The usually skeptical Floyd Norris looks at the economic data, and it makes him (surprise!) optimistic:

“The American economy appears to be in a cyclical recovery that is gaining strength. Firms have begun to hire and consumer spending seems to be accelerating.

That is what usually happens after particularly sharp recessions, so it is surprising that many commentators, whether economists or politicians, seem to doubt that such a thing could possibly be happening . . . Why is good news being received with such doubt? Why is “new normal” the currently popular economic phrase, signifying that growth will be subpar for an extended period, and that the old normal is no longer something to be expected?”

He is right on both employment AND consumer spending. A separate Times article notes that “The nation’s retailers reported their strongest monthly sales growth in a decade, with robust gains in virtually every category of merchandise and every type of store.” And while there is still a long road to travel to return to pre-recession employment levels — I estimate 60-70 months from the recession December 2007 beginning — NFP has finally turned positive.

After acknowledging the possibility that he might be “wrong and the prevalent pessimism is correct,” Norris looks at the factors unrelated to the actual economic data causing the negative outlook:

-Over-indebted consumers and governments.
-Housing collapse’s long impact.
-Recoveries post 1990-’91 and 2001 were very slow to pick up any momentum.
-Recessions normally make people pessimistic.
-The vast majority of seers failed to see this recession coming — hence, a fear of being embarrassed by (again) by looking “foolishly” optimistic (again).

He also points out to an unusual political factor: Both Republicans and Democrats are rooting for bad news. Republicans loath to give President Obama credit for anything, and Democrats want another stimulus bill passed. Hence, a recovery defeats what the parties seem to favor as an economic means to a political end.

As to the data, Norris channels his inner quant, looking at factors not emphasized elsewhere:

• The Household Survey showed  a Q1 gain of 1.1 million jobs (best data since the spring of 2005).

• Norris looked at 7 post recession recoveries (1950-1982). He found when the 3 month performance of the Household Survey was +0.8% or better (total existing jobs), the recession was over (median 7 months, range 2 to 13 months).

The data continues to impress, yet many people are fighting both the economic numbers and the tape. Professionals who miss a 75% generational rally risk losing clients and assets. The danger for both bulls and bears is bringing their bias to the table, and missing the risk or the opportunity of the moment.

I still expect a 20-30% correction — eventually — but until the market internals get uglier, our bias remains to the long side . . .


Why So Glum? History Suggests a Strong Recovery
NYT, April 8, 2010

U.S. Retailers Report Strong Gains for March
NYT, April 8, 2010

Category: Economy, Employment, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

66 Responses to “Retail, Jobs Suggest Stronger Recovery”

  1. More Norris:

    In 1982, Democrats scoffed at a surging stock market and thought a severe recession would last for a very long time. They were confident that the economy would doom Ronald Reagan’s re-election campaign in 1984. All they had to do was make clear they offered a stark alternative to the failing policies of the incumbent

    Change a few words (Reagan to Obama, Democrats to Republicans, 1984 to 2012) and you have an accurate description of the current political climate. Could the Republicans be as wrong now as the Democrats were then?

  2. HEHEHE says:

    For shame BR! For shame!!! Keep it up and you’ll be back on CNBC soon enough:)

    The retail stats are all pumped due to 1) retailers closing stores, 2) the bankruptcy of competitors and 3) the Easter weekend falling near March end. Add to it that last year’s stats were so abysmal you couldn’t do any worse. The best that you could say is that things may have bottomed. Which I seriously doubt considering the recent consumer credit figures.

    The household survey numbers are and always have been a joke and you’ve pointed it out constantly over the years. More importantly how are they going to keep unemployment under 10% with the upcoming job losses that are going to be hitting every cash strapped state and municipality in this country? Even the mathmagicians at the BLS aren’t going to be able to accomplish that feat.

    Of course I’m no Floyd Norris so I obviously don’t know what I am talking about. He works for the NYT and they’ve always been on top of this story from day one…wink…wink.

    PS. BR you really want to get that S&P 500 above 1200 don’t you;)

  3. wunsacon says:

    Good morning, Barry. I’m persuaded by Mish’d and HEHEHE ‘s comments on this matter regarding survivorship bias, the “average” store comps rising because of all the store closings, and “the truth” of sales tax revenues.

    However, if you’re investing in the “recovery” because it’s an actionable “Soros false premise” to invest in, then I completely understand. It’s been very profitable and might continue for a while. After all, it only pays to be a contrarian right before market turns.

    God bless the Squid.

  4. Robespierre says:

    BR, for a person who claims to be “data driven” you seem to ignore the “negative data” on your latest analysis. I think Mish has the correct analysis on retail sales (time will tell). So it seems that there is some “The danger for both bulls and bears is bringing their bias to the table, and missing the risk or the opportunity of the moment” on your part at this time?

  5. HEHEHE says:

    Seriously that “Norris channels his inner quant” is priceless. Memo to Floyd, after Circuit City went under and liquidated I am willing to wager a “recovery ” that Best Buy’s same store sales rose. When Linen’s & Things went belly up I’ll wager you an “employment miracle” that Bed Bath & Beyonds same store sales rose.

    US Government statistics at this point are as worthwhile as those coming from North Korea. The gameplan is massage the data to get a bullish, or at a minimum less bearish, headline and then revise the data downward a month later. The downward revision doesn’t matter because everything in the media is geared to the headline of the current data release.

    As was pointed out above if you want to go along for a ride on this pump job more power to you as the Wall Street/D.C. pr apparatus is pulling out all the stops to get this higher and try and get the retail investors back in the casino. They are pulling out all the stops for S&P 1200. They get over that and the quant funds will keep the market propped for a while; but lets not forget on the way down they carry the momentum too. The sad thing is when the music stops we all know who gets the chairs and who gets the door.


    BR: My day job is to go along for the ride. I still critique what is wrong, but professionally, I cannot afford to miss a 75% ride upwards — even if it ends in tears.

    As Ned Davis once asked, “do you want to be right or do you want to make money?”

  6. Dennis the menace says:

    Mish has fought the tape the whole way up. His union busting posts are the worst kind of traffic whoring, and his recession porn shows you that he lacks intellectual flexibility. Zero hedge has gone even deeper into the Conspiracy weeds.

    I read them both — they are each entertaining in their own way — but they won’t make me a single dollar.

    Wunsacon is right. Keep on showing the “actionable false premise” to invest in. Ignore the naysayers, keep doing what you are doing — cause I gots to pay the rent.

  7. Marcus Aurelius says:

    Headline from WaPo (I didn’t read the article, because I refuse to re-register at a Corporatist Cabal owned and operated propaganda site, so this comment is only on the headline and teaser paragraph):

    “Bernanke: ‘Cataclysm’ averted

    Fed chief says if less had been done, economic crisis would have been worse than the Depression.”

    Bernanke had the choice of hitting a large tree at high speed, or driving up a ramp and off of a cliff (no one is doubting that the owner, diver, and passengers of the vehicle were out of their minds’ drunk and high, after having one hell of a rolling party on their way into uncharted territory).

    Thank god we didn’t hit the tree.

    We’re now reaching the apex of altitude gained after our wheels left the ramp.

    Buckle up, or don’t, as neither will help us when we hit the ground. As I noted in a previous comment:

    • There’s been no resolution of ANY of the toxic crap on the Central Bank’s or it’s subsidiaries’ or its counter-parties’ books (MBSs, CDO’s, or more exotic derivatives).

    • There is more toxic sludge in the pipeline. We know this to be a fact, but until it hits the fan, its potential negative impact on the broader economy has been discounted to to zero.

    • Business fundamentals are bad.

    • Government spending way up, tax revenues way down, and we’ve committed (addicted) ourselves to QE for the foreseeable future.

    • Housing and Commercial foreclosures and delinquency rates are going full steam.

    • Bankruptcies are up

    • Federal, state and municipal finances are in tatters.

    • The US economy is fundamentally unbalanced.

    • Our industrial base is gone, apparently forever.

    • We are saturated with bad debt, both public and private.

    • No substantial regulation has been put in place to prevent a relapse.

    • Those responsible for the criminality which led us to this point still wield power over the allocation of our shared financial resources.

    Stay long, BR, and do what is profitable for your clients in the very short term. Never forget what happened to the banks and homebuilders — who were universally bullish past the point of rationality — in spite of having a clear view of the tree and the cliff looming larger in the windshield. Even though you might have an eye on the exit and a clear pathway to it, remember that not everyone will fit through it at the same time, and that many who will be trying to get out when the impact is imminent and unavoidable are much stronger, faster, and larger than you.

    There has never been a better time to be skeptical and/or conservative.

    As for Norris’ outlook, I see he didn’t address any of the issues swept under the rug, nor those still in the pipeline.

    Apparently, ignorance is truly bliss.

  8. VennData says:

    Cut the red tape so we can create jobs in this Obama recession… Get the Tea party TV cameras out to WV and start protesting those greedy miners and bad gov’t officials.

    Go Mining Companies. C’mon you Tea Partiers where are you guys? Free market mines.

    Oh this dressing up and protesting against the gov’t is fun. Fun Fun FUN.

    Why don’t the Tea Partiers go have fun down by the mines with the miner’s families?

  9. In 2008, and Q1 09, all I heard was — your a perma-bear, you want the market to go down, your data is missing ___ (fill in the blank).

    Now, in 2H 2009 and 2010, I hear your a perma-bull, you want the market to go up your data is missing ___ (fill in the blank).

    I find it harder to be relentlessly bearish AFTER a 55% market shellacking. And despite stating “I still expect a 20-30% correction” — I am somehow overlooking the negatives out there?

    At least the consistency of the push back is reassuring . . .

  10. says:

    BullSh*t: Tax Return Money & Monies In Lieu Of Mortgage Payments On Houses Their Walking From.

  11. dead hobo says:

    BR concluded

    I still expect a 20-30% correction — eventually — but until the market internals get uglier, our bias remains to the long side . . .

    The very definition of betting vs investing. Thanks for the honesty.

  12. Robespierre says:

    BR, I don’t think you are a perma-bull ( I don’t think you were a perma-bear either). However, I would expect a deeper look on the data you are presenting (otherwise you do sound like CNBC). You used to do in the past but you have stopped. May be you are becoming to complacent on the market?

  13. crunched says:

    I agree with everything HEHEHE said.

  14. dead hobo says:

    BR, Bet with your own money: fine.

    Bet with OPM but push it with sales spin and sell it using common industry hype: For shame!

  15. Dead hobo:

    Sales spin = what disagrees with you?

    After 13,000 posts over 7 years, I think I deserve the benefit of the doubt regarding what I write is what I honestly believe — not sales spin. That’s insulting bullshit to even suggest as much.

    In fact, its so insulting that I am going to say this: Anytime you want to take the opposite side of a trade from me, please feel free to do so.


    Unless you are being sarcastic and I am missing it!

  16. The Curmudgeon says:

    Marcus Aurelius gets it right. Floyd Norris is just trying to find something new to write about.

    The question was posed yesterday whether this was “Great”. Not yet, I’d say, but it’s not over, either. This recession revealed the fraudulent underpinnings of the economic systems of the entire developed world. Just because they’ve now been stitched back together and papered over, does not mean the underpinnings are any less fraudulent. They are in, in fact, weaker. Private losses have been socialized. The next catastrophic failure of the foundation, which won’t be long in coming, will be a failure of the public financial systems. Greece is a good example of what lies in store.

    Fundamentally, nothing has been changed to fix the cracking foundations of the developed economies. They’re all still crumbling, even if temporarily out of view.

  17. Scott F says:

    I’ve disagreed with Ritholtz a lot — more so lately it seems. But its always been an honest debate about nuance and shading. I’ve never had any cause to question his sincerity or the honesty of his writings.

  18. flipspiceland says:

    Does anyone else think that this is the single most important sentence in the entire article?

    “Both Republicans and Democrats are rooting for bad news”.

    The perversity of our political structure is clearly seen a two partys (ies) that system that instead of governing with the pursuit of happiness in mind, actually cheer for more disasters to make themselves look like heroes.

    This is the failure of representative government and undoing of the unUnited States. To keep their jobs and their power they must hope for the worst to happen and make every attempt to sabotage the solutions that might actually solve the problems that beset us. AND they award themselves lavish compensation even in the worst of times, never experiencing the devastation that their constituents do.

    How is this not like Royalty?

    You who vote for any incumbent need to have your heads examined.

  19. VennData says:

    “…When your kids have to go to community college, don’t blame me . . .”

    …A homerun.

    To all the Tea Partiers commenting here …in your flouncy hats and pilgrim shoes before getting ready to home school their offspring …your bonds are going to get destroyed.

  20. rktbrkr says:

    Banks back to same old tricks. An analysis of data released by the New York Fed shows large banks are hiding their risk levels by temporarily lowering their debt just before reporting periods. A group of 18 banks – including MS, GS, JPM, BAC and C – lowered the debt used to fund trading ventures by an average of 42% at the end of each of the past five quarters, refilling their tanks in subsequent months. While not illegal, the practice gives investors a false impression of banks’ leverage – one of the factors that led to the massive panic in 2008.

    I saw this after hearing BB modestly accepting credit for stopping The Greater Depression. So the banks have added gaming their trading debt to their bag of tricks. I presume these trading funds are borrowed from the Fed at nearly zero cost so the Fed approves and supports this practice. And Bernanke wants to be the one stop shop for financial regulation, WOW!

  21. Marcus Aurelius says:


    I don’t begrudge you your business, and I don’t have any alternative to present — you truly are doing what you’re paid to do.

    My only point is that The Big Picture contains a very thick underpainting that extends beyond the crop marks of your post.

    Our current situation will more than likely “end in tears,” or worse.

    Always better to be safe than sorry.

  22. buzzsrk says:

    Did I miss something, or did Barry point out that he was highlighting Floyd Norris’ argument? This wasn’t Barry’s data, it’s Floyd’s! C’mon guys, isn’t the whole reason we’re so f-in ticked off is that we (including Barry) see all the reasons why our economy and our country are screwed, and yet the market keeps finding reasons to go up? Barry not only has gotten it right, market-wise, he is very upfront about the fact that he better get it right because that’s his profession. He works harder at making the ‘bias he’s bringing to the table’ as clear as possible. There’s a lot to be angry about, but not because Barry highlighted a bullish article in the MSM.

  23. dead hobo says:

    Barry Ritholtz Says:
    April 9th, 2010 at 9:25 am

    Dead hobo:

    Sales spin = what disagrees with you?

    My issue is using credibility as currency.

    I remember not too long ago long articles dedicated to the weakness of the B/D adjustment and phony employment stats, and other rants. You always promoted your business, but the implication was that you ran a personalized boutique as opposed to a retail operation. Since expanding your business a year ago the blog has taken on more retail persona that comes across, to me, as a subliminal sales tool.

    Today, people such as myself are treated as permabears for noting the economy and markets conflict substantially. Every time you use subtlety to paint that picture, you insult me and, frankly, challenge me to take the other side as I have been doing.

    To be blunt I rarely accept investment advice and prefer to make my own gains ans mistakes. The only substantial loss I ever realized was by accepting your ‘toe in the water’ observation and buying at a bad time. While waiting it out would have been my chosen course, personal reasons forced me to sell out for a greater good and take the loss. While this is my fault, I deeply resent other jabs where you chide readers about their bad timing, panic sales, or invoke similar subliminal pitch work.

    You invite me to take the other side and I do it regularly.

    You want to use the markets to make money – fine with me. You want to use OPM – fine with me. Just provide better disclosure.

  24. Kevin Lane says:

    Stocks were resilient on Thursday as they shook off a minor uptick in the initial jobless claims to work higher. What was impressive about the reversal was the market’s ability to shake off these numbers even though going into the release there was a preexisting overbought condition. Like we said yesterday the market is seeing two key groups, the financials and transports catch a bid of late. Typically when these two groups are moving higher this bodes well for stocks.

    From a market breadth standpoint new highs continue to trounce new lows on a fairly regular basis on the NYSE, NASDAQ and AMEX. Additionally their advance-decline lines continue to work higher.

    When looking for a clue as to when things may reverse course on a more consistent basis we continue to watch sentiment and liquidity. At present liquidity is still ok, however it is not nearly as robust as it was say just 6 months ago. Sentiment while creeping up is not a problem either just yet. We continue to stay the course and believe as we approach 1,300 on the S&P 500 that investor should start to lighten up as this level likely will coincide with an excess of bullishness and taped out buying power.

    Setting a trailing stop program on open long positions makes sense give the extension of the rally off the lows and the approaching 1,300 resistance level.

  25. robertso2020 says:

    Fannie and Freddie are launching a massive loan forgiveness program that will clean up Homeowners B/S as well as banks with heavy 2nd lien exposure. Won’t the be a positive for the markets?

  26. The Curmudgeon says:


    The government needs problems in order for there to be a reason for it to exist. The bigger and more comprehensively insoluble, the better. Both parties are in the business of government, so no matter what they might say otherwise, always listen to what they do. And what they do is continually provide government solutions to every problem that arises, and in some cases, invent problems that don’t exist so they can have something to do, e.g., the various Wars–drugs, poverty, health insurance, wmd’s in Iraq, etc.

    Signs in my neighborhood have been cropping up recently that say “Fight back. Vote Republican” What a farce! I’m thinking of getting my own sign that says “Fight Back. Ignore the Politicians. Both sides are Lying” But for that strategy to work, we’d have to get rein of the out-of-control governments first.

    This fantastically rich country was not made rich by its people relying on government to solve (and even create) their problems. It was built on people solving their own problems so far as is possible, and only allowing governments to step in when real problems called for a real government solution. That idea seems toppled on its head now. Things won’t get sustainably better unless and until government again becomes a servant to the people’s own problem-solving initiative. That is also why this financial crisis ain’t over, not by a long shot.

  27. IvoZ says:


    BR seems to be looking for the “intellectual cover” to stay long, as this is what his technical models are telling him to do (I suppose). So he comes in conflict with his structural bearish view. I think Hussman offers a practical way how to reconcile the 2 viewpoints.

    The issue that some people here have is that now BR has changed camp, uses shallow arguments that he criticized before (sounds more and more like a CNBC “expert” with no “Big Picture” in mind) and calls some of the other structural bears now permabears, although nothing fundamentally has changed, except for a lot of temporary stimulus has been poured in without limits and the embezzlement game has been restarted (remember as long as the bezzle is not discovered both fraudster and defrauded feel richer).

    So it is a question of how things are expressed and a mutual respect. BR should acknowledge his “long bias” due to the technicals telling him so and his “bearish structural bias”, although markets and economy are not the same thing…

    And Barry – few people here called you a permabear, do not mistake your readers here for CNBC talking heads.

  28. Before I dive in to what will probably be a hugely entertaining series of comments I’ll say this:

    Does this mean that now that America has choked down the horse pill that is health care reform the PTB have forgiven them and will now turn their economy back on again?

  29. constantnormal says:

    Once you exceed the bounds of historical experience, history becomes an increasingly poor guide to the future.

    I think the concerns here are in a misperception of Barry as an “investor” — in his own eyes (and rightly so), he i, but he “invests” via trading. Therein lies the rub. Most people consider trading to be distinctly different from investing.

    The true picture? I think we have to turn to the world of literature for that …

    Humpty Dumpty: When I use a word, it means just what I choose it to mean – neither more nor less.

    Alice: The question is, whether you can make words mean so many different things.

    Humpty Dumpty: The question is: which is to be master – that’s all.

    – Alice in Wonderland, by Lewis Carroll (1832-1898)

  30. constantnormal says:

    that’s supposed to be “in his own eyes (and rightly so), he is,”

    the intent was to spotlight the multitude of definitions of “investing”, not to take sides in the matter.

  31. SOP says:

    Dear BR.

    Printing Floyd’s piece was fine. BUT see Mish/Dead Hobo/HeHeHe are right.

    Why repeat Floyd’s misunderstanding without correcting his gross errors?

    It’s fine to say the Market is like Flyod, overlooking the Honest Data and instead following misleading Data – and that it is better to follow the irrational Market right.

    The manner in which you posted this piece suggests you were not thinking clearly at the time, or you deliberately chose not to point out the fallacy of Floyd’s piece… motivations aside, not your best post.

  32. Bottom line folks: As long as the banking system is corrupt enough to print as many dollars as it wants and the people are gullible enough to treat them as anything other than useless paper promises, the market will dance to the fed’s commands

  33. tude says:

    Well BR, color me impressed with your ability to see what is really going on, and ride the wave whether or not you fundamentally believe in it or not. I was a latecomer to the financial blog world. I’m just an IT geek who woke up one day and suddenly saw things very clearly, to this day I really don’t know why. I pulled all my retirement funds out of the market into cash at the near top, and have been paralyzed with fear ever since. I only found your blog well into the rally, and didn’t start really understanding anything you were saying until we hit 10,000 on the Dow.

    I read many financial blogs daily (all the usual suspects) but I have to say, if I ever have the balls to try to grow my money again (notice I did not say “invest”), you are most likely the only one I will take investment advice from. I think the others are right on in their analysis of what is going on in America and the world (all the doomers included). But I think they underestimate the power and ruthlessness of TPTB, and overestimate the intelligence of JSP.

  34. constantnormal says:

    So how come nobody is calling foul regarding Norris spotlighting of a 1.1 million jobs creation in Q1, when that includes approx 1 million census jobs?

    This certainly looks like deceptive reporting on his part.

    Or am I mistaken in that there were actually about a million census jobs created in Q1? More informed input is requested.

    I counter the notion that retail sales are improving by offering up a tour of any strip mall in the heartland. I don’t see how closing a huge number of retail outlets can be regarded as a sign of strength. Perhaps a sign of a re-balancing to reflect a smaller economy, with the surviving stores doing better with less competition, but a smaller economy is generally not regarded as economic success.

    I eagerly await (the final corrected version of) a GDP growth number of 8% (annualized).

  35. tradeking13 says:

    I don’t think Norris was griping about why more people aren’t buying into the stock market rally. He was complaining about people not believing that this recovery is the real deal given the data that is coming out. However, he fails to address the massive stimuli (fiscal, monetary, regulatory/accounting forbearance) that has brought us to this point. It’s akin to asking “why don’t you think Barry Bonds is the greatest home run hitter of all time?”

  36. HEHEHE says:

    BR I was just busting your chops. I’ve no problem with you doing your job; I got destroyed trying to short this thing until I quit and you made a good call re this rally. My problem was your not pointing out the ridiculous flaws in Norris’ thesis that things are improving. This market rally is pure liquidity at work. The economy is where near where the market is currently and won’t be for years. The gubmint spent/took on $3-4T just to get a miniscule few quarters of GDP growth so they could say the recession “ended”. Who are they kidding?

    PS. Mish is correct on the macro story but the stock market is in OZ right now. When the plug is pulled just make sure you have on your ruby slippers.

  37. constantnormal says:


    – It’s akin to asking “why don’t you think Barry Bonds is the greatest home run hitter of all time?” –


  38. It’s The Quarter To Quarter Reversal In Household Sector Employment That Matters

    Last Friday I wrote two pieces on the simply stunning “V” reversal in non-manufacturing ISM
    household employment.

    People are surprised and vexed at what seems to be a sudden reversal on the economy on my
    part. They don’t see what I see in the payroll data nor in the press commentaries on the payroll

    First, after the employment report for February and the “breakout” in the non-manufacturing
    ISM for February I began to worry about this outcome. I wrote on the day of the February
    employment report, the following:


    It was one thing to see a 700,000+ rise in the household survey measure of employment in
    January. It’s a noisy data series; these things happen. Once it was confirmed by a second rise in
    the February report I began to wonder if the unlikely was happening: an almost unprecedented
    “V” bottom in this measure of employment. The rational thing was to assume that we would get
    a big negative number next month in this very noisy data series.

    Well, we didn’t. We got a third month in a row of gains on the order of several hundred
    thousand. Now the household measure of employment has gone from an average monthly
    decline of 416,000 in Q4 2009 to an average rise of 452,000 in Q1 2010. This kind of reversal
    almost never happens. You have to go back to the end of the “V” bottom recession in 1975 to
    find something comparable.

    According to the Gamburu Guru:

    “The second derivative of 3-month annualized growth rates in total HH employment right
    now is +6.8% after adjusting for the population discontinuity in Jan versus Dec. That is
    the strongest in any period since early 1975, when it was +7.1% (three months ending
    May 1975 was +0.9%, prior three-month change was -6.2%).”

    In the very few cases where there has been a reversal like this it has been powered by two things:
    industrial sector employment, as the economy went from severe inventory liquidation to an
    inventory build, and employment in construction stemming from a violent reversal in interest
    sensitive home building. But, given all the employment data we have in hand, it does not
    appear that this reversal in the household measure of employment has much to do with the
    industrial and construction sectors – especially the latter. It appears that it has occurred because
    of a reversal in employment in the dominant service sector.

    History has been no guide here. No cycle in the history of the U.S. economy has been quite like

    If this is so unusual maybe the household survey data is wrong. I don’t think so. To be sure the
    reversal is probably exaggerated by statistical noise. Maybe in reality we went from shedding
    250,000 jobs a month to gaining 250,000 a month. It doesn’t matter; this is one very big swing
    with no liftoff whatsoever in severely depressed construction.

  39. cognos says:

    God. I cannot believe all the Bears here somehow “believing” they have any data on their side. ALL the bears will continue to be wrong. Broad diverse data supports strong recovery. There is enormous profits leverage to recovery -

    Here is the data:
    - ISM up to 59+, best level since 2004, up from 32 bottom Dec 2008. Seems to be accelerating.
    - Payrolls up from -700k a year ago to +160k last month. Widely expected to be +250k, +350k, etc going forward.
    - Basic economic indicators seem to be accelerating upwards.

    - Earnings growth of better than 50% on all estimates since early 2009. Seems to be accelerating.
    - Trailing EPS on SPX of $62, this year is expected to be $78. This estimate has been consistent INCREASED consistently.
    - Q1 EPS was $10/shr on SPX last year… will be $17 in Q1. 70% growth! Many companies showing MORE than that. Comparisons in Q2, and Q3 will be similarly easy and post 30-50% YoY growth.

    - Companies continue to report better than expected sales and profit — F, MCD, CSCO, HPQ, AAPL, etc — ALL saying “things look much better than we thought”.
    - Retail sales increase of 9.1% last month was BEST EVER ON RECORD
    - About 80 companies in SPX have increased dividend payments in the 1st Q, most EVER ON RECORD.

    Do you want me to go on? (house prices bottomed, credit cycle turning, tax receipts picking up, …)
    Where do you think we are in 1-yr? (SPX above 1400, unemployment below 8%, recovery continuing)

  40. [...] morning’s post discussing Floyd Norris front page NYT column generated even more pushback than I expected. I am [...]

  41. Forbes says:

    @ HEHEHE

    +1 on your various comments

  42. Forbes says:

    Floyd Norris writes and apologetic for his employer in March 2009

    Are We Biased for Obama?

  43. constantnormal says:

    @cognos “house prices bottomed”? Good God, man, what planet are you living on?

    Credit cycle turning — You mean from bad to worse, right?

    Perhaps the retail sales INCREASE was the “BEST EVER IN RECORD” — but how about comparing retail sales? hmmmmm? Comparing rates of increase is the last refuge of a scoundrel.

  44. Mannwich says:

    Housing has NOT “bottomed”. I repeat – housing has NOT bottomed. Next.

  45. Mannwich says:

    And the bar for the retail sales “increase” couldn’t have been set any lower than comparisons to one of the worst years in recent memory. Pretty easy to step right over it. Having said that – I have come around to the fact these markets are going to get pumped to oblivion with Uncle Stupid’s help. It’s the only way out and they know it (the public pension bomb is really the biggest concern because that’s when social unrest will spill over), so everything AND the kitchen sink is being thrown in to ensure that another bubble is blown. And the powers-that-be will act shocked, SHOCKED when it all falls apart again. Until then, party on.

  46. impermanence says:

    Floyd Norris writes:
    “The vast majority of seers failed to see this recession coming — hence, a fear of being embarrassed by (again) by looking “foolishly” optimistic (again).”

    Most of these “seers” derive their income by encouraging the flock the give up their hard earned money to the financial community. Whether there is a recession coming or not is immaterial to this end.

  47. KidDynamite says:

    cognos – retail sales were not up 9%. same store sales were. as a few early commenters pointed out, SURVIVORSHIP BIAS explains this quite simply.

    that said, for the MARKET, maybe it doesn’t matter, as the surviving companies are the ones in the index (ie, CC and LIN are no longer traded, and BBY/BBBY respectively pick up their sales data)

  48. Mannwich says:

    @KD: Feel free to ignore cognos’ disingenuous data cherry picking/distortions. It’s basically his modis operandi around here in case you haven’t noticed.

  49. [...] Everybody seems to doubt that a strong economic recovery is possible.  (NYTimes also Big Picture) [...]

  50. KidDynamite says:

    sorry Mannwich – i’m not a regular comment reader anymore… i just read the posts themselves.

    i did write a post today about exactly the survivorship bias that hehehe mentioned though…

    i’m scratching my head at the second half of my comment above, though… after all, the XRT doesn’t contain Circuit City, Linens’n’things, and the other bankrupt companies anymore… the existing (surviving) companies reap the benefit of survival! they get a bigger piece of the pie – since there is less competition. so, even though it’s a smaller pie, they still do better

    disclosure: i have no retail positions, although every bone in my body tells me to short them.

  51. Mannwich says:

    @KD: My wife works in retail and their numbers still suck, although in comparison to last year’s horrific numbers, they’ve improved like everyone else. However, like I said, that bar isn’t even off the ground. An easy one to “beat” handily.

  52. KidDynamite says:

    mannwich – i was just looking at the last 3 or 4 years of earnings for a handful of XRT components, and was very surprised to find that many of them are higher (in terms of EPS, not revs) than in 2006 and 2007…

    URBN, TSCO, TJX, ARO, RSH, AMZN, BBY, EXPE all better

    ANN, FL, AEO, HOTT worse

    again, it surprised me. Perhaps especially surprising is that even the companies in the second list whose earnings have been decimated (vs 2006/200o7 levels) have seen their stocks largely recover…

  53. AS says:

    BR….let me quote you back…My day job is to go along for the ride. I still critique what is wrong, but professionally, I cannot afford to miss a 75% ride upwards — even if it ends in tears.

    Exact same sort of approach that kept Mr. Prince on the dance floor, a statement much maligned thereafter.

    But you gotta do what you gotta do, after all, you are in the biz. And you are covering yourself with a caveat after, all.

  54. Mannwich says:

    @KD: Look at TIF as well. At/Near ’07/’08 highs. Must be all that Wall Street welfare king money going to buy jewelry for the misses and mistresses……

  55. Mannwich says:

    Look at CROX as well. Up nearly 500% the last year. UFB. I thought that little fad had ended? Who buy’s plastic shoes anymore?

  56. Mannwich says:

    Eaten AGAIN. OK – try this again. CROX up nearly 500% the last year too. Is “CROX” on the bad words list?

  57. cognos says:

    KidDynamite — Its always nice when someone makes dumb-ass wrong corrections:

    “cognos – retail sales were not up 9%. same store sales were. as a few early commenters pointed out, SURVIVORSHIP BIAS explains this quite simply.”

    Uh, yeah. Here is the release: (note the 11.4% increase in TOTAL store sales)

    April 8 (Bloomberg) — U.S. same store sales excluding Wal-Mart rose 9 percent in March from a year earlier, according to the International Council of Shopping Centers. Total store sales rose 11.4% from a year earlier.

    But thanks for your (in)correction?

  58. PenelopeD says:

    This article was interesting to me, because earlier this morning I just read an article on about a struggling US retail industry. Findings from New York based Reis Inc claim that vacancies in US shopping centers have reached an all time high. Furthermore, Victor Calanog of Reis stated that the expected slow pace of job growth and inconsistent consumer spending patterns will weigh on tenants for at least another year.

  59. Sunny129 says:

    If the professionals disagree so deep and wide on “Are we on recover wagon or a wagon heading over the cliff, again” imagine the mental anguish and dilemma of retail investor like me!

    You read blogs focusing fundamentals which most them are perma bear like Mish Shedlock which I ended up agreeing most of the time. Then read blogs like BP where fundamentals second seat to technical and perception induced by vested interests including massive intervention of Govt favoring one industry over another and sudden suspension of M to M.

    My approach to the market was successful till the M to fantasy accounting was adopted. I utterly and foolishly (in retrospect) ignored the severe effect of that on my portfolio holdings. I was +8% in Nov of 2008 and gave up all my gains and then some, as BP aptly ,put it fighting the tape. I adopted to the changing ‘perception’ since last fall but what I was able to protect in 2008 compared to majority, I lost instead in 2009. I am self educated investor and have been successfully investing since 1982. But the events in early 2009 and brazen and deep intervention of Govt into so called free market rigging the market is simply shocking!

    Perception has won over ‘reality’ based fundamentals repeatedly so far!

    All the good stats favoring recovery, stated on numerous comments above, came after throwing Trillions of Taxpayers money for the past 18 months and suspending of M to M by FASB! Are all these data mentioned real or propped up, will be revealed when the real ‘Mr. Economy’ tries stand up in the next 2-3 qtrs!

    But again, in the end I grudgingly have to agree with BR – Do you want to be right or make money. Hard to disagree.

  60. Simply-Put says:

    I guess Barry and the Bulls are trying to justify their long positions having their own issues with conflicting economic data and the government’s bias recovery argument.

    So, I have concluded that this cycle is very different than most since the government has employed a ZIRP (Zero Interest Rate Policy). The main objective of the government is to penalize saving account holders and force them to either spend their money or invest it in the market. The only other option is to pay off debt. The big question remains how much higher does the market go based on valuations and realistic expectations. However, I believe to a large degree that the market is gamed by Wall Street. And at some point this market will run out of buyers as it always does. And as the saying goes ‘Bulls Make Money, Bears Make Money, Pigs Get Slaughtered ‘

  61. Consumers showed more signs of deleveraging in February, according to the Federal Reserve’s consumer-credit report:

    5.6%: seasonally adjusted annual rate of decline in consumer-credit outstanding in February
    $2.448 trillion: consumer credit outstanding in February, a decline of $11.5 billion from the previous month
    $9.4 billion: decline in revolving debt, such as credit cards, in February, the most in three months
    $2.1 billion: fall in non-revolving debt, such as car loans

  62. dagmountain says:

    According to Bank of America the richest one percent account for fifty three percent of the seventy percent consumer/GDP number. Can we be honest about who is driving these retail sales? It’s the plutonomists and main street is not just dealing with a new normal but a perma-normal.

  63. dss says:


    Keep up the good work. (I don’t ever want to be on the other side of your trades! ) The two posts and commentary are some of the best discussion that I have seen in a long time.

    The stock market looks forward and sees things that are not in evidence.

    One can argue about the interpretation of the data inputs, i.e., same store sales, employment numbers, yadda, yadda, yadda, but one cannot argue with PERFORMANCE.

    Loved the rules as I know that their basis is trying to learn from the mistakes that have been made in the past.

  64. [...] light of some of the pushback to Friday’s commentary, I thought it might be worthwhile trotting it out again. This is an unedited version of the [...]

  65. [...] etc.) as being the harbingers of a strong cyclical recovery.  Even Barry Ritholtz seems to have turned a bit of a corner on the issue.  Barry offers the following helpful rules for adaptive thinking in the face of [...]