Thursday, September 18, 2014 05:42pm
North Adams, MA now: 61 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: Jobs Versus the Market
By: Bill Schmick On: 07:06AM / Saturday June 04, 2011
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

The May non-farm payroll jobs report was a disappointment. So much so that investors dumped stocks, convinced that because the country only added 54,000 jobs, the economy is kaput and we all headed for economic Armageddon. Now, doesn't that sound silly?

Let's get real folks. We didn't lose 300,000 jobs last month, which might have justified Friday morning's sell-off. Sure, economists were looking for a job gain of 100,000 plus but why should any one be surprised that unemployment is still above 9 percent given the slow growth rate of our economy?

Since the end of the recession, quarterly GDP has been at best erratic. Beginning with the third quarter of 2009, we have experienced the following string of quarterly numbers: 1.6, 5.0, 3.7, 1.7, 2.6, 3.1, 1.8 percent. All but one of those quarters have trended well below the normal economic recovery rates associated with the end of a recession. Is it any wonder that our unemployment rate bounces around while remaining inordinately high?

The spate of negative economic numbers we have been experiencing of late, in my opinion, has much more to do with the body blow Japan has taken from its earthquake and aftermath. After all, Japan is the second largest economy in the world and the fallout from its present recession impacts everyone.

As for the markets, I believe there are similarities between the April-August period of last year and what is happening today. At that time investors were concerned that we were falling back into a double dip recession. GDP for the second quarter of 2010 had dropped to 1.7 percent from 3.7 percent, while unemployment hovered at 10 percent.

The S&P 500 Index fell by over 16 percent. It was only after the Federal Reserve Bank announced the possibility of QE II that the markets recovered in August. Now the S&P is almost 300 points higher.

Last quarter's GDP growth rate was 1.8 percent down from 3.1 percent the quarter before and unemployment is 9.1 percent, up a smidgeon from last month. Unlike last year, however, we face the "end" of QE II in less than 30 days.

Readers may recall that I discounted a double-dip recession last year. I argued that we were in a slow growth recovery and should expect erratic and conflicting economic data into the foreseeable future. As long as the housing market remains in the doldrums, so will the economy. That argument still holds. At the same time, if the economy slows further, the Fed still has our back no matter how many QEs it takes.

What investors tend to forget is that we narrowly escaped a second worldwide Depression two years ago. While politicians, investors and taxpayers alike speechify about our government's huge deficit and wasteful spending, they should stop and ask why the deficit and spending is where it is today.

As a result of the financial crisis, the deleveraging of debt in the private sector was an absolute necessity. The only way to accomplish that, without driving the world over the brink, was for the government to take on that debt (deliberately leveraging the public sector balance sheet) while, at the same time, spending as much as possible to jump start the economy.

To date, that strategy has worked, although not as perfectly as certain textbook economists might have hoped. We have averted a Depression although this last Great Recession is not like any of the recessions we have experienced since the end of WW II. It is going to take time, effort and patience to unwind the financial tangle that our banks, brokers and insurance companies have created. We are on the right track, even if our path ahead is dimly lit. Expect the track to run through peaks and valleys, make sharp turns, and accelerate at times, while coasting at others. In the meantime, stay the course.

As I write this, the markets are wrestling with 1,300 on the S&P 500 Index, the bottom end of my projected range. Could the markets fall even further? Of course, they can. If we break 1,300, the next stop would be 1,250-1,275, still not the end of the world. From top to bottom that would be an 8 percent correction, after a 300-point rally over 11 months. I'll gladly accept that kind of pullback for a chance to rally up to 1,400 or above.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Write a comment - 0 Comments       Tags: jobs, unemployment, economy      
News Headlines
North Adams Airport Commission Mulls Name Change
UCP Offering Workshops On Emergencies, School Plans
Williams Football Team Opens New Field on Saturday
North County Health Needs Report Advises ER, Outpatient Services
Bianchi Names New Berkshire Works Director
AutoZone Eyes Former Allendale Pizza Hut Location
Fohlin Praises MEMA's Help In Spruces Aftermath
Pittsfield School Department Ponders Silencing WTBR
Williams Field Hockey Falls at Mount Holyoke
Drury High Sees AP Scores, Enrollment Take Off
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (144)
Independent Investor (196)
Archives:
September 2014 (3)
September 2013 (3)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
Tags:
Stocks Stimulus Energy Economy Deficit Federal Reserve Interest Rates Congress Selloff Recession Debt Jobs Election Fed Pullback Europe Metals Currency Bailout Rally Fiscal Cliff Stock Market Crisis Greece Europe Debt Ceiling Japan Banks Markets Housing Taxes Commodities Oil Euro Retirement
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: Waiting on the Fed
The Independent Investor: The United States of Scotland?
The Independent Investor: Europe Follows the U.S. lead
@theMarket: What's Up With Bonds?
The Independent Investor: Baby Boomers and Retirement
@theMarket: Labor on Their Mind
The Independent Investor: Financing ISIS
@theMarket: Geopolitical Risk Trumps Economic Growth
The Independent Investor: Beware the Russian Bear
The Independent Investor: Why Some Corporations Are Leaving America


View All
Soccer: Taconic vs Drury
Drury boys soccer 3-1 loss to Taconic, Wednesday afternoon....
Golf: Monument vs Mount...
Two standout rounds for Mount Greylock and one standup move...
Volleyball: Lee vs Mount...
Lee 3, Mount Greylock 0, The visiting Wildcats won 25-23,...
Soccer: Mount Greylock vs...
Eric Hirsch scored twice and set up two goals to lead the...
Josh Billings RunAground 2014
The team from Pittsfield's Allen Heights Veterinary won the...
Football: Amherst vs Williams
Football: Amherst vs Williams in a scrimmage on Saturday...
Girls Soccer: Drury vs...
Taconic girls soccer team took a 3-2 win over Drury on...
Football: Wahconah vs...
The Wahconah Warriors tamed the Chicopee Colts 44-6 at home...
Football: Taconic vs...
The Taconic Braves ran over the Cathedral Panthers 20-8 at...
Youth Center Chair Reception...
Inspired seating was on display Saturday night in the...
Volleyball: Mount Greylock vs...
Mount Greylock bested Wahconah 3-2 on Wednesday night at...
Northern Berkshire Food Fest...
Hundreds flocked to Main Street on Sunday for the annual...
Williamstown Fun Run 2014
About 100 participants competed in the 5-kilometer and...
Soccer: Pittsfield vs Mt...
Friday night girl's soccer PHS wins over Mount Greylock...
Soccer: St. Joe s vs McCann...
McCann Tech defeated St. Joseph, 5-2, Wednesday afternoon...
Boys and Girls Cross Country
Lenox's girls went 3-0 on the afternoon, beating Hoosac,...
Soccer: Taconic vs Drury
Drury boys soccer 3-1 loss to Taconic, Wednesday afternoon....
Golf: Monument vs Mount...
Two standout rounds for Mount Greylock and one standup move...
Volleyball: Lee vs Mount...
Lee 3, Mount Greylock 0, The visiting Wildcats won 25-23,...
Soccer: Mount Greylock vs...
Eric Hirsch scored twice and set up two goals to lead the...
Josh Billings RunAground 2014
The team from Pittsfield's Allen Heights Veterinary won the...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved