Monday, March 17, 2014 Tuesday, December 6, 2011 Friday, February 4, 2011
Well that was a disappointment.  Get rid of ADP payroll report! 
Even though the report has confounded economists, take a look at the Gallup Poll of job creation.  It signals that job creation has stagnated for the past 3 months now. 
Now granted, you’re seeing other reports of decreased firings and reports of more job openings, however, it seems that companies are still too uncertain on whether the recovery is real.  As long as this uncertainty persists (consumer remain cautious and Emerging Markets deal with inflation), don’t look for large strong employment gains anytime soon. 
Another excuse cited was the bad weather across much of the country.  Sure this could have played a role and it makes next months employment report even more important to see if this months report was a statistical aberration. 
On the bright side, both November and December were revised upwards and the decline in the unemployment rate seemed solid as well. 
All in all a “blah” report and confirms that the job market is improving but at a painfully slow rate.  However, there are signs that the job market may improve in the months ahead.  Whether it actually happens in a different story because investors have been expecting accelerating job gains since last year and it still hasn’t happened. 
Furthermore, any large increase in jobs is sure to mean thinner profit margins for companies.  Maybe that’s why they’ve been holding back.  Profit margins are near all time highs.  Mean reversion would be a bitch for investors. 

Well that was a disappointment.  Get rid of ADP payroll report! 

Even though the report has confounded economists, take a look at the Gallup Poll of job creation.  It signals that job creation has stagnated for the past 3 months now. 

Now granted, you’re seeing other reports of decreased firings and reports of more job openings, however, it seems that companies are still too uncertain on whether the recovery is real.  As long as this uncertainty persists (consumer remain cautious and Emerging Markets deal with inflation), don’t look for large strong employment gains anytime soon. 

Another excuse cited was the bad weather across much of the country.  Sure this could have played a role and it makes next months employment report even more important to see if this months report was a statistical aberration. 

On the bright side, both November and December were revised upwards and the decline in the unemployment rate seemed solid as well. 

All in all a “blah” report and confirms that the job market is improving but at a painfully slow rate.  However, there are signs that the job market may improve in the months ahead.  Whether it actually happens in a different story because investors have been expecting accelerating job gains since last year and it still hasn’t happened. 

Furthermore, any large increase in jobs is sure to mean thinner profit margins for companies.  Maybe that’s why they’ve been holding back.  Profit margins are near all time highs.  Mean reversion would be a bitch for investors. 

Tuesday, December 21, 2010
herblondness:

By Felix Salmon
Stephen Culp has another striking chart today.
This chart should be ingrained in the mind of anybody who cares about fiscal policy. The main things to note:
Federal taxes are the lowest in 60 years, which gives you a pretty  good idea of why America’s long-term debt ratios are a big problem. If  the taxes reverted to somewhere near their historical mean, the problem  would be solved at a stroke.
Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
Employment taxes, by contrast—the regressive bit of the fiscal  structure—are bearing a large and increasing share of the brunt. Any  time that somebody starts complaining about how the poor don’t pay  income tax, point them to this chart. Income taxes are just one part of  the pie, and everybody with a job pays employment taxes.
There aren’t any wealth taxes, but the closest thing we’ve  got—estate and gift taxes—have shrunk to zero, after contributing a  non-negligible amount to the public fisc in earlier decades.
If you were structuring a tax code from scratch, it would look  nothing like this. But the problem is that tax hikes seem to be  politically impossible no matter which party is in power. And since any  revamp of the tax code would involve tax hikes somewhere, I fear we’re fiscally doomed.

herblondness:

By Felix Salmon

Stephen Culp has another striking chart today.

This chart should be ingrained in the mind of anybody who cares about fiscal policy. The main things to note:

  • Federal taxes are the lowest in 60 years, which gives you a pretty good idea of why America’s long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean, the problem would be solved at a stroke.
  • Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
  • Employment taxes, by contrast—the regressive bit of the fiscal structure—are bearing a large and increasing share of the brunt. Any time that somebody starts complaining about how the poor don’t pay income tax, point them to this chart. Income taxes are just one part of the pie, and everybody with a job pays employment taxes.
  • There aren’t any wealth taxes, but the closest thing we’ve got—estate and gift taxes—have shrunk to zero, after contributing a non-negligible amount to the public fisc in earlier decades.

If you were structuring a tax code from scratch, it would look nothing like this. But the problem is that tax hikes seem to be politically impossible no matter which party is in power. And since any revamp of the tax code would involve tax hikes somewhere, I fear we’re fiscally doomed.

Tuesday, December 7, 2010 Wednesday, December 1, 2010

Today’s Economic Indicators and Observations

+Improving economic results show that the recovery is on firmer footing.

ADP Employment report for November shows a gain of 93K, 23K above expectations, while October was revised higher to 82K from 43K.  The breadth of the gain was improved from the prior months. 

Strong UK PMI and German Retail Sales

Strong China PMI = the economy continues to cruise.

Mortgage Application for purchase inch up 1.1% after that large 14.4% increase and marks a new post-stimulus high. 

ISM Manufacturing gauge comes in at a healthy 56.6 in November from 56.9; Employment sub-index points to additional employment gains in the sector; Supply chains are working as delivery times slowed, however, backlogs continue to contract. 

-Some coals in the stocking as well though:

Challenger Job-Cut report shows a rise in the announced layoffs and is up the highest level since March/April.  While it isn’t cause for alarm just yet, it’s worth keeping an eye on as retailers begin shedding their “holiday workforce”.

The Productivity and Costs report points to employers continuing to squeeze work out of its existing workforce as productivity jumped 2.3% for the 3rd quarter, while labor costs continued to decline, though slightly, down 0.1%.  Overall this helps corporate profits, but at the expense of hiring and inflation (which is what the Fed is desperately attempting to foster).

Strong China PMI may mean more tightening as price gauges are near 2008 highs… with a possible property bubble, the probability of a hard-landing is increasing

——————————————————

Overall the contradicting economic indicators continue, which is representative of a muddle through economy that is growing, but not at a strong enough pace to bring down the massive labor slack. 

Is the Santa Claus Rally about to begin?  Perhaps, however, I stand by my cautiousness as the name of the game is forecasting what may come in the future, not what’s going on now.  The market has priced this economic improvement already and many headwinds will be getting stronger.

   Housing prices continue to double-dip thus eventually affecting consumption

   Unemployment benefits expiring, affecting consumption as well..will they be extended?

   China applying the breaks via price controls and increasing interest rates

   Eurozone Sovereign debt issues just won’t go away

   State & Local government reigning in spending (see Cisco’s recent earnings report)

   Bush-tax cuts not getting extended…the stakes were raised today by Mitch McConnell

Friday, November 5, 2010