All Work and No Blogging

All work and no Blogging make Greg a dull boy...

The rate of change has slowed considerably, leading many to conclude that the economy is "bottoming out".

It all depends on what your definition of what "bottoming out" is.

In the 2000 - 2008 U.S. "recovery" period, the only hiring was done by Governments at every level.  This means several things:  

There are not that many private sector folks left to fire.  The 600,000 jobs lost each month is going to have to come to a halt - and soon - or we would be without basic services.

Nonfarm payroll employment continued to decline in April (-539,000), and
the unemployment rate rose from 8.5 to 8.9 percent, the Bureau of Labor Sta-
tistics of the U.S. Department of Labor reported today. Since the recession
began in December 2007, 5.7 million jobs have been lost. In April, job los-
ses were large and widespread across nearly all major private-sector indus-
tries. Overall, private-sector employment fell by 611,000.

Unemployment (Household Survey Data)

The number of unemployed persons increased by 563,000 to 13.7 million in
April, and the unemployment rate rose to 8.9 percent. Over the past 12 months,
the number of unemployed persons has risen by 6.0 million, and the unemployment
rate has grown by 3.9 percentage points. (See table A-1.)

Unemployment rates rose in April for adult men (9.4 percent) and blacks
(15.0 percent). The jobless rates for adult women (7.1 percent), teenagers
(21.5 percent), whites (8.0 percent), and Hispanics (11.3 percent) were little
changed over the month. The unemployment rate for Asians was 6.6 percent in
April, not seasonally adjusted, up from 3.2 percent a year earlier. (See
tables A-1, A-2, and A-3.)

Among the unemployed, the number of job losers and persons who completed
temporary jobs rose by 571,000 in April to 8.8 million. This group has more
than doubled in size over the past 12 months. (See table A-8.)

The number of long-term unemployed (those jobless for 27 weeks or more)
increased by 498,000 to 3.7 million over the month and has risen by 2.4 mil-
lion since the start of the recession in December 2007. (See table A-9.)

Total Employment and the Labor Force (Household Survey Data)

The civilian labor force participation rate rose in April to 65.8 percent,
and the employment-population ratio was unchanged at 59.9 percent. The employ-
ment-population ratios for adult men and women showed little or no change over
the month. However, since December 2007, the men's ratio was down by 4.4 per-
centage points, while the women's ratio was down by 1.3 percentage points.
(See table A-1.)

In April, the number of persons working part time for economic reasons
(sometimes referred to as involuntary part-time workers) was essentially un-
changed at 8.9 million; however, the number of such workers has risen by 3.7
million over the past 12 months. (See table A-5.)

There is a big difference between having the rate of decline in employment slow, and a "recovery".  There is no "buy and hold" anything in this world.  Not even "cash".  There will likely be upside "surprises" in the employment numbers in the next 2 quarters.  I look forward to seeing how the U.S. equity market reacts to this with great anticipation.

--------------------------------------------------------

So.  Here we are.  Halfway through 2009.  This is "sh*t or get off the pot" time for "peak oil" and "peak imports" for the U.S.  The contango in Oil prices has come crashing in, via the increase in front month futures prices.  My bet is the curve comes in from here, perhaps brutally, and that this event, should it come to pass, might give one the opportunity of a life time.

Why now?  Peak crude Oil discovery was in 1964.  It is industry experience that fields production peaks approximately 40 years after discovery... the earth can be seen as a single "Oil field"... and we are now 45 years after the peak discovery year...

In the short term, "inventories" have been building, and that is likely to create price swings, but that has nothing to do with real, long term production capacity.  Productive capacity is an equation consisting of investment AND recoverable reserves, and the complex's budget for productive capacity has been slashed to the bone.

I have come to the opinion (and I reserve the right to change my mind on a dime) that Oil prices will not be able to supportable above, say, $120 per barrel until U.S. imports fall below 10 million barrels per day (or the US$ gets crushed).  At the moment imports are just over 12 million per day.

--------------------------------------------------------

Gold continues to be on of my biggest holdings, but I am going to get serious about acquiring more productive farm land and grass fed live stock in regions where it RAINS.  These investments take years to mature and come to fruition, and considering the very plain warnings we have been getting from the fertilizer industry, my bet is that this is going to be a VERY comfortable place to be in the future.  If you have cash, this might be the best long term investment you could possibly make.  Farm land is very rentable, and there are no calls from the tenant in the middle of the night over a leaky toilet.  

Gold might be more convenient, but farm land pays current income while it holds its intrinsic value.  Commercial real estate only holds value if, and it is a big IF, the property has rent paying tenants.  

The vacancy rate on productive farm land in the U.S. is essentially ZERO.  There is a good reason for this.

-------------------------------------------------

Watching the Democrats in Washington is making me ill.  Am I the only guy that sees that the ONLY thing that matters to these guys is the next election?  That they would be willing to pander ANYTHING to get those votes - payoff the unions at the expense of contract law and property rights, expand the deficit with silly assumptions, etc...

This was CHANGE?

Mentatt (at) yahoo (D0t) com