Posts Tagged ‘ labor market ’

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

March 30, 2012
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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...

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

December 20, 2011
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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...

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ISM New Orders – A Strong Indicator of GDP Growth Improved Sharply in November

December 2, 2011
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ISM New Orders – A Strong Indicator of GDP Growth Improved Sharply in November

The financial crisis in Europe detracts from a normal focus on the underlying strength of the US and global economy. Despite the US economy being relatively solid, an escalating Eurozone crisis has the potential to derail economic growth because of the enormity of the impact from a financial seizure. While the solution to the Eurozone liquidity and structure crisis is being debated, there continues to be very resilient economic data from the rest of the world. US GDP data is set to recover towards the 2.5%-3.0% range based on the strength coming from retail sales, manufacturing, and the labor market. It is relatively rare for the market to have a flat year of returns when earnings grow sharply in a non-recessionary environment. Clearly, valuation multiples for the S&P 500 have...

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

September 29, 2011
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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...

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