Whirlwind Economics

Posted on August 15, 2014 by MN Gordon

Things may be looking up for the unemployed working stiff.  After years of competing for scarce jobs with stagnant wages something extraordinary may be happening.  If you can believe it, opportunity has finally come for the unemployed.

According to the Labor Department’s recent monthly Job Openings and Labor Turnover Survey, the number of unemployed workers competing for each open job fell to a six-year low in June.  The number of unemployed job seekers per open job fell to 2.02 in June,” reported Reuters, “the lowest level since April 2008.  The ratio was at 2.14 in May and is now below the average from 2002 to 2006.”

On top of this, the number of job openings is at its highest level in over 13 years.  In addition, the rate of hiring hasn’t been better for over 6 years.  If these labor market improvements continue, wage growth should pick up too. Continue reading →

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Knockdown Drag Out Slugfest

Posted on August 12, 2014 by MN Gordon

Blows are being taken on the chin and dished out to the gut as daily prices wildly soar or crash.  Last week, for instance, the DOW jumped and dived several hundred points before finishing up about where it started.  Here we go again.

Down.  Up.  Up.  Down.  Up.  The stock market’s bouncing around like two boxers in a slugfest.  So far the judge’s score cards report a draw.

What to make of it.  Is the bull dead?  Or is the market searching for a new toe hold to spring upward and onward?

Here at the Economic Prism we have our money on the bear.  We see a slow growth economy that never really recovered from the Great Recession.  At the same time we see a stock market that’s been over inflated by radical monetary policy.

Extreme interventions into capital markets have pushed up assets and ballooned the accounts of the wealthy.  The wage earner has been left behind…median income is still below where it was in 2007. Continue reading →

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Up In Smoke

Posted on August 8, 2014 by MN Gordon

Earlier this week we said the bull market is cooked.  We even offered several reasons why…including various historical indicators.  Of course we don’t really know for certain.

Quite frankly, no one does.  But there are many fine fellows out there who are more qualified on the subject than we are.  Moreover, we’re always open to considering contrary perspectives.  Especially when they have a track record that shows they know what they are talking about.

For example, about the time we said the bull market is cooked, Wharton Professor Jeremy Siegel told CNBC “the bull market is not over.”  What?  Not over?  How could that possibly be?

“I still think the big bull is taking control of the market,” said Siegel.  “Surely there might be a correction – we always have corrections in a bull market.  I actually don’t think this is going to be one of them, but if it does happen, I think it’s going to be a great buying opportunity.” Continue reading →

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This Bull Market is Cooked

Posted on August 5, 2014 by MN Gordon

Several cracks in what was thought to be a granite foundation supporting the stock market were revealed last week.  The S&P 500 fell 2.67 percent between weeks open and close.  For the month of July, the S&P 500 finished down 1.63 percent…its first monthly loss since January.

Many reasons were given for the selloff.  The Argentine debt saga, the joint US and EU sanctions on Russia, and the prospect the Fed will raise rates were some of the most popular.  Here at the Economic Prism we have some reservations…these developments should have hardly been a surprise for investors.

Rather, we believe stocks fell for a much simpler reason.  We believe they fell because that’s what they must do.  Remember, the stock market goes up…and it also goes down.

After going up without interruption for the last five and a half years it is long overdue for the downside.  How much downside?  No one really knows.

But it will likely be much, much more than a couple percentage points.  “History doesn’t repeat itself, but it does rhyme,” goes the quote often attributed to Mark Twain. Continue reading →

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