— aleatory

Double Dip Redux

Things are idling along at the moment. But it’ll take jobs to move markets from here. Perceived wisdom sees the job report as a trailing indicator, assuming the count will pick up as companies get back to selling.

Like most financial models, this is fine when in median times. We’re not in that comfort zone yet.

So what happens when a historical anomaly upsets the apple cart? Who knows. We could compare it to the Great Depression, but it would be incorrect not to point out the massive government intervention poured into the economy this time round has not skewed realities somewhat. This may still, somehow & unbelieveably, work out. Upbeat future guidance is an interesting quirk of a variable to be gauged over the coming earnings season.

Massive and sustained job losses will stop a recovery. Governments have already thrown everything we’ve got at it. We are not immune to what may turn out to be government mismanagement. Future growth has been mortgaged in this respect.

So if things do go the way of the early 30s – the development of a 2nd dip – the warning sign to watch will be more job reports like those of last week.

  1. Blaise says: 3 August 200911:10 am

    It’s August already, S&P is marching, and GS still making their guaranteed profits for churning void trades producing void volume. What’s in play for the rest of 2009?

  2. rutherford says: 5 August 20095:49 pm

    lol. It appears as though the illusion of no expectations & government mortgaging has an air of inevitability about it.

    That said, over the economic time frame I like to discuss they are valid market stimuli. Whether you consider trades & volume ‘void’ is a descriptive irrelevance. The important thing is to ask why it is happening as opposed to why you think it shouldn’t be.

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