Posts Tagged ‘ jobs ’

Bernanke’s Labor Market Speech – The Case for Continued Accommodative Policy

March 30, 2012
By
Bernanke’s Labor Market Speech – The Case for Continued Accommodative Policy

Ben Bernanke made a highly referenced speech earlier this week, credited with fueling a sharp rally in the stock market. The speech is colorfully titled: “Recent Developments in the Labor Market” and is a worthwhile read for investors and those interested in the US economy. The speech highlights a growing controversy in the labor market regarding the constraints on hiring. The traditional school of economic thought focuses on the cyclical factors which have depressed hiring and constrained labor market improvements. In Fed speak this is described as insufficient “aggregate demand”. A new school of thought is emerging focusing on the bottlenecks in the job market stemming from; the aging of the workforce, globalization, and technological change. Obstacles based on these reasons are described as “structural impediments”. Ben Bernanke’s answer...

Read more »

Lack of Confidence – A Key Driver of Investment Returns in 2011 – An Opportunity and Risk for 2012

December 20, 2011
By
Lack of Confidence – A Key Driver of Investment Returns in 2011 – An Opportunity and Risk for 2012

2011 has been a difficult year for most investors. Market sentiment oscillated throughout the year and generating returns has been exceedingly difficult to come by, let alone maintain. The world experienced at least three distinct crisis; Japanese nuclear disaster, Arab Spring, and Sovereign Debt contagion through Europe. All three of these events were enough to knock the market down for a spell but the global economy was resilient enough to keep growing. Growing global GDP created an environment where corporate earnings rose, achieving new highs on the year. S&P 500 earnings will come in at close to $97 in 2011, up from about $86.50 in 2010. Earnings will register double digit growth of around 12% while the S&P is down 4% ytd. It isn’t difficult to see that the...

Read more »

Excesses Cause Recession – A Comparison of 2008 and 2011

October 4, 2011
By
Excesses Cause Recession – A Comparison of 2008 and 2011

Recessions are typically caused by some sort of an excess. Real economic activity stretches too far and the subsequent unwind causes a retrenchment via a sudden and abrupt change in business and household behavior. There have been a number of excesses that have built up in the global economy over the past couple of decades. Japan had a speculative bubble in terms of corporate borrowing and real estate investment at stratospheric prices in the late 1980s. The US and world saw a technology driven CAPEX boom in 1999-2000 which was unsustainable, and created the lead-in to the 2001 recession. 2008 saw the culmination of two decades of loose credit expansion which fed into the US housing market bubble. Ex-post the cause of the retrenchment is often clear. Today, most...

Read more »

Strong Labor Market Data Point – Unemployment Claims Solid Despite Department of Labor Explanation

September 29, 2011
By
Strong Labor Market Data Point – Unemployment Claims Solid Despite Department of Labor Explanation

In a curious press release, the Department of Labor came out this morning and highlighted some atypical calendar alignments for the unemployment claims data which make it more difficult for the government to adjust the not seasonally adjusted claims data for seasonal changes. As a result, the seasonally adjusted claims data fell by 37k to 391,000 claims which would be the best data since the first week of April. The Labor Department mentioned that the seasonal adjustment in claims heading into the last week of a quarter typically look for a drop in the raw data. This year’s data were expected to rise slightly, so the pre-released seasonal adjustment factor was set to revise the claims data lower. In actuality, raw claims came in without any abnormal increase and...

Read more »

Obama’s American Jobs Act Speech – Implications for Markets

September 8, 2011
By
Obama’s American Jobs Act Speech – Implications for Markets

The S&P 500 futures were about unchanged heading into his speech and at last glance they were down 3 points – but this may be due to the 9/11 anniversary terror threat announcement more so than anything said in the speech. I come away moderately encouraged by Obama’s speech tonight. He stated at the outset that our economic recovery won’t be led by the government but by businesses – which is refreshing. I felt the tone was still somewhat abrasive but the fact that the size of the Jobs Act is larger than expected ($447B) may be a slight positive. I think the gist of the plan makes sense. While you are trying to emerge from recession you spend in order to stimulate. So long as the spending is...

Read more »

Charles Evans Dual Mandate Responsibilities Speech – Goes Too Far

September 8, 2011
By
Charles Evans Dual Mandate Responsibilities Speech – Goes Too Far

Yesterday, Charles Evans who is the ninth president of the Federal Reserve Bank of Chicago and a voting member on the FOMC, gave a speech at the European Economics and Financial Center in London. This speech goes too far with starting to push the Fed towards more stimulus as the returns from additional stimulus diminish. The debate revolving around additional Federal Reserve accommodation also made its way to the WSJ this morning. I believe that the economy is actually much stronger than is being presented by the media. Yes the unemployment rate is 9%+ and it has been tough to work it down, but the Fed can do little at this point to actually create jobs. The incremental returns from additional monetary stimulus aren’t needed and become risky with...

Read more »

Why Can’t We Create Jobs?

September 2, 2011
By
Why Can’t We Create Jobs?

I’ve been holding a constructive view on the economy and markets for a number of reasons. The economy isn’t as soft as has been presented and market valuations are extremely low for a non-recessionary environment (if that is indeed the environment we are in). Today’s Employment Report was downright ugly. Being constructive, I could search for some of the glimmers within the guts of the report such as the household survey’s 331k new jobs or that the employment-population ratio ticked up slightly. This is a stretch though, and the report was clearly a disappointment because in normal cycles of economic recovery we “re-create” jobs which are lost during recessions. I believe the primary reasons the job market has been in a funk, where it is stable, but not creating...

Read more »