Still Losing Jobs but Stock Market keeps going UP. WHY???

[nopasties]

http://www.washingtonpost.com/wp-dyn...072404168.html

Earnings Reports Give Stocks Big Boost




Sunday, July 26, 2009

U.S. stocks rose last week, leaving the Dow Jones industrial average with its best two weeks since 2000, as companies beat profit estimates and an increase in home resales signaled an economic recovery may be underway. Caterpillar soared 24 percent as it reported earnings that tripled analysts' projections, and eBay rallied on results that signaled consumers' appetite for online commerce is rebounding. An index of home builders climbed 11 percent, led by Standard Pacific, as sales increased for a third straight month.
Microsoft dropped 8.3 percent on Friday, ending the Nasdaq composite index's 12-day winning streak, its longest since 1992.
The Standard & Poor's 500-stock index added 4.1 percent for the week to close at 979.26. The Dow jumped 349.30 points, or 4 percent, to 9093.24, topping 9000 for the first time since January and boosting its gain since July 10 to 12 percent. The Nasdaq gained 4.2 percent to finish at 1965.96.
"The rally's been a surprise to everyone, including the bulls," said Philip Dow, the Minneapolis-based director of equity strategy at RBC Wealth Management. "What's driving the market is positive earnings surprises, and the economic tea leaves are telling us the recovery is at hand."
Companies including Boeing and 3M reported second-quarter results that topped estimates, suggesting the worst recession in a half century is abating. Seventy-five percent of the companies in the S&P 500 that have released results surpassed predictions, according to data compiled by Bloomberg. That would be the highest rate ever for a full quarter, Bloomberg data going back to 1993 show.
The U.S. Treasury will auction $32 billion of three-month bills and $31 billion of six-month bills on Monday. They yielded 0.19 percent and 0.27 percent, respectively, in when-issued trading. One-month bills will be sold Tuesday.

http://online.wsj.com/article/SB124848422284880555.html

By ANJALI CORDEIRO

NEW YORK -- The Dow Jones Industrial Average held above the 9000 mark, but stocks finished mixed as shares of Microsoft and Amazon.com were beaten down on earnings news.



The DJIA gained 23.95 points, or 0.3%, to 9093.24; for the week the Dow rose 4%, marking its best two-week performance since March 2000. The Nasdaq Composite Index lost 7.64, or 0.4%, to 1965.96, its first fall in 13 sessions; for the week, the index gained 4.2%. The Standard & Poor's 500 added 2.97, or 0.3%, to 979.26, rising 4.1% on the week.
"I'm kind of surprised at how well the market is acting," said Todd Leone, a trader at Cowen & Co. "It's a good thing the market has been able to fight off the Microsoft news and hang in there."
Microsoft (Nasdaq) fell $2.11, or 8.3%, to $23.45. The software giant and Dow component tumbled after it reported a profit fall and sales slide. Microsoft stock fell 3.5% this week.
Earnings were in focus all week. Among the big names to report, coffee maker Starbucks surged midweek after swinging to a fiscal third-quarter profit. For the week the company's shares rose 19% but on Friday shares fell four cents to 17.22.
Amazon.com (Nasdaq) slumped 7.38, or 7.9%, to 86.49 as falling sales of videogames and consoles contributed to its weaker than expected second-quarter North American revenue growth.
Black & Decker gained 3.41, or 10%, to 37.13 after second-quarter earnings from the tool and home-improvement-products company beat Wall Street expectations.



Netflix (Nasdaq) fell 4.26, or 9.2%, to 42.20. The company's second-quarter earnings climbed 22% on increased subscriber growth and higher gross margins. But shares fell on some concerns about the growth of its operating margin. Wedbush Morgan and Oppenheimer reduced their ratings on the stock.
American depositary receipts of L.M. Ericsson Telephone (Nasdaq) fell 77 cents, or 7.4%, to 9.65 after the telecom-equipment maker posted a worse-than-forecast 56% profit fall.
ADRs of Baidu (Nasdaq) gained 25.46, or 7.7%, to 358.10 after second-quarter earnings rose and the Chinese Internet company continued to post strong revenue growth and add advertisers.
Broadcom (Nasdaq) lost 1.98, or 6.8%, to 27.20 after the chip maker's second-quarter profit plunged 90% as the company posted a double-digit revenue decline.

http://www.bls.gov/news.release/empsit.nr0.htm
last job report

Spoiler Alert, click show to read: 

Economic News Release
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CPS
Labor Force Statistics from the Current Population Survey

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CES
Current Employment Statistics - CES (National)

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Employment Situation Summary

Technical information: Household data: (202) 691-6378 USDL 09-0742 http://www.bls.gov/cps/ Establishment data: (202) 691-6555 Transmission of material in this release http://www.bls.gov/ces/ is embargoed until 8:30 A.M.(EDT),Media contact: (202) 691-5902 Thursday, July 2, 2009. THE EMPLOYMENT SITUATION: JUNE 2009 Nonfarm payroll employment continued to decline in June (-467,000),and the unemployment rate was little changed at 9.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Job losses were widespread across the major industry sectors, with large declines occurring in manufacturing, professional and business services, and construction.Unemployment (Household Survey Data) The number of unemployed persons (14.7 million) and the unemployment rate (9.5 percent) were little changed in June. Since the start of the recession in December 2007, the number of unemployed persons has increas-ed by 7.2 million, and the unemployment rate has risen by 4.6 percentage points. (See table A-1.) In June, unemployment rates for the major worker groups--adult men(10.0 percent), adult women (7.6 percent), teenagers (24.0 percent),whites (8.7 percent), blacks (14.7 percent), and Hispanics (12.2 per-cent)--showed little change. The unemployment rate for Asians was8.2 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.) Among the unemployed, the number of job losers and persons who com-pleted temporary jobs (9.6 million) was little changed in June after increasing by an average of 615,000 per month during the first 5 months of this year. (See table A-8.) The number of long-term unemployed (those jobless for 27 weeks ormore) increased by 433,000 over the month to 4.4 million. In June, 3in 10 unemployed persons were jobless for 27 weeks or more. (Seetable A-9.) - 2 - Table A. Major indicators of labor market activity, seasonally adjusted (Numbers in thousands) _______________________________________________________________________________ | | | | Quarterly | | | averages | Monthly data | May - Category |_________________|__________________________| June | | | | | | change | I | II | Apr. | May | June | | 2009 | 2009 | 2009 | 2009 | 2009 | _________________________|________|________|________|________|________|________ | HOUSEHOLD DATA | Labor force status |_____________________________________________________ | | | | | | Civilian labor force ....| 153,993| 154,912| 154,731| 155,081| 154,926| -155 Employment ............| 141,578| 140,591| 141,007| 140,570| 140,196| -374 Unemployment ..........| 12,415| 14,321| 13,724| 14,511| 14,729| 218 Not in labor force ......| 80,920| 80,547| 80,541| 80,371| 80,729| 358 |________|________|________|________|________|________ | | Unemployment rates |_____________________________________________________ | | | | | | All workers .............| 8.1| 9.2| 8.9| 9.4| 9.5| 0.1 Adult men .............| 8.2| 9.7| 9.4| 9.8| 10.0| .2 Adult women ...........| 6.7| 7.4| 7.1| 7.5| 7.6| .1 Teenagers .............| 21.3| 22.7| 21.5| 22.7| 24.0| 1.3 White .................| 7.4| 8.4| 8.0| 8.6| 8.7| .1 Black or African | | | | | | American ............| 13.1| 14.9| 15.0| 14.9| 14.7| -.2 Hispanic or Latino | | | | | | ethnicity ...........| 10.7| 12.0| 11.3| 12.7| 12.2| -.5 |________|________|________|________|________|________ | ESTABLISHMENT DATA | Employment |_____________________________________________________ | | | | | | Nonfarm employment.......| 133,662|p132,111| 132,481|p132,159|p131,692| p-467 Goods-producing (1)....| 19,826| p19,035| 19,253| p19,038| p18,815| p-223 Construction ........| 6,590| p6,309| 6,367| p6,319| p6,240| p-79 Manufacturing .......| 12,468| p11,997| 12,146| p11,990| p11,854| p-136 Service-providing (1)..| 113,835|p113,075| 113,228|p113,121|p112,877| p-244 Retail trade (2)...| 14,933| p14,821| 14,840| p14,822| p14,801| p-21 Professional and | | | | | | business services .| 17,048| p16,712| 16,783| p16,735| p16,617| p-118 Education and health | | | | | | services ..........| 19,138| p19,218| 19,175| p19,222| p19,256| p34 Leisure and | | | | | | hospitality .......| 13,235| p13,174| 13,168| p13,186| p13,168| p-18 Government ..........| 22,543| p22,592| 22,616| p22,606| p22,554| p-52 |________|________|________|________|________|________ | | Hours of work (3) |_____________________________________________________ | | | | | | Total private ...........| 33.2| p33.1| 33.1| p33.1| p33.0| p-0.1 Manufacturing .........| 39.6| p39.5| 39.6| p39.4| p39.5| p.1 Overtime ............| 2.7| p2.8| 2.7| p2.8| p2.8| p.0 |________|________|________|________|________|________ | | Indexes of aggregate weekly hours (2002=100)(3) |_____________________________________________________ | | | | | | Total private ...........| 101.7| p99.6| 100.1| p99.8| p99.0| p-0.8 |________|________|________|________|________|________ | | Earnings (3) |_____________________________________________________ Average hourly earnings, | | | | | | total private .........| $18.46| p$18.52| $18.50| p$18.53| p$18.53| p$0.00 Average weekly earnings, | | | | | | total private .........| 613.60| p612.39| 612.35| p613.34| p611.49| p-1.85 _________________________|________|________|________|________|________|________ 1 Includes other industries, not shown separately. 2 Quarterly averages and the over-the-month change are calculated using unrounded data. 3 Data relate to private production and nonsupervisory workers. p = preliminary. - 3 - Total Employment and the Labor Force (Household Survey Data) The civilian labor force participation rate was little changed inJune at 65.7 percent. The employment-population ratio, at 59.5 per-cent, continued to trend down over the month. The employment-popula-tion ratio has declined by 3.2 percentage points since the start ofthe recession in December 2007. (See table A-1.) The number of persons working part time for economic reasons(sometimes referred to as involuntary part-time workers) was littlechanged in June at 9.0 million. Since the start of the recession, thenumber of such workers has increased by 4.4 million. (See table A-5.) Persons Not in the Labor Force (Household Survey Data) About 2.2 million persons (not seasonally adjusted) were marginallyattached to the labor force in June, 618,000 more than a year earlier.These individuals wanted and were available for work and had lookedfor a job sometime in the past 12 months. They were not counted asunemployed because they had not searched for work in the 4 weekspreceding the survey. Among the marginally attached, there were793,000 discouraged workers in June, up by 373,000 from a yearearlier. Discouraged workers are persons not currently looking forwork because they believe no jobs are available for them. The other1.4 million persons marginally attached to the labor force in Junehad not searched for work in the 4 weeks preceding the survey forreasons such as school attendance or family responsibilities. (Seetable A-13.) Industry Payroll Employment (Establishment Survey Data) Total nonfarm payroll employment continued to decline in June (-467,000). Job losses from April to June averaged 436,000 per month, compared with losses averaging 670,000 per month from November to March. Since the recession began in December 2007, payroll employment has fallen by 6.5 million. In June, job losses continued to be wide-spread across major industry sectors. (See table B-1.) Employment in manufacturing fell by 136,000 over the month and hasdeclined by 1.9 million during the recession. Within the durablegoods industry, motor vehicles and parts (-27,000), fabricated metal products (-18,000), computer and electronic products (-16,000), and machinery (-14,000) continued to lose jobs in June. Since the reces-sion began, employment in motor vehicles and parts has declined by 335,000, or about one-third. In June, employment in construction fell by 79,000, with lossesspread throughout the industry. Since the start of the recession,construction employment has fallen by 1.3 million. Mining employ-ment fell by 8,000 in June, about in line with the average monthlydecline since its recent peak in October 2008. Employment in the professional and business services industrydeclined by 118,000 in June. This industry has shed 1.5 million jobssince an employment peak in December 2007. Within this sector, employ-ment in temporary help services fell by 38,000 in June; this industry has lost 848,000 jobs since the start of the recession. - 4 - Retail trade employment edged down in June (-21,000); job losses inretail trade have moderated in the past 3 months. Over the month, joblosses continued in automobile dealerships (-9,000). Employment con-tinued to fall in wholesale trade (-16,000). In June, financial activities employment continued to decline (-27,000). Since the start of the recession, this industry has lost489,000 jobs. In June, employment declined in credit intermediationand related activities (-10,000) and in securities, commodity contracts, and investments (-6,000). The information industry lost 21,000 jobs over the month and187,000 since the start of the recession. Publishing accounted forabout half of the employment decline in the information industryduring the recession. Health care employment increased by 21,000 in June. Job gains inhealth care have averaged 21,000 per month thus far in 2009, down froman average of 30,000 per month during 2008. Employment in federalgovernment fell by 49,000 in June, largely due to the layoff of work-ers temporarily hired to prepare for Census 2010. The change in total nonfarm employment for April was revised from -504,000 to -519,000, and the change for May was revised from -345,000to -322,000. Weekly Hours (Establishment Survey Data) In June, the average workweek for production and nonsupervisoryworkers on private nonfarm payrolls fell by 0.1 hour to 33.0 hours--thelowest level on record for the series, which began in 1964. The manu-facturing workweek rose by 0.1 hour to 39.5 hours, and factory overtime was unchanged at 2.8 hours. (See table B-2.) The index of aggregate weekly hours of production and nonsupervisory workers on private nonfarm payrolls fell by 0.8 percent in June. The manufacturing index declined by 1.2 percent over the month. (See table B-5.) Hourly and Weekly Earnings (Establishment Survey Data) In June, average hourly earnings of production and nonsupervisoryworkers on private nonfarm payrolls were unchanged at $18.53. Overthe past 12 months, average hourly earnings have increased by 2.7 per-cent, while weekly earnings have risen by only 0.9 percent, reflecting a decline in the average workweek. (See table B-3.) ______________________________ The Employment Situation for July 2009 is scheduled to be releasedon Friday, August 7, at 8:30 A.M. (EDT). _______________________________________________________________ | | | Upcoming Changes to The Employment Situation News Release | | | | Beginning with the next edition of The Employment Situation | |news release scheduled for publication on August 7, 2009, the | |Bureau of Labor Statistics will introduce changes in the pre- | |sentation of the text section of the release. There will be no| |changes to the format and content of the tables. A sample of | |the revamped Employment Situation will be posted on the BLS Web| |site on Monday, July 6. For further information, please see | |http://www.bls.gov/bls/changes_to_te...ons_of_nrs.htm. | |_______________________________________________________________|

• Employment Situation Frequently Asked Questions
• Employment Situation Technical Note
• Table A-1. Employment status of the civilian population by sex and age
• Table A-2. Employment status of the civilian population by race, sex, and age
• Table A-3. Employment status of the Hispanic or Latino population by sex and age
• Table A-4. Employment status of the civilian population 25 years and over by educational attainment
• Table A-5. Employed persons by class of worker and part-time status
• Table A-6. Selected employment indicators
• Table A-7. Selected unemployment indicators, seasonally adjusted
• Table A-8. Unemployed persons by reason for unemployment
• Table A-9. Unemployed persons by duration of unemployment
• Table A-10. Employed and unemployed persons by occupation, not seasonally adjusted
• Table A-11. Unemployed persons by industry and class of worker, not seasonally adjusted
• Table A-12. Alternative measures of labor underutilization
• Table A-13. Persons not in the labor force and multiple jobholders by sex, not seasonally adjusted
• Table B-1. Employees on nonfarm payrolls by industry sector and selected industry detail
• Table B-2. Average weekly hours of production and nonsupervisory workers (1) on private nonfarm payrolls by industry sector and selected industry detail
• Table B-3. Average hourly and weekly earnings of production and nonsupervisory workers (1) on private nonfarm payrolls by industry sector and selected industry detail
• Table B-4. Average hourly earnings of production and nonsupervisory workers (1) on private nonfarm payrolls by industry sector and selected industry detail, seasonally adjusted
• Table B-5. Indexes of aggregate weekly hours of production and nonsupervisory workers (1) on private nonfarm payrolls by industry sector and selected industry detail
• Table B-6. Indexes of aggregate weekly payrolls of production and nonsupervisory workers (1) on private nonfarm payrolls by industry sector and selected industry detail
• Table B-7. Diffusion indexes of employment change
• HTML version of the entire news release
• Access to historical data for the "A" tables of the Employment Situation Release
• Access to historical data for the "B" tables of the Employment Situation Release

WHY???

[patrick1191]

[Downey]

JP Morgan and Goldman Sachs had huge earnings. Different sectors of the economy are doing bad. etc.

[jankren]

Because Obama is Great!

[Sidmen]

I'm gonna go with: the devaluation of money.

If a stock was worth $10 in year 2000, and just now reaching $10 again, I'd hardly call that the same value.

[bushbush]

I'm gonna go with: the devaluation of money.

If a stock was worth $10 in year 2000, and just now reaching $10 again, I'd hardly call that the same value.

? when people are buying stocks today, they are still using today's money, not money from 2000. Your theory makes no sense, unless people are changing their 2000 money (stored in a time-frozen account) into today's money (through a magical process) and buy stocks now.

the stock market rebounding is simply signs that people are less afraid to spend and invest than awhile ago. But does it reflect the reality that the economy is really recovering? tough to say.

[nopasties]

? when people are buying stocks today, they are still using today's money, not money from 2000. Your theory makes no sense, unless people are changing their 2000 money (stored in a time-frozen account) into today's money (through a magical process) and buy stocks now.

the stock market rebounding is simply signs that people are less afraid to spend and invest than awhile ago. But does it reflect the reality that the economy is really recovering? tough to say.

TARP basically transferred a couple $trillion from the government to the stock market. That was sort of the point but little of that money went to the real economy.

His point I think is if the stock market was at 10000 in 00' and is 9000 in 09' but the value of a dollar is say 1/3 the value of year2000 $'s than the current stock value would be 6000 in year2000 $'s. The #'s game messes with our perception. and they always talk about the DOW because it has the biggest number.

[bushbush]

His point I think is if the stock market was at 10000 in 00' and is 9000 in 09' but the value of a dollar is say 1/3 the value of year2000 $'s than the current stock value would be 6000 in year2000 $'s. The #'s game messes with our perception. and they always talk about the DOW because it has the biggest number.

they always talk about DOW because it represents 30 most powerful industrial companies in the world.... the ones that have grown tremendously since the beginning of this index.

and again, no, the change of value of dollar shouldn't be a concern here. This index isn't even a price average.

[Alsatian]

Unemployment is a lagging factor, therefore it will probably still remain at the same level/rise even if the economy's recovering, or has recovered.

[Viking Prince]

The premise is wrong. Why should rising unemployment mean stock price declines? Just an idea to think about -- Companies respond to slower demand by cutting the less productive workers. Why should stock price declines be related to any one particular fact?

[nopasties]

The premise is wrong. Why should rising unemployment mean stock price declines? Just an idea to think about -- Companies respond to slower demand by cutting the less productive workers. Why should stock price declines be related to any one particular fact?

The premise was meant to spur debate

[Sidmen]

? when people are buying stocks today, they are still using today's money, not money from 2000. Your theory makes no sense,

Exactly my point, there is more money out there today than there was in 2000. Each dollar is worth less now than it was before, so if the stock market is returning to its previous level number-wise, then its still far behind where it was value-wise.

My theory says that as the value of the dollar goes down, the amount of dollars in the stock market will go up. Since money is constantly going down, the stock market is constantly going up.

[bushbush]

Exactly my point, there is more money out there today than there was in 2000. Each dollar is worth less now than it was before, so if the stock market is returning to its previous level number-wise, then its still far behind where it was value-wise.

My theory says that as the value of the dollar goes down, the amount of dollars in the stock market will go up. Since money is constantly going down, the stock market is constantly going up.

um...by your theory, since we rarely experienced deflation in the recent years, shouldn't the stock market never go down? and always go up in proportion (or close) to the money supply?

and no, the index isn't even a simply price average...

[Generaal Van Heutsz]

Exactly my point, there is more money out there today than there was in 2000. Each dollar is worth less now than it was before, so if the stock market is returning to its previous level number-wise, then its still far behind where it was value-wise.

My theory says that as the value of the dollar goes down, the amount of dollars in the stock market will go up. Since money is constantly going down, the stock market is constantly going up.

Almost correct, the value of the dollar goes down because the FED has created a lot of new money out of thin air, which finds their way to banks, which tend to invest it on the stockmarket driving up prices of stocks and thus creating a bubble.

If you are wondering why the stock market is going up whereas the economy still shows no sign of recovering, have a look at this graph, keeping in mind what I wrote above.


There are now 2 possible scenarios possible: either the FED will keep interest rates low and we will see the continuation of this giant bubble and some signs of economic recovery followed by a steady increase in inflation and even the possibility of hyperinflation or the FED will increase interest rates and we'll see the economy plummit again, with more mortgages defaulting, businesses going bankrupt and the stockmarket in free fall again.


* Though choice: bite the bullet, let the recession (or depression even) do its work, restructure the economy *or see hyperinflation and the total destruction of the economy. I think they will choose the latter as the effects are seen much later when the current politicians most likely will be out off office and it won't be their problem anymore.

[Sidmen]

um...by your theory, since we rarely experienced deflation in the recent years, shouldn't the stock market never go down? and always go up in proportion (or close) to the money supply?

If the stock market is stable, or is doing good it should increase in proportion to the money suppily, yes. But the stock market isn't always doing good, and thats when it declines or doesn't keep up with inflation.

It only really comes into play when people use phrases like "The stock market has reached the highest point since 2000" and then compare it to the economy at large.

The stock market isn't doing as well as it was in 2000, and neither is the rest of the economy. If it were, the stock market's value should be much higher.

[Erik]

WHY???

Because the value of stocks aren't based on the current value of the companies they represent, but on what the average trader predicts those companies will be worth in the future.

If profit and employment reports are bad, but less terrible than previously predicted, then stocks should logically go up.

[Viking Prince]

Your ST Louis Fed graph is not so dire:

St. Louis Fed Analysis: Will the Expansion of the Monetary Base ...

"When the time comes to shrink the monetary base," he said, "the Fed could
allow the lending programs to expire as the loans mature and sell the assets
outright. If the crisis is over, the assets should be priced in the market
and the Fed should expect to recover most of its investments in such assets."

Gavin's paper is available online at the St. Louis Fed's web site:
http://research.stlouisfed.org/publications/review.

So the question is what is the value of the assets that were swapped for the increase in excess reserves? These assets will go back into the market. This is no differant than a home owner with a clear and clean title to the home goes down to the bank and mortgages the property. The homeowner's bank balance balloons, but the mortgage will get paid off and the bank balance then returns to normal. I admit there are logical and real world concerns with the monetary base , but this need not automaticly translate into inflation.

[Generaal Van Heutsz]

Your ST Louis Fed graph is not so dire:

St. Louis Fed Analysis: Will the Expansion of the Monetary Base ...



So the question is what is the value of the assets that were swapped for the increase in excess reserves? These assets will go back into the market. This is no differant than a home owner with a clear and clean title to the home goes down to the bank and mortgages the property. The homeowner's bank balance balloons, but the mortgage will get paid off and the bank balance then returns to normal. I admit there are logical and real world concerns with the monetary base , but this need not automaticly translate into inflation.

* I read it and to me it still sounds as bad, or maybe even worse because they took out all of those bad assets out of the economy and replaced them with real printed money. Real printed money can of course serve as a base to create even more credit (I believe it can be leveraged 93-95%, ie. one dollar on the bank is lend out 20 times!). Anyway who would buy those toxic assets later to get the money out of the system for the prices that they went in? No one would be that stupid...


By the time they start measuring price inflation in things like the CPI and core inflation (which are terribly flawed anyway) it will be too late as the FED's effects on the economy are always delayed by some months. This doesn't even take into account all the dollars held abroad, once they see inflation, they'll swamp the market even more...


(in fact the chinese have already slowly started ditching their dollars and so have other countries, nobody wanting to create a panic to loose the value of the dollars they are trying to sell)

[JP226]

Jobs are a lagging variable. If this is the actual rebound, which it possibly isn't, then the market would theoretically go up and stay up for some time before actual employment kicked in.

[mrmouth]

Jobs are a lagging variable. If this is the actual rebound, which it possibly isn't, then the market would theoretically go up and stay up for some time before actual employment kicked in.

And they are not necessairly as tied together as people think. As is the popular thing to say now, this will be a jobless recovery.

The most important news is that home sales are up, and continue to climb significantly.