So, Who Is The Contrarian?

On January 3, I made a series of 2012 economic prognostications.  On balance, I will be surprised if anyone who read them does not see them as collectively being “more than a little” gloomy.

I think listening to and thinking about an opposite viewpoint is always constructive, and possibly instructive.  I thought you might find an entirely opposite perception of what is going to happen economically in 2012 worth “thinking for yourself about”.  A recent article lists 10 predictions made by the Chief Equity Strategist of Blackrock Investment Management, Bob Doll.   I see Mr. Dole as the consummate optimist in the face of my own ‘2012 glass likely less than half full view’ of things. Mr. Doll is reported as believing the European debt crisis will ease in the face of European recession, that U.S. equities will experience a double digit percent return in 2012, and that President Obama will not be re-elected in circumstances where after the November elections the U.S. will have:

• a Republican President;
• Republicans retaining control of the Congress; and,
• Republicans also gaining control of the Senate.

I simply do not see that ‘Republican domination’ happening given the preponderance of votes located on U.S. Main Street.

For an alternate perspective to mine, and I suggest one you should think seriously about, see ‘Bob Dole’s 10 predictions for 2012’ sourced by the AdvisorAnalyst blog from Blackrock’s December 30, 2011 Weekly Investment Commentary letter (a link to that commentary provided in the article) – reading time 2 minutes, thinking time far longer.

Given the differences between my views on what may or will transpire in 2012 and those of Mr. Dole, I suggest you discuss both sets of views with your investment advisor.  If you are interested in re-visiting my January 3 ‘2012 predictions commentary’, you can do that at ‘2012 Predictions’ – reading time 5 minutes.

Compendium of ‘Employment Assist Articles’!

The content of this commentary is unusual for me, but in circumstances of the current unemployment in the developed countries, bear with me.

Last week I received an unsolicited e-mail from a reader who works with Onlinecollege.org.  The e-mail included a link to a compilation of 65 articles that it says are “sure to inspire, educate, and motivate you as you manage the good, the bad, and the ugly of unemployment”.  The article compilation is titled ‘The Ultimate Unemployment Reading List’ – reading time ‘as long as someone wants to take’.

If you are reading this e-mail I expect you are either gainfully employed or happily retired.  That said, I have included this link as you may know young or mature unemployed people who might benefit if you forward the ‘article compilation link’ to them.

IMF’s Christine Lagarde on the Euro?

Reuters reported that when speaking in South Africa last week Christine Lagarde, IMF Managing Director, said last Friday that in her opinion the euro is likely to survive 2012. The article reports that European leaders will hold another summit meeting in January to …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 3 minutes.

U.S. Military Strategy?

Last Thursday President Obama visited the Pentagon and announced that the U.S. military will shrink its Army and Marine Corps, reduce forces in Europe, and perhaps make further cuts to the nation’s nuclear arsenal. This downsizing, attributed to the enormous national debt problems facing the United States, is reported as meaning the U.S. military will depend more on ally coalitions going forward, and from here …..continue reading.                                    

Commentary reading time 3 minutes.  Referenced article(s) reading time 4 minutes.

Eurozone Retail Sales – November Drop!

An article late last week reported that retail sales in the 17 country euro zone dropped in November from October by 4/5 of 1% and were down by 2.5% from November 2010. The article goes on to discuss retail sales drops in specific euro zone countries.  Across the board those reported were …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 4 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

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An article last Sunday in the Econobrowser Blog titled ‘Current (U.S.) economic conditions’ – reading time 3 minutes – concludes that things are looking better for the U.S. economy, but not a whole lot better.  James Hamilton writes the Econobrower.

In his Sunday article, Hamilton reaches the conclusion he does by first citing what he calls “disappointingly weak growth” in the quarter ended September 30, but says that subsequent data suggests the fourth quarter is “starting out a little better”.  He reaches this conclusion by citing October and November U.S. light vehicle unit sales statistics, and an improved ISM Manufacturing Survey where the ISM Index has been reported at 52.7 in November – up from 50.8 in October – in circumstances where he says the median historical ISM Index is 53.3.  An ISM Index of over 50 indicates the number of facilities reporting improving conditions outnumbers those reporting declines.  Finally, he comments on what he calls favourable post-Thanksgiving U.S. consumer sales, and last Friday’s U.S. Labor Report.

My comments:

• first, it seems to me light vehicle unit sales statistics may or may not be indicative of improvement or deterioration in a given economy.  This is because unit sales are dependent on underlying sales prices and dealer and manufacturers margins, and must be measured in dollars and (in the end) in manufacturers and dealers after-tax free cash flow.  The number of units of anything sold in a given period – or on a period/period comparison – while interesting at some level is not in my view a meaningful measure of economic activity from which meaningful conclusions can be drawn;

• second, I suspect that likewise the ISM Index while an interesting touchpoint is not really very meaningful as it measures a reporting metric that is based on ‘facilities reporting’ without (or so I think) regard to the relative sizes of the facilities that report.  Assuming that is true, as a ‘period measurement’ of positive or negative economic activity I do not weight it heavily; and,

• third, if you did not read my comments on last Friday’s U.S. Labor Department report, you can do that here.  U.S. reported unemployment statistics increasingly are making less sense to me (i.e. I am placing less credibility on them) as the months pass by.

Interesting on the U.S. unemployment front, Hamilton says that in each month over the past year the U.S. on average has added 149,000 new individuals over 16 years of age who are not ‘actively looking for work’.  That is 1.8 million people in a year, which in turn is (by my calculations) about 1.2% of potentially employable Americans.  My question, and I think a very important one, is:  what is the age demographic of those 149,000 people.  The more it is skewed toward ‘age 16’, the more worrisome I find it.  This again goes back to my strongly held view that any given economy has to employ its youth or there will be ever increasing risk of societal disorder such as that experienced in the United Kingdom this past August (to cite but one example).  In the developed countries where many young people have been brought up with a sense of entitlement, I see the risks of disgruntled unemployed young people as particularly disconcerting.  America is clearly one of those countries where I think for many young people a sense of entitlement is rampant.

Something to think about as you enjoy ‘Holiday Cheer’ over the next several weeks.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

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As I (and everyone else) reported, last Friday the U.S. Department of Labor said that the U.S. unemployment rate had dropped to 8.6% (from 9%) following the creation in November of 120,000 net new jobs.  The U.S. is believed by some to need to create 125,000 new jobs each month simply to keep up with its population growth – for example, see a Businessweek article written by Chistopher Rugaber, published December 2 titled ‘Unemployment rate falls to lowest since March 2009’, – reading time 5 minutes.  That article also reported that:

• according to the U.S. National Retail Federation American’s spent $52.4 billion over the November 24 – 27 Thanksgiving weekend, while Mastercard said spending was up over 9% in that same period over 2010;

• currently in the U.S. about 13.3 million people are counted as unemployed;

• retailers, restaurants and bars created more than 50% of the jobs in November.  My comment:  that is to be expected given the build-up to so-called ‘Black Friday’ (the day retailers traditionally have believed their fiscal year profit and loss statements will change from an accumulated loss to an accumulated gain) and the Christmas holiday season generally.  To borrow a word from Fed Chief Bernanke, I expect many (if not most) of those jobs to be ‘transitory’;

• I say ‘importantly’, more than 300,000 people stopped searching for a job in November.  If that is true, given the time of year (the holiday season) that we are now in I think that is ominous; and,

• the so-called ‘underemployment rate’, which counts people who have given up looking for jobs and people with part-time jobs looking for full-time jobs fell from 16.2% to 15.6% in November.

On an overview basis, these statistics seem inconsistent to me – but then perhaps I am misinterpreting them.  I say this because if 13.3 million unemployed people represent 8.6% of the potentially employed U.S. population, that ‘potentially employed population’ would be (100/8.6 X 13.3) = 154.7 million people.  If the 120,000 reported net jobs had not been created in November, then the total number of people counted as unemployed presumably would have been 13.42 million (13.3 million plus 120 thousand).  The unemployment rate would then be 8.67%, not the 9.0% previously reported (13.42/154.7).  I am very skeptical about all these U.S. unemployment figures.  Antidotally, for what it is worth I can tell you that just having spent 5 weeks in the U.S. (North Carolina and Florida) no one I spoke with (and I spoke with a lot of people from all walks of life) told me they were seeing economic improvement in their respective geographic areas.  The best news I learned from some of those people was that some thought things weren’t ‘getting worse economically’, or weren’t ‘getting much worse economically’ – and broadly they were all both worried and disappointed with what they saw as ‘Washington in deadlock’.

You might also want to read:

• a December 2 Washington Post article written by Brad Plumer titled ‘Why are people dropping out of the labor force?’ – reading time 4 minutes; and,

• a Minnesota Public Radio story written by Paul Tosto titled ‘What the unemployment rate says and doesn’t say’ – reading time 1 minute.

Finally, you might want to:

• watch a December 2 eight minute video featuring Gerald Celente titled: ‘Gerald Celente: We-re going into an economic 9/11’.  The beginning of this video for me emphasizes how simplistic the main-stream media can be at times as they report what they are provided with without much if any thought – watch the video and see if you agree with this comment;

• watch a December 2 two minute CNBC video titled ‘Santelli: I Don’t Trust the Unemployment Rate’ for main-stream media coverage that actually looks behind the numbers; and,

• read a Wall Street Journal Blog article titled ‘Did (U.S.) Economy Create Nearly 500,000 Jobs in November?’ – reading time 4 minutes.  The 500,000 number is based on an Adjusted Household Survey Employment number also produced by the U.S. Labor Department, as contrasted with the aforementioned 120,000 number generated by what is referred to as the Establishment Survey.  I added this article reference for completeness, not for its confusion value, but I do suggest this article emphasizes that one has to wonder what one ought to believe.  Perhaps the best answer to that question is that people probably elect to pick the reported statistic that best suits their own particular purpose.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

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A just published article by Neil Irwin in the Washington Post is titled ‘U.S. unemployment rate falls to 8.6% in Nov.: 120K jobs added’ – reading time 3 minutes.

This article was (I say ‘had to be quickly’) written following release this morning of a report by the U.S. Bureau of Labor Statistics.  You can read that report by clicking here.  I think not surprisingly, the Dow is up 100 points at 10:10 a.m. Eastern Time this morning – one factor in this index increase perhaps being that unemployment rate announcement.

I am not going to reach any hasty conclusions, but rather will comment on the U.S. unemployment rate in my e-mail this coming Monday.  That said, I am skeptical that a net jobs added number of 120,000 could affect the reported unemployment rate by 4/10ths of one percent unless a tremendous number of Americans have dropped out of the number of those seeking work.  More on Monday.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• So, Who Is The Contrarian?, Compendium of ‘Employment Assist Articles’!
• Grasping at Straws?
• U.S. Unemployment Rate?
• U.K. Youth Unemployment
• Jobs Recession, Unrest?