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TMFDeej (99.47)

*GASP*... I have something positive to say.

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May 08, 2009 – Comments (13) | RELATED TICKERS: JOBS

 

Good morning everyone.  The Bureau of Labor Statistics published its April Employment Report this morning.  As usual, the numbers are bad and in reality they are worse than they appear at first glance.  Having said this, there were a few positives that can be taken away from it.

Let's start with the bad stuff.  Despite the fact that the number of job losses for the month came in at -539,000, which was less than expected, this number understates the real world number of losses. 

First of all, once again the BS er um BLS added 228,000 to the report using the good old birth / death adjustment. 

Furthermore, 72,000 of the jobs that were added in April were government jobs.  The number of private aka non-government jobs that were lost was actually 611,000.

Also, once again the BLS made a negative revision to the prior month's jobs number.  This adds another 66,000 job losses in February and March.

All of the jobs that were added during the month came in government, education, and health.  I expect the latter two to come under increasing pressure in the future.

That's the negative. 

Here's the positive (am I allowed to mention that here?).  Things are clearly bad and getting worse, and I realize that this is no consolation to the millions of people who have unfortunately lost their jobs, BUT...looking at things objectively the rate of deterioration in the economy seems to be slowing.   The rate of decline in jobs was the smallest in six months.  Even after backing out the new government jobs the 611,000 jobs lost in April was less than the 699,000 revised or 663,000 that were originally reported to have been lost in March and the 681,000 / 651,000 that were reported in February.  Furthermore, the weekly jobless claims numbers have been a little better lately.

I have little doubt that the U.S. unemployment rate (I know that U6, which is currently at 15.8% is a better number) will eventually hit 10%, but if we can stop the cliff dive that the economy has been in over the past 8 months or so the stabilization process can begin.  Things have to stop getting worse as quickly before they can stabilize.  I think that is exactly what will happen.  We're in for an "L" shaped recession. 

The stabilization process is something to keep an eye on.  Over the next year, I personally expect that the pace of job losses will begin to slow and that we will hit a bottom and sit there for a while.  This is consistent with my previous statements looking for slow to no growth over the next several years.  We're not all doomed, but things aren't going to get better any time soon either.  This thought ties in nicely with my new favorite quote:

It is possible it is better to be 200 yards from hell and moving away than 10 miles away and moving toward it.

Having said all of this positive stuff I am not buying stocks right now, nor have I found any opportunities in bonds that were nearly as attractive as I saw several months ago.  I have been keeping any new money that I am able to save in cold, hard cash for how. 

Not only do I want to be prepared with a large safety net if these job losses hit me or my wife personally, I personally feel as though stocks are actually overvalued at this point after our recent bull run.  The price-to-peak earnings multiple for the S&P 500 is now approximately 11 BUT and this is a HUGE butt, er uh I mean but, there's absolutely no way that we are returning to the level of profits that we saw in 2007 any time in the near future.  Profit margins then were around 50% higher than their historical average, in part as a result of all of the crazy leverage that was being used. 

Looking at more normalized profit margins the current valuation of stocks is probably above its historical average, which means that returns from stocks will likely be below average from this point. 

Here's a rant on a somewhat related note:

Once again, a CNBC anchor annoyed me this morning.  Not only is she a homewrecker, but Becky Quick is actually stupid as well.  When she heard one of the guests on Squawk Box state that the large number of government census jobs that were created last month were only temporary and are lower quality than what most people want she cluelessly said several times something along the lines of “I don’t understand, They’re jobs."

Ahhhh hello Miss Pampered News Anchor.  Let's see you get up from your cushy job behind a desk and hit the street with a clipboard doing census work for minimal pay.  Then perhaps you'll understand what the guest on your show was talking about.

Deej

 

P.S. Becky...you're not nearly as hot as you think you are.

13 Comments – Post Your Own

#1) On May 08, 2009 at 10:30 AM, portefeuille (99.77) wrote:

the link

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#2) On May 08, 2009 at 10:34 AM, TDRH (99.85) wrote:

Wait for the adjustment- personally I think it is mostly spin.  The rate may be slowing, but the pain is real and 70% of  the economy is based directly on consumer spending.  

 Your Dad's quote is pretty spot on.

Ref:  Miss Pampered News Anchor

Not to appear sexist, but to me it is similar to the conservative mouthpiece Ann something or another,  going on and on about how the US interrogation techniques are wussified, and not real torture, and how the liberal media distorts the process.

I consider myself relatively conservative, but I don't believe she would last very long in waterboarding before she called her Liberal New York attorney and made an appointment at the hairdresser.

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#3) On May 08, 2009 at 10:48 AM, TMFDeej (99.47) wrote:

Hmmm, my link to the report didn't work.  Thanks for fixing it, port.

Deej

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#4) On May 08, 2009 at 11:00 AM, TMFDeej (99.47) wrote:

Oh, there's no doubt that this pain is very real, TDRH.  A number of my very close, personal friends have been affected by it. 

The U.S. economy definitely is messed up.  We let it become way too dependent upon consumer spending and services.  We need to actually create things of value that we can export rather than financial engineering, working for an ever-growing government, and serving each other fancy coffee.

This is one of the reasons why the government's treatment of the automakers bothers me so much.  Believe me, I know first hand that they were TERRIBLY run companies, but at least the build stuff.  A huge number of these banks that Uncle Sam is blindly throwing dollar after dollar at create nothing of value at all. 

I know that the economic growth depends upon the flow of money and that the system was dangerously close to collapse, but think about it...What real value does Goldman Sucks create (disclosure I'm long Goldman)? 

Nothing. 

They just move money around from place to place and continuously skim some off of the top in the process. 

In order for America to be successful long term, we need to have real companies that invent and produce real stuff that people, particularly those in foreign countries, want to buy. 

The profits in finance and banking got way out of line and salaries there were too high.  These industries sucked the real, talented, intelligent Americans in with their huge pay packages and bonuses when we really need our smartest people creating things of value.  I'm glad that the banks are messed up.  We need them, but I believe that part of our problem is that they had become too powerful.

Enough ranting, I'm actually pretty busy today.

Deej

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#5) On May 08, 2009 at 12:56 PM, bostoncelitcs (69.26) wrote:

Thank you for your "positive" sentiments.

It's very comforting.

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#6) On May 08, 2009 at 1:21 PM, dbjella (< 20) wrote:

Deej -

Why are people exepting an "L" shaped recession?

I wonder how things like the internet, cell phones, twitter, facebook....things that didn't really exist in previous recessions help close the information gap that existed previously.  Too me the information gap kept people from connecting quicker. 

Previously, an employer would put an ad in the paper.  Applicants would mail their application and maybe follow up with a phone call.  Employers had to open the mail and sift through the paper.  The whole process took longer than today.  

Today, we have so much more access to information and we are becoming more nimble everyday.  Obviously, the economy needs to be growing, but shouldn't we get to a recovery faster with our connected society? 

So, why do you expect a long recession?

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#7) On May 08, 2009 at 1:25 PM, FoolishChemist (98.16) wrote:

Letterman's first question to her.  "What are your qualifications?"  Then "Do you have an MBA?"

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#8) On May 08, 2009 at 2:09 PM, motleyanimal (97.75) wrote:

She dresses too conservatively. I can't see her gozongas.

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#9) On May 08, 2009 at 3:01 PM, TMFDeej (99.47) wrote:

Hi dbjella.  Take a look at the cool chart that I pasted at the top of this post.  As you can see, despite the advances in technology that you cited the recovery period for jobs is taking increasingly longer. 

The jobs recovery has taken longer in the past two recessions than in any other recession post World War II.  It took jobs nearly twice as long to recover after the 2001 recession than it has in any other. 

The Federal Reserve is losing its ability to continue propping up the economy to avoid a long overdue recession.  By propping things up the last several times around instead of letting the chips fall where they may they were only delaying the inevitable.  Now we are feeling all of the pain that should have been felt gradually all at the same time. 

Technology is great, but I personally feel as though we have already squeezed much of the productivity gains that we will see out of the Internet from it.  Sure there's more to come, but the impact will not be nearly as dramatic as when the Internet was first introduced. 

To me, some of the things that you mentioned, like Twitter and Facebook are practically worthless from a productivity standpoint.  If anything, they make people less productive.

The jobs application process has been streamlined by the Internet, but it doesn't matter how easy it is to apply when there aren't any new jobs to be had.  Even if things were less efficient in the past, if a job opened up during a recession people would have absolutely found out about it

Deej

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#10) On May 08, 2009 at 4:58 PM, leohaas (93.60) wrote:

"What real value does Goldman Sucks create (disclosure I'm long Goldman)? "

Interesting: to be long a stock in a company that does not create any value. Can you explain this one?

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#11) On May 08, 2009 at 5:15 PM, TMFDeej (99.47) wrote:

They don't create any value for society...just themselves and they control everything.  I own only GS preferred and bonds with high yields.

Deej

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#12) On May 09, 2009 at 9:28 AM, garyc27 (< 20) wrote:

Job Loss and why you can't "create" anything in America.  Here is a story about job loss due to government and environmentalist action.

There is disbelief from the Californians who are responsible for delivering drinking water to 25 million of their fellow countrymen and irrigation water to three million acres of some of the most productive farmland in the world. A ruling by U.S. District Court Judge Oliver Wanger in Fresno, has restricted water deliveries from the northern to the southern two-thirds of the state.The ruling is to save an endangered minnow, the Delta smelt, a species that grows to no more than three inches and never lives longer than a year under ideal conditions.  Those who want to preserve the smelt say the minnow is a benchmark for the ecological health of the Delta. It apparently has no other benefit to mankind. No one has said it is the only indicator of Delta ecological health.  The judge’s ruling stemmed from a lawsuit filed by Natural Resources Defense Council and other environmental organizations which claim the pumps are threatening the endangered species.

http://hannity.blogs.foxnews.com/2009/05/07/fish-or-famine/ Report this comment
#13) On May 13, 2009 at 3:13 PM, bostoncelitcs (69.26) wrote:

I wonder if Exxon Mobil ever paid off their fines for the Exxon Valdez spill........I guess their profits weren't BIG enough during the Bush administration,  they needed to have the fine reduced.

Maybe Hannity and FoxNews can do a story on that?

 

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