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. Now this might make you sell your house fast with Covenant Properties or any other company, but read on.

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…
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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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Zero Hedge

If Not-QE Is QE, Then Is Not-A-Blowoff-Top A Blowoff Top?

Courtesy of ZeroHedge View original post here.

Authored by Charles Hugh Smith via OfTwoMinds blog,

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets?

When is "Not-QE" QE? When Federal Reserve Chairperson Jerome Powell declares QE is not QE. We can constructively recall the story that Abraham L...



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Phil's Favorites

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Insider Scoop

WeWork Could Leave Thousands Without Jobs

Courtesy of Benzinga

Co-working space startup WeWork could lay off more than one-third of its total workforce as soon as next week, the New York Times reported on Sunday.

What Happened

More than 2,000 people employed in WeWork’s core business of subletting working space will lose their jobs, according to the New York Times.

Another 1,000 employees will be laid off as the startup shuts down its other businesses, including a private school it runs i...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Kimble Charting Solutions

Silver Testing This Support For The First Time In 8-Years!

Courtesy of Chris Kimble

Its been a good while since Silver bulls could say that it is testing support. Well, this week that can be said! Will this support test hold? Silver Bulls sure hope so!

This chart looks at Silver Futures over the past 10-years. Silver has spent the majority of the past 8-years inside of the pink shaded falling channel, as it has created lower highs and lower lows.

Silver broke above the top of this falling channel around 90-days ago at (1). It quickly rallied over 15%, before creating a large bearish reversal pattern, around 5-weeks after the bre...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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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.

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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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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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