tag:blogger.com,1999:blog-6616959642391988608.post2197021450568231879..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Jobs are a lagging indicator (2)Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-6616959642391988608.post-57164237207564685772009-01-13T19:36:00.000-08:002009-01-13T19:36:00.000-08:00Well, economics is not a science. Turns out that t...Well, economics is not a science. Turns out that the stock market hit bottom around the same time that jobs hit bottom. As I said in the post, financial markets "can and do" lead the real economy. But the 1990-91 recession is one of the exceptions. What I could say in favor of my assertion is that stocks turned up well before the official end of the recession was announced, and well before the Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-30544378824207411492009-01-12T12:19:00.000-08:002009-01-12T12:19:00.000-08:00Scott,Did you get a chance to go back and look at ...Scott,<BR/><BR/>Did you get a chance to go back and look at the 1990 recession to see if the same 7 month lag between the stock market bottom and job market bottom was in play then as well? Do you recall if the unemployement rate exceeded 8% during that downturn? It seems to me that it did. Thanks.atempehttps://www.blogger.com/profile/10353922186740637834noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-12914751260807944532009-01-11T13:45:00.000-08:002009-01-11T13:45:00.000-08:00Thanks for your responseThanks for your responsebroderohttps://www.blogger.com/profile/12296214283216386700noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-85560068079403903242009-01-11T09:27:00.000-08:002009-01-11T09:27:00.000-08:00brodero: I can only guess as to where we are in th...brodero: I can only guess as to where we are in the deleveraging cycle. I think it's quite advanced. Most importantly, I think most of the forced selling/deleveraging has occurred. I base that guess on the higher prices we are seeing for almost all of the things that were the object of leverage's affection (e.g., commodities, stocks, corporate bonds, the ABX and CMBX securities). It would be Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-64640688035077563122009-01-10T21:00:00.000-08:002009-01-10T21:00:00.000-08:00Speculative or not, I tend to agree with your clar...Speculative or not, I tend to agree with your clarified comments on the lag between job losses and the sell-off in equities. The precipitous onset of this crisis could very well point to a dramatic recovery. <BR/><BR/>As you've shown, this downturn is supported by fundamentals, yet the drop-off appears to have surpassed levels you might expect to see given these fundamentals. I tend to agree Chrishttps://www.blogger.com/profile/01191716391981171045noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-21747487956991790012009-01-10T15:39:00.000-08:002009-01-10T15:39:00.000-08:00This is not related to the graph but could you com...This is not related to the graph but could you comment on where you think we are in the deleveraging cycle and do you think a study of total margin outstanding could be a<BR/>decent proxy for measuring deleveragingbroderohttps://www.blogger.com/profile/12296214283216386700noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-66896832367002047462009-01-10T15:29:00.000-08:002009-01-10T15:29:00.000-08:00sam: I understand your concerns, believe me. I too...sam: I understand your concerns, believe me. I too worry about all the volatility and policy uncertainty. But I think this is already priced into the market. If I'm right and if Obama manages to avoid doing really stupid things (consider all the ill-considered promises that he has already reneged on), then there is a decent chance that the future will be less terrible than the market expects.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-28416026368664178072009-01-10T15:24:00.000-08:002009-01-10T15:24:00.000-08:00Believe it or not, that is pure coincidence. I was...Believe it or not, that is pure coincidence. I was just trying to estimate what a reasonable level was for job losses over the next 6 months.<BR/><BR/>If it turns out that job losses in this recession are no more than 3%, then without doubt the market is priced to an extremely pessimistic view of the economy's fortunes.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-27049816722286907482009-01-10T15:07:00.000-08:002009-01-10T15:07:00.000-08:00I noticed that you pick the point of 134 million f...I noticed that you pick the point of 134 million for the bottom in job losses is that because the 81 and 74 recessions resulted in a 3% drop in total nonfarm payroll employment.broderohttps://www.blogger.com/profile/12296214283216386700noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-90030391366916197422009-01-10T14:04:00.000-08:002009-01-10T14:04:00.000-08:00Though I am somewhat heartened by your analysis, I...Though I am somewhat heartened by your analysis, I must admit to being spooked by what appears to be an increasingly volatile economy in general.<BR/><BR/>Such rapid change on so many fronts, and the accompanying loss of a sense of predictability that results, is for me, one of the most worrisome things revealed by your chart.Anonymoushttps://www.blogger.com/profile/15918980162534676838noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-10382342666718418752009-01-10T08:13:00.000-08:002009-01-10T08:13:00.000-08:00Scott, thanks so much for your excellent commentar...Scott, thanks so much for your excellent commentary and graphing.<BR/><BR/>Interesting that as a country, even after the job losses of the last twelve months, we're still up a couple million jobs over the peak in 2001 and about four million from the recession trough in 2002.<BR/><BR/>I suspect one reason that we're coming down in employment so quickly is the result of the rapid growth of Cabodoghttps://www.blogger.com/profile/08299113185481067179noreply@blogger.com