LOL FED has a great post up today that explores some major commodity winners since the financial crisis started. I have to agree that SPAM is the big winner, I have a pantry with plenty of it in case of banking failure, swine flu, or other random catastrophe:
We’ve been saying for like six months that SPAM is the go-to commodity in times of fail, and sure enough, Hormel just posted a 6% increase in first-quarter sales. If you’re wondering what else is flying off the shelves (yes, a few things actually are), AP is out with a report this weekend, which we’ll dissect.
AP says we’re packing our carts with:
- SPAM, as discussed above.
- Macaroni and cheese, because SPAM can’t go it alone.
- Laxatives and stomach remedies, to help cope with all that SPAM and macaroni-and-cheese indigestion and constipation.
- Running shoes and fishing gear. Sporting goods are the kind of things where the initial outlay of $ can keep you amused for months, provided the item doesn’t end up collecting dust in your closet somewhere.
- Gold coins, a nice shiny hedge against inflation.
- Gardening seeds. Peek over your fence, and you’ll probably find the yuppies next door scratching in the dirt, talking about TEOTWAWKI or at least about “radical self-reliance,” attempting to turn their plot of suburbia into arable land. Well, okay, probably not. They’ve probably just gone out and gotten themselves an Aerogarden.
- Guns. Must protect the gold coins and Aerogarden.
- Booze. It’s cheaper to drink it at home than at the bar, and we still need SOMETHING to cry in.
- Condoms and match.com memberships. Hey, I just explained that no one is going to the bar.
- Self-tanner. Angelo Mozilo idolatry at work? Nah, probably just trying to get your date to like you, and there’s no way you can afford to get to the beach. Hey, your date might like the chocolate that made the list, too.
This is your life, America.
Now, if you’ll pardon me, I’ve gotta go pour some cheap beer out on my doorstep for Dow 14,000.
I would add banking stocks to the list as they seem to be the hottest "must have" item right now.
Job Losses After the "Jobless" Recovery
It seems to be genrally accepted that unemployment numbers do not really matter anymore because they are a lagging indiactor and a V shaped recovery will solve the jobs problem anyway. While we can certainly debate the merits of such thinking, I wanted to spend a minute looking at job creation over the past few years.
It is generally accepted that about 300k jobs need to be created a month to provide a stable job force that can accomidate new workers and economic growth. After the Nasdaq tech bust and then September 11th, unemployment rose quickly, but then eased off. The credit boom and its' and associated vehicles (real estate and mortgage related jobs) were high growth areas, but most other sectors stayed weak for some time.
The site iCharts has almost any chart you can imagine and I would point you towards this chart of monthly non-farm payrolls.
It is clear from the chart that from 2004 to 2008 job creation was anemic. The 300k level was only reached a few times over that span. Now the jobs picture is ugly with job losses piling up wiping out much of the 4 years of gains in about a year.
I think about the fact that there was a "jobless recovery" that has been followed up by monster job losses. Proponents of the secondhalf recovery theme should probably stop and ask where the needed jobs for a real recovery are going to come from. Federal spending, loaded bank earnings, and low end earnings estimate beats are good enough for a 30% run up in the stock market, but they are hardly the bedrock of a recovery in the "real economy".
Steps Closer to the Real "Grand Experiment"
There were several related items circulating today that rovelve around a central point. First, the stories:
Brazil and China eye plan to axe dollar
Brazil and China want to settle accounts in their own currrencies, not the dollar.
Asia will author its own destruction if it triggers a crisis over US bonds
Japan and China can never dump the dollar (via treasury holdings) because they will collapse if they do.
Moody's Japan downgrade puts triple-As in spotlightHigh government spending and no real plan for change cause Japan to get downgraded, but the USA is all good.
In aggregate these stories bring up a thought that I have written about at length;
Can the US spend whatever it wants?
By "spend" I of course mean "borrow". With tax revenue falling off a cliff and increased federal spending as far as the eye can see (wait until the state bailouts begin, oh brother!) the US seems immune from bearing any of the usual bond consequences for this kind of behavior.
The actions of the Treasury and the FED amount to a new kind of "Grand Experiment". In this lab test tube we are going to see just how dissociated from any economic reality one actor can behave without causing a collpase.
The officials in charge think they know just how far they can push the envelope. Just like they think they know where interest rates should be and just how "contained" mortgage loses will become. I hope there is a backup plan.
Have a good night.