Improving Economy and Historic Low Interest Rates

"if things continue the way they are now" -- including unemployment?

nothings is gonna matter until we get job creation

don't worry everyone. The jobless recovery will be here sooner than you think!

When are you guys going to understand that unemployment is a lagging indicator. Everyone knows that except for you guys. Are you so blind to see what the market is saying?

"When are you guys going to understand that unemployment is a lagging indicator. Everyone knows that except for you guys. Are you so blind to see what the market is saying?"

ahh yes..straight from the day traders guide to economic analysis...lets go outside the box a little and look at the problems and how we got here. if people are still unemployed and underemployed, how can they dig their way out of a hole? how can comsumers spend like they used to, if they are unemployed? what happens to commercial RE when business is not expanding?

unemployment means that you don't have a job which means that you don't have any income which means that if you don't have someone else or savings to support you that you're screwed.

go to michigan or ohio and tell the 15-20 % of the population who are unemployed that they're lagging indicators. i'm sure that will provide great comfort for them.

ericho...the last hope the bears have is unemployment and they refuse to understand the lagging part. "The economy gets better first bears and then hiring begins shortly thereafter"...got it?.

And unemployment is a result of????

As businesses are doing better, their upcoming budget will get BIGGER which will probably pave way for hiring.
You should study economic 101.

"the last hope the bears have is unemployment and they refuse to understand the lagging part."

And i wonder what they will try to pull next as unemployment improves early next year.

The problem is always that people usually wait until things are better instead of getting better. I am not saying that this is the turnaround but the masses usually don't pull the trigger until way late in the game.

There are no signs of a turnaround or a bottom yet - people are just guessing as to whether we'll bottom in 6 or 12 or 18 months. Beating consensus earnings estimates and missing revenue estimates is not a turnaround. All you day traders are focused on beating EPS but you're completely overlooking the revenue misses which indicate that things are still getting worse and companies are simply cutting costs - and cutting costs means other companies / people are losing revenue which means the economy is still heading south.

"The problem is always that people usually wait until things are better instead of getting better. I am not saying that this is the turnaround but the masses usually don't pull the trigger until way late in the game."

Bingo!
The mass are always too afraid to buy at the bottom.
When prices start to trend up, they also refuses to buy at the bottom because they missed the lows.

this is funny..its the chicken and the egg debate. How do business's do better ? whats more imprtant..top line growth or cost cutting ?

75% of S&P is now beating consensus. People were expecting LOWER earnings numbers. These same folks are now pricing in earnings to be a little bit better. If earnings come in stronger again next quarter, then adjustment will be made again to the upside....on and on...

btw, who's shipping all them goods on sea?

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

"btw, who's shipping all them goods on sea?

http://investmenttools.com/futures/bdi_baltic_dry_index.htm"

dude you have no idea what goes into those BDI numbers. look at the long term chart and then the factore that go into it.

how about all those goods on land? UPS lowered numbers

how many people determine the rise and fall of the stock market? less than 10,000? less than 50,000?

No CC...billions...

If you look at the market over the past century and lay it down on top of unemployment and actually economic data, you'll see the correlation.

Glad you guys know what a lagging indicator is. Guess what indicator lags unemployment? RE.

By the way there is not agreement that the unemployment rate will be a lagging indicator this time around. see, e.g. El-Erian

billions? is that a joke?

Yes..that's correct.
The collective effect of billions on earth dictates the direction of the market. If you understand that concept, you're on the road to riches.

hilarious. you seem to really believe this?

how many of those billions of people were involved in the recent nose dive in the market?

I think US equities will have a serious correction in Q3-4 when people realize that the economy is still heading south and won't bottom for another 6-12 months, and after bottoming it will grow at an incredibly slow pace.

"When are you guys going to understand that unemployment is a lagging indicator. Everyone knows that except for you guys. Are you so blind to see what the market is saying?"

The irony of the guy saying everyone else doesn't get it being the one who REALLY doesn't get it.

Yes, unemployment normally lags, absolutely.

But thats why this is such a big recession... we also got hit early and hard.... and we have the highest unemployment in decades.

The early unemployment isn't a sign that the recession is ending, its a sign of how bad things are. If we follow the normal pattern, unemployment is going to get significantly worse.

Speaking of empirical (historical) data, if one looks at the market during the Great Depression, which arguably is the most relevant comparison to this downturn - especially when one considers that UNDEREMPLOYMENT is close to 20% - a similar pattern existed.

After the crash of 1932, the market came roaring back (similar to the current rally), but gave back almost all of the gains the following year. When one considers that the largest # of ARM resets will not occur until mid-2010, it's not only possible, but likely that this fragile recovery financed by all of us on this job board may very well collapse.

I also cringe to point out that the market took almost thirty (that's 30) years to reach the market peak established in 1929.

I want a recovery as much as the rest of us, but Wall Street AND Main Street are back to the same old habits that got us into this mess in the first place. Combine that with 20% underemployment, and it's a recipe for disaster.

Sorry to be doom and gloom, but hope, while a temporary self-fulfilling prophecy - eventually needs to be solidified with actual facts. The current rally is based on profits that are slightly beating ridiculously lowered estimates. Revenues, on the other hand, continue to come in light. Translation: "Efficiencies", which really means layoffs and hourly reductions for workers. The other "positive" news is that initial claims were ONLY 554k and continuing claims haven't budged?? Someone will need to explain to me how that's good news...lagging or not.

So may be this is "jobless recovery"?? I have a little anecdote for that:

Henry Ford toured his assembly line plant one day and said to the plant manager, "at this rate, we won't need any people to build the cars", to which the plant manager responded, "then who will buy the cars?"

On a daily basis, a few institutions can swing the market one way or the other, but in the long run macro economic trends will determine everything

but how many actual people determine the meaning of those trends? and translate them into actual bid/ask prices?

"hilarious. you seem to really believe this?"

It's hilarious you don't get it. People buy and sell based on earnings expectations. Earnings are driven by consumers. Everyone of us one way or another contributes to this global economy. What is it that you don't understand? Are you one of those nutty bears that thing everything is rigged in this world. I know a perfect place for you....

http://media.photobucket.com/image/bomb%20shelter/radishbeet/fall-out-shelter519x501.gif

Speaking of empirical (historical) data, if one looks at the market during the Great Depression, which arguably is the most relevant comparison to this downturn - especially when one considers that UNDEREMPLOYMENT is close to 20% - a similar pattern existed.

After the crash of 1932, the market came roaring back (similar to the current rally), but gave back almost all of the gains the following year. When one considers that the largest # of ARM resets will not occur until mid-2010, it's not only possible, but likely that this fragile recovery financed by all of us on this job board may very well collapse.

I also cringe to point out that the market took almost thirty (that's 30) years to reach the market peak established in 1929.

I want a recovery as much as the rest of us, but Wall Street AND Main Street are back to the same old habits that got us into this mess in the first place. Combine that with 20% underemployment, and it's a recipe for disaster.

Sorry to be doom and gloom, but hope, while a temporary self-fulfilling prophecy - eventually needs to be solidified with actual facts. The current rally is based on profits that are slightly beating ridiculously lowered estimates. Revenues, on the other hand, continue to come in light. Translation: "Efficiencies", which really means layoffs and hourly reductions for workers. The other "positive" news is that initial claims were ONLY 554k and continuing claims haven't budged?? Someone will need to explain to me how that's good news...lagging or not.

So may be this is "jobless recovery"?? I have a little anecdote for that:

Henry Ford toured his assembly line plant one day and said to the plant manager, "at this rate, we won't need any people to build the cars", to which the plant manager responded, "then who will buy the cars?"

still haven't answered my question. how many actual people do the interpreting that create prices?

society detremines the trends, and the trends are then reflected in capital markets.

A few major institutions.
But who orders them to enter the bid/ask? Investors..big and small. And how does these investors decide at what price the bid and ask should be? Based on macro economic news and trends...and who drive these trends...

Consumers...billions of them around the world.

"interpreting that create prices?"

Man..you ready are clueless.

hasn't it been sufficiently documented that relatively few individuals (certainly less than 25,000) created the sub prime meltdown?

For what it's worth:
I personally know a lot of people that were laid off last week from sales and IT in non finance industries. Up until six months ago, the job losses seemed limited to finance. In my personal network, it's starting to trickle over to other industries.

Anyone else notice similar things?

so according to johngalt, we'd never emerge from any recession, ever, because it would be a never ending cycle of layoffs leading to reduced consumer spending leading to more layoffs, further reductions in spending, etc.

but that's not what happens. now that companies have made their major cuts, and they are more profitable than feared, they will cautiously increase spending - say more marketing, or some IT infrastructure they'd put off. and so those companies which have also cut to the bone see some revenue increase, and maybe hire a couple of people, and then you gradually begin the expansion process. of course other areas are still cutting, so it takes a while for the net numbers to be positive. you people act like this is the first time we've ever had a recession

are we really going to rehash the endless discussion of whether this is a so called normal recession or a sign of something worse yet short of the big D?

Tiny bubbles (tiny bubbles)
"In the wine (in the wine)
Make me happy (make me happy)
Make me feel fine (make me feel fine)

Tiny bubbles (tiny bubbles)
Make me warm all over
With a feeling that I'm gonna
Love you till the end of time"

RIP Don...

sniff sniff... I smell bear season coming... and a hint of Azz, is that you Ericho69? :)

Of course it will end. It always does. But WHEN is the question, and at what expense? How much debt? According to printer we may as well never sell any equities because eventually everything will go back up. Actually, that's probably true, but there's a wrinkle. If it takes 10, 20, or 30 years to "recover", how will the older generations sustain themselves? Unless they're among the top 1% or 2% of the population, don't they HAVE to sell something at some point? If demand and credit aren't there to support that supply...well you know the rest.

So, sure - eventually we'll get back on track, but it could take as long as it did in 1932 - 30 YEARS!

I bet you bought Amazon at $400/ share. How long do you plan to wait for that to come back?

Tim Duy has some great charts showing why this recession, with its unemployment situation similar to the one in the early '80s, won't result in the v-shape recovery that occurred then. this won't be a "big recession, big recovery" scenario.

http://economistsview.typepad.com/timduy/2009/07/the-debate-continues.html

http://robertreich.blogspot.com/2009/07/wall-street-rally-watch-your-wallets.html

"According to the chief investment officer at BNY Mellon Wealth Management, if the companies that haven't yet reported earnings show the same pattern a the companies that have reported so far, overall corporate earnings will have dropped 25 percent over the past year. That may not be as much of a drop as analysts had expected, but it's still awful. Operating income for companies in the S&P 500 that have reported so far has been almost 29 percent lower than last year, more than 80 percent lower than 2007, according to Standard and Poors. Ouch.

"Better-than-expected" is Wall Street's euphemism these days for "we're happier than we thought we'd be." But Wall Street is in the business of cheer leading, even when there's really nothing to cheer about. It wants investors to think positively, on the assumption that positive thinking can be a self-fulfilling prophesy: If investors begin putting more money into the market, then the market will automatically rise, leading more investors to put in more money -- until, that is, the rally ends because nothing has fundamentally changed in the real economy.

Keep your eye on the real economy, where unemployment and underemployment keep rising. It's not as much fun as cheering and investing right now, but it's far safer."