patrick.net

Anybody who says job market is getting better, here is the labor department data.

http://money.cnn.com/2010/10/08/news/economy/september_jobs_report/index.htm?hpt=Sbin

bubble .... not only that, but the government continues to use the highly misleading and overly optimistic U-3 statistics instead of the much more accurate and encompassing U-6 which counts underemployed (part timers that need full time work), people who have lost their benefits, others that have simply lost hope and given up looking for work, etc.

RayAmerica says

bubble …. not only that, but the government continues to use the highly misleading and overly optimistic U-3 statistics instead of the much more accurate and encompassing U-6 which counts underemployed (part timers that need full time work), people who have lost their benefits, others that have simply lost hope and given up looking for work, etc.

Yeah, that underemployed part is always in the back of my mind. This is not real data. A guy who lost his six figure job and working a $13 jobs to get past his bad days is not considered employed by any means.

http://www.boston.com/business/articles/2010/10/07/job_openings_increase_for_second_straight_month/

"Job openings rose in August for the second straight month and layoffs dropped sharply, evidence that the job market is slowly healing."

What?? Obviously they didn't get the message that the world is ending. Would you bears consider job openings to be forward looking? I would say so. And unemployment numbers tend to be backward looking, huh?

Unemployment will improve .... it's just going to take a little bit of time. LOL

http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2128-us-wont-recover-lost-jobs-until-march-2020-at-current-pace

Tatupu, read the article you posted a link to. The author clearly (and correctly) states that increased job openings numbers have NOT caused any commensurate increase in HIRES, very far from it. It also correctly states that AS JOB OPENING NUMBERS INCREASED SO HAS THE UNEMPLOYMENT RATE.

schmitz_kris says

Tatupu, read the article you posted a link to. The author clearly (and correctly) states that increased job openings numbers have NOT caused any commensurate increase in HIRES, very far from it. It also correctly states that AS JOB OPENING NUMBERS INCREASED SO HAS THE UNEMPLOYMENT RATE.

Yes, but there is obviously a lag between a job opening and a job hire. That's why it's a leading indicator--the hiring will lag by some time period...

Why stop at saying that just housing needs to be so cheap and almost free for everyone? I want to expand this "I want to have everything for cheap or free" passion. Can you believe that a brand new sedan costs over $20,000.00? Who can afford that? It should be less than $5.00, with used cars between $1.00 and $4.00 depending on mileage. We have a huge bubble in auto prices. Restaurant pizza prices are just absurd. A large pie with 3 toppings should not cost more than 5 cents. Pure greed and speculation has made it cost over $10.00. Everybody deserves a free gallon of milk per day, everyday. That is our birthright, and yet greedy grocery stores are charging between $3.00 and $5.00, which is unsustainable. My index of milk prices starting in 1500 A.D shows that gallon milk prices have historically been one thousandth of minimum wage, so it should be less than a cent now. I look at all the idiots buying all these goods at inflated prices and laugh...

schmitz_kris says

You know, it’s funny. When I talk economic metrics with folks, especially those concerning the housing market, the older folks and senior citizens (those who have had their homes 100% paid for quite some time already) never get so defensive/emotional about the value of their property. The younger, indebted individuals/”family men,” etc. ALWAYS do, however. Why? IT’S USUALLY ALL THEY’VE GOT, and they’re in big debt to boot. THIS IS EXTREMELY STRESSFUL. Give these people a break. Deep down they know this ship is sinking (look at the details of today’s job numbers - it’s nothing but pathetic all around with the few sectors that were strengthening as a result of unprecedented money pumping now turning over and headed south once again), but when your livelihood and/or ability to sleep at night and remain at least functionally optimistic about the future depends on you believing something or holding a certain paradigm, that’s EXACTLY WHAT YOU DO.

Caterpillar CAT is +41% YTD, +50% YoY.
If it’s a bubble, I like this one even more than the RE one.
Must be a bunch of idiots and speculators driving up the price.
Hurry, who knows how long Uncle Ben can keep throwing U$D from his helicopter.

kt1652 says

Caterpillar CAT is +41% YTD, +50% YoY.
If it’s a bubble, I like this one even more than the RE one.
Must be a bunch of idiots and speculators driving up the price.

Yes, it must be idiots. Can't have anything to do with the fact that CAT made $1.09/share last quarter, up 91% from a year ago. Sales up 31% And they're up in developing countries, so Uncle Ben isn't really driving it..

tatupu70 says

so Uncle Ben isn’t really driving it..

温家宝 is da man. All this Chinese-owned infrastructure isn't going to build itself. . .

Caterpillar Inc. (CAT - Analyst Report) plans to lay off 2,454 employees across 5 plants in Illinois, Indiana and Georgia to cut costs amid recessionary conditions.

When you cut OPX its normal for net income to raise and stock to go up. CAT had a 10% reduction in force. Of course the stock reacted with higher expectations of earnings in the future. We saw these things happen in prior recessions like back in 1991-92.

Only an increase in Payroll numbers as disclosed from Payroll services like ADP or Ceridan will provide a better guage where we stand on the job front. Advertisements for jobs are meaningless. You have multiple posts for single jobs being posted everywhere.

thomas.wong1986 says

When you cut OPX its normal for net income to raise and stock to go up. CAT had a 10% reduction in force. Of course the stock reacted with higher expectations of earnings in the future. We saw these things happen in prior recessions like back in 1991-92.

What about the top line revenue growth Thomas? How can you explain that away?

thomas.wong1986 says

Caterpillar Inc. (CAT - Analyst Report) plans to lay off 2,454 employees across 5 plants in Illinois, Indiana and Georgia to cut costs amid recessionary conditions.
When you cut OPX its normal for net income to raise and stock to go up. CAT had a 10% reduction in force. Of course the stock reacted with higher expectations of earnings in the future. We saw these things happen in prior recessions like back in 1991-92.

No doubt CAT is, um, right-sizing the places where sales are going ballistic. Don't think the Brazilians are buying Cat products because they are on sale. Perhaps to build something big?

"Caterpillar generates a sizeable portion of its revenues overseas. About thirty percent comes from Latin America and China. The numbers there are ramping up big-time. Latin America increases sales by over 80 percent 2Q YoY. Asia/Pacific was up 45 percent YOY; and the machinery segment was up by 62 percent."

It is too late to jump on this one. But co's like CAT, INTC, IBM, APPL are international companies. They have trimmed fat and sitting on record cash.
Seems shipping and rail traffic is up nicely too.
Consult Dr. Copper and Mr. Alcoa as well.
Just some data points.

clayfire23 says

Why stop at saying that just housing needs to be so cheap and almost free for everyone? I want to expand this “I want to have everything for cheap or free” passion. Can you believe that a brand new sedan costs over $20,000.00? Who can afford that? It should be less than $5.00, with used cars between $1.00 and $4.00 depending on mileage. We have a huge bubble in auto prices. Restaurant pizza prices are just absurd. A large pie with 3 toppings should not cost more than 5 cents. Pure greed and speculation has made it cost over $10.00. Everybody deserves a free gallon of milk per day, everyday. That is our birthright, and yet greedy grocery stores are charging between $3.00 and $5.00, which is unsustainable. My index of milk prices starting in 1500 A.D shows that gallon milk prices have historically been one thousandth of minimum wage, so it should be less than a cent now. I look at all the idiots buying all these goods at inflated prices and laugh…

You know, I used to wonder how people could have been so shortsighted as to overpay for houses as much as they did at the peak of the bubble. But sadly, I now realize that clayfire23's post is pretty typical of the extent of the public's understanding of the housing market. That is to say, no understanding at all.

clayfire23 says

Why stop at saying that just housing needs to be so cheap and almost free for everyone?

Housing has two components. 1) the entitlement to land-use rights and 2) the fixed improvements.

1) cannot normally respond to market buy-side pressure by increasing supply. This results in great inflationary effects as supply in a given market tightens. Labor can be applied to improve land to make it habitable, but in my area this hasn't been done at all in my lifetime. Quite the opposite, no-growth advocates have stopped this cold.

2) provides the actual housing good, and what a "good" it is. Try living a normal life just one week with your family without it! This is an incredibly durable good, too. Houses built 50 years ago for peanuts and maintained minimally can actually have appreciated in value, thanks to the higher replacement costs today. Eg. thanks to inflation what cost $25,000 in 1965 would cost $170,000 today. This means actual consumption of the housing good is on the order of 50 or 100 years, even more.

So housing has become a cross between an investment in land and a very durable life necessity -- something that can last basically forever with maintenance. The land was produced by our Heavenly Father and He hasn't billed us for the labor. The fixed improvements last centuries and if anything get better with time and maintenance.

Why shouldn't housing be free to today's buyers?

Of course, being an economic good with limited (if not fixed) supply and unbounded demand (we'd all like a better place to live or a second better place to live, or thirty rental houses to collect income like in Monopoly), rents appear on all housing.

Housing can never be free because of this, we can only, by public policy, determine who gets to pocket the rent.

If we were smart, we'd look at replacing other taxes with all this rent -- all state taxes could easily be replaced with this rent tax.

But we are not smart.

tatupu70 says

What about the top line revenue growth Thomas? How can you explain that away?

Layoffs are no longer tied to good or bad times. As KT states right-sizing. We saw this over a few years at HP as well when Mark Hurd was cutting the fat, before the recession.

thomas.wong1986 says

If you want to use concrete job numbers then yes, PR data is much more solid number to use then ads. Jobs for a single position in a given company can be put up, down, deferred or canceled without being filled. Seen this multiple times.

Of course they can. But that doesn't change the fact that job opening data is most certainly not meaningless.

I can show numbers that housing prices in the Bay Area (SF MSA) for non-short sales/non-foreclosures is trending back down. Morgan Stanley sliced and diced Case-Shiller for this several weeks ago:

http://www.housingwire.com/2010/08/04/for-investors-sake-morgan-stanley-questions-power-of-home-price-indices

MS found that the medians were highly susceptible to mix, as many people suspected.

CS is hilarious. Minneapolis is #3 on the list just behind San Fran and Diego at 11.6% "appreciation."

When you include all types of real estate sales, however (RPX), the actual rate is NEGATIVE 2.6%, clear depreciation. In my county (exurban belt) things are significantly worse than that - especially for new and existing SFHs.

Most recent newspaper article had our metro at an additional 2.6% decline on SFHs now that the tax credit has disappeared.

These "gains" are just temporary statistical noise, garbage - the market is consolidating, bouncing along the current bottom. Whether it will GENUINELY go up or down in the future is at best a guess, but guess which way every single economic fundamental is pointing?

Fed admits "recovery" is weakening and ready to induce a second round of quantitative easing (will be nearly meaningless economically speaking - big guns have already been fired/shooting a BB gun isn't going to make anyone jump). Their actions suggest desperation/failure, and they continue to do what did NOT work very well in the past (we continue to hemorrhage jobs). Inducing oil and food price spikes will just crater the economy that much faster.

Jobs analysis of latest report is EXCEPTIONALLY DISMAL, period. We are now NEGATIVE 3,300,000 PLUS JOBS since Obama took office! The BLS has announced that it will be revising DOWNWARDS the jobs numbers as models suggest an additonal 340,000 jobs or so were LOST during latest revisionary period.

For every tiny glimmering piece of bullish hope, we have many more that are bearish. The Fed's actions (minutes) indicate this.

schmitz_kris says

We are now NEGATIVE 3,300,000 PLUS JOBS since Obama took office!

That number is coming close to Obama's campaign promise of "creating 4 million jobs." The only problem is that he failed to clarify those "jobs" were for China, not America.

schmitz_kris says

but guess which way every single economic fundamental is pointing?

Kris--when you make statements like that, you lose credibility. I'm not sure if you ever read or watch the news, but economic fundamentals are mixed at worst. Manufacturing has been growing for something like 14 months straight. GDP has been positive for multiple quarters. As I posted earlier, job openings are rising.

Things still aren't great, but they are clearly better than a year ago.

Positive GDP? Depends on the math you use.

http://www.shadowstats.com/alternate_data/gross-domestic-product-charts

GDP increase as a result of DRAMATICALLY INCREASED DEBT LOADS (to fuel consumption, like Cash for Clunkers, etc.) is a ridiculous pile of poop.

ISM data for manufacturing HAS BEEN OVER 50 for 14 months straight, BUT WHAT MATTERS IS HOW THAT RELATES TO EMPLOYMENT!

Get this: EMPLOYMENT in the manufacturing sector HAS BEEN FLAT FOR FIVE MONTHS (since May) according to last week's official BLS report, AND THEIR BENCHMARK REVISION IS A NEGATIVE 114,000 JOBS IN THE SECTOR.

Given the unprecedented, huge monetary stimulus I don't see anything to cheer about.

Plus, look up what is currently included in US "manufacturing." You'll be amazed, trust me. Smile.

Lastly, "better than a year ago."

Existing house sales are not (record low hit this summer) New house sales are not. (ditto) U-6 unemployment is not - JUST INCREASED FROM 16.7 TO 17.1 IN A SINGLE MONTH - ALMOST AT THE VERY WORST OF THE OFFICIAL STATS (17.4).

I could go on and on and on.

schmitz_kris says

Positive GDP? Depends on the math you use.
http://www.shadowstats.com/alternate_data/gross-domestic-product-charts
GDP increase as a result of DRAMATICALLY INCREASED DEBT LOADS (to fuel consumption, like Cash for Clunkers, etc.) is a ridiculous pile of poop.
ISM data for manufacturing HAS BEEN OVER 50 for 14 months straight, BUT WHAT MATTERS IS HOW THAT RELATES TO EMPLOYMENT!
Get this: EMPLOYMENT in the manufacturing sector HAS BEEN FLAT FOR FIVE MONTHS (since May) according to last week’s official BLS report, AND THEIR BENCHMARK REVISION IS A NEGATIVE 114,000 JOBS IN THE SECTOR.
Given the unprecedented, huge monetary stimulus I don’t see anything to cheer about.
Plus, look up what is currently included in US “manufacturing.” You’ll be amazed, trust me. Smile.

Obviously you aren't cheering, that much is clear. And what you're saying then is that "every economic fundamental" actually means only employment.

I own a house now and fu_king want housing price to drop so I can buy one more.... PLEASE DROP!!!

It will drop simply because there are no takers for the product they are selling at the marketed price point. Self denial only lasts so long, at some point people need jobs food and money. Pipe dreams don't work out.

tatupu70 says

bubblesitter says

What amuses me as that correction started in 2006-2007 and people(existing homeowners) were calling bottom already in 2009. Like 10 years of crazy appreciation was okay but 2 years into down turn and we are fine….it is going to start recover now…

Why do you think it’s going to a symmetrical rise and fall? Better to look at price/rent or price/income ratios. If those are OK, it doesn’t matter if it’s been 1 year or 15 years…

Tatapu, you are, as always, dreaming. Show me one bubble where the decline was not symmetric with the rise. This bubble began all the way back in the 1975. The 1989-1995 rise/fall was just a Bear Trap, the 2006 was the peak, the 2009-2010 was a Bull Trap, and now we are on the continuation of a 1 continuous path down which will fall much much lower than most bulls can even imagine. The broken clock of the bull's predictions will eventually come true, but the bottom will be just as insanely low as the top was insanely high.

dunnross says

This bubble began all the way back in the 1975.

Enough said. I don't think I even need to respond to that.

IMO there definitely will be a second dip. For one thing markets out here are still ballooned and above afford-ability by a lot. The fact that houses that were in low 200's are now in high 300's to mid 500's tells me we got ways to go.

In business it is almost impossible to sell a product when no buyer wants it (or especially cannot afford) at the asking price, and knows it is overpriced while having access to cheaper alternatives. At the end of the day people need money, jobs and food. Pipe dreams don't work out. Which is why there will be another dip in CA.

tatupu70 says

dunnross

Well, I asked people on this blog already where they thought we were according to these graphs, and I got no response. I assumed, that most people can see the uncanny resemblance.

Like I said in the other thread where you posted that--I believe the stealth phase started in 1890.

Saying the bubble started in 1975 is dumb. Houses weren't overpriced by any measure until ~1999 or 2000. Why you would pick 1975 is beyond me...

Nomograph says

I’m curious how you consider the fact that most people are willing and able to pay their mortgage as “proof” that the market is crashing. Your own facts indicate exactly the opposite.

"Most" people didnt buy during bubble years.

vain says

I think prices are correct in my area.
Let’s look at a typical lower end home in San Francisco.
You should be able to get one for $450k or so in the south eastern neighborhoods.
Put 20% down ($90k). You will need a loan of $360k. The mortgage for that is around $1800/month. Income requirement for a safe mortgage is $5400/month, or $65k/year. That’s couple earning $32500/year. San Francisco minimum wage is nearly $10/hour. A couple earning minimum wage has a household income of $41k. If prices go any lower, you will soon be competing with minimum wage earners. Do you guys realistically think market conditions will allow minimum wage earners to be able to afford a home?

Vain, I have a hard time with this math. I make about 110K a year. I put about 11K in my 401K. I really think I should max that out and hope to get myself to do that this year. I have a child for whom childcare runs about 1400 a month. I don't have a car payment or cc debt. I have a little bit of student loan debt that costs me about 200 a month. I put about 1200 in investment accounts each month. I find myself running close to spending all of my cash that isn't going to savings or retirement every month. This month it was 1400 in car maintenance (tires, brakes, 100k service). Next month my car insurance and registration is due. I can't imagine managing a life where I earned near minimum wage, bought a house (with all of the expenses) and kept up with the expenses of running a family life. I can't imagine being that buyer. I do live on the peninsula, so maybe I am located in a very different place than what you are talking about. I also had some health problems in my family that meant a couple of unexpected trips that depleted some cash. So, take it with a grain of salt, but I think that buying with low income would be very difficult.

thomas.wong1986 says

Nomograph says

I’m curious how you consider the fact that most people are willing and able to pay their mortgage as “proof” that the market is crashing. Your own facts indicate exactly the opposite.

“Most” people didnt buy during bubble years.

No but an awful lot of them heloc'd the equity out.

thomas.wong1986 says

Nomograph says

I’m curious how you consider the fact that most people are willing and able to pay their mortgage as “proof” that the market is crashing. Your own facts indicate exactly the opposite.

“Most” people didnt buy during bubble years.

APOCALYPSEFUCK says

Anyone buying a house instead of seed potatoes, water purification systems and advanced armaments is insane. A house you can’t defend will be clearly worthless when cannibal anarchy overtakes America.

When I first started reading this site, I was a little confused and disconcerted by your posts. Now they are kind of pleasing and funny.

“Most” people didnt buy during bubble years.

I think this is a really good point that seems to get lost sometimes.

dunnross says

tatupu70 says

dunnross

Well, I asked people on this blog already where they thought we were according to these graphs, and I got no response. I assumed, that most people can see the uncanny resemblance.

I would comment but I feel like pointing out an error in your logic
you would just dismiss it as meaning we're still in the denial stage.

So there's really no point in arguing with you.

Yeah, Japanese are smart a$$ people and they couldn't correct their bubble. Economics of nature. I don't see any reason why US could quickly buy their way out so fast without producing goods and service to counter the bubble money.

bg says

I am often amazed by the things that people do that make little financial sense.

Hi bg. Maybe you misunderstood me. I agree with you too. Most people do do things which makes little financial sense. That's why 75% of underwater mortgage holders are not defaulting now, thinking there is some kind of a return to normalcy. That makes very little financial sense. However, as the bubble transitions from "return to normalcy" phase to "fear" and "capitulation", you will see more and more of these 75%'ers defaulting. The majority of them will be defaulting at the trough of the housing market, which, again will make absolutely no financial sense at all.