Talisman is the one in the red. The others are West Texas oil, Suncor and PetroBakken chosen on the basis that I have commented on all of them. Notice that they are all within 10-20% of the starting point in May except Talisman Energy, which is still 45% below that level. This is worrying as we may miss the boat (as with Morgan Stanley). On the other hand there is a train going by all the time so, you miss one, you take the next one. Up to you.
The tech stocks, represented by the Nasdaq, have enjoyed quite a bit of (irrational?) exuberance lately with the upcoming Facebook IPO, the Superbowl and Greece’s soon to come “no-default” default. But the simple fact that this index is still down by 40% since the highs some twelve years ago, remains. Also, despite the longer timeframes involved, the “picture” is essentially identical to most other indices and or individual stocks. The message is that this can turn any moment.
Some might argue that the market is full of negativity, pessimism and so on, but looking at the standard gauges like Put/Call ratios, sentiment indicators, volatility and so on , they clearly indicate the contrary. Not to bore the reader, we will show only two, the cash ratio at mutual funds in the US(see link),and a sentiment index for the Nasdaq; http://home.comcast.net/~RoyAshworth/Mutual_Fund_Cash_Levels/Mutual_Fund_Cash_Levels.htm
The sentiment is running at an all time high, at least for this 10+ year period. The cash levels at mutual funds are at an all time low at about 3.5% of assets held. The message here is that there is no one left to buy nor any money left to buy. Volatility – I am now boring you- that is now around 17 coming off 47 or so a few months ago, tells the same story;
Here I have overlaid the S&P onto a chart of the VIX, or volatility index. The current wisdom is that you should wait for the markets to calm down, which clearly is exactly what you should not do, at least not for the past 14 or so years. The zero line is just a base line set at the start of this chart, it does not represent a particular value! Note that when the S&P goes up, the VIX goes down and vice versa. This is logical as one should buy when the proverbial blood is flowing in the streets. Obviously not now!
Employment is, obviously, the other side of the coin of unemployment. Interestingly it is following an EW pattern very similar to most stock markets. Curiously over the last few months employment has gone down and so has unemployment, truly a miracle!
“Shadow Government Statistics” is a great web site that makes it it’s business to calculate various government statistics in a way that they believe is more accurate or appropriate. Often this involves going back in time and using methods that were used in the past; arguable this leads to a better presentation of the numbers. This is what they posted today for unemployment;
The explanation is given as follows;
SGS stands for “Shadow Government Statistics”. The one that all the fuss today was about is the one in red. The one above that (in grey) is reported publically as well but is down played by the media. The real unemployment rate, according to the authors of this website is the blue one, at the top. It is more in line with unemployment rates all over the world. In case it is not entirely clear what a discouraged worker is , here is the definition;
In Canada if you are unemployed AND collecting EI (Employment Insurance) you are required to report every two weeks that you are still available to work. No questions are asked with respect to what you might have done in order to obtain work. After EI stops, usually quite soon and that is assuming that you get it in the first place, no reporting whatsoever occurs. How they do it in the US I have no idea but if for statistical reasons you can exclude anyone who has not stated an intent to look for just 4 weeks, than clearly the result becomes almost meaningless. When adjusted for this factor (the blue line) unemployment has actually increased on balance for the past 2 years, and is running above 22%.
As the US has the highest level of incarceration of any country in the world and growing, and as most other countries are less than 1/4 of that, one could further argue that, provided a reasonable proportion of those in jail would be unemployed if they were not (I have no idea if this is true!) unemployment might even be a little higher.
Most European countries run at incarceration rates that are about 1/10 of those in America. When making a comparison perhaps some adjustment should be made.