A Bourse Diary

Thoughts on stocks, speculation and ... life

Saturday, June 03, 2006

The Payroll Figures from Now and the Past - how do you think about it?

There is a nice chart I've seen on The Big Picture Blog - it shows the development of the payroll recovery after some equivalent recessions in the past:

Source attributed: Contrary Investor

The author is - to say it politely - concerned about the outlook for the bourse and the economy by this comparatively weak recovery of employment. And he has not overlooked the fact, that we start this jobs recovery from quite low unemployment levels and that the recent recession in the USA was a rather small one. Though there is concern, and "the bill" for the very supportive monetary policy (as main reason to do relatively smooth in the real economy despite the second biggest stock market collapse in history) is still to be paid...

So, it's surely not easy to get the right view on those complex developments. I can't do it as well. Anyway, what I thought about is, that the pressure on prices (i.e. inflation) coming from the employment increase should remain weaker than currently feared. Ok, before the last report...

A smoother recovery (and the smoother recession before) provide - in my view - one more indication about the effects of globalization, more stable and ripe financial markets and capability of the world economy (and of course of the US-economy). It just does not shake that much as it used to. And the business cycles turn smoother and longer.

And I do expect this stock cycle will turn out to be longer than anticipated.

The free market economy is more capable than ever to absorb shocks, deterioration than ever before. As mentioned - we absorbed very well the severe bear market after 2000. The few of a budget deficit and slowing real estate markets will (hey - probably, I'm not an oracle) not get us so easy out of track.

So, if the economy is to stay relatively robust, how about the shares? They can nonetheless go down? Yes, if there were "hot air" and "hot speculation" and the prices are not in trace with the fundamentals. But I can't see none of that at the recent levels.

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Disclaimer: All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and are in no way intended to serve as personal investing advice and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Readers should not make any investment decision without first conducting their own thorough due diligence. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed.