Some thoughts at the end…………

“Davidson” submits:

The Conference Board released its HWOL (Help Wanted Online) report this morning for Sept 2013 with a 209,700 help wanted ad increase. Their Chart 2. Employment vs. Labor Demand is shown below:


Economic trends are really not as complicated as many make them out to be. Where I differ from common practice is in the evaluation “time frame” of the data. I am always looking for the significant trend using 6mos, 12mos or longer period data trends. I also monitor multiple economic indicators for correlations and very importantly I assign little importance to most sentiment indicators such as the Purchasing Managers Index(PMI). What matters most are ‘hard counts’ of how many automobiles or houses sold, how much we have of Industrial Production or Retail Sales or how many individuals are added to the employment rolls. How investors feel has never determined economic direction! The HWOL is a ‘hard count’ series and a good forecaster of future employment and economic trends. The often highlighted PMI data does not provide even close to the same degree of useful information.

Today’s HWOL report is a new high for this cycle of 5,184,600 job openings. We should expect economic activity to expand the next 6mos-12mos and stocks should reflect this by moving higher.

The current issue of government shutdown and the chatter of ‘default’ while it may scare some with those in the media indicating that Republicans truly want the ‘US to default this time’ to teach the Democrats a lesson by destroying the confidence built in the US financial system since 1700s is more scare mongering than realistic. The US has never defaulted and it will not this time either. Talk of this makes for good theater, but it is very poor economic reasoning.

Much of my commentary is about seeing the forest thru the trees. My commentary is about not panicking over each data point as it is reported. I only change my views when the data justifies a change. This means that I can be positive for 10yrs straight if the data justifies this. Some may see this as boring! Some like to hear positional changes more often than that! Some like to trade thinking that they are participating in the ebb and flow of the economy. My view is that the ebb and flows are not discernible in the data as much as many would like to you to think. They make their living on commissions. I do not. If we stay long for most of the investment up-cycle, we do not incur short term capital gains taxes and importantly we continue to compound our funds with minimal annual taxes while others are paying not only commissions but taxes at income tax rates. By having a longer term view we shelter portfolio gains till we see the signs that the economic cycle is ending. Only then will a wholesale portfolio shift occur. Not buying/selling multiple times during an economic cycle lets portfolios take advantage of long term capital gains taxes and activates the compounding factor which occurs only by holding through investment market temporary swoons.

Meanwhile, all indicators forecast economic expansion and higher equity prices

Something odd is going on out there. While on the one hand we have an unemployment rate at 7.2%, we also have a shortage or workers in housing in a category (construction) where unemployment is over 9% as of August. This is not just a Texas issue as in the article. I am hearing the same things across the board from those in the business across the country. Their two biggest problems right now are lot shortages and labor shortages.

Why aren’t construction workers filling open jobs in the housing industry? Have these workers moved on the to other industries and are just simply continuing to collect unemployment checks? Are the reported unemployment numbers that far off? I don’t know and anyone who has ideas please feel free to leave them in the comments

Via: valueplays