CNBC Appearance

The Stock Market (Excerpt)

Previously, I’ve shown that the current bull market in the S&P 500 since 2009 through 2013 so far has tracked a virtually identical course as the prior one from 2003-2007. Indeed, they both fit on the same scale for the S&P 500 from 600-1600. (However, the last bull market was somewhat less volatile than the current one, so the go-away-in-May advice was an even less successful strategy back then.) The previous bull market was gored by a global credit crunch.

This time, central banks have flooded the global capital markets with liquidity, which is one of the main reasons I expect that 2013 will part ways with 2007. Government bond yields in the US, Germany, France, and Japan have dropped to record or near-record lows this week following the BoJ’s pledge to double its balance sheet over the next two years. Dodgy credits have also benefitted from the global bond rally, most notably among the sovereign debts of the peripheral euro zone countries and high yield bonds.

The result has been that many investors are scrambling to load up on even more stocks paying dividends.

Today's Morning Briefing: Super Market. (1) 1665 is only 5% above yesterday’s close. (2) The trick to riding bulls. (3) Who cares about Italy and Cyprus, or Lil’ Kim? (4) Technicians seeing bad stuff in their charts. (5) Don’t bet against the three richest men in the world. (6) Irrational exuberance, here we come? (7) Scrambling for dividend-yielding stocks as central banks push bond yields closer to zero. (8) Performance Derby is a mixed bag so far in April consistent with broad bull market. (9) Still keen on bull’s outperformers: Consumer Discretionary, Financials, and Industrials. (10) Not as keen on Energy and Materials. (11) IT is cheap. (More for subscribers.)

Education & Unemployment (Excerpt)

People with more education tend to have lower unemployment rates than those with less education. The jobless rate for workers with a BA degree or higher was only 3.8% in March versus 11.1% for those with less than a high school diploma and 7.6% for those with a diploma, but no college.

The bad news is that higher education may be losing its value as a sure way to get a job, especially a good one. That’s because too many people are going to college and majoring in subjects that may not meet the requirements of the available jobs. So there may be an excess supply of highly educated people who aren’t qualified to fill the job openings.

In March, there were 49.2 million people in the labor force with a BA degree or higher. That’s up 20.4 million in the past 20 years. Over the same period, the number with some college or an associate degree rose 9.2 million to 37.2 million in March. While the unemployment rates for college educated workers are relatively low, their jobless rates currently remain relatively high at this late stage of the business cycle.

Just as troubling is that many of the people coming out of college may be taking jobs requiring relatively low skills. If so, then they are inadvertently boosting the unemployment rates for people with less education. People with college degrees may be crowding out those with high school degrees in the labor market. The former college students are increasingly saddled with debts to pay for their education and are especially anxious to get a job, any job to make their loan payments. Of course, quite a few are simply defaulting on their loans.

Today's Morning Briefing: Why No Jolt in JOLTS? (1) JOLTS showing fewer job gains than official tally. (2) Help is wanted. So why aren’t hires rising faster? (3) Maybe job seekers aren’t qualified for the jobs. (4) Could more job openings cause unemployed to stop looking? (5) Fed’s doves won’t be happy if jobless rate falls on shrinking labor force. (6) Average duration of unemployment remains too high. (7) A degree will still get you a job, but maybe not one that requires a degree. (8) College degrees crowding out high school diplomas? (9) Analysts spent Q1 cutting earnings estimates across the board. (10) Fiscal Cliff deal could boost earnings. (More for subscribers.)

Global Trade & S&P 500 Revenues (Excerpt)

The good news is that the global economy is growing, with the volume of world exports rising to a record high in January. The bad news is that the growth rate is in the low single digits--at 2.5% y/y during January. S&P 500 revenues per share is highly correlated with the volume of world exports. I still expect that revenues will increase by 5%-7% this year and next year. I am encouraged to see that the consensus expectations of industry analysts for revenues both this year and next year have been rising over the past few weeks. They now expect an increase of 5% both this year and next.

Today's Morning Briefing: Pump It Up. (1) Whatever-It-Takes goes global. (2) Central bankers gone wild. (3) Mandate madness. (4) Delusional macroeconomists. (5) From the Great Moderation to the Great Recession to the Great Deformation. (6) BOJ pumping air into global bond bubble. (7) Draghi’s best-in-class balance sheet. (8) Obama’s subprime solution. (9) Are agency mortgage REITs too hot? (10) Global trade growing, but slowly. (11) S&P 500 revenues expectations rising. (12) Focus on Transportation industries. (13) My favorite robot. (More for subscribers.)

US Employment (Excerpt)

I wasn’t disappointed by Friday’s employment report because I don’t pay all that much attention to the preliminary payroll estimate for the latest month, which was only 88,000 for March. Rather, I give much more weight to the regular revisions in the previous two months' payrolls, which were both increased by a total of 61,000 for January and February. Over the past three months through February, payrolls are up 211,700 on average, the best since the three months through March 2012. Over the past 12 months, revisions added 449,000 to the jobs tally, based on first-reported data. During economic expansions (recessions), revisions tended to be to the upside (downside).

Previously, I’ve noted that the monthly employment report has so much information that it can be confusing. Pundits tend to make it even more confusing since optimistic ones usually will find some numbers to support their view, while pessimists can do the same. So I was surprised to hear that the commentators assembled on CNBC Friday morning all seemed to conclude that it was an unambiguously bad report. I disagree.

To cut through all the noise, I focus on just one number, which I calculate by multiplying aggregate hours of private industry workers by their wage rate, i.e., average hourly earnings. The resulting YRI Earned Income Proxy (YRI-EIP) is highly correlated with wages and salaries in private industries, which is included in the monthly personal income report. My proxy was boosted by the upward revisions in payrolls and now shows a solid gain of 2.8% over the past five months to a fresh record high.

Today's Morning Briefing: Not so Bad. (1) Friday’s shocker wasn’t so shocking. (2) Revisions are more useful than first estimates. (3) Proxy for wages & salaries at record high. (4) Mixed bag of employment indicators. (5) Bad weather vs. fiscal drag. (6) No rush to phase out QE after Friday’s numbers. (7) The puzzling weakness in the labor force. (8) The Baby Boomers are checking out. (9) Draghi is committed to the euro, but admits ECB has limits. (10) Draghi disses Dijsselbloem twice in one day! (More for subscribers.)