Financial News

[NorthSideSox72]

Those barriers are important from a psychological standpoint with traders. If it can hold, it could sustain the rally for a while longer.

I think I just said that.

 

[Cknolls]

Ok. we hit 20 DMA. S&P has not traded below 20DMA since Nov. Doing so today on a weekly closing basis is a bearish sign. Right now that number is 1281.46. My gut says if no bounce here in the next hour or so then we could hit 1260.

[Balta1701]

Seemingly thanks to the possible revolution in Egypt, the markets have retreated from your guys' numbers, the S&P is down to 1275-ish.

[Y2HH]

Seemingly thanks to the possible revolution in Egypt, the markets have retreated from your guys' numbers, the S&P is down to 1275-ish.

 

Honestly, I'd prefer it if the S&P was down at it's 2008 lows and stayed there for the next 10 years or so. That way I could buy way more S&P500 index in my 401k for the next decade and have it go way up and make a ton of money. Buy low. Buy BEFORE it's high. People, for some reason, do this completely backwards with everything market related. They only want to get involved when it's already high. Look at the fools buying into the Gold craze. Buying gold now is foolish...it's already too high, you needed to buy gold 10 years ago when it was at 300, not now when it's at 1300.

[Balta1701]

Honestly, I'd prefer it if the S&P was down at it's 2008 lows and stayed there for the next 10 years or so. That way I could buy way more S&P500 index in my 401k for the next decade and have it go way up and make a ton of money. Buy low. Buy BEFORE it's high. People, for some reason, do this completely backwards with everything market related. They only want to get involved when it's already high. Look at the fools buying into the Gold craze. Buying gold now is foolish...it's already too high, you needed to buy gold 10 years ago when it was at 300, not now when it's at 1300.

Yeah, it would be nice if we could make the stock market magically work perfectly for us

[Y2HH]

Yeah, it would be nice if we could make the stock market magically work perfectly for us

 

I never asked for anything to work perfectly. I merely said I wish the market was down, because that's when I buy...so while I'm still in my investment for the future years (now), I'd prefer it be down. Until you are getting ready to sell, it doesn't matter how much it's worth (outside of an emergency scenario, which is besides the point).

[Balta1701]

I never asked for anything to work perfectly. I merely said I wish the market was down, because that's when I buy...so while I'm still in my investment for the future years (now), I'd prefer it be down. Until you are getting ready to sell, it doesn't matter how much it's worth (outside of an emergency scenario, which is besides the point).

Don't worry, the market will be back through the floor at some point...probably sooner than we expect, considering how many of the problems which led to the last collapse have not been solved.

[iamshack]

Don't worry, the market will be back through the floor at some point...probably sooner than we expect, considering how many of the problems which led to the last collapse have not been solved.

Did anyone happen to catch Tim Geithner on the Charlie Rose show last night at the World Economic Forum? It was a pretty solid interview.

[Balta1701]

A couple to throw out there that I found at least interesting...

As politicians, executives and financiers networked at parties and panels last week in Davos, Switzerland, Barrie Wilkinson was in a nearby hotel, warning that a 2015 financial catastrophe may be looming.

 

“The fundamentals haven’t been addressed at all,” Wilkinson, a London-based partner at consulting firm Oliver Wyman, said in an interview at the Hotel Morosani Schweizerhof. “The things that caused the previous crisis -- loose monetary policy and trade imbalances -- they’re actually bigger now than they were then.”

...

 

Wilkinson’s report, titled “The Financial Crisis of 2015: An Avoidable History,” isn’t so sanguine. The 24-page study describes how banks, unwilling to accept the lower returns on equity, or ROEs, that result from higher capital requirements, may fuel a new bubble by chasing high returns in commodities or emerging markets. Regulators, by focusing their restraints on banks, may drive risk-taking into unregulated funds that also pose danger to the system.

 

The report urges bank executives and shareholders to accept that returns of the past are unsustainable and that they need to do a better job of monitoring risks, especially in areas that produce unusually high profits.

 

“Banks need to be less leveraged,” said Wilkinson, 38, who has an engineering degree from the University of Cambridge’s Trinity College and has worked since 1993 at Oliver Wyman, where he focuses on risk management. “The true test for me of whether they’ve deleveraged is if the industrywide ROEs come down. If they don’t, I’m very suspicious that there are hidden risks in the system.”

And second, James Kwak argues, stronger than I expected he could, that the conventional wisdom that shutting down the GSE's would have a strong negative effect on the mortgage markets in the U.S. is wrong.

So here’s my not-very-thought-through proposal: Fannie and Freddie should continue doing what they are doing, as wards of the federal government. But every year, for each $1 in assets that get paid off, they should only invest $0.50 in new mortgages (the rest should reduce net debt). So gradually, over the next 15-20 years, their balance sheets should shrink to small fractions of what they are today, and then they should be shut down as borrowing and investing institutions. As I said above, I think it’s possible and perhaps preferable to keep them in the role of defining and verifying conforming loan standards so that investors have some confidence in securities backed by those mortgages.

 

Yes, this would be a big experiment. But we’ve had a big experiment in subsidizing homeownership, and I’d say it hasn’t worked out too well.

 

Now, to reassure regular readers of this blog, I’m not against subsidized mortgages because I’m against government subsidies in principle. I just think government subsidies should be saved for things that are worth subsidizing — like fruits and vegetables, for example. I should add that I’m no expert on Fannie and Freddie and I’m willing to be talked out of this position. But it seems to make sense to me.

[NorthSideSox72]

Missed a couple of days' of interesting data..

 

YESTERDAY:

Midwest Manufacturing report (ISM-Chicago) rose to 68.8 (vs expected fall to 65.0), highest reading since July of 1988

Consumer spending rose 0.7% in Decemberm vs expected 0.5%

 

TODAY:

Dow closed above 12k, S&P above 1300

A bunch of heavy stocks reporting stronger than expected earnings

ISM for January showed fastest industrial expansion in 7 years

 

[Balta1701]

Private-sector employment increased by 187,000 from December to January on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from November to December was revised down by 50,000 to 247,000 from the previously reported increase of 297,000.

 

This month’s ADP National Employment Report suggests solid growth of private nonfarm payroll employment heading into the New Year. The recent pattern of rising employment gains since the middle of last year appears to be intact, as the average gain over December and January (217,000) is well above the average gain over the prior six months (52,000). Strength was evident within all major industries and across all size business tracked in the ADP Report.

...

In January, construction employment dropped 1,000. The total decline in construction employment since its peak in January 2007 is 2,311,000.

The big ADP number in December was what made December job performance particularly disappointing. The BLS report is on Friday, with a consensus of 150k jobs added in January.

 

My bet is that it'll miss the mark, badly, I'm just not sure if it'll be high or low. The usual rule is that January job growth tells me nothing about actual job growth in January, but everything about how temporary employment in Nov/Dec was relative to the average year and the seasonal adjustment.

[Balta1701]

January job number = awful, with caveat noted in previous post.

Winter weather kept job seekers home in January, getting the year off to a disappointing start, but the unemployment rate took a surprising tumble.

 

The economy added only 36,000 jobs in January -- falling far short of expectations. Meanwhile, the unemployment rate sunk to 9%, down from 9.4% the month before.

 

Economists surveyed by CNNMoney were expecting the economy to add 149,000 jobs during the month, and the unemployment rate to rise to 9.5%.

 

The Labor Department also revised payroll numbers for 2010. Eight months were revised downward, by a combined total of 298,000 jobs. Four months were revised upward, adding 83,000 jobs to the 2010 tally.

 

Overall, there were 215,000 fewer jobs added in 2010 than previously reported.

[jasonxctf]

How can both of these statements be true?

 

 

The unemployment rate unexpectedly fell to 9 percent in January, the lowest level in nearly two years, but the economy added just 36,000 new jobs last month.

 

The Labor Department reported Friday that more than 500,000 Americans reported finding jobs in January, improving the jobless rate from December’s 9.4 percent to 9 percent. The last time it was that low was in April 2009.

 

 

 

Read more: http://www.politico.com/news/stories/0211/...l#ixzz1D0Z9gdG1

[southsider2k5]

How can both of these statements be true?

 

 

The unemployment rate unexpectedly fell to 9 percent in January, the lowest level in nearly two years, but the economy added just 36,000 new jobs last month.

 

The Labor Department reported Friday that more than 500,000 Americans reported finding jobs in January, improving the jobless rate from December’s 9.4 percent to 9 percent. The last time it was that low was in April 2009.

 

 

 

Read more: http://www.politico.com/news/stories/0211/...l#ixzz1D0Z9gdG1

 

That is a net number. It means 500,000 found jobs, but 464,000 lost jobs= 36,000 jobs created. (numbers aren't actual, but you get the idea.

[NorthSideSox72]

That is a net number. It means 500,000 found jobs, but 464,000 lost jobs= 36,000 jobs created. (numbers aren't actual, but you get the idea.

Right.

 

The 4Q running number was significantly higher than 3Q, so smoothing out the diffs, the curve is going the right way... just not steeply enough yet. We'll see how the full 1Q 2011 pans out.

 

[Cknolls]

Replying to Balta in other post: The Fed can sell anyhting they want, but who will buy? Since they change the accounting rules to fit their game, there has to be a buyer for the junk they want to sell. Wait until QE3,4,and 5 are done. How do you think the Feds are going to bail out the states and localities throughout the country. No I have zero confidence in this moron doing anything right. When the end of QE comes I believe the Fed balance sheet will stand at close to $4 trillion. Buy your gold now before it hits $3000 on its way even higher.

[Rex Kickass]

Right.

 

The 4Q running number was significantly higher than 3Q, so smoothing out the diffs, the curve is going the right way... just not steeply enough yet. We'll see how the full 1Q 2011 pans out.

 

But they are attributing this big drop in the unemployment rate to this 500K number and not to people falling off the rolls, at least as far as I can tell, and if it was a net number, then the unemployment rate should not have budged at all, no?

[southsider2k5]

But they are attributing this big drop in the unemployment rate to this 500K number and not to people falling off the rolls, at least as far as I can tell, and if it was a net number, then the unemployment rate should not have budged at all, no?

 

There was a massive drop in the total employment participation number too.

[mr_genius]

+36,000 is way worse than predicted. but tons of people are falling out of the labor market, so the rate goes down. it's just how they count someone as unemployed.

[Balta1701]

Replying to Balta in other post: The Fed can sell anyhting they want, but who will buy? Since they change the accounting rules to fit their game, there has to be a buyer for the junk they want to sell. Wait until QE3,4,and 5 are done. How do you think the Feds are going to bail out the states and localities throughout the country. No I have zero confidence in this moron doing anything right. When the end of QE comes I believe the Fed balance sheet will stand at close to $4 trillion. Buy your gold now before it hits $3000 on its way even higher.

Right now, everyone is still buying. The interest rate on the 30 year Treasury bill is 4.9%. People are buying that stuff up like it's being sold by Glenn Beck.

[Cknolls]

There was a massive drop in the total employment participation number too.

 

 

Lowest in 25 years. 63.9% Also ratio of employment to population fell to lowest level in 27 years, 57.6%.

[NorthSideSox72]

Right now, everyone is still buying. The interest rate on the 30 year Treasury bill is 4.9%. People are buying that stuff up like it's being sold by Glenn Beck.

You are showing a chart that goes through 2007.

 

[Balta1701]

You are showing a chart that goes through 2007.

And gave the modern number as well.

 

Here is the version through 2010, now that I found a better site.

 

 

(The 30 year Treasury was temporarily discontinued after the surpluses of the Clinton administration.)

 

Here is the corresponding chart for the 10 year treasury.

 

[Balta1701]

But they are attributing this big drop in the unemployment rate to this 500K number and not to people falling off the rolls, at least as far as I can tell, and if it was a net number, then the unemployment rate should not have budged at all, no?

Most of the news reports on the January employment report expressed confusion over the seeming contradiction between the 0.4 percentage point plunge in the unemployment rate shown by the survey of households and the weak 36,000 job growth reported by the establishment survey. The drop in unemployment in the household survey was the result of a reported increase in employment of 589,000, after adjusting for changes in population controls. This difference is actually not very confusing to people familiar with the data.

 

The household survey is always erratic. It effectively is measuring the level of total employment in the economy. Even if it is off by just 0.2 percent, this implies an error of almost 300,000. If it errors by this much on the high side one month and then by an equal amount on the low side the following month, it would imply a drop in employment of 600,000 in a context where there was no actual change in employment. Looking back over the last two decades it is easy to find months with large changes in employment that did not coincide with any obvious upturns or downturns in the economy.

 

For example, in April of 2007 the survey showed a drop in employment of 724,000 at a time when the economy was still showing healthy growth. In May of 2000, also a period of healthy growth, the survey showed a fall in employment of 640,000.

 

For some reason, probably associated with the difficulty of seasonal adjustments, January is especially prone to show such out of line numbers. In January of 1992, 1994, and 1997, the household survey showed gains in employment (not counting any population control effects) of 512,000, 502,000, and 438,000, respectively.The economy was growing in each of these months, but certainly not at a pace that would be consistent with the creation of 5-6 million jobs a year. In January of 2000, the employment gain (adjusted for the change in controls) was 784,000, which would imply an annual rate of job creation of more than 9 million.

 

This is why economists familiar with the two surveys tend to rely much more on the establishment survey. This survey is benchmarked every year to the state unemployment insurance data, which is a virtual census since it covers nearly all employers in the country. The establishment survey effectively measures changes rather than levels. There are reasons that it can be inaccurate as well (most importantly in picking up jobs in newly created firms), but the error is likely to be measured in the tens of thousands, not hundreds of thousands.

 

Those desiring a third source of data on labor market could have looked to the data on unemployment insurance filings. The 4-week average stands at 430,000. The economy did not start generating jobs on a consistent basis following the last recession until claims fell below 400,000. A weekly average of 430,000 new claims is certainly inconsistent with the sort of extraordinary job growth implied by the household data.

Link

[kapkomet]

Unemployment is a bulls*** number any way you cut it, unless you want to talk about the U6 #, and even that is skewed heavily.