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Obama Rally Won’t Last While Jobs, Spending Wane: John F. Wasik
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Commentary by John F. Wasik
May 11 (Bloomberg) -- We have just had a stock rally that is linked to U.S. President Barack Obama’s first 100 days.
It was a decent sprint, but I don’t think it has legs.
The Standard & Poor’s 500 Index managed to rebound from its dismal showing in 2008. If you measure the index from Obama’s inauguration on Jan. 20 through April 30, the benchmark gained 10 percent with dividends reinvested.
If you stayed in the market all of last year, though, you still have some ground to make up after losing 40 percent during one of the worst years for stocks since the Great Depression. So the Obama rally is still a pyrrhic victory so far.
The same can be said in emerging stock markets, which lost more than half of their value last year. They have risen 34 percent in Obama’s first 100 days -- as measured by the iShares MSCI Emerging Markets Index exchange-traded fund.
At the start of Franklin Delano Roosevelt’s first term as president, U.S. stocks surged more than 50 percent, while the economy improved only slightly. Obama may also be benefiting from a “honeymoon effect” or what economist John Maynard Keynes called “animal spirits.”
Bonds haven’t fared quite as well under Obama. The Vanguard Total Bond Market ETF, which was up about 7 percent last year, was off almost 1 percent during the Obama period.
Another lackluster asset class is commodity funds, which also lost about half their value last year. They are down about 1 percent during the period, if you track the returns of the Goldman Sachs Commodity Strategy Fund.
Known ‘Unknowns’
The Obama rally was fueled by optimism that most of the largest U.S. banks won’t collapse. The market may believe that the “unknowns” of their balance sheets are now known.
A handful of patients may pull through while the rest of the U.S. economy at large, reeling from diminished consumer spending and high unemployment, still has a fever. Even though payrolls fell less than expected -- by 539,000 -- in March, the U.S. labor market is projected to remain weak for months.
Those losing -- or afraid of losing -- their jobs reel in their spending. A Bloomberg survey of economists forecast that spending will drop 0.1 percent this year. For the American economy, that’s not encouraging news.
Let’s say stocks are due for another tumble. Will bonds provide the safe haven they did last year?
Deflation -- a general decline in price levels -- is ruling the day during a massive deleveraging going on from Main Street to Wall Street.
Three Bubbles
You can’t forget that three burst bubbles have blistered stock returns to such an extent that investors in 20-year U.S. Treasuries beat the S&P 500 from 1979 through 2008, says Robert Arnott of Research Affiliates in Pasadena, California.
While stock routs generally favor fixed-income investors, risks still loom.
Bond prices may plummet after Western governments have to fully finance all the debt they need to sell for their economic stimulus packages. The Obama administration’s recently announced $3.4 trillion budget alone will balloon the federal deficit to a projected $1.7 trillion.
Inflation may come back to ravage debtor countries then. So make sure you protect your bond holdings through inflation- protected securities and commodity funds.
In judging current events, separate politics and recent returns from what you need to do.
Risk Appetite
Find out how much you will need to comfortably live on and see if you are saving enough. Understand and measure the kinds of risk you are facing with each kind of asset. How much can you lose? A lot of people didn’t ask that question in 2008.
Don’t be nationalistic when it comes to your stock allocations, either. Growth will probably come from places you have never been and don’t understand.
You may even want to cut down on your U.S. stock holdings by investing in a global portfolio such as the Vanguard FTSE All-World EX-US Index ETF that samples non-U.S. equity returns.
Most of all, forget recent returns and spread your money between bonds, stocks, commodities, real estate, Treasury- Inflation Protected Securities and cash.
And never forget to eschew investing decisions according to political polls and current stock-market returns. Those red herrings have the shelf life of all other fish.
(John F. Wasik, author of “The Cul-de-Sac Syndrome,” is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: John F. Wasik in Chicago at jwasik@bloomberg.net.
Last Updated: May 11, 2009 00:00 EDT
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"May 11 (Bloomberg) -- We have just had a stock rally that is linked to U.S. President Barack Obama’s first 100 days. "
Sorry Bloomberg.
Getbig financial experts have declared the stim package had ZERO EFFECT on the Dow or the economy.
yes, ten tril of new spending didn't affect anything.
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"May 11 (Bloomberg) -- We have just had a stock rally that is linked to U.S. President Barack Obama’s first 100 days. "
Sorry Bloomberg.
Getbig financial experts have declared the stim package had ZERO EFFECT on the Dow or the economy.
yes, ten tril of new spending didn't affect anything.
I thought the stimulous package was designed to "create" jobs.We jost lost over 500,000 again last month.Please tell me how this plan is doing what it was supposed to.
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I thought the stimulous package was designed to "create" jobs.We jost lost over 500,000 again last month.Please tell me how this plan is doing what it was supposed to.
I am keeping a running tab with 240. He said it would create 4 million jobs in 18 months.
At this pace, the stimulus needs to create about 6 million jobs in 14-15 months to keep up. I think I am winning that bet..
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obama said 3 to 4 mil jobs in 18 months.
he said we'd see less job loss each month as new jobs are created.
There were indeed fewer jobs lost last month, than ht month before.
he hasn't been wrong thus far.
Let's evaluate in 18 months. I'll buy you a can of coke if you are correct, as we all wait in line at the soup kitchen. So far, however, the DOW is up, job loss trends are shrinking, and it's happening exactly as obama said it would. Ppl here still think the stim bill has zero effect on the DOW, which is beyond silly.
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obama said 3 to 4 mil jobs in 18 months.
he said we'd see less job loss each month as new jobs are created.
There were indeed fewer jobs lost last month, than ht month before.
he hasn't been wrong thus far.
Let's evaluate in 18 months. I'll buy you a can of coke if you are correct, as we all wait in line at the soup kitchen. So far, however, the DOW is up, job loss trends are shrinking, and it's happening exactly as obama said it would. Ppl here still think the stim bill has zero effect on the DOW, which is beyond silly.
You are brain dead. The jobs figure was masked because of temp govt jobs to do the census. otherwise, it was still 600k jobs lost.
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You are brain dead. The jobs figure was masked because of temp govt jobs to do the census. otherwise, it was still 600k jobs lost.
Hey, it was a band-aid for this month. Will he do the same thing next month? I can guarantee the hundreds of thousands of people who had a job for the month weren't bitching when they cashed their checks.
All jobs are temporary in this day and age. how many ppl work at a single firm for 30 years anymore?
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You are brain dead.
You recently paid elevated prices for guns that were 40% cheaper during the Bush administration.
So if anything, you're brain dead too. I mean, do you wait til there's a gas shortage to fill up your tank? Do you wait until straberries are out of season to crave them? Come on...
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Hey, it was a band-aid for this month. Will he do the same thing next month? I can guarantee the hundreds of thousands of people who had a job for the month weren't bitching when they cashed their checks.
All jobs are temporary in this day and age. how many ppl work at a single firm for 30 years anymore?
govt jobs are not real jobs and dont add anything to the economy.
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govt jobs are not real jobs and dont add anything to the economy.
If 200k people made 200,000,000 bucks last month - and they spent it (which they presumably did)
Then yes, an influx of 200 million bucks into the economy does make a diff.
(This only assumes each of the workers made 250 a week for just a month)
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If 200k people made 200,000,000 bucks last month - and they spent it (which they presumably did)
Then yes, an influx of 200 million bucks into the economy does make a diff.
(This only assumes each of the workers made 250 a week for just a month)
So by your anaology, why dont we hire all jobless people to work for the Govt???
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So by your anaology, why dont we hire all jobless people to work for the Govt???
There isn't a demand for that many people.
There was a demand for census workers this month to map out the GPSs, however.
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There isn't a demand for that many people.
There was a demand for census workers this month to map out the GPSs, however.
Yes,its great.The average government job just increaded from 75,000 a year to 78,00 a year[Not quite sure of the exact numbers but its close].Tell me,what does the government produce to pay that money?Where does the income come from to pay such salaries?
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Yes,its great.The average government job just increaded from 75,000 a year to 78,00 a year[Not quite sure of the exact numbers but its close].Tell me,what does the government produce to pay that money?Where does the income come from to pay such salaries?
in this case, the govt is producing the 2010 census, used for macro resource allocation for the good people of the USA.
Are we going to debate the need for that?
Govt has never "produced" any money - that comes from population in 100% of governments throughout history. If you have a problem with that, then your beef is with the definition of govt. You're pissing in the wind now mate.
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in this case, the govt is producing the 2010 census, used for macro resource allocation for the good people of the USA.
Are we going to debate the need for that?
Govt has never "produced" any money - that comes from population in 100% of governments throughout history. If you have a problem with that, then your beef is with the definition of govt. You're pissing in the wind now mate.
his question was what does the govt produce to PAY for the workers? as far as I know the govt doesnt sell the consensus data so thats not making money...
POINT is 240 is that those jobs arent self sustaining, its more govt welfare that we as tax payer are footing the bill for.
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his question was what does the govt produce to PAY for the workers? as far as I know the govt doesnt sell the consensus data so thats not making money...
POINT is 240 is that those jobs arent self sustaining, its more govt welfare that we as tax payer are footing the bill for.
No govt produces anything.
They use public treasury, funded from tax dollars, to pay for their spending.
The census data is useful for better planning of our society's needs, water and other esource allocation, and things on the level of energy grid, longterm population growth, yada yada. The need for census data isn't debatable.
Neither is the fact taht govts don't produce anything. They never have, never will. The bush admin didn't, the obama admin didn't, and the next guy won't either. it's govt by definition - they use public funds for national projects.
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in this case, the govt is producing the 2010 census, used for macro resource allocation for the good people of the USA.
Are we going to debate the need for that?
Govt has never "produced" any money - that comes from population in 100% of governments throughout history. If you have a problem with that, then your beef is with the definition of govt. You're pissing in the wind now mate.
No,the point is that the government hiring is like welfare.The jobs are paid for BY US!!!They dont produce anything.These government workers are part of the problem,not the solution.
By the way,I listened to Rush today.No mention of black ass Wanda.WRONG AGAIN!!!!!
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No govt produces anything.
They use public treasury, funded from tax dollars, to pay for their spending.
The census data is useful for better planning of our society's needs, water and other esource allocation, and things on the level of energy grid, longterm population growth, yada yada. The need for census data isn't debatable.
Neither is the fact taht govts don't produce anything. They never have, never will. The bush admin didn't, the obama admin didn't, and the next guy won't either. it's govt by definition - they use public funds for national projects.
I agree with you but you are the one argueing that he created jobs...LOL these jobs arent really profit producing jobs, you see the money they are getting paid with is simply money taken from you and me. In addition these jobs will go by the wayside when the census is done this means that we will simply get more influx of unemployed ppl later on...again more of obama postponing the problem i.e. bailouts of failed industries.
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No mention of black ass Wanda.
Do you consider yourself a racist? Serious Q here.
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I agree with you but you are the one argueing that he created jobs...LOL these jobs arent really profit producing jobs, you see the money they are getting paid with is simply money taken from you and me. In addition these jobs will go by the wayside when the census is done this means that we will simply get more influx of unemployed ppl later on...again more of obama postponing the problem i.e. bailouts of failed industries.
The idea is this-
the temporary spending (from temporary workers) will create a level of temporary confidence, as more fluid capital is interjected into the market.
using this confidence (and money), individuals and firms will quit acting like bitches and hoarding the resources they are today.
They'll add a wing to the plant, hire 20 guys back, make a deal they've been stalling on, etc.
Productivity returns when you can inject some $$$$ into the market. Productivity avalanches into growth, which gets us the hell out of this hole we're in.
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The idea is this-
the temporary spending (from temporary workers) will create a level of temporary confidence, as more fluid capital is interjected into the market.
using this confidence (and money), individuals and firms will quit acting like bitches and hoarding the resources they are today.
They'll add a wing to the plant, hire 20 guys back, make a deal they've been stalling on, etc.
Productivity returns when you can inject some $$$$ into the market. Productivity avalanches into growth, which gets us the hell out of this hole we're in.
you mean the billions and trillions weve thrown at it already isnt enough? ::) LOL i thought we had shovel ready projects, infrastructure projects etc...so what youre saying is that barry didnt really explain himself before he took all our money and gave it away?
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you mean the billions and trillions weve thrown at it already isnt enough? ::) LOL i thought we had shovel ready projects, infrastructure projects etc...so what youre saying is that barry didnt really explain himself before he took all our money and gave it away?
Temp gov workers dont create wealth or jobs, they spend money on food, booze, condoms, credit cards, etc.
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Temp gov workers dont create wealth or jobs, they spend money on food, booze, condoms, credit cards, etc.
guess what? Even if you're right, this allows Coors to hire new employees. This allows Trojan to open a new branch in idaho. This allows Walmart to hire 2000 guys to stock the chips/pretzel aisles.
Ya feel me?
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you mean the billions and trillions weve thrown at it already isnt enough? ::) LOL i thought we had shovel ready projects, infrastructure projects etc...so what youre saying is that barry didnt really explain himself before he took all our money and gave it away?
bump
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guess what? Even if you're right, this allows Coors to hire new employees. This allows Trojan to open a new branch in idaho. This allows Walmart to hire 2000 guys to stock the chips/pretzel aisles.
Ya feel me?
No. This is utter nonsense. The overall economy is being harmed by this just to support condoms sales and beer?
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No. This is utter nonsense. The overall economy is being harmed by this just to support condoms sales and beer?
No, we're injecting $X into the ecnomy in the hopes that it will lead to economic growth greater than X, hopefully perpetually.
Also, your belief that the old woman who knocked on my door with the census paper last month is buying beer and condoms right now is a little silly.
You don't 'get it' that interjecting $ into the economy will get growth rolling. Read this again please.
The idea is this-
the temporary spending (from temporary workers) will create a level of temporary confidence, as more fluid capital is interjected into the market.
using this confidence (and money), individuals and firms will quit acting like bitches and hoarding the resources they are today.
They'll add a wing to the plant, hire 20 guys back, make a deal they've been stalling on, etc.
Productivity returns when you can inject some $$$$ into the market. Productivity avalanches into growth, which gets us the hell out of this hole we're in.
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No, we're injecting $X into the ecnomy in the hopes that it will lead to economic growth greater than X, hopefully perpetually.
Also, your belief that the old woman who knocked on my door with the census paper last month is buying beer and condoms right now is a little silly.
You don't 'get it' that interjecting $ into the economy will get growth rolling. Read this again please.
you mean the billions and trillions weve thrown at it already isnt enough? ::) LOL i thought we had shovel ready projects, infrastructure projects etc...so what youre saying is that barry didnt really explain himself before he took all our money and gave it away?
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No, we're injecting $X into the ecnomy in the hopes that it will lead to economic growth greater than X, hopefully perpetually.
Also, your belief that the old woman who knocked on my door with the census paper last month is buying beer and condoms right now is a little silly.
You don't 'get it' that interjecting $ into the economy will get growth rolling. Read this again please.
That is complete garbage.
Its the govt taking from one to give to another to spend on frivolous crap.
It would be different if the govt gave the money to companies to build new factories here or to assist in selling goods and seervices to other nations.
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Do you consider yourself a racist? Serious Q here.
I consider myself a white man that will use THE EXACT same type of rehtoric that blacks,jews and libs use against me and my people.When someone like Sykes compares Rush to Osama Bin Laden,then she gets what she dishes out.When Obama allows black ass "Rev."Lowery to insult whites,he then is treated like what he is, a negro racist.When little jew Robert Reich says whites shouldnt get the jobs the stimulous creates,he is then a filthy jew bastard to me.IF THAT DEFINES ME AS A RACIST,THATS FINE WITH ME.I dont back away from the label.
Im not one of these scared white cowards who is afraid to stand up for my race or people of my race and will not tolerate fools to insult my people.I know guys like you are scared shitless of being labeled a racist so you find NO OUTRAGE in anything that minorities do, EVER.This site is filled with them.OTRAGED over Imus,dead ass silent over Jaime Foxx.
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I consider myself a white man that will use THE EXACT same type of rehtoric that blacks,jews and libs use against me and my people.When someone like Sykes compares Rush to Osama Bin Laden,then she gets what she dishes out.When Obama allows black ass "Rev."Lowery to insult whites,he then is treated like what he is, a negro racist.When little jew Robert Reich says whites shouldnt get the jobs the stimulous creates,he is then a filthy jew bastard to me.IF THAT DEFINES ME AS A RACIST,THATS FINE WITH ME.I dont back away from the label.
Im not one of these scared white cowards who is afraid to stand up for my race or people of my race and will not tolerate fools to insult my people.I know guys like you are scared shitless of being labeled a racist so you find NO OUTRAGE in anything that minorities do, EVER.This site is filled with them.OTRAGED over Imus,dead ass silent over Jaime Foxx.
Woah.
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Woah.
240 - how about you educate yourself on economics??? Watch and learn the error of your ways.
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I consider myself a white man that will use THE EXACT same type of rehtoric that blacks,jews and libs use against me and my people.When someone like Sykes compares Rush to Osama Bin Laden,then she gets what she dishes out.When Obama allows black ass "Rev."Lowery to insult whites,he then is treated like what he is, a negro racist.When little jew Robert Reich says whites shouldnt get the jobs the stimulous creates,he is then a filthy jew bastard to me.IF THAT DEFINES ME AS A RACIST,THATS FINE WITH ME.I dont back away from the label.
Im not one of these scared white cowards who is afraid to stand up for my race or people of my race and will not tolerate fools to insult my people.I know guys like you are scared shitless of being labeled a racist so you find NO OUTRAGE in anything that minorities do, EVER.This site is filled with them.OTRAGED over Imus,dead ass silent over Jaime Foxx.
240. billy may be using strong language here but in my opinion the point that he is trying to make is a poignant one. racism is wrong from any side. if a jewish person or a black person lashes out against white people, they should be taken to task. in the past 20 years in this country they have not been taken to task. we are just so used to reverse racism that when you hear language like that coming from a white man you are taken aback. if you heard the same language coming from a black or a jewish person, you would be applauding them for sticking up for their race.
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240. billy may be using strong language here but in my opinion the point that he is trying to make is a poignant one. racism is wrong from any side. if a jewish person or a black person lashes out against white people, they should be taken to task. in the past 20 years in this country they have not been taken to task. we are just so used to reverse racism that when you hear language like that coming from a white man you are taken aback. if you heard the same language coming from a black or a jewish person, you would be applauding them for sticking up for their race.
Thats the point.Guys like 240 have been brainwashed by left wing libs to be ashamed of being white.They allow their race to be insulted,maligned and mocked and he just builds up a callous and doesnt see it.When Rev. Lowery insulted whites,a guy like 240 didnt blink an eye.He saw nothing outrageous about it.When he hears Robert Reich,he is not outraged,in fact he actually defends it by saying "well he isnt part of the administration".
However,when he hears Don Imus, A COMEDIAN AND THE INVENTOR OF MORNING SHOCK JOCK RADIO,make his comments,he is outraged.This is what Im talking about.I,on the other hand,dont care that Rev. Lowery said what he did,but I dont care what Imus says either.Neither outrages me,bothers me or even gets a rise from me.Its THE REACTION of both that gets me pissed off.So,to combat that,I react IN THE EXACT SAME WAY THEY REACT TO ME!!!He then asks if Im racist?
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Its called being "softened" up for slaughter.
They dont get it.
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Its called being "softened" up for slaughter.
They dont get it.
well said.