The Long Slog Out of the Recession
Wishing for jobs will not create them.
Frequently, there's little agreement among them. News which is at best neutral -- for example, a .02% improvement in the purported "unemployment rate" (see below) -- is interpreted by the spinsters and the market as "good news." Positive information frequently is contradicted by negative information concerning the same segment of the economy released the same day or the day after.
The question on everyone's mind is whether the "green shoots" of autumn will survive the frosts of the coming winter and continue to grow in 2010. When will we see the end of what some are already calling the "Great Recession," not only in technical GDP terms, but in terms of improvement of the financial situation and future prospects of the American people?
There's positive information, to be sure. Stability appears to have been restored among the major American financial institutions, almost all of whom are prospering even to the extent that they're repaying their TARP advances to the federal government. (Cynics would say that principal purpose of these repayments is to avoid government limitations on executive pay and bonuses that may be imposed on institutions that still have unpaid TARP funds.)
The stock indexes have recovered significantly from their March 2009 lows. However, although it's often said that an increase in stock market index levels is a "leading indicator" of a recovery, that conclusion may not follow this time around. Before one gets too excited about the 59% run in the Dow and the even higher run in the S&P 500 average, consider that "recovery" in the stock market is a relative thing; the markets are almost exactly at the levels they were at 10 years ago.
Moreover, as Paul J. Lim wrote in his November 28, 2009 article in the New York Times, the overall price-earnings ratio for the S&P 500 is much higher than it's been in other early bull market moves out of severe bear markets. He offers that one shouldn't take too much comfort in current stock index levels because overall earnings are still trending down. The market indexes also appear to have been driven artificially higher by a the continued inflow of money into the stock market from money funds and other sources because many of these less volatile investments are producing returns that are effectively nil. See Bill Gross' article, Anything But .01%, In the PIMCO December 2009 Investment Outook. The article also contains that great 1933 quote of Will Rogers: "I am not so much concerned with the return on my money as the return of my money."
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter