Stocks Slide Amid Reminders of Weak Job Market- AP
Started by lr10021
about 17 years ago
Posts: 175
Member since: May 2007
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I just went to Yahoo Finance and the above cheesy headline appears. Isn't it fun to see how forgetful the market is? What reminder are they talking about? It has been a foregone conclusion that the unemployment rate will reach double digits fairly soon from 9.5% -- The small business sector is a mess. IMO, the whole stock market rally occurred because of two things stimulus/bailouts, and the lean... [more]
I just went to Yahoo Finance and the above cheesy headline appears.
Isn't it fun to see how forgetful the market is? What reminder are they talking about? It has been a foregone conclusion that the unemployment rate will reach double digits fairly soon from 9.5% -- The small business sector is a mess. IMO, the whole stock market rally occurred because of two things stimulus/bailouts, and the lean methodology - a company's ability to quickly right-size for demand.
Regarding Lean, following the 2002-2003 recession, which was a doozy for corporate profits, most corporations adopted new metholodogys to quickly right size for demand. That means they pulled the pink slip trigger as fast as they could. So theory would have it that they will ramp up hiring quickly. But is anyone really hiring? If not, why? Because for the first time in a long time the American consumer is not coming back so quickly. Why? Maybe it has something to do with 10% unemployment and 2 serious wealth bubbles in a decade? Kind of puts a damper on things.
Regarding Stimulus and Bailouts, artificial stimulus that has to be paid for by the very tax payers that are expected to prop up the economy can never be a good thing. It seems that the government is creating another bubble in the mindset of the economy. This one should be called the bailout bubble.
Don't buy into this trap, because when the excess that we artificially engineered has to be pulled back, by natural economic forces, limits, or even by different government, the American consumer might not be there to save you. Hopefully the BRIC consumers will be.
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Look at what happened in that first quarter GDP number — total GDP contracted around $30 billion at an annual rate, but when you strip out all the government activity, ranging from spending, to tax reductions, to benefit payouts, the decline exceeded $300 billion. In other words, without all the government intervention, the decline in GDP in 1Q would have been closer to an 8% annual rate, not 1%.
....
But what all these gimmicks do is bring forward consumption — they don’t “create” anything more than a brief spending splurge at the expense of future performance — the pattern gets distorted as opposed to there being any real permanent change in the trend.
Even as economists start to pen in 3.0%+ GDP growth for 3Q, we remain of the view that we could end up with something closer to 1.0% growth or a touch better.
As for 4Q, the key will be the consumer, and without more government support, either in the form of stepped-up spending incentives or extension of jobless benefits, the odds of a relapse towards 0% growth is non-trivial. This is beyond the limited time horizon of the equity market, but come Labour Day, attention will turn away from the recession ending (assuming it has — one quarter does not make the difference) towards the contours of the recovery (assuming we have one).
......
Rosenberg also points out that the 46% rally in 101 days is unmatched dating back to 1933. I suppose the rally could continue given the 1933 rally lasted 249 days taking the stock market up 172%. However, I would not recommend playing for it.
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Response by lr10021
about 17 years ago
Posts: 175
Member since: May 2007
AR - awesome read. Agree with everything with the following exception:
I don't think the rally will continue because the recession was not as bad as the TGD. Therefore any bounceback should be relative. I think that come mid-August and September that market is going to be gripped by fear again, on the demand side. I think we set the tone for the month with the job number due out on Friday. It can't be good given todays report on the private sector, weak wages yesterday, and some anecdotal evidence that I see from time to time.
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Response by lr10021
about 17 years ago
Posts: 175
Member since: May 2007
Vacancy rates continue climb in July
August 04, 2009 06:30PM
Manhattan office vacancy rates rose and asking rents fell in July after a relatively stable June, according to the monthly office market report from Colliers ABR released today. The Class A vacancy rate in Manhattan rose to 12.1 percent, the highest rate since June 1997. The increase in the Class A vacancy rate was due to a rise in space available for direct lease, even as the amount of sublease space on the market actually fell. Class A asking rent dropped 2.1 percent to $64.22 per square foot from $65.77 per square foot in June. In Midtown, the vacancy rate rose to 13.7 percent, and was over 15 percent in the Plaza and Grand Central submarkets. The vacancy rate hit 13.9 percent in Midtown South and 8.4 percent downtown, all increases from June. While July saw several noteworthy leases and renewals, most were for the same amount of space or less than the tenant already held, according to the report. TRD
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Response by mh23
about 17 years ago
Posts: 327
Member since: Dec 2007
AR, I read that as well. Rosenberg has been very accurate for the several years that I have been following him. I suppose that this rally could go on for a while longer, but fundamentally, things are not good. As Rosenberg points out, absent Government stimulus, there is no demand. Now, as far as China goes, they have plenty of cash, so if they want to inflate a stock market and real estate bubble, that's fine. We, on the other hand, do not, so our stimulus is really just adding more debt to our over burdened economy.
Kensyian stimulus plans only work if private demand is in place when the government stimulus ends. It was not there in 1937 when FDR reigned in spending, and the US went into another leg of the Depression. In our situation, things are even more challenged because we are going through a massive deleveraging, which means that once things "bottom", there is nor engine for demand out there that I can see, hence an L, rather than V shaped recovery.
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Response by lr10021
about 17 years ago
Posts: 175
Member since: May 2007
It's official - the rally is over - Citigroup is up over 10%
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Response by lr10021
about 17 years ago
Posts: 175
Member since: May 2007
wait AIG is up 65% --- revenge of the bail outs?
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Response by aboutready
about 17 years ago
Posts: 16354
Member since: Oct 2007
Who needs strong earnings from P&G when we've got AIG.
Mish, quoting Rosenberg.
http://globaleconomicanalysis.blogspot.com/2009/08/global-gdp-rebound-is-underway-but-whos.html
Look at what happened in that first quarter GDP number — total GDP contracted around $30 billion at an annual rate, but when you strip out all the government activity, ranging from spending, to tax reductions, to benefit payouts, the decline exceeded $300 billion. In other words, without all the government intervention, the decline in GDP in 1Q would have been closer to an 8% annual rate, not 1%.
....
But what all these gimmicks do is bring forward consumption — they don’t “create” anything more than a brief spending splurge at the expense of future performance — the pattern gets distorted as opposed to there being any real permanent change in the trend.
Even as economists start to pen in 3.0%+ GDP growth for 3Q, we remain of the view that we could end up with something closer to 1.0% growth or a touch better.
As for 4Q, the key will be the consumer, and without more government support, either in the form of stepped-up spending incentives or extension of jobless benefits, the odds of a relapse towards 0% growth is non-trivial. This is beyond the limited time horizon of the equity market, but come Labour Day, attention will turn away from the recession ending (assuming it has — one quarter does not make the difference) towards the contours of the recovery (assuming we have one).
......
Rosenberg also points out that the 46% rally in 101 days is unmatched dating back to 1933. I suppose the rally could continue given the 1933 rally lasted 249 days taking the stock market up 172%. However, I would not recommend playing for it.
AR - awesome read. Agree with everything with the following exception:
I don't think the rally will continue because the recession was not as bad as the TGD. Therefore any bounceback should be relative. I think that come mid-August and September that market is going to be gripped by fear again, on the demand side. I think we set the tone for the month with the job number due out on Friday. It can't be good given todays report on the private sector, weak wages yesterday, and some anecdotal evidence that I see from time to time.
Vacancy rates continue climb in July
August 04, 2009 06:30PM
Manhattan office vacancy rates rose and asking rents fell in July after a relatively stable June, according to the monthly office market report from Colliers ABR released today. The Class A vacancy rate in Manhattan rose to 12.1 percent, the highest rate since June 1997. The increase in the Class A vacancy rate was due to a rise in space available for direct lease, even as the amount of sublease space on the market actually fell. Class A asking rent dropped 2.1 percent to $64.22 per square foot from $65.77 per square foot in June. In Midtown, the vacancy rate rose to 13.7 percent, and was over 15 percent in the Plaza and Grand Central submarkets. The vacancy rate hit 13.9 percent in Midtown South and 8.4 percent downtown, all increases from June. While July saw several noteworthy leases and renewals, most were for the same amount of space or less than the tenant already held, according to the report. TRD
AR, I read that as well. Rosenberg has been very accurate for the several years that I have been following him. I suppose that this rally could go on for a while longer, but fundamentally, things are not good. As Rosenberg points out, absent Government stimulus, there is no demand. Now, as far as China goes, they have plenty of cash, so if they want to inflate a stock market and real estate bubble, that's fine. We, on the other hand, do not, so our stimulus is really just adding more debt to our over burdened economy.
Kensyian stimulus plans only work if private demand is in place when the government stimulus ends. It was not there in 1937 when FDR reigned in spending, and the US went into another leg of the Depression. In our situation, things are even more challenged because we are going through a massive deleveraging, which means that once things "bottom", there is nor engine for demand out there that I can see, hence an L, rather than V shaped recovery.
It's official - the rally is over - Citigroup is up over 10%
wait AIG is up 65% --- revenge of the bail outs?
Who needs strong earnings from P&G when we've got AIG.