Thanks for turning our world upside down, Einstein.
I’m going to go a little off topic here.
Yesterday, my post on the jobs report was part of Barry Ritholz’s links post at The Big Picture (not just trying to throw Barry traffic here, he certainly doesn’t need our help, I just want you to know how I fell into this particular rabbit hole.) One of the other posts he linked to was this one, by Rod Dreher, about the loss of reason in our culture.
“Whether they realize it, ordinary people have become more comfortable with the idea that truth is relative,” he writes. “Traditional belief in the effectiveness of reason, however imperfectly realized, has long been a stabilizing force in our liberal democracy. If that faith is slipping into irrelevance, we are going to lose more than our minds.”
This may sound a bit nuts, but I can tell who you is to blame for that, and it isn’t George Bush or Bill Clinton, or even Morton Downey Jr.
Posted by Steven Russolilloon November 24, 2009 Uncategorized /
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On Tomorrow’s News Today, Madeleine Lim and Mike Casey discuss the mixed picture indicated by the latest US data, including Case-Shiller home-price indexes and GDP.
Posted by Steven Russolilloon November 23, 2009 Uncategorized /
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On Tomorrow’s News Today, Eduardo Kaplan and Madeleine Lim discuss some positive economic reports, including the latest US housing data, and economic figures from the Organization for Economic Cooperation and Development.
I don’t usually write comments on other people websites, but I really almost commented on Daniel Gross’s piece for Slate, “Coming Soon: Jobs!” Then, of course, I realized I didn’t have to comment on his site, when I’ve got my own.
Now, I’ve heard of Daniel Gross before, and I’d be willing to be he’s never heard of me, which means he’s probably better known than I am (no false modestly there, it’s just true,) but I just don’t think his optimism is very well founded. He writes:
Some recent data points, and an understanding of the behavior of companies at different phases of the business cycle, suggest we’ll have job creation sooner rather than later.
He’s right about one thing: at this early point in the recovery, companies are still reluctant to ramp up hiring, as one might expect. “We aren’t close to needing to hire people in a significant way,” Applied Materials CEO Mike Splinter said at the WSJ’s CEO Council. And that’s about what we’ve been hearing for the past month.
But Gross looks ahead, and this is where I think he’s tripping himself up. He starts making some shaky assumptions about growth, and seeing as most of his argument rests upon that growth, his sunny optimism is suspect.
Fed chairman Ben Bernanke can talk all he wants about the strengthening US economy, but nothing can hide the fact that unemployment remains in a dire situation without much hope for a turnaround in the near future.
The notoriously bearish Nouriel Roubini penned a NY Daily News op-ed yesterday cautioning the worst is yet to come on the unemployment front. He expects job losses will continue until the end of 2010 at the earliest, unemployment will peak near 11% and will remain elevated for at least two years.
From Roubini:
In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
He says government should pass another round of stimulus that will put people back to work sooner rather than later.
There’s really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.
Roubini isn’t the only doomsayer who’s predicting the jobs market to get even worse than it already is. Gluskin Sheff chief economist David Rosenberg predicted last week that the unemployment rate could hit as high as 12%-13%. Goldman Sachs chief economist Jan Hatzius has also said the jobless rate could reach 11%.
“We feel increasingly confident in the sustainability of the US and global economic recovery,” BofA Merrill US strategist David Bianco says. He thinks the S&P 500 might even surpass his EPS estimates of $70 and $80 for 2010 and ’11, respectively.
Street expections for 2009 are around $55 a share on an operating basis, according to S&P.
And what’s got Bianco so convinced? He credits “oil prices and FX rates more favorable than our assumptions,” in a report out today.
What about high unemployment? Isn’t that a concern?
He acknowledges unemployment “is near post Depression highs,” but “capacity utilization is near post Depression lows,” so that just means inflation won’t pose any immediate threat.
Posted by John Shipmanon October 08, 2009 Uncategorized /
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Better-than-expected 3Q results from Alcoa late yesterday help cast a positive premarket tone for US stocks.
AA’s profits were down 71% vs year ago, and sales were off 33%, but Street was looking for a loss, and revenue did improve vs 2Q.
Asian markets moved higher overnight, and European stock markets are also stronger so far. Weekly jobless claims set for 8:30 a.m., and August wholesale trade data due at 10:00 a.m. September chain-store sales reports spill out throughout the morning. US dollar looks to be struggling again, commodities rallying.
S&P futures up 8.60; DJ futures up 71. Ten-year lower, yield at 3.19%.
Bank of America (BAC) failing to announce a clear succession plan after Ken Lewis’ announced he’s stepping down gives BofA investors something else to worry about.
Not announcing a successor or even an interim CEO is a negative for BofA, Fox-Pitt says, while questioning the bank’s ability to attract a top exec while operating under close government supervision. BofA said it’ll announce a successor by year’s end, but analysts and bloggers are already speculating who’ll take the helm.
Stifel Nicolaus analyst Christopher Mustascio speculates that Bill Winters, who lost out as co-CEO of JPMorgan Chase’s (JPM) investment bank in Tuesday’s management reshuffle, might be a candidate to succeed Lewis. Other internal candidates are likely consumer banking head Brian Moynihan, and Thomas Montag, head of investment banking, but “potential external candidates could include former (BofA) CFO Al de Molina,” Mutascio writes.
BofA’s wealth management chief Sally Krawcheck is also being mentioned as a potential successor. “[Krawcheck] has the kind of credibility as a straight-shooter that the company desperately needs, and she might be able to mollify some of the bank’s more antagonistic foes,” Reuters blogger Felix Salmon says.
Ultimately, whoever the board picks must have savvy political skills, especially considering the banking giant’s dicey relationship with the government. From Salmon:
The job of the CEO is not really about managing down, so much as managing out — repairing relationships with Andrew Cuomo, Sheila Bair, Barney Frank, Mary Shapiro, Elizabeth Warren, and other Washington VIPs. The board will want an experienced manager, to be sure. But they’ll really want someone with political skills, who can calm the savage beast that has woken up DC and which is eyeing the giant of Charlotte.
(Brendan Conway and Matthias Rieker contributed to this post.)
Posted by John Shipmanon September 23, 2009 Uncategorized /
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Fed's in no rush to raise rates
BofA/Merrill economists expect the FOMC today “to underscore its ‘go slow’ policy, continuing to promise an ‘extended period’ of low interest rates and giving no hint of an early end to its credit easing policy.”
And while many believe the Fed’s attempt to exit from all its market support programs is akin to threading a needle, the firm says it’s “doable.”
Improvement in the economy and capital markets “will likely be slow, giving the Fed time to plan, test and implement its exit strategy,” BofA says. “This also suggests relative minor disruptions to the capital markets.”
In one episode of AMC’s “Mad Men,” ad exec Don Draper and his wife Betty are driving home late at night from a business dinner. Betty’s in the passenger seat, crying, because she’s realized Don’s having an affair with one of the women they just dined with.
Rather than confront her husband (something she’ll get around to later,) she slides across the car’s bench seat and nuzzles up next to him, and that’s how they ride off, Don with one arm around his wife, one hand on the wheel.
Somewhere in that front seat, somewhere on that road, even as her marriage is falling apart, Betty finds comfort.
It seemed to me, re-watching the episode recently, that there’s something quintessential about that image. A man driving one of those big old Detroit dinosaurs, one arm around his girl, one hand on the wheel. It’s uniquely American: the open road, the wide-open future. Even if that future never quite comes.
The American love affair with cars began its slow death somewhere around the point when Detroit started putting bucket seats in their cars instead of bench seats. Bucket seats are utilitarian. There’s a reason they put them in race cars. Once Detroit traded efficiency for adventure, once they started competing on their competitors’ terms, they were done for.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
Michael Dorff, a professor at Southwestern Law School in Los Angeles, says CEOs are paid for performance – but it’s usually not their own performance. They’re paid millions for the performance of the economy, their industry, their employees, and sometimes just for having good luck. For years boards of directors – often made up of CEOs who believe in […]
