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Article says it is a V Shaped Recovery
Old 04-05-2010, 12:30 PM   #1
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Article says it is a V Shaped Recovery

This is the kind of article I like to read:

yes it's a v shaped recovery risk of double dip "relatively low" liz ann sonders says: Tech Ticker, Yahoo! Finance

I will say that hitting a new high just recently in my portfolio has made me feel a lot better. My city never slowed down much due to a large military base here and now that the weather is nice again, the stores/restaurants are packed. I'm hopeful that this recovery is real and unemployment will start going down.



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Old 04-05-2010, 01:22 PM   #2
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You should know that this kind of stuff ruins the days of the dedicated sourpusses on this forum.
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Old 04-05-2010, 01:51 PM   #3
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Look around some more - you'll find forecast to affirm any of your preconceptions, or suit your mood for the day.

It is good to be informed, but maintain a healthy dose of skepticism.
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Old 04-05-2010, 02:06 PM   #4
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I think quite a few of us in here would prefer a U shaped recovery where the upward leg comes in about 3-4 more years.
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Old 04-05-2010, 02:14 PM   #5
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I think quite a few of us in here would prefer a U shaped recovery where the upward leg comes in about 3-4 more years.
I'll take one of those, if it comes with steady gradual improvement in the economy, and comes with a 10-15% per year pay raise for DW and I, and allows me to hire 4-5 more underlings and make a ton of money! All without the stock market going up too much. Just 3-4 more years is all I need!
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Old 04-05-2010, 02:19 PM   #6
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I think quite a few of us in here would prefer a U shaped recovery where the upward leg comes in about 3-4 more years.
Nope. I'm retired and living on my "cash bucket" (no pension nor SS).

Time to re-stock my bucket for the next go-around ...
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Old 04-05-2010, 06:14 PM   #7
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Originally Posted by Gone4Good View Post
You should know that this kind of stuff ruins the days of the dedicated sourpusses on this forum.
Nothing ruined, we sourpusses just consider articles like these contrarian indicators. I wonder when they'll announce that stocks have reached a permanent high plateau.

EDIT: to compensate for these negative vibes, here's some more good news: the economy and job creation are getting stronger!
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Old 04-05-2010, 06:41 PM   #8
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Lets see-

48,000 of the new jobs were US Census Workers.

Long-term unemployment is at an all-time high.

1 in 10 working Americans out of work.

Federal payrolls grew by another 39,000 last month

State and local governments both reduced headcounts last month due to decreased revenues.

Looks like the "recovery" is mostly in the federal employment sector.
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Old 04-05-2010, 07:10 PM   #9
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Looks like the "recovery" is mostly in the federal employment sector.
I guess you missed the 123,000 non-government jobs that were added last month.
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Old 04-05-2010, 07:51 PM   #10
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Here's what Mish thinks about the job report:

On the plus side: Job gained across the board, the first we have seen in years.

On the negative side:

Involuntary part-time employment increased by 738,000 workers in two months.
The number of long-term unemployed (those jobless for 27 weeks and over) increased by 414,000 over the month to 6.5 million.
72,000 jobs this year are from census hiring. Those jobs will vanish by midsummer.
There is still no driver for jobs as housing and family formation are exceptionally weak.

All things considered, this report looks OK on the surface, and horrendous underneath.

Also bear in mind that huge cuts in public sector jobs and benefits at the city, county, and state level are on the way. These are badly needed adjustments.
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Old 04-05-2010, 08:10 PM   #11
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On the negative side:

Does any of that sound unreasonable for an economy that JUST produced its first meaningfully positive jobs report in two years? Do people really think you jump from 10% unemployment to 5% in one month? And that all the bad stuff, like long-term unemployment, goes away immediately? They sure sound like that's what they expect.

I just don't see how you can ignore 14 months of sequentially improving jobs reports and say it looks "horrendous". Is that "horrendous" compared with full employment. Or horrendous compared with any time in the past year and a half?
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Old 04-05-2010, 08:22 PM   #12
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Look around some more - you'll find forecast to affirm any of your preconceptions, or suit your mood for the day.
But Liz Ann Sonders is good looking. That's good enough for me.
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Old 04-05-2010, 08:26 PM   #13
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I just don't see how you can ignore 14 months of sequentially improving jobs reports and say it looks "horrendous".
I certainly can't claim to completely understand these statistics, nor have I read a lot about the subject.
But when U6 ("the so-called real unemployment rate") has increased from (seasonally adjusted) 15.6% one year ago to 16.9% now, I'm not sure the situation is sequentially improving.

Though I must admit that 16.9% is better than last December's 17.3%.
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Old 04-05-2010, 08:37 PM   #14
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Remember who's counted in U6. My buddy who is gainfully unemployed but living the high life and drinking lots of High Life. No reason to scrounge for a substandard job yet - he still has potentially 70 weeks of unemployment remaining! His bills get paid, and he's living a good life.

And a relative who may or may not have under the table employment paid in cash. When you add this cash compensation that he or she may or may not receive to the unemployment benefits, he or she is doing as well as they were before their layoff.

And for the last half of 2009, my furloughed coworker who would have been on maternity leave anyway if we had paid maternity leave at work. She was making more being furloughed than she is now back on the payroll, after childcare expenses. She would remain voluntarily unemployed as long as she kept getting that weekly dole check! Plus she was making a little cash on the side while unemployed by selling things on ebay.

I could name a few more cases.

My point is twofold. 1 - giving folks 2 years of unemployment may give them a reason NOT to work. 2 - Lots of these "unemployed" who we think have no money to spend every month still have the unemployment checks plus income from casual grey or black market jobs that pay cash compensation or barter trade. That extra income plus up to 2 years of dole checks (and maybe other welfare benefits) means their standards of living might not have dropped a whole lot. They will stop drinking expensive imported beer and start drinking High Life.
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Old 04-05-2010, 08:46 PM   #15
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I certainly can't claim to completely understand these statistics, nor have I read a lot about the subject.
But when U6 ("the so-called real unemployment rate") has increased from (seasonally adjusted) 15.6% one year ago to 16.9% now, I'm not sure the situation is sequentially improving.

Though I must admit that 16.9% is better than last December's 17.3%.
A rising unemployment rate and sequentially improving jobs reports is entirely consistent. The country has been losing jobs for two years. The peak of those job losses happened in January 2009. From January 2009 forward we've lost fewer and fewer jobs each month until the most recent BLS report where we added jobs. So notwithstanding the fact that we were losing fewer jobs, we were still losing jobs. Meanwhile the population continues to grow so unemployment rises.

I think part of the confusion is between the words "good" and "better". Nobody is saying that the employment situation is good. But it is better. And the trend since last January is sequentially better almost every month.

Here's the monthly change in employment that I posted on another thread . . .
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Old 04-05-2010, 09:51 PM   #16
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Well I could go on and on...

The madder I get and the more bearish I get the higher the market goes

Im getting tired of of watching my ETF's like a hawk and buying dips and selling highs...

So I bought a good chunk of VTI last Friday, and another good chunk of VT this morning...

Heck the market just keeps going up every day with hardly a blip down...

Up Up Up on low low volume...

So when does the card castle fall
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Old 04-05-2010, 10:21 PM   #17
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It has certainly exceeded my expectations.

I didn't rebalance in Jan because I wasn't that far out of balance. So if the market goes high enough, I'll get to rebalance. S&P would probably have to exceed 1250 though for me to rebalance.

I guess we'll see if it gets there in the next few months....

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Old 04-05-2010, 10:22 PM   #18
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The unemployment rate can be misleading. For example I read the other day that the unemployment rate for college graduates is only 5% which is still technically "full employment". For people with a degree in STEM (science technology engineering and math) I am guessing the unemployment rate is even lower.

Another interesting thing about STEM college graduates in the work place, is that I have read that half of the people in this category are Baby Boomers. Although our population continues to grow I have also read that the number of STEM graduates has actually been decreasing slightly, which is very surprising to me. So, for those like myself, with a degree in computer science, the job market may become very good in just a year or two. I think Baby Boomers may keep working for another five years but after that it will be a massive exodus.

As far as the stock market goes, I am primarily invested in large cap multinationals and I tend to keep global market cap weightings country wise, i.e. 40% US and 60% foreign as of now. So, I really don't think it has much correlation with any particular economy, such as the US. My portfolio could conceivably continue going up even if the US were to decline.
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Old 04-06-2010, 12:01 AM   #19
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The US spent approximately $5.2 billion in Food Stamps in 2009 (up from $2.8 billion on 2007). Approximately 16 % of households are on Food Stamps, or approximately 1 out of every six households. While a lagging indicator, it is very hard to see how a consumer driven economy can do well with that level of economically hurting Americans. Add the anemic job picture, which in the most recent report saw hours worked increasing and compensation decreasing and it is very hard to see a private sector, self sustaining recovery as yet.
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Old 04-06-2010, 05:50 AM   #20
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My point is twofold. 1 - giving folks 2 years of unemployment may give them a reason NOT to work. 2 - Lots of these "unemployed" who we think have no money to spend every month still have the unemployment checks plus income from casual grey or black market jobs that pay cash compensation or barter trade. That extra income plus up to 2 years of dole checks (and maybe other welfare benefits) means their standards of living might not have dropped a whole lot. They will stop drinking expensive imported beer and start drinking High Life.
My former company shut down their local operations last year, putting a few hundred folks on the street.

I met a guy I worked with last year (IT dept). I asked what he was doing. He said he was just screwing around and acting like he was retired (late 40's). While he had two offers within the last six months, they were at a lower rate of pay, and considering his unemployment/termination pay, it wasen't worth it to go back to work.

Sometimes too many benefits remove the incentive to get your rear in gear ...
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