06/08/09 Taipei, Taiwan Everybody is busy counting…but nothing’s adding up the way they want.
The Chinese are counting on the American’s not to clip their coins; Americans are counting on the Chinese to keep accepting them. The Chinese count on the Americans to buy their widgets; Americans count on the Chinese to loan them the money to pay for them.
The Chinese ask the Americans for some numbers, “some arithmetic.” The Americans squeeze and mold, cram the equations through their models and computers, but still the numbers come out the same: with a negative sign in front of them.
But sometimes bad numbers can be good, or so the market is trying to tell us. What would once have been terrible numbers are now reason for celebration and sighs of relief. Anything under half a million, for example, is apparently a wonderful number of jobs to lose in a month. Maybe we should get some of these newly laid-off people around for a party, to join in the celebration. They must be positively stoked to be part of such a “less-bad” statistic.
“The world’s largest economy has lost 6 million jobs since the recession began in December 2007,” Bloomberg reports, “exacerbating the biggest drop in any post-World War II economic downturn.”
Hmmm…Good number or bad number?
The report continues:
“Including those that have stopped looking for work because they are discouraged by employment prospects and those working only part-time who prefer a full-time job, the jobless rate would have jumped to 16.4 percent in May, the highest level since comparable records began in 1994, from 15.8 percent the prior month.”
Good numbers or bad numbers?
Well, the markets seem to like them, whatever that means. The Dow is back to where it started the year and the S&P is actually up a few percent. Measures from Dubai to Tokyo are racing ahead (though the former collapsed almost 4% today…proving our next point.) Stock markets, by their very nature, suffer from a very severe type of multiple-personality disorder. They are the collection of millions of peoples’ very own hopes, fears and delusions…all wrapped-up neatly in a daily print. And, because of those millions of clashing opinions, markets have a tendency to overshoot themselves.
The higher this rally goes, in other words, the harder we can expect it to fall when the next jolt hits.
Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
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it all good baby!
it’s called 2d or 3d derivative delusion. morning will come and there won’t be enough paper bags to go around. i bought that stock with a 44-60 p/e ratio???
does anyone realize how fast earnings would have to rise on an annualized basis to get to 15-20? please.