Posts Tagged ‘jobless recovery’

32% of Homeowners Expect Home Prices to Drop Next Year, Highest Short-Term Pessimism Ever; Recognition Phase Underway

32% of Homeowners Expect Home Prices to Drop Next Year, Highest Short-Term Pessimism Ever; Recognition Phase Underway

foreclosuresCourtesy of Mish

Rasmussen Reports recently released an interesting survey that shows Homeowners Are More Pessimistic Than Ever About the Short-Term Housing Market

A new Rasmussen Reports survey finds that 32% expect the value of their home to decrease over the next year, the highest finding since Rasmussen Reports began asking the question regularly in December 2008.

Just 21% believe the value of their home will go up over the next year.

Looking longer term, people are feeling a bit better. Fifty-two percent (52%) of homeowners say the value of their home will increase over the next five years, the highest level of optimism measured since May.

For the second month in a row, only 55% of homeowners say their home is worth more than their mortgage. A third (33%), however, report that the mortgage is bigger than the home value.

Over half of Americans know someone who has lost their home because they could not pay their mortgage, but just 20% believe that when banks foreclose on a home, it’s generally due to unfair lending practices.

Recognition Phase

Some will look at the survey results and see a contrarian indicator. I rather doubt it. I do not think we bottom until homeowners sour on long-term optimism.

Given current conditions, housing inventory, shadow inventory, another jobless "recovery", and changing social attitudes from younger generations, home prices will likely stay depressed for a while.

So instead of the survey being a contrarian indicator, I view these attitudes as part of the recognition phase. Consumers are starting to realize the economic headwinds and what that will do to housing prices in the short-term, even if they have not yet figured out the long-term demographic mess.

Time and Price is the Only Legitimate Cure

The most encouraging sign in the report is that "a majority of Americans continue to oppose any government intervention in the housing market."

The only legitimate cure for what ails housing is price and time. Prices need to fall to the point there is genuine demand. When that happens, the bottom will be in, although appreciation off that bottom will be quite slow.

In the meantime, the Fed’s misguided attempt to prop up prices, in conjunction with all the interference by Congress, just stretches out the bottoming timeline.

Mike
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No Jobs Recovery

No Jobs Recovery

Courtesy of Robert Reich

Man Without Job

The US economy added 162,000 jobs in March. Great news until you look more closely. In March, the federal government began hiring census takers big time. These are six-month temp jobs, and they tell us nothing about underlying trends in the labor market. It’s hard to gauge precisely how many were hired — probably between 100,000 and 140,000, although some estimates put the hiring as low as 48,000. Almost a million census workers will need to be hired over the next few months. Subtract these, and today’s job numbers are good but nothing to write home about.

There are some positive signs. Manufacturing payrolls expanded a bit, heath care employers added 27,000 jobs, and about 40,000 private-sector temp jobs were added. But payrolls continue to be slashed in financial services and the information industry.

Two big things to bear in mind:

First, government spending on last year’s giant stimulus is still near its peak, and the Fed continues to hold down interest rates. Without these props, it’s far from clear we’d have any job growth at all.

Second, since the start of the Great Recession, the economy has lost 8.4 million jobs and failed to create another 2.7 million needed just to keep up with population growth. That means we’re more than 11 million in the hole right now. And that hole keeps deepening every month we fail to add at least 150,000 new jobs, again reflecting population growth.

A census-taking job is better than no job, but it’s no substitute for the real thing.

Bottom line: This is no jobs recovery.

***

CORRECTION: In my March 30 posting, “Fraud on the Street,” I stated that a whistle-blower who’d alerted Ernst & Young to fraud had been fired by Ernst & Young. It’s actually worse than that. The whistle blower was from Lehman Brothers itself, and he was fired by Lehman when he tried to blow the whistle. Apologies to Ernst & Young. Even bigger condemnation of Lehman.


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States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP

States have $5.17 Trillion in Pension Obligations, Gap is $3.23 Trillion; State Debt as Share of GDP

Courtesy of Mish 

As the jobless yet supposedly nascent recovery plods on, states are finding it increasingly difficult to ignore their fiscal woes and pension deficits. The New York Times has some details in State Debt Woes Grow Too Big to Camouflage.

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation.

Unstated debts pose a bigger problem to states with smaller economies. If Rhode Island were a country, the fair value of its pension debt would push it outside the maximum permitted by the euro zone, which tries to limit government debt to 60 percent of gross domestic product, according to Andrew Biggs, an economist with the American Enterprise Institute who has been analyzing state debt. Alaska would not qualify either.

Professor Rogoff, who has spent most of his career studying global debt crises, has combed through several centuries’ worth of records with a fellow economist, Carmen M. Reinhart of the University of Maryland, looking for signs that a country was about to default.

“When an accident is waiting to happen, it eventually does,” the two economists wrote in their book, titled “This Time Is Different” — the words often on the lips of policy makers just before a debt bomb exploded. “But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.”

Some economists think the last straw for states and cities will be debt hidden in their pension obligations.

Joshua Rauh, an economist at Northwestern University, and Robert Novy-Marx of the University of Chicago, recently recalculated the value of the 50 states’ pension


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GURU OUTLOOK: DAVID GERSTENHABER & THE “CONTAINED DEPRESSION”

GURU OUTLOOK: DAVID GERSTENHABER & THE “CONTAINED DEPRESSION”

Courtesy of The Pragmatic Capitalist 

guruDavid Gerstenhaber is a former Tiger Cub and President of Argonaut Capital Management. His distinguished pedigree is of the long line of successful traders that once traded under Julian Robertson (see Robertson’s guru outlook here).  His global macro strategy fund has never lost money since its founding in 2000 and has averaged an annual return of 19%.  What was a disastrous 2008 for most investors was another excellent year for Argonaut as Gerstenhaber guided the fund to a 12.3% gain.  In 2008 he bet big against high interest rates in the UK and shorted the British Pound in response.  Both were huge winners.  The pound alone fell over 25% in 2008.  He is well known for being a superb risk manager and has proven to be able to thrive in any market environment.

Although there have been signs of economic recovery Gerstenhaber hasn’t changed his bearish outlook all that much.  In a recent interview with CNBC he said we are in a “contained depression”.  He describes this as a period of very low growth and a jobless recovery.  Although it is not technically a depression it will feel very much like one.  He also believes the US consumer has been reset.  Thinking with regards to spending and speculation will never return to what it once was.

He reiterates a belief of our own that the problem of debt continues to hinder the global economy.  On the whole, the bailouts and government spending set a poor precedent.  He says this is particularly true in Greece.  While the bailout in Greece could be a near-term positive it is in fact a long-term negative and sets a very bad precedent.   I couldn’t agree more.  He says the Euro could remain depressed for an extended period of time due to this.  He also says the Eurozone is still suffering from a battle with deflation and it is likely to continue for the foreseeable future.

In terms of the U.S. equity markets Gerstenhaber now says the market is fully valued and that the easy money has been made.  He believes 2010 will be a very difficult year for equities as the U.S. government is making many of the same mistakes that were made in Japan.  He says that we settled for a “workout” period as opposed to taking our medicine or inflating our…
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Nine More Banks Fail with CIT on Deck for a Packaged Bankruptcy While Gold Shines

Nine More Banks Fail with CIT on Deck for a Packaged Bankruptcy While Gold Shines

Courtesy of Jesse’s Café Américain

There was a tension in the markets today despite the ‘good news’ in the headline economic numbers. The markets are also on edge ahead of the ADP and BLS jobs numbers next week. The much touted theory of a ‘jobless recovery’ is started to show some big holes in credibility, as well it should.

A jobless recovery is nothing more than a euphemism for a monetary asset bubble. 

Gold coins being weighed on balance, with stacks of gold bars in background

Trader confidence was shaken by more indications that CIT will declared a preplanned bankruptcy next week, and the observations by billionaire Wilbur Ross of an approaching meltdown in the Commercial Real Estate market which has been widely anticipated among the non-shill market analysts.

Gold showed a remarkable resilience today against determined short selling in the paper Comex markets. Here is a decent summary of the case that the gold bulls have been making, in addition to the standard observations about dollar weakness.

Gold Market Reaching the Breaking Point

Meanwhile, nine more commercial banks rolled over this week.

North Houston Bank, Houston, TX, with approximately $326.2 million in assets and approximately $308.0 million in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)

Madisonville State Bank, Madisonville, TX, with approximately $256.7 million in assets and approximately $225.2 million in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)

Citizens National Bank, Teague, TX, with approximately $118.2 million in assets and approximately $97.7 million in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)

Park National Bank, Chicago, IL, with approximately $4.7 billion in assets and approximately $3.7 billion in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)

Pacific National Bank, San Francisco, CA, with approximately $2.3 billion in assets and approximately $1.8 billion in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)

California National Bank, Los Angeles, CA, with approximately $7.8 billion in assets and approximately $6.2 billion in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)

San Diego National Bank, San Diego, CA,


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About The Jobless Recovery ….

About The Jobless Recovery ….

Courtesy of Jesse’s Café Américain

For the first time we had a ‘jobless recovery’ after the tech bubble bust thanks to the wonders of Greenspan’s monetary expansion and the willingness (gullibility?) of the average American to assume enormous amounts of debt, largely based on home mortgages, the house as ATM phenomenon. Not to mention the large, unfunded expenditures of the government thanks to tax cuts and multiple wars.

household cash less liabilities

national debt
 

Now the pundits are talking about the hopes for another jobless recovery.

Who is going to go deeply into debt this time? It looks like its the government’s turn. And the expectation is that foreigners will continue to suck up the debt.

growth in public debt

Federal Debt (Percentage of GDP)
 

If you think this explosion of Federal debt will facilitate a stronger US dollar you might be suffering from ideological myopia or some other delusion.

Some years ago we forecast that the financiers and their elites would take the world down this road of leveraged debt and malinvestment, and then make you an offer that they think you cannot refuse. They will seek to frighten you with a collapse of the existing financial order, because that is what they fear the most themselves, for their own unique positions of power.

The offer will be a one world currency, which is a giant step towards a one world government, managed by them of course. Once you control the money, local fiscal and social preferences start to matter less and less.

This theory seems more plausible today than it did then.


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Why Our Economy Is Utterly Screwed

Why Our Economy Is Utterly Screwed

Courtesy of Karl Denninger at The Market Ticker


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Thoughts On The “Recoveryless Recovery”

Here’s an excellent article by Mish explaining, in detail, what he meant when he wrote the "bottom may be in." – Ilene

Thoughts On The "Recoveryless Recovery"

bottom, recoveryCourtesy of Mish

In response to Military vs. Non-Military Durable Goods in Pictures where I suggested the "bottom may be in", many people asked "how so?"

For example "They Stole My Country" writes:

Mish,

Most of the deflation blogs I lurk at here and there are pretty adamant that things are going to get worse. You always seem to hedge that the "bottom might be in." When I look at all I have learned from you and others regarding the state of the economy, I just can’t hold out hope the bottom might be in. The jobs are not coming back. Why do you feel the need to qualify?

Likewise "VaAppraiser" asks:

Mish, I also am wondering what bottom you keep referring to? I do not like gloom and doom predictions but I am in the camp with all the others that we not seeing spring here (re: green shoots). Looks more like the end of fall… but I am no expert in the larger matters. What I do know and have expertise in is the housing markets I cover. I have written on some other sites that there is no way any of the markets I cover have reached their bottom.

In the best markets, they still have just under 6 months inventory and we are about 75% of the way through our selling season. If this were the inventory going into the season, yes…we could be bottoming but we are getting ready to go into our slow season…not the bottom by far. I believe inventory will shoot up to 9-12 months pretty quickly. Then prices drop, especially with short sales and REO’s having such a big percentage of the market.

Recovery? What Recovery?

Before we can address the question "is the bottom in?" we must answer the question: "the bottom of what?" Moreover, we must also state a timeframe. The latter is critical.

  • In general, when I say the bottom may be in, I am speaking of the GDP. Yes, GDP is a very flawed measure, but given all the economic stimulus, it is highly likely the GDP will rebound for a quarter or two, perhaps more.
  • In regards


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Is the U.S. Economy Headed for a “Jobless Recovery?”

Is the U.S. Economy Headed for a “Jobless Recovery?”

By Don Miller
Associate Editor, Money Morning

Could the U.S. economy be looking at a "jobless recovery?"

After the worst financial crisis since the Great Depression reached its apex late last year, the U.S. economy has shown signs of life in recent months. Stock prices have soared. The housing market – once in veritable freefall – seems to be bottoming out in preparation for an eventual upsurge. And just last week, the government said that businesses cut jobs in May at the lowest rate in six months, a report that offered encouragement both to investors and to the millions of U.S. workers who have lost their jobs.

But U.S. Federal Reserve Bank Chairman Ben S. Bernanke threw cold water on hope for a full-blown economic rebound when he hinted that the U.S. labor market could well be facing a jobless recovery – an upturn in which the economy and corporate profits advance, but virtually no new jobs are created to compensate for years of layoffs.

Just this week, economists at the Federal Reserve Bank of San Francisco said they see signs that the current turnaround could mimic the aftermath of the 1990-1991 recession – a wheezy, drawn-out recovery with little hiring that means years of additional problems for U.S. workers.

"This projection indicates that the level of labor market slack would be higher by the end of 2009 than experienced at any other time in the post-World War II period,implying a longer and slower recovery path for the unemployment rate," the Fed economists wrote.  "This suggests that, more than in previous recessions, when the economy rebounds, employers will tap into their existing work forces rather than hire new workers. This could substantially slow the recovery of the outflow rate and put upward pressure on future unemployment rates."

Unemployment Damage Widespread

Alongside other economic indications of a stabilizing housing market and rising consumer confidence, the unemployment figures offered a glimmer of hope that we may be on the cusp of an economic turnaround and the end of job destruction.

But it’s highly unlikely this economy will produce meaningful job creation anytime soon.  The financial fallout from the biggest recession in 60 years is likely to be so costly and so pervasive that new-job creation is likely to be virtually nonexistent for years to…
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Phil's Favorites

Brexit: An 'escape room' with no escape

 

Brexit: An ‘escape room’ with no escape

Courtesy of Terrence Guay, Pennsylvania State University

Brexit is beginning to look a lot like an “escape room” with no exit.

An escape room is an increasingly popular adventure game that requires participants to solve a series of puzzles before they can leave the room and advance into another one with additional riddles.

Brexit now seems to be a riddle that can’t be solved, after U.K. lawmakers voted down Prime Minister Theresa May’...



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Zero Hedge

Is This The Real Reason Why Stocks Are Surging?

Courtesy of Zero Hedge

Wondering why US equity markets are soaring at a pace not seen since the March 2009 lows? Confused by the massive swings higher despite weak macro data, and tumbling earnings expectations?

Well, the answer is simple once again, "it's not the economy, it's the central banks, stupid!"

Q4 2018 saw global stock markets finally wake up to the fact that the world's central banks were withdrawing liquidity and played catch-down to an ugly tightening reality. December's contagion to American stocks was the final straw for the world's elites however  and after the Mnuchin Massacre, it appears the Plunge Protection was ordered back into battle...



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Kimble Charting Solutions

The "Average Stock" is Facing a Big Test Here!

Courtesy of Chris Kimble.

The Value Line Geometric Index tends to give investors a good idea of the health of the overall market. It is an equal-weighted index with a broad swath of stocks that gives investors an idea of how the “average stock” is performing.

The Value Line Geometric formed highs in the same area in 1998, 2007, and 2015 (see blue line). In the last two years, the index broke out above that line and held above it until the recent correction.

It is now testing the underside of that price area (now resistance). Bulls will get good news with a breakout ABOVE thi...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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