Thursday, August 6, 2009

TrimTabs Begged to Differ and Feels Vindicated

Courtesy of Zero Hedge:

TrimTabs Investment Research estimates that the U.S. economy lost 488,000 jobs in July, considerably more than the consensus estimate of a loss of 305,000 jobs. In addition, TrimTabs expects the Bureau of Labor Statistics to revise its job loss estimates sharply higher for the first half of 2009 based on the latest unemployment insurance survey results.

“While Wall Street is convinced the recession is over, the economy continues to shed jobs at an alarming rate,” said Charles Biderman, CEO of TrimTabs.

TrimTabs’ employment estimates are based on analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees. Historically, TrimTabs’ employment estimates have been more accurate than those of the BLS.

“The personal income report the Bureau of Economic Analysis released Tuesday contained huge downward revisions to wage and salary growth,” said Biderman. “Now that the BEA is using unemployment insurance reports from the first quarter to estimate current wage and salary growth, its data confirms what we have been reporting for months.”

The BEA’s estimates of wages and salary growth changed from year-over-year declines of 0.8% in April and 1.1% in May to year-over-year declines of 4.0% in April and 4.2% in May. Also, the BEA reported that wages and salaries dropped even more sharply in June, falling 4.7% year-over-year.

“Two months ago, we asked BEA economists how they reconciled the huge declines in real-time tax deposits with their report of a modest decline in wages and salaries,” said Biderman. “They could not answer our question. We know now that by ignoring real-time data, the BEA was providing an inaccurate view of the economy’s health.”

As reported here, TrimTabs also saw no improvement in wages and salaries in July; if anything they saw further deterioration.

We are now exactly 5 months from the stock market bottom. The S&P 500 is up an astounding 50%. Yet profit estimates for the current quarter are down from those then-current and unemployment is higher.
And in case any American has not figured it out, either China is in a bubble that likely is pulling the U. S. financial market upward; or China is growing internally and sucking more and more of the world's resources into it for its own use. Either way, the growth news out of China absent big increases in our imports from it is NOT good news for American stock or bond markets.

Back in the U. S., the financial firms continue to be recapitalized on the backs of savers, and companies in general are keeping their profit margins up or rising by continuing to let go of labor. Today's negative ISM report in services, and the revisions to the wages and salaries data described above, make a rationalist wonder why so many people are risking so much money on speculations as risky as stocks when they in general pay such low dividends.

Copyright (C) Long Lake LLC 2009

No comments:

Post a Comment