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How 'Over-valued' Are Stocks Relative To Jobs?
While the noise and seasonality of the various measures of employment (or lack thereof) in the US make interpretation nigh on impossible (for all but the most linear extrapolators), many strategists recognize that their is a correlated (if not causative) relationship between the rate of unemployment and the S&P 500. However, as Bloomberg's Chase Van Der Rhoer notes, using the unemployment rate to predict the S&P 500 Index may be an oversimplification, but doing so yields surprisingly robust results and suggests the index is overvalued to the tune of 150 points.
Chart: Bloomberg Briefs
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The modern "Trinity": Overvalued, overbought, overbullish. We are in for a surprise ...
I bought a truckload of TWTR on Thursday's IPO.
I used maximum margin leverage, even put a second mortgage on my home to buy extra shares.
What could possibly go wrong?
Overvalued, overbought, overbullish
The Bernake Trifecta.
Not really. It's only high if you cheat and don't adjust for for inflation - a fact blurted on CNBC to the consternation of the "hosts" blabbing about "new highs". Compare 1998 - gas was $1.06, a movie ticket, $2.69, the S&P, 1175. Gas has tripled, movie tickets quadrupled but the S&P is up 50%. It's why folks fully invested can't seem to get ahead even after this huge run up - inflation has so elevated everything that our highs are deceiving. If the S&P has gone up an average of gas & movie tickets it would be 3,600.
how much over valued is this if they used U6, or if people didnt continually drop out of labor force and U3 was 11-12%?
Bingo! Lets use the labour participation rate to calculate this, shall we?
150 points doesn't even come close to the overvalue figure.
If it is 150 overvalued using the 0bama Protected publicly announced employment figures, it must be 1,150 overvalued if you used something approaching the true numbers.
http://www.dailymail.co.uk/video/video-1069680/GRAPHIC-Russian-man-nails...
http://www.youtube.com/watch?v=B_3TlrZLpQ0
forgot to factor in day traders as unemployed but working...
However, as Bloomberg's Chase Van Der Rhoer notes, using the unemployment rate to predict the S&P 500 Index may be an oversimplification, but doing so yields surprisingly robust results and suggests the index is overvalued to the tune of 150 points.
Well this recent Bloomberg presentation/post makes a convincing case that the metric we should be looking at is consumer spending power, not simply jobs or the unemployment rate per se.
'Spending power' of most conned-sumers today is based on what kind of check they got from the guvt. this month.
UE checks are stimulative to the economy, ask any dem or rino repub, subsidy by all powerful .gov, keeps everyone afloat, corporations banks local .gov, so DC must become larger so they can distribute more security, adm more regs and laws, print more paper notes and FRN's, fight more wars, give aid and security to all the countries of the world ..we live in the age of government centric thinking, some of us still productive run counter to the paradime they have created, so we must be crushed, they are doing a good job of it so far..that is why they will take all your wealth, and that is why so many hide wealth off shore,or in PM's, art, guns, what ever has the hope of avoiding the confiscation to come.
I think there is a misprint: it should of read-1500 overvalued!
Nope, just 500 points...
Stocks vs unemployment rate slide via BCA Research: http://instagram.com/p/X4poDNsDN4/
In era of QE: jobs don't matter. Stocks, fiat, and fake "profits" do.
This has to end at some point, but this has been going on in Japan for over 20 years.
Wage+job deflation + asset inflation = stagnation
The whole "flation" debate is pointless in a "market" that doesn't allow for true price discovery. Print all the fiat you want, it still take calories (energy) in order to actually get anything done or manufacture something of real value. Japan has been able to get away with this for 20+ years because things were relatively stable elsewhere, when the whole world "turns Japanese" all hell will break loose...
Tick tock motherfuckers.
Which is a testament to the interconnected nature of the world economy. I guess we'll figure out how centralized or distributed our system is... hopefully the latter for the sake of millions of folks, but I have my doubts.
Also, it ought to be a pretty solid smoking gun for the FED's (and other central banks') intervention(s) in the global markets... as well as the solidity of their collusion.
all in all a dumb post. it corelates to qe-end of story.
"Look Ma! I can fly!!"
<thud>
"Jump, you fuckers!"
<thud>
*Sigh* if only .....
So? I thought everyone by now realized stock indexes are for mass crowd control only....people are still trying to say they reflect reality in any way?
I don't even know why they're so desperate to pump stocks anymore either, no one I know is even paying attention anymore they're just droning thru their days now like robots pretty much.
They reflect reality for the 10% of the population that gets to play along at home; it matters a great deal to CEOs and even CDO-(squared?)-shareholdin' sycophants and other hangers-on from the Hamptons.
I see, so fooling themselves is what really matters. Sounds legit!
Now, debt relative to jobs, different story. After all, it is the only mandate, right?
MMM 127.99 pe 19.67
Probably overvalued by 55 dollars per share with earnings at 6.51 and a dividend of 2.54 USD.
'Investors' are hoping for a stock split, however, MMM split about five years ago, so they are not going to see it, imo.
I don't know when it is all going to fall and a panic develops.
I do know that it will happen.
Jobs don't matter anymore. It's all QE driven. The Fed is stuck.
It's why Yellen and her 12 member PhD stooges will have to supply ever more QE booze and drugs to the Wall Street stock party.
In this twilight zone market it can become even more overbought. Outragiously overbought. It's feels like DOT COM again.
How can you compare two manipulated values?
Easy: You just compare them to a randomly drawn line which you simply pull out of your ass or likewise
Reading the preamble to this article was enough to dissuade me from reading the rest.
The dumb fuck wits forgot to add in that it also is dependant on all things being equall,
Like hours shorter, weeks shorter, and the massive 30% real drop in incomes.. so knock another 40% off before that 150 deduction. That makes it oh about 900.
seems about right that to me
I think you meant overvalued by 1,500 points.