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Sep. Nonfarm Payrolls: +103K vs. consensus of +60K, 0 prior. Unemployment 9.1% in-line with...
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Friday, October 7, 2011, 8:31 AM ETSep. Nonfarm Payrolls: +103K vs. consensus of +60K, 0 prior. Unemployment 9.1% in-line with expectation. Avg. hourly earnings +$0.04. to $23.12. Workweek +0.1 hour to 34.3.
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There was positive job growth in the last recession as well.
Recall in Nov 2010:
"October’s employment report, released this morning by the Bureau of Labor Statistics, showed faster private sector employment growth than in recent months, 159,000, along with strong upward revisions to earlier data (+110,000)."
http://bit.ly/p8liAk/
The unemployment rate was 4.7% and the Recession started 2 months later I might add.
Hubris is a dangerous thing and it is times like these where the maximum amount of pain will be caused. This will provide fuel to the bulls and if that turns out wrong, well then the drop will be monumental.
Good luck.
No hubris. Just a relentless focus on data, as I always admonish people to do, rather than focus on talking heads, doomsayers and assorted others, who more often than not don't back outspoken claims with data and probably have short-side agendas in many cases, too.
If one keeps looking at ISM, retail, autos and, now, employment, the data only looks favorable, not negative. Adding to this, rail traffic just reported its highest level in three years. Nonetheless, many investors have readily substituted fear of Europe and accepted negative punditry for a more pedantic assessment of the actual data, and this has/had led to a massive sell-off, all the way down to touching bear-market levels, at 20% from highs.
But, none of this aligns with what's actually happening, just what people fear. Betting the downside after a 20% decline and in the face of the above data, indeed, takes a brave soul, in my opinion. It's not the long-side traders who are brave; it's the reverse, but they just don't know it.
As far as recession pundits are concerned, we are still here. And waiting.
Seasonal adjustments added 500,000 to the labor force. In otherwords…the 103,000 is merely a season adjustment and not actual counted.
In my humble opinion, you just don't get it.
Retail numbers reported yesterday were tremendous, many of the same-store sales gaining double digits and blowing away the estimates. Auto sales are way up, and these are significant purchases, not a day at Walmart. ISM numbers rose and show endless consecutive months of expansion, not contraction. Rail traffic just hit three-year highs. Etc. Etc.
You want to focus on how the ever-in-the-media unemployed are doing, as your principal fulcrum for deciding how the economy is doing or whether we'll have a recession? This will lead you nowhere. The behavior of employed people drives the economy, not the wishes and hopes of those not employed, or those standing around protesting down at Wall Street, rather than looking for a job. A lot of the discussion about unemployment is more suited to political science and sociology classes than investment management.
I don't base my assessments on the employment number and neither think the current report is "great" or poor. I probably view it as the least important number in the economy, being the "laggingest" of lagging indicators. I am far more concerned with what employed people are doing and what results corporations are reporting.
None of the foregoing means that a prudent investor should not be well hedged, diversified and balanced, given the overall situation, but, to me, being very short, given the actual economic situation and given the market's steep recent declines, is rife with risk, far more than any balanced long position.
In my humble opinion, you just don't get it. Numbers you are mentioning were... Hm, let's say modest. On the other side, you have proven recessionary slowing in Europe, and if you think it will not hit US labour market or banking sector, I would say it is delusional. Europe just can't get it together, it has been trying for almost 2 years now, and the latest result? France wants EFSF to recapitalize its own banks, Germany says nein, that is the last resort. First official very serious rift between France and Germany, after two years of wrangling in the EZ. And it would lead Europe right to recession, they already are in borderline contraction, which will be seen soon. And the US will feel every single consequence of it.
As I said previously, we each choose the datapoints we want to follow. At this point, to me, the most meaningful call is the ECRI one which is a forecast for the future not a current forecast. If they change their call then I will change mine.
By the time we are in a recession it will be too late to make adjustments.
As I said in prior posts, I thought the markets would rebound to the 1220-1260 range before running out of steam, but the ultimate downside will be in the 950 range assuming ECRI is right.
I am amazed by the level of increasing bullishness as evidenced anecdotally here and elsewhere in the media. No one is calling for a recession except for a very small number of contrarians. This is what creates the setup for a big fall if the result is counter to the conventional wisdom.
The consensus economists did not predict the onset of the greatest recession of our generation and yet they are still considered credible. I can't explain it.
As an FYI, ECRI was the first major group to call the last recession as well even though they did so after it started they were still way ahead of everyone else.
If you have the time this article from Ambrose Pritchard Evans is worth reading (doom and gloom!):
http://tgr.ph/oP2RK1
"Nautical twilight" - tread carefully.
If you want to follow somebody else's opinion --and that's all ECRI is, an opinion-- that's fine. I make judgments based on actual hard data. I've always done it that way, and it's served me well. As for recession calls being "just a few," I think you must have been residing in a cave. Have you had the mainstream media on lately? It's been relentless pessimism.
The market has already priced in a recession, so I'm not sure why betting on steep market declines is where to be right now, especially when little or no data is confirming that direction.
Modest?
JWN +10.7% vs. +5.2%
SKS +9.3% vs. +6.5%.
TGT +5.3% vs. +3.9%.
COST +12% vs. +10.1%.
LTD +11% vs. +4.6%.
These are modest? These gains have been achieved while we're being told recession is "unavoidable" and consumers are "stretched" and cannot make an impact. These numbers would be good in boom times, much less now. One has to put pessimistic blinders on to judge these results as "modest."
And, how is rail traffic at three-year highs "modest?"
Or, substantial increases in auto sales?
Europe is a risk and potential threat, but, it's not at all apparent that the Europeans will not recapitalize their banks through national or regional efforts. In fact, it's virtually assured they will, as they have no other choice.
Personally, I'd be very nervous to be deeply short right now. Six months ago, no, but, now, yes.
"Personal income decreased $7.3 billion, or 0.1 percent, and disposable personal income (DPI)
decreased $5.0 billion, or less than 0.1 percent, in August, according to the Bureau of Economic Analysis."
Plus saving contracted dramatically. That tells me people are back to the credit card trough….which will end badly like it did last time.
…and the bankers agree:
"Bankers expressed concern about consumer credit health beyond mortgages. When asked their opinions about the next six months, a large number of survey respondents indicated that they expect delinquencies to rise on auto loans, credit cards and student loans." http://bit.ly/rsosQS/
Meredith Whitney? What does she have to do with this discussion?
The "media" is a datapoint?
ECRI is not an "opinion" - it is a conclusion based upon a process which in turn is based upon hard data. You really should not create straw men.
We started the year at consensus growth of over 4% for 2011 and we are heading for less than 2% so who was wrong?
And now:
http://bit.ly/nbyG03
"The advance estimate of Q3 growth in GDP is due to be released on October 27. The current consensus among economists who contribute to the national newsletter Blue Chip Economic Indicators calls for Q3 growth of 1.9 percent, an improvement over Q2. Analysts expect growth to be positive but slow in the quarters ahead.
The general public may see the economy differently. Confidence measures tracking the sentiments of consumers, small business owners, and executives are less than robust. A CNN poll (September 2) found 80 percent of those surveyed believe the economy is in recession right now, and 35 percent said the recession was "serious."
A historical note suggests we should not discount the extreme gloom that pervades the public perception of the economy. In December of 2007, the prevailing consensus among private economists was that recession would be avoided, Q1 2008 growth in GDP would be a positive 1.4 percent, and GDP would improve each quarter after that. A Gallup Poll survey at that same time found only 20 percent of respondents described the economy as getting better.
Instead of behaving as economists expected, Q1 2008 GDP decreased by 1.8 percent and our deepest and longest post-war recession was underway.
Although most analysts are still treating the prospect of recession as a possibillity rather than a certainty, it should be noted the probability has been increasing in recent months. The Blue Chip economists now put the odds of a recession by the end of 2012 at 33 percent, with the 10 least optimistic approaching a 50/50 chance of a double dip."
I have done quite well this year following ECRI - their December 2010 call was the right one if you are not a Trader but an investor.
Let's agree to disagree. If I am wrong in my opinion, I have no problem expressing it.
Tell me you see consumer "gloom" represented in the same-store data I posted just below your reply.
This opinion poll, that opinion poll. Polls of consumers. Polls of businessmen. Polls of investors.
Watch the data, not all the opinions. The idea that opinions translate themselves into behavior is continuously refuted in actual data. People often grouse in polls and express moods, concerns, bad-hair days, then go right about their business, as usual. In fact, this is probably more typical than the contrary.
Is a recession impossible? Of course not, but, it will only happen if people talk themselves into it. It's certainly not in the cards from any view of current personal consumption, corporate results or available liquidity to support the economy.
In fact, the most important ingredient to continued gradual improvement is for the Government and the Fed to do precisely nothing. If they start meddling again, then, look for the mischief they create to depress markets and the economy.
But they will do something because they think what they do drives the economy. It does, but only into the ground. Doing nothing is an action that you can't brag about. After doing something that fails you can still opine that your intentions were good.
Everything I posted supports your point of view... and mine.
You are in the mainstream viewpoint (I am not) and the BlueChip economic forecasters agree with you that there will not be a recession. The odds of a recession should be close to zero as the NY FED Model predicts so you are on very solid ground.
Recessions are rare, down years in the market are rare (30% or less of the time), profits are high, multiples are low, expectations are muted so in that respect the case for being bullish on the market is unbelievably positive. People should be buying with both hands.
I am planning for the possibility that a recession CAN happen not that it WON'T happen.
Better for the country if I am wrong but my gut tells me otherwise and I choose to follow my gut guided by intellect :)
As far as investing is concerned, I have chosen to funnel what would normally be my equity allocation directly into Angel Investing in the next generation of business leaders - putting money into entrepreneurs hands will do more for job growth and the future of this country than buying publicly traded equities. It is non-correlated so very diversifying and also extremely gratifying.
I wish you the best.
1/9 the size and no bailouts, no stimulus, and no BS.
This would translate to over 500k in jobs here.
It is time for you to be a man and admit you are plain wrong.
Watch out for those poodle poops they are bad for your dancing shoes.
Borg, Star Trek: "Death is irrelevant... And any resistance is futile."
Wonder when we're going to learn you can't cut your way to prosperity. Someone has to spend. Corporate cash needs to find work, and not sit in vaults and bonds, unemployed.
Already been tried before - What's the point?
When the Government stops creating endless uncertainty with myriad mandates, tax proposals and regulations, then, business will act, but not before then. Likely, that means post-Obama because he's incapable of altering his anti-business, anti-capitalist positions, even if it kills him.
As for Government jobs contracting, it can't happen enough. They represent an endless non-productive drain on the real economy.
Employers are learning to do more with less and more layoff's are imminent. Our government is dealing with deficits which means more public sector layoff's are more likely than not.
Leading indicators are suggestive of sluggish growth. Unfortunately, bulls are getting excited over "not so bad news" in hopes of taking their mind away from the crisis in Europe. Remember, the slightest hint of additional slowing in the U.S. or failure to implement austerity in Europe will give stocks a new low! Trade with caution.....
i would also like to see a dysfunctional government adopt simpson / boles and structurally change the landscape.
then i again ...pigs dont fly .
When O's posterior quarters get hit by the screen door, business investing and spending will go ballistic. Meanwhile, consumers are doing a rather remarkable job.
greed will eventually beat fear.the question remains where is the dow when this happens ? i think its dow 10,200 before we get there.