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Another Freaky Friday?
Submitted by Leo Kolivakis, publisher of Pension Pulse.
It
was another freaky Friday. First, let's discuss the US jobs report.
There was a decline of 20,000 payrolls in January and the unemployment
rate fell to 9.7%. Despite being off in my forecast (I was expecting
big payroll gains close to 150K), I am still convinced that big job
gains are in store for Q1 & Q2 2010.
There are two encouraging things worth noting from the January jobs report.
First, temporary employment added 52,000 jobs in January and it wasn't
all Census hiring. Since reaching a low point in September 2009,
temporary help services have added almost a quarter of a million jobs.
Why
is this important? Because employment lags the broader economic
recovery, and companies usually hire temp workers initially before
offering them full-time jobs. As shown in the chart below, the pickup
in temp workers has historically been a good harbinger of future
employment gains.
Next,
Stéfane Marion, Chief Economist & Strategist at the National Bank
of Canada noted the following encouraging news from the US jobs report:
...the
wage bill is now expanding at a 4% clip in the last three months, the
best showing since early 2008. We also note that the household survey
from which the unemployment rate is derived showed the addition of
784,000 jobs in January (after adjusting for revisions to population).
The employment figures derived from this survey, however, are much more
volatile than those obtained from the payroll survey. As such, it is
preferable to use a 3-month moving average to extract the underlying
trend. As shown, household jobs still show a gain of 110,000 after
smoothing. In the past, the household survey has led the payroll
survey coming out of recessions.
All
this means that no matter how the BLS muddies the waters, job growth is around the corner. It has been a severe
recession which is why it's taking a frustratingly long time to see
some meaningful employment gains, but the recovery in the US labor
market is already upon us.
Now, the stock market is another
beast altogether. The explosion of algorithmic trading makes it very
difficult to understand the daily movements in stocks. Just look at
today's price action on the Dow:
What
happened at the end of the day? Traders will tell you "it's just short
covering" while conspiracy theorists will tell you it's the "Plunge Protection Team" (PPT) or Goldman Sachs.
Maybe it was just the
big hedgies manipulating shares lower in the early morning so they can
scoop them up at attractive levels. Who knows? All I know is that there
is still plenty of liquidity out there to drive shares much higher.
That's why I keep buying these dips, especially the big dips on solar
shares.
Look, is the market rigged? You bet it is. If you study
stock markets on a daily basis, you'll see very weird things that defy
logic. But at the end of the day, it all boils down to fear &
greed. Forget Greece, PIIGS and all the noise coming out of Europe.
This is just noise that the big hedgies use to feed off retail and less
sophisticated institutional investors.
So, while it was another
freaky Friday on Wall Street, I'd say the US jobs report was
encouraging as was the price action in the stock market. Things are
slowly getting better, but the pace of job growth is painfully slow.
However, as the recovery gains steam, job growth will follow. It's only
a matter of time now.
»
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While I think Leo does good work on the pension issues, I don't understand why the solution to every underfunded pension isn't to "buy solars on the dips"?
Less facetiously, I think the continued rallying cry "buy solars on the dips" has rightly made many skeptical of your actual purchasing of said solars. How are you buying the dips if you aren't selling the tops? Yet, you make no mention of sells. Also, I see no rules for when to buy on the dips. At the end of a down day? A down week? A down hour? If I bought CSIQ a month ago, I'd be down almost 30% already. Once a stock breaks down, technically, it really does become a matter of "Fools rush in". The much better play, from a chartist perspective, was to short that breakdown, especially once the late thrust from 29 to 32 failed to make a new high and reversed. For me, that would have led to a cover around 27, another short around 26 and cover around 23, etc. If you're going to play volatile stocks, why on Earth would you only play them from 1 side?
I'm glad no one else takes your calls literally, but I also hope that you don't take them literally, either, otherwise that "mint" you lost on Nortel will be repeated in the near future.
exactly
I like this list as a starting point for discussing how screwed we are. I cut the explanations where I figured they were pretty clear. I could add to it, as most here could. This is stuff is bad. I pasted this on to a doc I plan to give my students Monday. Sorry for the remaining screwy stuff I can't get rid of that looks like code.
20 economic weapons of mass destruction triggering ticking Global Debt Time BombPaul B. Farrell
1. Federal Budget Deficit Bomb.
2. US Foreign Trade Bomb.
3. Weakening U.S. Dollar as Foreign Reserve Currency Bomb.
4. Cheap Money Bomb: Credit Ratings Down, Rates Up.
5. Global Real Estate Bomb.
6. Peak Oil and the Population Bomb.
7. Social Security Bomb.
8. Medicare: A Nuclear Bomb.
9. Health-care Insurance Bomb.
10. State and Local Government Budget Bombs.
11. Underfunded Corporate Pensions Bomb.
12. Consumer Debt Bomb.
13. Personal Savings Bomb.
14. War and Military Defense Deficits.
15. Homeland Insecurity Bomb. Security at airports, seaports, borders, vulnerable chemical plants all increase budgets.
16. Fed/Treasury Bailout Bombs.
17. Insatiable Washington Lobbyists Bombs. Paulson, Goldman, Geithner, Morgan and Wall Street banks, through their lobbyists and former employees working inside now have absolute power over government spending. Democracy and voters are now irrelevant in America's new corporate-socialism.
18. Shadow Banking: The Derivatives Bomb.
19. Dysfunctional Two-Party Political Bomb. Polarized partisanship increasing: Every day both parties show zero interest in cooperating for the public good. Instead they fight viciously, resisting everything and anything proposed by opponents. Only goal: Score political points, make the other side look bad.
20. The Coming Populous Rebellion Bombs. Nobody trusts anyone in authority. For good reason. So immediate gratification, short-term betting and a lack of long-term perspective wins for individual investors, consumers and taxpayers as well as Washington, Wall Street and Corporate America CEOs. Today: "Doing what's right for the common good and country" is just empty political rhetoric.
wait, save the planet, kill yourself.
oh i kid the president.
Thats it. I am commiting suicide, after the superbowl
of course. See everyone in the next world!
i hear the next world has perfect health,balanced budgets
and plenty of energy...
We love Leo's pension stuff and in truth, we'd be thrilled if his "things are looking up" prediction is right. Our big problem is that we own a couple of manufacturing companies and also provide receivable financing to others. In these business (in US and Canada) things aren't looking so rosy.
But, I did hear how you can make money on solar - put some panels on the roof (they don't really have to be good or work) then buy the electricity for a dime per Kw and (in Ontario anyway) feed it back into the grid for 80-cents per Kw. Solar is great - it's meant to be milked just like the ethanol scam.
Although not exactly on the thread of this conversation, I found the trading action on Friday afternoon highly curious. Until yesterday, the Friday pattern had been weakness and waning interest. Going into Superbowl weekend and a big East Coast storm, and in the absence of any option expiration induced activity, one would not have expected the explosion in SPY and E-mini volume that produced the highest volume days for both securities since March/April of last year. It strikes me that someone was getting bored, and saw that they could engineer a little action by working the CDS game again and alarming people with 40 page reports calling attention to the plight of Europe's weak members. The fact that the VIX went from 26 to 29 and back to 26 again in the last three hours of the day also suggests there was a big game going on because I did not pick up anything fundamental enough to cause the wild swings. Does anyone know what happened?
Why hire again when you can get as much work from a lot less employees? Thats whats taking place now. I know that because Im part of that now. Last year I went from working 5 days to working 4 days for about 5 months. When Inventory started to move lower, we were back working 5 days. Well guess what, that inventory is back up, but its not selling, so since the beginning of January we have been working a 3 day work week. We make Hot water boilers for homes and residentual properties. This is normally our busy time of the year. With record cold temps in most of the US, and record snowfalls, were still not moving much inventory. Customers say they can't get loans from the banks, so they are not buying our boilers. It looks like I'll be working 3 days a week for a long time. Forget those green shoots, there never was any, just politicians and wallstreet bullshitters trying to pump up the market. They were successful in doing that, but they haven't pumped up the jobs market one bit.
My clients are cutting back even more in the new year, in every way, including on my hours, and the projects they want me to do. They are using temp help to get work done in crunch periods, then letting them go. If this is being done nationwide, it would explain the spike in temp hiring, but does not point to eventual permanent hires.
They are, however, investing in a faster server and more remote access capability, so that the fewer administrative employees they have can work even more hours while still getting some family time. If this is also happening nationwide, it backs up the increased IT spending and the increased productivity numbers, but again, does not necessarily point to a recovery.
Getting more done with less is all I see from here, too, Foxmuldar.
Leo - a nice holiday destination for the solar enthusiast with dollars in the age of cheap euros
The first post war solar furnace built on the star shaped fortress of Mont Louis ( mirror made from a wartime searchlight) and a very modern large solar furnace built in 1970 just south of Mont Louis.
Unfortunetly less babes then seen on a typical Greek island but you can't have everything !
www.anglophone-direct.com/Mont-Louis-Font-Romeu-Odeillo-Via
Someone mentioned business hiring back to build up inventories. Well let me say that I'm a welder that was working 4 days a week for about 5 months last year. In October we were back to 5 days a week building up that inventory. Well guess what? the inventory is built back up and for the past month we have been working a 3 day work week, and I don't see any signs of a recovery in sight. We make hot water boilers and with the country in a deep freeze this winter, and record snowfalls, sales of our boilers have shown very little improvement. Three years ago, I would have been working 10 hour days and 18 hours overtime each week. Thats how busy we were. Now our customers say they can't get loans from the banks. If we can't sell our product when its usually the bussiest time of the year then I'm expecting to remain on a 3 day workweek for a long time. Forget those green shoots.
leo,
I disagree. Keeping employees happy used to be the way to move forward, now with so many looking for Your job, that is not high in priority. They will continue to do more with less until the system resets and starts anew. And that will not happen until the people demand it. Politicians are useless thieving parasites that care about 2 things. Getting re-elected and how much money they retire with. I have never seen such a large part of the sheeples so disgusted with our govt. the banksters and our so called elected officials. Long way to go.
If the inventory build that boosted the last report does not get pulled off the shelf by end consumers, it becomes a liability because it is largely financed by debt.
Until you see personal income rise and, even more, see it rise above the increased savings rate, you got nothing.
Leo, you are mistaken that the stock market will go up just because the news is good (or appears to be getting good). The market has its own mind(s) controlling it. Most likely the 1.6T debt maturing in March will be the big controlling event until March meaning an engineered crash as has been often suggested on this site.
In a deflationary depression, employment,GDP and the markets all trigger each other simultaneously.
Labor and employment is not a lagging indicator but a preceding indicator. If there are no job, then there is no buying and thus no GDP and thus no equity rally in earnings. If the market goes down, people hunker down and do not spend and that kills money velocity and that kills GDP which kills labor hiring.
If the business cycle turns down(GDP) then there is less hiring, less profits and that affects the stock market.
This is the unique problem in deflations and why it's considered a ponzi death spiral. It will stop when it decides to stop. And when it stops ALL 3 indicators will be moving up at the same time. We are 10 years from this
Just don't understand where anything is gettting better.
1. We are just bouncing off the bottom, that is it. Jobs, what jobs? Jobs that pay well, full time with benefits. Forget it. Not gonna happen.
2. The banks will bring us down again as the toxic waste that is off their books will at some point have to be reloaded as those loans continue to not perform and foreclosures increase.
3. Never in the history of man has a country prospered from debt, never.
4. A govt. that is inept, lies to us and deceives us with spin is not a recipie for recovery.
5. When all this debt blows up on us you will hear about it world wide.
Does not mean we cannot rally for a few more months. Wall Street does not pay that much attention to debt.....Until it matters.
There's no doubt about it - everything is looking up. Er, ah . . . whoops spoke too soon . . .
http://www.news.com.au/business/secret-summit-of-top-bankers/story-e6frfm1i-1225827289543
nothing to see here, just visiting each other and having a few laughs . . .
"Central bankers are to meet in Australia's biggest city for two days of talks as plunging stock markets renew fears of a slow and patchy recovery from the global financial crisis, Sydney's Herald Sun reported Saturday. The paper said representatives from 24 central banks, including the US Federal Reserve and the European Central Bank, are to assemble Sunday and Monday in an undisclosed location.
The organizer of the meeting is the Bank for International Settlements rather than the Australian government, which would help explain why secrecy prevails. [Well, that certainly explains that - Ned]
The governors of the People's Bank of China, the Bank of Japan and the Reserve Bank of India are said to be on the guest list.
The gathering, arranged last year, takes place against a background of world share markets reeling from fears that governments, not just companies, may have difficulty with their balance sheets.
"It's been a long time since we have seen really serious sovereign risk in developed economies," Gerard Minack, the head of brokerage Morgan Stanley's Australian operations, told the public broadcaster ABC. "We don't have a lot of history to go by, at least in the modern era."
Minack said the concern was not just about Greece, Spain and other southern European countries - the so called Club Med - but about other economies.
"We are now seeing it spread around the ring of fire that surrounds core Europe," he said. "I mean, Eastern Europe looks terrible. We know already there are concerns about the Spanish, the Italians, possibly the Japanese."
Australian shares lost 2.3 per cent of their value Friday in line with stock markets around the world. The Australian dollar fell to a six-week low against the US dollar as investors sought a safe haven in the world's top currency. "
Good on ya, mate! I knew if something like this was gonna happen this weekend, someone on ZH would be on it like stink on skunk.
Rock on, Ned! Excellent work. This one's for you:
Led Zeppelin - No Quarter
http://www.youtube.com/watch?v=RKOngTfTMs0
Wish I could pipe this into a Sydney hotel meeting room.
Hint: play the video on your link and then play No Quarter in the background. Spooky.
In the video, it's reported that global markets are being sold off due to the adjustment of an additional 1.4 million unemployed in the US. Obviously the rest of the world has no problem disregarding the 9.7% and digging for the truth.
No Quarter - mmmmmm..........sweet
Why do you have this creepy, cheerleading goombah writing on your site? Hasn't this goon made enough incorrect predictions, and isn't he ignorant enough? His waving a wand over the economy is pathetic. Get him OFF this site.
He was so wrong last month about jobs it was a pathetic joke. Now "things" are getting "better." Does he write for Hallmark greeting cards? Is he Goebbels?
This clown should follow the Mellonesque liquidation is in place, particularly the decline of supply chain, so beloved of cartelists. It started in transportation, has found its way into agriculture, and is moving toward utilities.
And you, reader? Just as corporatists always do, they are moving quickly to end your control over 401k and mutual fund assets. These will be loaned to the government and replaced by Treasury notes.
If Leo knew anything at all, he would read Sraffa on what Mussolini did to the banking system. It's exactly what our oligopolists are now doing to our whole economy: looting it.
Leo, you're playing a rigged game. You are going to get creamed. I truly wish you well. Godspeed to you, sir.
Leo--I am sorry folks are being so mean. Nonetheless, Picard facepalm. The more I read, the more worried I get.
Cindy, I thought the discussion was quite civil
today. To summarize:
Leo is too optimistic.
The doom and gloomers (otherwise known as realists)
need a bit of balance.
We are surrounded by massive problems, everywhere we
look. My issue is not that we are inundated with disaster,
the issue is that we are not letting our brilliant
folks any where near these problems......
Fraud and corruption are everywhere.....Until we address
fraud and corruption, no solution is possible..
The advance number of actual initial claims under state programs, unadjusted, totaled 530,405 in the week ending Jan. 30, an increase of 28,234 from the previous week. There were 682,176 initial claims in the comparable week in 2009.
Folks on the EUC increased by +281,442 between Jan 9th and Jan 16th.
Let me know if I'm missing something.. but... official unemployment counts only those that are still on the rolls to receive unemployment payments from the insurance policies of employers, right?
And... unadjusted numbers start affecting the seasonally adjusted at some point, right? Some weeks they have been 200-400k different, with unadjusted always higher.
Let's back away from the government telling us what they want us to think, and use some common sense. Once these unemployment insurance benefits are exhausted, these people are not back to work, they just are not counted in the official total. A decreasing unemployment rate is now occuring as EUC additions are ramping up. It now appears that extended numbers are dropping (more and more states' funds sucked dry) and EUC, which is Federal Emergency Unemployment, is getting the spillover.
This is not improvement, it's just reporting a shrinking category of jobless and ignoring a bigger growing category.
You know, if the unemployment insurance companies lobbied, I bet they can get a new, federally mandated decrease in the weeks they need to cover. A little bailout for them, and the government get to report an even LOWER unemployment rate. It's a win-win!
As long as yee guys across the pond believe that utilities have to make large profits to drive your economy - the rest of the economy will continue to have declining profits and increasing unemployment and poverty .
But I guess it won't mater much if your resident corporations make their money in euros and yuan and send them home to New York !
Europe has begun to adopt your enlightened industrial policey so don't expect much more doe from this part of the world but never fear you will always have China.....
Leo,
I predict you will be sorely disappointed in your predictions and lose a ton of money in the next 2 years.
Leo.. Leo.. Leo,
If you are looking for "lemmings" you came to the wrong place.
http://thereformedbroker.com/2010/02/05/a-tripling-of-those-unemployed-f...
http://www.bearmarketcomparison.com/Bear-Market-Comparison-Unemployment-...
http://www.bls.gov/news.release/empsit.a.htm
Put down that pipe you're smoking and take off your rosy sunglasses.
"THE world's top central bankers began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets..."
...
"Three major religions have outlawed usury for thousands of years; and yet imposed across the world are currencies by which, if we merely maintain a vital circulation, can only perpetually multiply principal into ever greater, ever more usurious sums of debt. But worse, the pretended principles of purported modern "economics" are even inherently and inevitably terminal, because it is impossible to fulfill the obligation to service debt if we do not maintain a circulation, and because we can only maintain a circulation by re-borrowing principal and interest as subsequent sums of debt, perpetually increased in proportion to the circulation so much as periodic interest. Ultimately and inevitably then, every circulation subject to usury engenders a sum of debt which is terminal.
Even if the jobs did return you wouldn't want them. Our standard of living is quickly diving down to the level of the third world. Rather than creating a middle class in China and India, the global economy has created world wide poverty. There will be soon be an underclass in America deprived of everything but entertainment. Why are Americans so docile in this challenge to their standard of living? Because we realize the true nature of things.
There is no technology which creates energy out of thin air, (that wind turbine requires other resources in order for it to build) and no economy which creates wealth out of paper.
While the various nation-states run their economies at full power to fuel the engines of war, and self preservation, (which are the same thing really) the wholly inefficient system gains speed as it lurches toward the edge of the cliff. (If America would give up its sham war against the terrorists we could run a sustainable economy, and a sustainable economy might allow some measure of self preservation)
Perhaps we need to figure out everyones carbon footprint, figure out what the earths resources can sustain, and set some realistic population goals which put this all in balance. Jobs are like buggy whips, but as McLuhan points out, the automobile made the horse and wagon obsolete, and those things became recreational destinations, through the movies where the western became a major film genre.
Entertainment, incidentally is Americas greatest export, something for which we receive very little compensation, and is exported practically for free. The rest of the world is a cultural sink hole, and this planet would be one dark gray gulag without American TV,Movies and Music.
You want jobs, check out Mike Rowe and his Dirty Jobs. Jobs are entertainment. You want to get rich, go to work for Goldman, the modern alchemists of money. Between cable programs about truckers, and laborers, and the high rises on Wall Street, there is nothing really, but the enervated masses. Do they have the same power as the crowd that took down the czars? Hardly, this is a different age.
A small (cultural) mass or a large mass, it matters little really. The demise of the corporate quasi fascist government business hybrid economy will buckle and break. Watch for signs of the strain. Government is doing its part to save the dinosaurs, which means the end is near. Watch for small vertical economies to rise up from the ashes, and the mass marketing of investment paper will fail too.
Ultimately small countries like Greece will begin to look good, while the major industrial powers falter. South Africa may become a financial center, as their gold reserves to currency ratio is very high.
Amazing. Just amazing. With oil consumption down sharply from 2007, its price is still $4 higher than 2007's average. It's down because economic activity is down. Don't pretend there are enough Prius vehicles driving around to have had any impact at all because there are not. There is no significant consumption decline not attributable to economic decline.
But no one talks or even thinks about the 75 million barrels fewer in existence each day unless it's a day or week with a price spike.
Wake up, people. Oil gets burned every single day whether the market is up or down. It's not infinite. Production is down and everyone believes anyone's . . . ANYONE's . . . claim that all that production decline is voluntary.
The economy is NEVER coming back, sports fans. Oil will spike and crush any attempt it makes to do so.
supply curve not falling as fast as demand curve - at least for now.
Leo,
Some prayers and appreciate the honesty. IMHO, use little guys rarely get glimpses into what's going on in the backroom with the guys with stinky cegars and fine scotch.
I get you're drift, you're saying positive data and deep pockets keeps the smart money long. Pretty simple in my eyes.
Totally agree on risk and stops, and fwiw, my own story is similar.
Good Luck
Great, at least I am not alone here! LOL! Best of luck to you.
I'm with you. Seem like a good guy I'd have laughs and a beer with.
I'll buy for everyone, so long as Leo keeps up these weekend posts! This stuff gets better and better with each passing comment.
Leo,
The logical fallacy of stating "unemployment is a lagging indicator" and then using that statement to draw conclusions about job growth is that, even if unemployment lags all the time, it says nothing about the duration of the lag or the strength of the job recovery. You may ultimately be proven 100% correct in stating that there's a lag, but, likewise, be 100% wrong on the swiftness or magnitude of the recovery.
Daedal,
I said nothing about the magnitude of the recovery, only that it will likely surprise to the upside in 2010. After that, it will be modest at best. Too many long-term structural problems (deleveraging of households and releveraging of public sector) to think that we are going to grow like crazy. Growth in emerging markets will help, but it's not enough. We need to get back to basics. Less financial engineers and more software, electrical, and mechanical engineers.
I live in Eastern europe in an emerging market and all of the sudden emerging markets are the hottest and everyone in London trading emergings thinks this year is emerging mkts year! And that after equity indexes rose 2-3 or 4 times so far from March 2009 lows! Hedge funds are late to the party again, when (not if) things will blow they will lose their shirt just like they did in 1994. Why do think that?
Last week there were wise hedge fund guys selling EURPLN hand over fist below 4.00 and they coudnt even point Warsav on the map:) SO much sounds like the Bhutan Dry Docks story!
I agree with that wholeheartedly.
Further, the squeeze by companies in current market perpetuates slow job growth. Here's an anecdote of a recent experience I had/am having:
My company recently eliminated positions from my department, and I ended up being 'laid off'. It's in quotes because I was offered to move into a different area to fill in another worker who was let go. So, my former position was being eliminated and I replaced a worker (I actually got a ~20% raise/promotion). Ok, so far so good. Then, a few weeks ago, they laid off another person in my new department and handed me the work. Now I'm doing work of 2 positions in new department, and am even providing support from the position which "no longer exists" of my former department. In 1 month I went from having work load of 1 person to work load of 2.5 people with a 20% raise! Meanwhile, the company eliminated 2 positions in the process. Even more absurd is the workers I replaced were more senior, and thus higher salaried. To summarize: I get 20% more money, 2.5x more work, and company saves 200%-300% of what they pay me. Needless to say, I'm trying to get the hell out of there. I've been sending resumes out for 2 weeks and nothing so far. I do not see any 'swift' recovery any time soon. And considering job market, other companies are squeezing their employees' by the nut sack for the same reason my nuts are in the vice -- because they can.
I'm also reminded of another interesting tidbit. Before the market totally collapsed, I was looking for a job in 2007 and was also finding it materially harder to get interviews, much less job offers, than I had in the past (when I had less experience). I decided to see what was going on, so I posted a position (similar to the ones I've been applying to) on craigslist to investigate the competition. In 12 hours I received 300 responses. And in 24 hours I received 500 responses. This was 2007... I can't imagine what it's like now, but now that I think about it, I might run that expirement again.
Same thing happened to my sister in law, who
works at BofA. Her working hours are now 9am
to 11pm. No kidding. She looks like hell now,
they are working her ragged......
How are the models and statistics going to work with all these new behaviors. My personal anecdote is that I own my own small business with four employees. I worked six days a week for over ten years and finally got it to five days a week, then in 2008, I cut myself back to four days a week and waited, not cutting anyone elses hours. Then at the beginning of this year I cut everyone's hours 20% and their pay %15 and I'm back to six days a week personally. I'm afraid that these anecdotes time 100,000 are going to "look" rosy for a while(productivity gains, wage gains per hour worked etc), but the reality is that we're against the wall.
Daedal,
Thanks for sharing. Ruthless and short-sighted capitalists will try to squeeze blood out of a rock. But they can't do this forever without hurting the bottom line. Smart companies know when to hire and keep their workforce happy, and don't treat them like slaves.
Leo
On the micro level, most small businesses are hanging on by the skin of their eyelids. Liquidity is not on the ground. Anywhere in North America. Period.
Good luck with the head in the clouds thing.
I disagree with this far too rosy picture, deflation will come after the domino's start falling one by one. Double dip will hit, or better: continuation of the depression.
Longer-term, the risks of deflation will explode if policymakers are too quick & too agressive in removing liquidity from the financial system. But they know this, and will proceed accordingly.
-34.5 x 2
If true, then there should always have been the proper level of liquidity and the real estate bubble would never have ballooned in the first place. Keynesian Boom & Bust cycles are evidence that central planning does not work (or, to directly address your quote, that central planners have no idea how their policies affect the future until after the fact -- and even then, they suffer from hindsight bais thinking that this time they'll predict the future). They won't know when to pull liquidity any more than they have ever known, which was never.
One other thing: the market already priced in a V-shaped recession, so there is little room left to the upside. The markets already start worrying about the second half of 2010, which will very likely prove that this is not a V-shape recovery.... January 2010 was very telling in this respect. Earnings are quite OK, but not what most V-shapers expected. They are IMO in for more disappointment.
Well, I don't think that the policy makers know what they are doing! And they cannot prevent all domino's from falling down. We get a reasonable Q1 and Q2 2010 at best, after which it will slide back to recession. At the moment the EU situation is dominant in the markets and as long as the threat of debt defaults in the EU remains, I don't see the markets go up. Expect Portugal and Spain to be next on the agenda, and pretty soon, too.
BLS's stock in trade: official measurements of the speed of descent of a number of stones; just before they hit the ground, BLS steps in with its assumption that a few of those stones, despite the obvious (gravity), will definitely then reverse course and rise back up into the air. Then take the average of those two sets of events, and voila, a decrease in the rate of speed of descent of all of the stones!
And about the same level of common sense.