Economics Roundtable
Calculated Risk
Read the Bill McBride interview.
Jobs
The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .
Click on the image to get a bigger version.
June Payroll Employment
The slowndown in employment growth over the past few months is starting to become more apparent in the graph below.
Click on the image to get a bigger version.
Focus on the Problem
U.S. payroll employment peaked at 132.5 million jobs in February 2001. For April 2012, U.S. payroll employment had reached 133.0 million jobs, marking the third month in a row above the February 2001 level.
Click on the image to get a bigger version.
Graph-of-the-Year Candidates
Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?
Brad DeLong favors the U.S. gdp gap.
Finally, it's hard to argue against the payroll employment graph below (straight from FRED) and the comparison across recessions (courtesy of Calculated Risk).
Looking Up At 2001
In February 2001, U.S. payroll employment peaked at 132.5 million. The November 2011 figure of 131.7 million still falls 800,000 jobs short of the earlier peak.
Click on the chart for a larger version.
Remember M1?
Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?
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EconModel
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The Aleph Blog (David Markel)
A little more than two years ago, I wrote Goes Down Double-Speed. I wrote it after the market had doubled from its lows two years earlier. I want to update the piece and explain we have learned over the past 2+ years, and maybe discuss what could happen over ...
The foolish do the best in a strong market
“The trend is your friend, until the bend at the end.” So the saying goes for those that blindly follow momentum. The same is true for some amateur investors that run concentrated portfolios, and happen to get it right for a while, ...
I have not been a fan of this rally, and I have been selling into it. I do have a rule for equity clients — cash never goes above 20%. I have been close to that recently, and after rebalancing some companies that have hit the top of the ...
US Economics
For all the debt, there’s a shortage of bonds stks.co/cUj1 There isn’t a shortage of bonds, but of yield w/reasonable safety $$FED Very Low Inflation Panic Button: Soon DEFCON 2 stks.co/sDIg Argues that Fed will give up confident talk &continue easing $$Wake up! Neither political party cares about the rest of ...
I have a saying that when there is no news, the market reveals its true direction. That applies to individual securities as well as the market as a whole. Why?
Think of institutional traders, who drive much of the market. They are so big that they have to spread out their ...
I wrote this piece once, and lost it, 1000 words. Going to try again.
1) The first thing to realize is that diversification across insurance subindustries usually does not work.
Do not mix:
Life & P&CFinancial & AnythingHealth & AnythingMaybe you can mix P&C, Mortgage & Title, after all Old Republic survived. The ...
From a reader who I appreciate:
David, I am curious if you have thoughts about insurance companies (especially P&C) hedging political risk … the answer to this question obviously will carry over to healthcare quickly.
Recently, my state (Corrupticut) was hit by hurricane Sandy. Many municipalities (but not all) still had extensive ...
China
Pettis: I would argue that until Beijing has cleaned up its debt problems and its very unstable balance sheets, it cannot move quickly. $$Pettis: Reducing the [interest] subsidy by raising rates would cause them all to bleed money. (DM: thus fin’l liberalization difficult) $$Pettis: Far more than 100% of ...
This piece is the sixth out of seven in a series that I have been writing at Aleph Blog. Here are links to the first five pieces:
On Insurance Investing, Part 1 (reducing share count)On ...My view is that there is no such thing as a free lunch, not even for governments or central banks. Any action taken may have benefits, but also imposes costs, even if those costs are imposed upon others. So it is for the Fed. At the beginning of 2008, they ...