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 The pendulum swings. . . Thank goodness my generation falls right in the middle and we wear our pants in the correct position.GREECE As of this writing (Monday morning) Greece still hasn't made an agreement with their private creditors. They have met the last three days, but it seems the leaders of the political parties can't agree amongst themselves as to how much more torture they can take in the recession category. They've already been in recession 3 or 4 years and it seems this deal will only make matters worse. On the flip side of the coin, how much worse will it get if they DON'T put a deal together? The dilemma is that a laborer in Germany gets paid about 30% less than a laborer in Greece. If a laborer in WI gets paid 30% MORE than a laborer in IL, where will the manufacturer put his next plant? It is a catch 22. In Greece, 40% of the age group that would have their pants hanging around their knees (15 - 24) are unemployed. The next group older have 22% unemployment. I wouldn't want to be the one to tell these people things are only going to get worse before they get better. We in WI have had major problems with the governor taking away benefits. Think how bad it would be if he wanted to take 1/3 of our paychecks away also!! Makes it a little easier to see how anarchy take take hold. The dirty little secret is that even if this agreement gets made, the country is still bankrupt with their debt to income still about 125% of their GDP. The deal simply allows them to live another day. They will be able to make their march payments. Big deal. At this point we will begin reading about the next debt payment that needs to be made and their inability to make that as well. When will it stop? Probably when they leave or get kicked out of the union. Over The Top Employment Numbers Last Week Last week I spoke of the Baltic Dry Index because it provides real data outside the government's manipulation and endless revisions. This week I would like to mention the ability to track federal withholding taxes. It is only common sense that if more people are employed, then there will be more taxes being withheld, right? A group called TrimTabs follow these withholding taxes on a regular basis. They report that the government figures in the last few months paint a different picture from what the withholding taxes do. They said the last time there was such a large difference was during the last recession. As it turns out, the government numbers were wrong and had to be revised back to figures in line with the TrimTabs expectations. And yes, the government's employment report is off on the high side. Its as they say, figures can't lie but liars can figure! Time will tell who was correct. I have a feeling I already know. Could the government be serving up numbers to simply make themselves look better in an election year? Never has an incumbant administration or their party been re-elected when the election year was recessionary. Bush the 2nd was the last to affirm this in 2008. Long time readers know that what we are doing with our portfolios doesn't go hand in hand with what I write in this letter. I am writing about my thoughts of the overall economy. The market is a barometer of the economy. It moves BECAUSE of the economy in general, but its nature is to predict what is going to happen in the economy and move before the economy actually does. Since these predictions aren't always correct, large mood swings occur. Have a great day!! John Norquay CEO PivotPoint Advisors |
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Monday, February 6, 2012
Employment Numbers: Real or Unreal?
Moderately Aggressive Model
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