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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (43579)	10/15/2005 7:44:42 PM
From: ild	Respond to of 110194

"As for the details [of the September employment report], it's hard to figure out what really happened. For example, did you know that the oil extraction industry added workers? Huh? There were huge declines in retail trade and the hospitality sector but the rise in health care continued largely unabated in spite of the closing of Gulf hospitals and health care facilities. There was a strong gain in education even though schools are not open. Another sign of craziness: The hours worked in the natural resources industry eased back only slightly. I guess those oil rigs really didn't shut down. How are these strange things possible?" ----(The Wall Street Journal - Joel L. Naroff, Naroff Economic Advisors - 10/8/05) "Surprisingly, the 'not at work due to bad weather' tally [in the September employment report] came in at only 214,000 -- somewhat below the year ago reading of 225,000. However, the relatively low reading was likely due to the fact that BLS interviewers did not gather any data from two parishes in New Orleans that were under mandatory evacuation orders." ---- (The Wall Street Journal - David Greenlaw, Morgan Stanley - 10/8/05) Schaeffer's addendum: The government data mill that brings you month after month of "contained" inflation numbers would also have you believe that the damage to employment (and hence to the economy) from Katrina was much milder than anticipated. Most economists quoted in the piece ran with this data and deemed it yet another indication of the economy's "resilience." I always dig in such articles for those whose insights seem worthy of our attention, and they are quoted above. Bernie Schaeffer "It would be unfair to describe the mood on Wall Street as complacent. There is no sign of the bubble mentality the late 1990s. Strategists seem to be coming around to the view that future returns will be modest, across a range of assets." ----(Financial Times - Philip Coggan - 10/7/05) Schaeffer's addendum: It depends on what your definition of "complacent" is. An accurate measure of complacency is always difficult, but at the very least it must be "contextual." A "bubble" mind set is almost always a creature of booming share prices. It is therefore not surprising in the least that the "bubble mentality" has not survived a huge market plunge and then a modest recovery followed by a market that has effectively been in a coma for almost two years. But this doesn't mean that the current attitude on the Street can't be described as "complacency." I would describe the current complacency not as one based on the belief that stock prices will soar forever, but rather on the widespread and troubling belief that there is no significant downside risk in this market. Even as they "conservatively" proclaim that "future returns will be modest" these strategists are implicitly assuming that risk is modest as well, otherwise, by their own definition, investing in the stock market would be folly. Bernie Schaeffer