
My wife and I just had our Chase United Visa rate increased to 18%. She’s had the card for over 15 years now. Is NEVER late and always pays the balance on time, so we don’t care about the rate, but it’s tempting to cancel just on principle alone.
June 5th, 2009 at 3:39 pm
@Manny (3:31)
The chart helps explain the Clinton “economic miracle”…
Give ‘em all CREDIT CARDS! while VC’s are investing millions into vaporware and fiber optic overcapacity!
June 5th, 2009 at 3:40 pm
karen,
gotta ask it now after the gold chart, do you think gold could go to 680???
June 5th, 2009 at 3:42 pm
@cvienne: It’s been the U.S. “economic miracle” for the last 30 years or so. Notice the recession of the late ’80′s/early ’90s and how credit dropped off. The only way to get things going in this economy is on the back of cheap credit today, that is, until some sort of innovative “game changer” is invented by someone. If that doesn’t happen here in the U.S., we’re screwed.
June 5th, 2009 at 3:42 pm
@hopeImwrong, both EMAs rising confirms the trend but the crossover can be used as a reliable buy single… play with it on various tickers… see how you like it.. (note the settings on RSI (13) and MACD (13, 34, 1) as well.
June 5th, 2009 at 3:42 pm
ben22, lol, what do you think i think?
June 5th, 2009 at 3:43 pm
$-15.7B ??? That’s not a green shoot….
No it’s not, just massive credit deflation. look out.
June 5th, 2009 at 3:43 pm
would NFW answer the question succinctly?
June 5th, 2009 at 3:44 pm
One day soon, the get long ahead of the end of day pump trade is going to blow up in someone’s face. Doesnt look like its today though…
June 5th, 2009 at 3:46 pm
I-Man: I-man can play right back for USA, lefty can play left back. Defence would improve, I think. The marking thing would be especially useful when playing those speedy Central American teams.
ben22: Damn right, there’s your credit deflation, the flip side of increased savings rates.
Mish would be proud of you, young man.
June 5th, 2009 at 3:46 pm
Anyone shorting into the pump?
June 5th, 2009 at 3:46 pm
@Manny: I raised an issue earlier that didn’t spark much interest — 401(k) loans. We’ve all been so focused on HELOCs but apparently 1/5 – 1/6 people with 401(k)s have loans against them at any given time. I’d be really curious to see the numbers on them currently. If you default you have to take an early payment penalty, but things can also get interesting if you lose your job while you’re carrying a balance.
Damn, that stinks about your wife’s card. My cash advance rate is less than that — better stay that way! LOL
Just shows it pays to be paranoid and stay on top of things.
June 5th, 2009 at 3:47 pm
@leftback: Nyet, not I. Watching.
June 5th, 2009 at 3:49 pm
karen,
I’m thinking you’d say no :)
left,
still no shorts here. soon, though. soon. like I said earlier, if that credit contraction continues, which obviously I think it will and that it’s hardly started, this is going to keep getting easier to call.
June 5th, 2009 at 3:50 pm
@LB
No shorts on my end…EXCEPT short GOLD (which I put on earlier today)
June 5th, 2009 at 3:53 pm
Mike in Nola, thanks re: site.
June 5th, 2009 at 3:53 pm
Obviously I’m no Miss Cleo…
@ Left: Gotta play dirty when you take on the Lamericans… they’ll flick you in the balls.
June 5th, 2009 at 3:53 pm
Is anyone seeing this? Huge Doji on both Dow and S&P. $UUP is above 9 day ema. This might be a start for market correction.
June 5th, 2009 at 3:54 pm
LB wants to see Monday’s currency action, expecting a knee-jerk bounce in the Euro and oil, risky assets.
After that it could be kitchen sink time on the short side. The gold short stays on.
June 5th, 2009 at 3:54 pm
Transor,
The 401k loan is problematic but I don’t think anywhere on the level of the Heloc/loan issue for one major reason:
The average 401k balance is so small when compared to the equity that was available to borrow against in homes during the boom years.
considering though that 401k loans cause double taxation people that are taking them will find out eventually how big of a mistake that is. It’s also gonna be tough when people find out you can’t roll-over a 401k to an IRA without eating the tax bill first if you lose your job and have a loan against it. Sadly, in lots of 401k literature they talk about how you are just paying yourself back the interest so people think it’s a good idea.
June 5th, 2009 at 3:59 pm
Mike in Nola-
was only in N’Orleans about a week- not long enough to see much of it’s thuggish side- when I caught my cab @ 4:00 AM to get to the airport- Bourbon St was still partying on-
when I was scouting out some cemetaries did stray into a few areas on foot that were a “lock” they were projects – everyone friendly enough though-
found the gravesite of voodo priestess Marie Laveau- pretty cool graveyards in general- right out of “Interview with a Vampire”
June 5th, 2009 at 4:00 pm
@ Karen:
So is Fazzy coming home with you tonight or did you leave her on the corner where she belongs?
June 5th, 2009 at 4:00 pm
leftback @ 3:54
I did short 2000 shares of QQQQ this morning @ $37.00; although I’m not necessarily going to stay with it for long.
June 5th, 2009 at 4:00 pm
@manhattanguy
The S&P has all the way down to the 910-915 range before as an initial support, then it has 880 after that…
Nothing to get TOO excited about…Neither one is a trend breaker just yet…
June 5th, 2009 at 4:01 pm
No pump today… in the words of my boy Scooby Doo:
RUH-ROH
June 5th, 2009 at 4:02 pm
Home early, just in time for a sentiment indicator:
I flipped on Oprah. Don’t ask me why. It’s a whole show about thrift, and of course Suze Orman is there.
Hmmm, feels like more credit deflation to me.
June 5th, 2009 at 4:03 pm
@I-Man: You really need to “introduce yourself” as a defender and get your retaliation in first in those road games. It’s hard to play pretty football when you are face down in the turf.
LB is not taking anything home except DZZ. I bet Johnny Retail will want another piece of this market on Monday.
June 5th, 2009 at 4:04 pm
@cvienne this could be an early indication. Bulls can’t push the indices above 200 dma. Plus the rally in dollar will bring down equities imo.
June 5th, 2009 at 4:05 pm
Pretty cool. The pump looked massive and it still was red for the day.
June 5th, 2009 at 4:06 pm
I-Man, my faz vampire is male and growing on me… i’m definitely not done with him yet.
June 5th, 2009 at 4:08 pm
karen-
watch Trueblood much?
June 5th, 2009 at 4:09 pm
@manhattanguy
The 2oodayMA is kind of a “non-starter” for me…
I prefer fibonacci numbers…On a DAILY chart, it’s firmly above both the 89, and 144…
It has yet to make an attempt on the 233…
If I see a breakdown of the 144 before an attempt on the 233, I’ll get excited about going “short”
June 5th, 2009 at 4:11 pm
Can the Fed fill the credit gap as fast as it is deflating?
BTW the 7% annual decline rate is still not close to the 7-15% growth rate for the past 8 years.
Still two weeks before the Fed releases Total Household debt and total US debt.
The consumer debt revisions are remarkable.
June 5th, 2009 at 4:12 pm
@manhattanguy
And as for the dollar…
I actually believe that the dollar reversal (if confirmed Monday) might be real…
Which means I believe that there could be some “disconnect” in the markets for a week or couple of weeks…(i.e. dollar gets stronger AND S&P rallies at the same time)…
The disconnect will get resolved soon enough…S&P will break down…I don’t see it as “imminent” though…yet…
June 5th, 2009 at 4:13 pm
I would have thought the consumer credit numbers would have more of an impact- definitely not bullish-
seems to me the market should have sold off more today-
am I wrong?
June 5th, 2009 at 4:14 pm
@manhattanguy
Remember – you have OPEX coming up in two weeks…maybe the S&P retraces just a little here (to 912 or so)…”Shorts” pile in, then get CRUSHED as the S&P trades to 972 on OPEX week…
June 5th, 2009 at 4:14 pm
“The pump looked massive and it still was red for the day”
Hobo, I hope you are talking about the markets here.
LB wants to see 925 and 875 break down before all kitchen sinks are deployed. May dabble short side next week.
Seems like we will all have to digest the week’s big currency swings and Treasury market action for a few days.
June 5th, 2009 at 4:15 pm
I still think the market pushes into the range of 965-1k before this rally ends. I wish there were more bullish posts here, but that is picking up slowly. I also think that by the end of October all the people that think that we can’t go below 700 again will be wrong. If that happens again this time will be worse, people holding on to a lot of equity that lost 40% + last year should finally give up on another loss close to that. Two of those in a two year period should be scare people out of stocks for a while. If anything it should at least make more people pay attention. If what is going on in our office the last two weeks is any indication of what others are dealing with, the 10/07 – 3/6/09 period hasn’t done much to scare people out of the market.
June 5th, 2009 at 4:16 pm
ahab, no tv, haven’t seen it. read Anne Rice’s “Vampire Chronicles” once upon a time.
June 5th, 2009 at 4:17 pm
“S&P trades to 972 on OPEX week”
Then a one way trip to the basement on June 22? I like this scenario.
June 5th, 2009 at 4:18 pm
@manhattanguy
So here’s MY trade…If you’re following me…
- I went SHORT gold today…
- Monday I’ll go long the dollar (as long as I get a confirmation)
- I’ll wait until OPEX week…If i get a last blowout rally to the upside on the S&P (towards the 233 day MA), I’ll go short the S&P then…
June 5th, 2009 at 4:20 pm
@ben22 – Buy and hold theory went out of the door, it’s purely a trader’s market.
@cvienne – agree that it could recover once it hits 912, but i am predicting a short term correction in both indices well in sync with dollar rally and oil correction
I expect a double dip recession similar to what we saw in early 2002.
June 5th, 2009 at 4:20 pm
leftback Says:
June 5th, 2009 at 4:14 pm
“The pump looked massive and it still was red for the day”
Hobo, I hope you are talking about the markets here.
reply:
—————
I was commenting on the last few minutes of the day. I don’t have access to good tools and was just observing S&P volume at the close. It bumped up a large amount, but it didn’t trigger any knee jerk buying. I’m sure the pump will be back Monday and will continue until it stops working. I was just having a moment because someone was probably really pissed about not making Pavlov’s Dog bark for the 100th time in a row.
June 5th, 2009 at 4:23 pm
@ben22 (4:15)
I’d like to hear more bulls here too my friend…
But I’ll tell you something…The guys I play golf with (who consider me to be “the stock market guy”), have all been asking me lately what stocks to buy…I MEAN…A LOT…
I just roll my eyes and tell them to go work on their “short game”…(and they think I’m referring to chipping & putting so I have them all bamboozled)…:-)
June 5th, 2009 at 4:26 pm
ahab:
Actually, the one where they shot the Interview scenes and a scene in the Huey Long movie with Goodman is on Washington and Prytania. It is pretty safe and somewhat interesting. Hadn’t been there until after the storm when we took a friend back to NOLA to visit. Found one grave whose date identified him as having been killed in the battle of the bulge.
I believe across the street is one of the best restaurants in NOLA, Commanders Palace.
There are still murders in some of the projects, despite the locks. I think the Marie Laveau tomb is in the cemetary on Basin Street and which used to hose a tourist robbery from time to time due to it’s proximity to the project. Don’t know how it is these days. Best thing is to ask middle class natives who aren’t involved in tourism about where they’d feel safe. The tourism industry is reluctant to publish a map showing where it’s safe.
June 5th, 2009 at 4:34 pm
Actually…
For everybody’s reference…the 233 day EMA on the S&P would be 972 (today)…
And it’s flattening out as we speak (which means by OPEX Friday, it ought to be roughly the same number – or somewhere between 965 and 972 – depending how any “minor” correction either next week or the week after effects it))…
A break ABOVE that line would be significant (because it would start to ‘slope’ the MA upwards if that trend were to hold)…
So I’d say it’s PUT UP or SHUT UP time for the bulls…
It would be two shorts weeks until end of quarter and start of earnings season after that…
Short the S&P???
965-972 is looking better and better…
June 5th, 2009 at 4:36 pm
cv@4:23 –
“…go work on their short game…”
June 5th, 2009 at 4:38 pm
cvienne@4:12 – You and I are on the same page. I thought I was alone with the dollar up and stocks up in concert call.
June 5th, 2009 at 4:43 pm
manhattanguy,
@ben22 – Buy and hold theory went out of the door, it’s purely a trader’s market.
You don’t really believe the masses are trading now do you? Sure, the AAII percentage allocated to stocks dropped levels seen in 2002 and the early 90′s which indicated that lots of people went to cash at the bottom, but there are still tons of people just holding on. Someone just asked me a question on this site the other day explaining that they were trying to get the 401k balance back to where it was at the top. My point above was that many more people will give up if they take another 30% + hit after this. A record level desire to hold cash and not stock should only be fitting given the severity of our situation.
June 5th, 2009 at 4:44 pm
“The guys I play golf with (who consider me to be “the stock market guy”), have all been asking me lately what stocks to buy…I MEAN…A LOT…”
A sure sign that InvestTools™ are returning like lambs to the slaughter. It will not be long ‘ere the worm turns. Remarkably it seems as though people are lining up to get fleeced again. Incredible.
Here in Manhattan, Bob and Barbara Bulge-Bracket are once again crowing to LB that “the market always comes back” and “Manhattan real estate never goes down”… they are triumphant in victory. Let’s see now:
Bob and Barb portfolio, was $800K, now down to $500K. Condo, $1.5M down to $1.2M (being generous here, as if they could sell it); mortgage and other debt owed = $1M. Net worth, was 1.3M, now = 700K. Bob’s bonus is sadly declining and Barb is not making (m)any high end condo sales. Mucho expensive lifestyle continues with kids at Brick, Dalton and Spence. We won’t discuss Barb’s Saks charge card or Bob’s “entertainment expenses”.
Meanwhile, LB no debt, trading portfolio up 20% since 2007. All thanks to TBP.
June 5th, 2009 at 4:47 pm
@Franklin411:
“…The point is that the world was living under the gun from 1931-1939, which certainly had a depressing effect on the investment outlook.”
Thus, sentiment regarding investment about which you just make an assumption was more important than the real debt bubble for the trajectory of the world economy back then, you say.
“Having better economic data reduces the liklihood of making significant policy mistakes.”
Assuming that the government of the United States can really control the trajectory of the US-economy, or even the one of the world economy, of which the US-economy is only a sector, if there are more and better economic data. If an asteroid were going to hit Earth, I am certain we would have much better data about this nowadays than 80 years ago.
But if the US-government or any government were able to control world economy why has there been a deep global recession in the first hand? This fact alone contradicts your belief about the great power the US-administration has with its policies.
“Sixth, Q1–You miss my argument completely, which is that the political situation now and in the Depression is critically important.”
In what way is this critically important regarding the fact of a credit market debt to GDP ratio of 375%? Doesn’t debt need to be serviced anymore today, in contrast to the times of the Great Depression? I have noticed that you have carefully chosen to ignore my repeated question about this point.
“Q2. I don’t cheer a wobble; in fact, I established that the trend is towards reduced levels of job losses. The number of lost jobs has dropped precipitously since the peak in January.”
No, you haven’t established. How do you know the drop in the decrease of the nonfarm payroll data from January to May indicates an impending recovery, but isn’t just a wobble, before it is going to trend down further, or just going to decrease at a slower rate for a much longer time? If you look at the graphs for different economic indicators during the Great Depression you see that this kind of wobbles within a longer down trend can last over many months:
http://www.voxeu.org/index.php?q=node/3421
Besides that, as I already said, you have cherry picked your data to prove your point.
Here is the change in the number of unemployed from the household survey. You haven’t answered my question why the payroll data are relevant for your assessment, but not the change in the number of unemployed.
May 2008 861,000
Jun 2008 99,000
Jul 2008 248,000
Aug 2008 640,000
Sep 2008 42,000
Oct 2008 629,000
Nov 2008 255,000
Dec 2008 632,000
Jan 2009 508,000
Feb 2009 851,000
Mar 2009 694,000
Apr 2009 563,000
May 2009 787,000
(Reference: http://research.stlouisfed.org/fred2/data/UNEMPLOY.txt)
No significant drop in the unemployment increase from January to May to see here.
rc
June 5th, 2009 at 4:49 pm
@ben22: Yes, of course. 401(k) loans are very small compared to HELOC. The max is only about $50k or 50% of balance. Apparently, the average balance is about $65k, so that gives an indication of the max scale. However, EBRI estimates ~ $3 trillion invested in 401(k) plans, so clearly the numbers are substantial (albeit not RRE/HELOC substantial).
According to EBRI there were about 46 million 401(k) participants in the US at the end of 2007 and according to the Harvard study below about 85% of plans allow 401(k) loans. Take 18% of ~40 million people and you’re ~ 7 million people carrying 401(k) loans. Multiply that number by the average loan size, between $7k and $8k, and you’re looking at around $50 billion in consumer debt. The average monthly 401(k) loan payment is $125 — noticeable for the average US family.
And IMO this is particularly crummy debt which, as you alluded to, is people undercutting their life savings. The Harvard study (published after the crash in late 2008) reports anecdotal increases in 401(k) loans as a result of the recession. So quite possibly the aggregate loan balance could be much higher than $50 billion.
http://www.ebri.org/pdf/briefspdf/EBRI_IB_12a-2008.pdf
http://www.hsph.harvard.edu/pgda/events/seminars/2009/Loans_Madrian_Fall2008.pdf
June 5th, 2009 at 4:49 pm
Mike-
made it the cemetary by Commanders Palace- Lafayette I believe is the name of it- cool street few blocks away with many restaurants and shops- Magazine Street I believe- the cemetary with Marie Laveau is St Louis-
cool town- interesting history- very unique- a foodie paradise I would think-
if it was just me- I could live there very easily- weather in March was beautiful- also loved the chicory coffee and benet’s- Cafe Du Monde I think it was
June 5th, 2009 at 4:51 pm
>>> I was commenting on the last few minutes of the day. I don’t have access to good tools and was just observing S&P volume at the close. It bumped up a large amount, but it didn’t trigger any knee jerk buying. I’m sure the pump will be back Monday and will continue until it stops working.<<<
=================
ZeroHedge has been following this too. The last little while, it’s been JPM, taking blocks of 5K SPY on every dip.
June 5th, 2009 at 4:52 pm
@hopeimwrong
Yup – just a ‘temporary’ divergence…
OK let’s face it…In the ‘olden dayz’ (when the US actually produced something other than paper debt instruments), a strong dollar & strong equity markets would go hand in hand as a given…
Now a strong dollar KILLS our exports…
So here, the dollar can get stronger (until the equities finally blow off to the upside)…Then it’s time to say BYE BYE to anything resembling 4 digits on the S&P (until I’d imagine around the year 2025)…
June 5th, 2009 at 4:52 pm
@lb 4.44: Buy now or priced out forever :) you will be surprised how many are still in denial about RE.
@ben22 : speaking of 401k, i moved some of my retirement funds to cash after they doubled in 3 months.
June 5th, 2009 at 4:53 pm
@LB — I think you may have a new career as a football commentator! Small correction, the US pants squad was beaten 3-1 — Donovan scored in injury time at the very end.
Beasley — rubbish indeed. That guy is just too old.
June 5th, 2009 at 4:54 pm
ben22
You really think this little bunch is turning bullish? :) Or do you mean from less frequent posters who pop up just wanting to shake it in our bearish faces? I can see that as a good contrarian indicator.
I’d also like to see the VIX really drop. Still very skittish here although it did drop with the market today, correcting the rise with the market a while back. In other words I’d like to see an easier short entry here that’s more profitable, coming off a real blow off top.
June 5th, 2009 at 4:56 pm
here’s my plan-
short $
long oil
AAPL and then more AAPL and then GOOG with a little more AAPL- anything left over goes to QQQQ
a winner????
June 5th, 2009 at 4:56 pm
@LB
So THAT’s why you have so much time 4 cricket & soccer (I mean ‘football”)…Sorry mate!
June 5th, 2009 at 4:56 pm
beignets… the streetcars, the street cafes Uptown. Laissez les bons temps rouler….
June 5th, 2009 at 4:56 pm
ben22
Hussman talks about a revulsion of stocks by the average investor that still needs to take place to set a bottom. Sounds like what you’re talking about too. Especially after they venture back in at these levels.
June 5th, 2009 at 4:59 pm
@mike & ahab
re: NO
that’s my “heritage”…Don’t leave town without pigging out on a nice plate of red beans & rice!
June 5th, 2009 at 5:00 pm
ahab:
It is a great place to hang out and waste time. The food is much better than Houston. In Houston you have to look for the good places and hit a lot of duds. In NOLA most any place will be at least good. Think it’s the competition. Tom Fitzmorris, the local food critic ( http://www.nomenu.com ) went through the phone book post-Katrina and found that the metro area had more restaurants than before even though the population had declined. It was something over 800 not counting chains, which he doesn’t consider real restaurants.
Weather is about the same as Houston, which is nice in the fall and winter. Opposite of the north.
June 5th, 2009 at 5:00 pm
“beignets”- I knew botched that
June 5th, 2009 at 5:02 pm
@ahab – I never spell it right myself.
BTW for anyone in Houston, we’ve found a place that has better beignets than they serve in NOLA. It’s Chez Beignets way down Holcombe. Pretty decent chicory coffee too. Don’t try going at night as they have a huge Vietnamese clientele shows up in the late afternoon and night.
June 5th, 2009 at 5:05 pm
@mike in nola
Man all this food talk right at “happy hour” is making my mouth water for some fried alligator!
June 5th, 2009 at 5:06 pm
“Weather is about the same as Houston, which is nice in the fall and winter. Opposite of the north.”
55 and pissing with rain in NYC…. g’night all.
June 5th, 2009 at 5:07 pm
cveinne-
your name does sound a bit Cajun- I actually bumped into a guy that was visiting his daughter in the city – the guy was all Cajun- pretty cool old guy
June 5th, 2009 at 5:08 pm
Question for the board:
When you guys speak of the dollar getting stronger, are you referencing strength against other fiat little pieces of toilet paper equally covered with shit, or are you referencing the dollar strengthening against something real, like a basket of international-traded ag commodities, or the energy markets?
See, because it doesn’t really say much to me that the dollar will rally against the Euro or the Yen or whatever, unless that also means it takes less of them to buy corn. So long as corn stays as expensive as before, a dollar “rally” means that for some reason the purchasers of fiat currency think that Euros are more covered in shit than are dollars, not that there isn’t still a devaluation afoot vis a vis the dollar.
Inflation (or currency devaluation) is ever and always a monetary phenomenon.
Please tell me where I’m mistaken.
June 5th, 2009 at 5:08 pm
manhattan guy: good for you on the trades. Sadly though, I highly doubt many 401k participants are getting the same results, nor do a lot of participants even have a cash option to go to like yourself. “Stable Value” is more common. MBS is just like cash….until it isn’t.
Transor: All those numbers look to be from year end 2007, so to be generous lets slice 25% off the top of assets value, if the loan amounts still increased in 2008 clearly it’s a problem. that said, the problem is small compared to all the other debt issues ones so we probably won’t hear too much about it.
Onlooker,
no I’m not looking for the regular commenters to get bullish, just more people coming in for a few one liners about how it’s so doom and gloom here, and we are all the guns and canned goods crowd, that kind of stuff.
June 5th, 2009 at 5:12 pm
@ahab
The name is TOTALLY cajun…90% of anyone whom I might be able to trace any ancestry to lives in the Bayous…
June 5th, 2009 at 5:14 pm
Ahab,
I take the opposite position of your trade. Although this might change from day to day depending the market activity.
Here is my short term trade
Long dollar, short oil, COF and AAPL.
All the food talk makes me hungry now.. Have a good weekend guys.
June 5th, 2009 at 5:14 pm
I’m the new poster and average guy ben22 mentioned @4:33 trying to recover my 401k balance. To clarify, I have no hope to get back to what it was “at the top”. I would simply like to recover my lifetime contributions, inflation-adjusted. I never stopped buying 100% long equities so the last few months have been good to me, but I still need S&P to reach 1150 for my break even point.
It’s been hard to stick it, especially given how much I’ve been reading the comments here since March 6. Believe me, I will experience total revulsion if/when another 30% hit comes. I don’t intend to let that happen. It’s not as simple for us InvestTools, since we don’t have tools like stops and basically have rules against “trading” in our 401ks. I don’t intend to go down with the ship a third time. Until then, the trend is my friend.
I don’t think I would “trade” even if I want to. If/when I ever break even, I’m going to move it all into something like Harry Browne’s Permanent Portfolio and forget about it. I’m long past sick of following the stock market.
June 5th, 2009 at 5:15 pm
@cvienne:
that narrows it down to French, Spanish, African, Mulatto, English or German, if I remember my history correctly. A cajun is truly a mutt. Maybe that’s why they’re so lovable.
June 5th, 2009 at 5:17 pm
@ahab
although I’m not THAT old…yet…
I’m a LATE baby boomer…(you know – the ones that will NEVER see a social security check because the system will be bankrupt by then)…
Why do you think I’m a “do it yourself’er” and have re-trained myself to “live off the land” if need be?
June 5th, 2009 at 5:22 pm
@curmudgeon
Français…
I’ve heard that my lineage actually comes down from Charlemagne…
But then doesn’t EVERYONE tell them they are descendent of some royalty or were someone “famous” in a past life?
Whay wasn’t anyone ever a janitor or a hooker in a past life?
June 5th, 2009 at 5:23 pm
manhattenguy-
should have tagged my “trading plan” @ 4:56 with a [snark] flag- was jk
curmudgeon-
I think what is being implied is that when the $ strengthens against other currencies there is a corresponding sell off in equities AND commodities- so I guess you could say it is strengthening against real stuff too
June 5th, 2009 at 5:32 pm
ahab – re: shorts.
Wait and see what AAPL introduces, likely next week. The fanbois will have tears in their eyes watching Steve. The analysts will likely go wild if they intro a new cheap iPhone and the stock my pop good. greg may buy some :) Would be great if it went up to something near it’s old high. Then it’s a no brainer. Of course my QID would take a further hit.
If AAPL competes on price with a $99 iPhone it may cannabalize some of it’s own sales and may make Palm and other competitors good shorts since they will have to compete on price.
June 5th, 2009 at 5:33 pm
@curmudgeon
re: dollar
I can’t speak for ANYONE else here, but I’ll give you my DOLLAR take…
I think it’s simply a part & parcel issue of the “ebb and flow” of the UNWINDING of all asset classes in this GLOBAL CREDIT DEFLATIONARY SPIRAL (that is bound to go on – in my estimation – for AT LEAST another 30 months before we hit rock bottom)…
So the scenario works like this:
- Real Estate bubble bursts (already happened)
- Liquidity crisis (already happened)
- Political & monetary intervention (already happened)
- Equity market sell-off PART #1 (already happened)
- Equity market rally from political & monetary intervention (happening now)
- Risk of hyperinflation due to political & monetary intervention (happening now)
- Realization of hyperinflation risks by political & monetary interventionists (imminent)
- Response by equity markets…SELLOFF (coming in next 4 months)
- Flight back to SAFETY of US dollars & Treasuries because they’re big huge parking lots (coincident)
- Rinse & repeat cycles of all points above (except #1) for the next 30 months until we finally reach a bottom…
so that’s it in a nutshell…
June 5th, 2009 at 5:41 pm
cvienne: Cajuns apparently think alike. Don’t eat any alligator or crawfish, tho.
Was discussing The Best Stop with my brother in law last night and started thinking of how to engineer a trip back to NOLA so I could get some cracklins. 3 years of weekly commutes probably shortened my life span noticeably.
June 5th, 2009 at 5:42 pm
@ cv
Just so you know- I’m from VA and I used to stomp all over WV as a youngster… paddling the new, skiing at canaan, climbing at seneca, and getting muddy in just about every cave on the map.
Beautiful country over there… I miss it.
June 5th, 2009 at 5:45 pm
cracklins… get stuck in the teeth.
June 5th, 2009 at 5:46 pm
j6p,
wasn’t trying to take a jab at you just so you know. anyway, you should get your hands on your summary plan description, or call your provider and see if your company allows for an in service non-penalty withdrawal on your 401k. You might be able to move to an IRA while you are still working if they do, or at least a portion of your money, and then you can take more control and use things like stops to protect yourself.
June 5th, 2009 at 5:47 pm
Check this crazy cracker out Mike:
http://www.deltablues.net/cracklin.html
June 5th, 2009 at 5:50 pm
@mike in nola
I’d do for anything a little exotic now…
I’ve got catfish coming out of my ears at the moment…At least I’ve learned how to put a little Louisiana spice on them though :-)
@ I-man
There’s been a heckuvalot of rain lately, so the rivers are running high & fast…SWEET!
June 5th, 2009 at 5:50 pm
ben22,
mahalos again.
June 5th, 2009 at 5:56 pm
@I-man
you DEFINITELY need to cook cracklins outside (and in a big pot)…
I still have a few grease burn scars on my legs from when i didn’t heed this advice when I was 17 years old…
Although they’re pretty faint now (except for the one on the instep of my right foot below the ankle)…
I almost burned down the house on that episode…
June 5th, 2009 at 5:59 pm
Alright bredren- Jah Bless.
I-Man out.
June 5th, 2009 at 6:17 pm
Mike in Nola-
I’ve seen your remarks today, and I’m thinking you really like the Apple discussions. Come on, you can admit it. I already own some options by the way, in reference to your 5.23 post. Not so sure Jobs will be there next week, or he could be introduced as the “one more thing”.
Wish me luck at least with my options ;>)
June 5th, 2009 at 7:19 pm
greg: assume they are calls :) Probably a good play til they get all the announcements over. Just don’t look at them as buy and hold. As a glamour stock, could rise a good bit from here.But, unless you believe the recession is about over, it won’t stay, no matter how good the products are. For one thing the end of bear markets brings compression of multiples which hasn’t happened all that much yet, esp. to Apple.
Also, price competition is going to be fierce as the number of people willing and able to buy tech gadgets shrinks. This will decrese everyone’s earnings.
One of my bad traits is that I keep needling people. My daughter gets really mad when I do it to her, but I don’t mean anything by it. I do hope you make money.
June 5th, 2009 at 8:13 pm
@Curmudgeon 5:15
What you describe is more specifically Creole. Also, “Cajun” refers to a select group of descendants of the francophones that were exiled from Nova Scotia. There are very few actual “Cajuns”, though many claim to be one; though, I guess it could be anyone who assumes the culture. I have a French surname, but I don’t consider myself Cajun because my ancestors arrived here directly from France. Finally, New Orleans is definitely NOT French; it is Creole, with the same ethnicities that you listed. Most people don’t realize it, but there are (were) huge popluations of German and Irish ethicities that arrived in the late 19-th century in New Orleans. Finally, the French part of Louisiana is centered in Lafayette. Most of Louisiana is not “French.”
June 5th, 2009 at 8:38 pm
Do y’all see a relationship between a NY accent and a NO accent?
June 5th, 2009 at 9:46 pm
Cursive Says-
“Cajun” refers to a select group of descendants of the francophones that were exiled from Nova Scotia.”
true- correct term is Acadians
June 5th, 2009 at 11:01 pm
Actually, Italians were the largest ethnic group in New Orleans from the early 20th century until the white flight in the 1970′s. Well, they were really Sicilians. I think I know more Sicilians than any other group. It was the same wave that populated N.Y., but they went south. There was a good deal of friction with the older established ethnic groups and even a still-remembered lynching of some Italians about which one of my old Italian friends still holds a grudge even though it happened long before he was born. He is not happy that a few of the decendents of the lynchers are prominent lawyers, one even being King of Carnival. Don Corleone’s long memory was not fantasy.
June 5th, 2009 at 11:02 pm
Forgot the link to the lynching story. http://en.wikipedia.org/wiki/David_Hennessey
I think blacks were actually treated better in those days. They knew their place.
June 6th, 2009 at 9:16 am
[...] rate slows but doesn’t mean much Jump to Comments 345K jobs lost. U6 is 16.4%: • Temporary workers continue to loss jobs, but seem to be moderating, losing only 7,000 jobs; [...]
June 6th, 2009 at 9:54 am
[...] NFP is . . . -345k | The Big Picture The number is . . . a much better than expected loss of 345,000 jobs. [...]
June 8th, 2009 at 6:39 am
[...] NFP is . . . -345k (June 5, 2009) [...]
June 9th, 2009 at 2:16 am
Franklin411 @1:16, @3:07, and previously asserts that Hoover was some kind of tightwad libertarian. Not so:
http://www.cato.org/pubs/journal/cj16n2-2.html
See Table 1.
Quoting from this Keynesian source:
http://www.wwnorton.com/college/econ/ecu7/section05/case-studies.htm
“FDR had spent much of the 1932 campaign declaring his faith in a balanced budget and blasting Hoover as a big spender.”
Whatever your position on past causes and effects, Hoover was far from a tightwad libertarian, and FDR ran on a platform of fiscal prudence, but changed his tune once elected — and the Depression got worse throughout the ’30s in spite of all the stimulus, because the credit bubble of the ’20s left too big a debt overhang. This happened in spite of gold confiscation and inflation to debase the remaining debt load.
The only true end was not merely the “good” WWII-level stimulus and regimentation of the national economy, but the post-war demilitarization and recovery landscape, which left the USA on top of the heap, holding 2/3ds the world’s government-held gold, and an intact manufacturing base.
“History doesn’t repeat itself – at best it sometimes rhymes” – Mark Twain
- M2P