Down 15% from a year ago. Employment lags job openings by a few months. It hit the usual suspects but also the services industries, including finance & insurance, tech, and healthcare.
By Wolf Richter for WOLF STREET.
Let’s make this clear: these are job openings in December and prior months, before the novel coronavirus had shown up on the business-staffing horizon. Let’s also make clear that the two-month drop was so bad that a statistical flaw might have skewed the data, such as some seasonal adjustments gone berserk. But as we will see, the not-seasonally adjusted data looks even worse. And it’s not just one month. With hindsight we see that the trend started in early 2019 in small uneven drips, and it didn’t really matter until it suddenly did.
The number of job openings in December dropped by 364,000 from November (seasonally adjusted), after having already plunged by 574,000 in November, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). This two-month plunge of 938,000 job openings came after a series of ups and downs with downward trend starting after the peak in January 2019. It brought the number of job openings in December to 6.42 million (seasonally adjusted), same level as in October 2017. Since the peak in January 2019, over 1.2 million job openings have dissolved into ambient air (November and December in red).
On a not-seasonally adjusted basis, job openings in December plunged by 14.9% from December 2018, the steepest since the Great Recession. In total, 1.05 million job openings have disappeared over the period. This was the seventh month in a row of year-over-year declines.
Year-over-year comparisons eliminate seasonal fluctuations. And the fact that this year-over-year drop of 14.9% in December occurred in the not-seasonally adjusted data shows that the drop to 6.42 million job openings was not due to seasonal adjustments gone berserk. It was due to other reasons.
There had been a minuscule dip into the negative in January 2013, and then the more visible dip into the negative in late 2016 and early 2017. What we’re seeing now is in an entirely different ballpark:
Job openings are a first indication. Other indicators lag job openings, including at the far end total nonfarm employment. And for now, these other indicators have not yet picked up on the plunge in job openings though some have started to wobble.
Number of hires in December at 5.9 million was up 3.3% from December 2018 and in the range between 5.6 million and 6.0 million that has prevailed since April 2018.
Number of quits – employees voluntarily walking out because they found something better to do – rose 2.9% year-over-year to 3.5 million but was down from a year-over-year surge in quits of 15% in January 2019, and from the peaks in 2013-2015 of 18% to 19%. Quits are a sign of confidence by employees. The rate of quits has more than doubled from the bottom of the Great Recession when people clung by their fingernails to even miserable jobs.
Number of layoffs and discharges of 1.89 million in December has been in this range since 2012.
The total level of employment lags directional changes in job openings, and is a lot less volatile than the number of job openings, which can be pulled instantly when the outlook changes. After a significant and persistent decline in job openings, we would see the number of hires drop first, then layoffs and discharges would begin to rise, and eventually total nonfarm employment would begin to tick down. But this hasn’t happened yet.
The chart below shows total nonfarm employment (red line) compared to job openings (blue line). Note the lag during the Great Recession, with job openings beginning to trend down in early fall of 2007 while total employment started declining in February 2008:
So what does this mean?
The sharp decline in job openings could just be a statistical issue that skewed the data. And we will have to see if this bears out. Or it could be that companies finally pulled all the so-called job openings that they never had had any intention of filling in the first place. And this happens, but company by company. It’s hard to imagine it would happen across the board all of a sudden to produce this kind of drop.
Or it could mean that the labor market is starting to run out of steam. And that seems to be the more likely scenario – given how widespread it was by employment category and by region.
Some of the employment categories that have seen large drops in job openings are the usual suspects in beleaguered industries that we track here: brick-and-mortar retail, manufacturing, transportation, and oil and gas drilling.
But there are now new suspects in the services industries that we have been watching like a hawk for signs of weakness because services are 70% of the US economy, and it takes a decline in services for a recession to occur. And now, job openings have dropped on a year-over-year basis in professional and business services, finance & insurance, and health care!
The year-over-year drop in the number of job openings by major category:
- Retail trade: -265,000
- Professional and business services (includes part of tech): -232,000
- Health care and social assistance: -165,000
- Accommodation and food services: -125,000
- Transportation, warehousing, and utilities: -85,000
- Finance and insurance: -79,000
- Manufacturing: -75,000
- Construction: -60,000
- Mining and logging, which includes oil & gas drilling: -15,000
And the year-over-year drop in job openings by region:
- South: -475,000
- Midwest: -343,000
- Northeast: -120,000
- West: -91,000
The lag between the first significant declines in job openings and an actual decline in employment, where jobs are being lost, seems to be about four to six months. If this data was skewed by a statistical fluke, the drop will self-correct over the next few months. But if what we’re seeing here are the actual trends in job openings, and they don’t bounce back in a serious manner, we can expect to see declining employment a few months from now.
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The last four years sure do look great when compared to the eight before that.
Are you looking at the same charts I am? Or are they just in your mind?
Yeah, I am pretty sure he is looking at the same charts. From the raw numbers perspective it does look better in the last four years.
But there are always questions, how many of these are openings that are never filled. The other question that is important is whether this downside acceleration will continue. If the numbers continues to be bad in Jan and Feb, then it’s a trend. Forget about whether the Coronavirus is a cause, it would just act as an accelerant to a bad situation.
2banana is well known troll on other websites with his viewpoints (i.e. previous president did 0% right, current president does 100% right).
I think the graphs show an increase upwards since around 2010 with a spike up around 2018, but now reverting to the mean or possibly starting a new prolonged downturn.
He’s likely not an individual, maybe part of the group tuned to and tasked with WS. I have a cousin who does research for people with the 2b agenda, and he works in an organized group, but since I don’t bother to have anything to do with him anymore, I don’t know if he was moved into a posting work group. If I were still into Sociology I would cultivate our family relationship and learn more from him, but once I took Biology I was completely hooked.
Let not your heart be troubled, banana, and I look forward to a laugh from you always starting comments off (although not nearly as good as when your guy speaks off twitter, which is very rare for obvious reasons), after getting a headache from reading the article and the BLS source (at least on this one). But that’s how one learns stuff.
Job openings drop but looks like only to the same level as 2018, still looks like plenty of job openings. This is goldilocks for stock investors, it gives the Fed yet another excuse to continue their policy of T-bill purchases (debt monetization) yet robust enough to sustain full employment (everyone who wants a job has one) aka the “consumer is strong”.
Service sector finally weakening? Maybe, time will tell, but the increased government deficits should continue to flow into the economy and keep unproductive workers employed and the “consumer strong”. I just don’t see a significant and sustained drop in employment with the government printing over $1 trillion/year and flooding it into the economy. Boa tarde.
Interesting. Would need confirmation. Since the Weekly Claims data hasn’t turned yet, and neither has the stock market, are there other (preferably non-government-manipulated) sources to confirm?
On the flip side: It’s 2020 so Census hiring should be kicking in soon.
All of the above could be mooted by the black swan coronavirus.
Wisdom Seeker,
We just need to be more like the Chinese, despite their ineptitude, causing the pandemic. Which in China by the looks of things, will eventually cause millions of deaths and has resulted in most of country shutting down for an indeterminate amount of time. There will still be GDP growth this year.
Ineptitude? That is funny. I can only imagine if such a virus started its spread in a US city instead. There would be *no way* to shut it down, we are weaned on “nobody can tell me what to do” so people would not tolerate any attempt at locking it down. It would spread 10x more than it has in China.
Zantetsu,
That isn’t true for many reasons. The CCP “Chinese communist party” has pushed for traditional Chinese values in an effort to isolate the average Chinese individual from the rest of the world. This includes eating exotic animals “the likely cause of the corona outbreak” and away from proper health standards and education.
The CCP then covered up the outbreak for over a month and a half even through Chinese New Year and even held the infamous 100,000 person state banquet not far from where it started. That month and a half was a critical period where the virus could have been wiped out. By the time they decided to act it was too late. During that 1.5 month period they instead violently suppressed any info about the corona virus outbreak.
Whatever does happen it’s the CCP’s fault.
Wisdom Seeker,
Job openings would be the first indicator. Everything else follows. Layoffs (unemployment claims, etc.) are near last. From a business perspective, it makes sense:
First, you decide you’re not going to need all these people that you thought you might need in the future, so you pull the job ads. But you continue to hire the ones that are in the pipeline and look selectively at some new hires. So in terms of actual hiring, it’s still going up.
Then, if business doesn’t pick up enough to hire more people, you turn off the hiring pipeline, and the number of new hires drops.
Then, when business declines, you start trimming your workforce a little here and there, and you let a few people go, and maybe you still hire a few people.
Then when you get worried and see the downdraft in your financials, you start cutting more and put on a hiring freeze. And at that point, your payroll actually starts to decline.
All we’re seeing now in the overall economy is what looks like step one. It could still be a statistical fluke, because it’s just so sudden. And confirmation is definitely needed.
But with January and February data we’re likely to see the coronavirus impact job ads in the travel industry and everything related to tourism. So this is going to be tough to sort out.
I get the logic, but of course reality and expectation often diverge.
In the archival charts available online, the JOLTS openings in 2007-2008 turned south concurrently with the weekly unemployment claims. Both lagged the peak in the stock market. The 3 together were good indicators that the economy had turned. Interestingly, JOLTS openings had a rounded peak that time, very different from now.
Unfortunately JOLTS was very new in the dot-com recession, so 2007-2008 is the only test of its predictive power so far. Be really interesting to see where the series goes in the next 2-3 months!
Another weird thing about JOLTS – there was a massive surge in openings in summer 2018. JOLTS hires turned up a bit at that time too, but not in nearly the same magnitude. Not knowing what drove that surge, perhaps it’s possible that the current plunge is simply undoing it?
great article with good food for thought!
WS,
It is true that JOLT has internal divergences (openings VS hirings gaps) and external divergences – I wonder if anyone has tried to rigorously reconcile payroll survey adds to JOLT net hirings…
Granted these are just sample surveys and comparing *across* surveys will never exactly match…but sometimes the divergences are in the millions…
Also, I’d like to add that under the new tax laws, employees are less valuable tax deductions than they were in the past. This may result in employers laying off employees sooner than they did in the past.
So looking through the BLS charts, I noticed “job openings” seem to have many more data points than “employment”. I would think just the opposite, as IRS data is pretty solid stuff. Sorry, but I didn’t look into their methodology.
“Black Swan” we don’t need no stinkin black swan This economy has been awful and will get worse The whole thing ended in 2008 and everybody knows that Debt has kept it going this long and that’s getting long in the tooth now Tic toc beeches
Why should viral deaths and incapacitations affect things any more than the same from vehicle driving? Maybe 40K + 40K in the US every year?
I honestly think people are so numb to the latter that they prefer something new and exciting to worry/bitch/talk about.
Viruses have had 4 billion years to perfect their occupations….they aren’t stupid…
..not to say it isn’t possible this is the BIG ONE!
Wolf,
You are sharp! Thanks for the lesson!
I’d be interested in seeing the exact JOLTS methodology; there are a lot of posted jobs on LinkedIn, etc, that are thought by many to just be fishing. In other words, companies are trying to see what candidates they can attract and keep CVs for future use, etc. I just don’t know how granular JOLTS gets into what qualifies as a job posting, etc.
Michael Hughes — I receive daily job alerts from Glassdoor and LinkedIn. After researching the companies, the ‘Directors’ and the value proposition of the company — I discovered that these postings are intentiontionally posted as the company’s Marketing plan and Baits (Hooks) that create False Hopes, especially for professionals with USA working visas or those outside the USA seeking opportunities within the USA.
LinkedIn, Glassdoor, et al platforms do keep the CV’s in their servers for a year or more. This reality is disturbing because anyone can pretend to be an employer and extract the resume of their ‘targeted victim’ — worldwide.
That’s why metrics like total employees (Employer Sourced) and Employed to Population 25 to 54 are closer to being a gold standard – “openings” is mushy for the reasons listed.
This move seems to be common to many new “businesses” (if we can call them that) birthed in the last few years. Make the consumer the product. In other words, try to collect as much data as possible and try to monetize it. Somehow, I have to think that all of this data is not quite as valuable as it is made out to be, and oftentimes possessing data leaves a firm liable to breaches and thus rather nasty litigation. But someone is making money in the meantime. Helluva world.
1) Steve Job ghost at Feb top is the inverse image of Dec 20018/
Jan 2019 image ( also the 2002/3 bottom).
2) MAGA (MSFT, AMZN, GOOGL, AAPL) 1hour, are sharply down.
3) If the biggest $1.0T + killer whales get red Faces, the guppies cannot lift the SPX.
Mr. Engel,
I’ve long thought your comments are like a visit with a palm-reader – very cryptic – but this one, “If the biggest $1.0T + killer whales get red Faces, the guppies cannot lift the SPX”, is a beauty.
Or. The soldiers have all been shot and only the generals are left to lead with no troops
Michael Engel:
(His comments)
Perfect!
(Financial) Haiku!
Yeaah….figured it out!!
Go Michael!!
Putting on my Fed Thinking Cap, this seems the indicated response:
Time for fire up those “insurance rate cuts.” No need to wait for more data, this is INSURANCE against bad stuff we’re talking about.
The isn’t done cutting rates until they are 0%.
Better throw in more QE, too, so financial service parasite jobs keep expanding.
I hope that was sarcasm because that’s a sure fire way to blow everything up even sooner Got Gold? You should if you don’t
While this older and ‘historical’ information is valuable, I can testify the following: In the week after the most recent SOTU speech, the daily job openings listings on Indeed, with the only qualifier being ”construction,” in FL and CA, were approximately between double and triple the couple of weeks before that speech. (Those initial weeks were when I started looking again.)
On the other hand, the trend of those more recent listings seems to have migrated from ”pre-construction” types to actual ”git her done” types of jobs within the construction industry…
Does that imply the newer jobs are more likely to be temp/lower paid?
No, implication is that there are fewer job openings for ”pre-construction” such as estimating, design-build manager, etc., and the jobs have trended toward ” carpenter, plumber, etc., project manager, job site superintendent,” and others who actually do or manage the work to accomplish the project.
Though I will add that today, for the first time I can remember, I am seeing a lot of ”design” job listings; that may just be a function of the architects and engineers ”catching on” to the Indeed website.
Certainly an interesting world we are in these days, with so much direct instantaneous communication happening.
Vintage West — One of my consulting 2-week gig was a ‘space allocation auditor’ for an interior commercial designer whose tenant occupies 3 full floors ( guessing at SF commercial rent: $1 Million a year). The space on every floor is occupied daily at 30%, most employees work remotely and ‘go in’ the office once a week for meetings. After this gig, I changed my perception of this tenant who threw and still throwing investors money thoughtlessly. One walks out of the building and confronted
with the homeless and elders peddling for change.
BTW, FWIW, I have been following the boom or bust, feast or famine nature of the construction industry since 1956, when my self-employed architect dad had no work at all come into the office for six months; mom just went around town buying groceries, etc., on her ”charge accounts” so that we ate OK, etc.
After that time, work started coming in again, and all the accounts got paid off, though I think dad sold the farm, and we lost one of the houses.
I encouraged both of my children to avoid the construction industry, but apparently the genes run deeper than logic…
The USA can only use so many bartenders.
Bartenders? Did anyone say anything about bartenders?
If you have followed where the job gains have been since 2008, it’s the hot spot…aka not exactly inspiring
Keeper Hill,
People confuse “service” jobs with bartenders. Jobs in services include all kinds of tech and telecom jobs, doctors, nurses, architects, lawyers, engineers of all kinds, finance & insurance…. Many of these sectors have been booming in recent years, and those are high-paid jobs, and the job growth in these areas has been big. Those sectors I listed here make up the majority of the US economy.
Bartenders fall under jobs in NAICS code 722410 (drinking places with alcoholic beverages). This is a small subcategory in the NAICS group 722, which includes hotels, casino hotels, B&Bs, other traveler accommodation, restaurants, cafés, caterers, etc. That entire category – in the article, “4. Accommodation and food services” — lost 125,000 job openings, out of the 1.1 million job openings lost. A small portion of that 125,000 might be bartenders – or might not be because drinking places might be doing quite well.
“Bartenders” was a ZeroHedge trope during the Obama years. Sounds like someone needs the Wolf treatment to get de-programmed!
Mr. Richter:
Hey, you started it!
“Bartenders? Did anyone say anything about bartenders?”
What to expect from such an eclectic readership?!!
(Giggle!)
Well, they can always run for Congress.
That is alcoholics you are thinking of, not bartenders…
Alcoholic career politicians.
2B,
Oops…missed the AOC reference the first time around…
Honestly, half the time I’d almost prefer if Congress was blotto; they are apt to be less dangerous in that condition.
Given my experience with both, I would take bartenders over current members of Congress. Not joking. Bartenders have far more understanding of the real world, and pick up A LOT of information from all kinds of sources.
Or was your post just a cheap dig at AOC?
He’s having a tough time with this article getting his stuff in….mostly statistical comments…..but I’ll bite.
“Along with failed B actors and failed businessmen turned reality show hosts and money launderers.”
I am never sure about ‘the numbers’ across the country but I can give a personal observation here in the Tampa area for the ‘tech’ and ‘business services’ sector. Things have been very strong here, but I have witnessed things changing on a dime in my 4 decades of work. One thing that I can validate is that salaries for experienced tech employees here in the Tampa area have been very weak (in an area that has fairly unimpressive salaries to begin with). Lots of things going on today. Proceed with caution.
Tampa is supposed to be one of the hot real estate markets. I guess it is being fueled by the northerners, not the locals.
TTT, a trading service, is saying ROW is in technical recession, and that US markets should get flight to safety investment dollars, [which often just turn into financially engineered profits not jobs.] I take the other side, money on the sidelines in the US will seek value in the EU and the EM and American business will take a hit. Those jobs returning depart again, to offshore destinations when money shifts back overseas. Fed holds the market up with belt and suspenders. Investors bail. Analysts have been talking up the EM for a while and may be the slowdown there is bottoming.
European PMI is starting to turn up. The Coronavirus might stall the numbers, but on balance, things appear to have bottomed in Europe. Once the China disruption abates things will get better.
Who told you it will abate?
Wait till they run out of parts from, or exports to, China.
We’ll have our grand vacation very soon.
No doubt this will provide the perfect excuse for concentrating corporate JIT supply lines.
Is it possible that the “ghost jobs” that were not going to be filled were pulled from the data base by companies to be used in the future as part of a data strategy?
That would be one of my guesses; for most jobs at the mid or above level, it is somewhat of a labor buyer’s market, with the exceptions to the rule. The purple squirrel syndrome still appears to be quite catching.
DR DOOM,
I definitely agree with part 1 of your statement that there is a possibility that a lot of ghost jobs got pulled, and I mentioned that. But if that is indeed the case, I CANNOT figure out why they would get pulled all at once over a period of two month, as if someone had given a signal. That suddenness makes me doubt that scenario. It would happen gradually, over time.
While I don’t discount any scenario (trust but verify), is it possible consolidation of advisory services taken place over recent years (big data services) might magnify such phenomenon?
where i work we have been trying to hire people, granted at entry level positions, with a decent for the area starting pay. in the last few weeks we have scheduled 8-10 interviews and one person actually showed up. that one lasted exactly one day.
not sure what to make of it, but that is my anecdotal data point…
the ghost job concept is interesting. when i reentered the job market three years ago after not having applied for a job for twenty years, i was shocked at how the process has changed. in my field, i have seen a lot of job postings that were clearly cut and paste from other postings and were obviously written by people who had no experience in the field. i had a lot of my time wasted with “ghost jobs.
anecdotally, three years later i have developed a new network of contacts and finding work is not a problem. i’ve been told by managers that they don’t bother to list most tech positions as long as they are freelance/part-time. they just go with referrals. the way hey handle it at my fortune 100 company is start you out freelance/part-time and if you survive the first year, you will make contacts to get brought in part-time in another department. that way you can work full-time between two departments without the managers having to get permission to create a new “staff” position. welcome to the new normal.
Some of the recently created jobs are PT jobs with some people working two jobs.
I found a recent report of strong wage growth in So Cal. That is a sign of a tight job market. Foreclosures are low.
China is begging for travel restrictions barring Chinese citizens from traveling should be lifted citing risks to the economy. The number of deaths per day has not peaked. Hot weather killed viruses.
The virus can only live in a host organism or for a short time in a body fluid. If the host is asymptomatic the temperature will be normal. There is no evidence that this is problem for the virus or that high fever kills it with any certainty.
I am a bit puzzled by the theory that hot weather kills the virus. Not picking on you btw, I’ve heard it on the news too. Here is another theory: that cold weather sees more spreading of viruses because people (and animals) are in closer quarters in shelters.
At least the ‘it just like the flu’ theory seems to be muted. Not too many 34 year old doctors die of seasonal flu.
Some good sales already starting for cruises. Seriously, I saw an add for a 30% reduction for a south pacific jaunt, in winter. Imagine that.
I would expect this is the beginning of the end for this insane industry.
I certainly feel sorry for the pax trapped onboard.
2 questions. Will they get a refund? Will there be class action suits?
@nick kelly:
Read this 2010 scientific paper, “Effects of Air Temperature and Relative Humidity on Coronavirus Survival on Surfaces”.
The abstract is:
“Assessment of the risks posed by severe acute respiratory syndrome (SARS) coronavirus (SARS-CoV) on surfaces requires data on survival of this virus on environmental surfaces and on how survival is affected by environmental variables, such as air temperature (AT) and relative humidity (RH). The use of surrogate viruses has the potential to overcome the challenges of working with SARS-CoV and to increase the available data on coronavirus survival on surfaces. Two potential surrogates were evaluated in this study; transmissible gastroenteritis virus (TGEV) and mouse hepatitis virus (MHV) were used to determine effects of AT and RH on the survival of coronaviruses on stainless steel. At 4°C, infectious virus persisted for as long as 28 days, and the lowest level of inactivation occurred at 20% RH. Inactivation was more rapid at 20°C than at 4°C at all humidity levels; the viruses persisted for 5 to 28 days, and the slowest inactivation occurred at low RH. Both viruses were inactivated more rapidly at 40°C than at 20°C. The relationship between inactivation and RH was not monotonic, and there was greater survival or a greater protective effect at low RH (20%) and high RH (80%) than at moderate RH (50%). There was also evidence of an interaction between AT and RH. The results show that when high numbers of viruses are deposited, TGEV and MHV may survive for days on surfaces at ATs and RHs typical of indoor environments. TGEV and MHV could serve as conservative surrogates for modeling exposure, the risk of transmission, and control measures for pathogenic enveloped viruses, such as SARS-CoV and influenza virus, on health care surfaces.”
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2863430/
The Wuhan bug is a similar coronavirus.
The short version is that the bugs like it cold and dry, and die quickly when it’s hot and wet. The coronaviruses studied can live for 28 days or more at 4 degrees Celsius and 20% relative humidity. At 20 degrees Celsius and 50% relative humidity, 99% of them die within 2 days, the rest are dead after 6 days. At 40 degrees Celsius and 80% relative humidity, almost all of them die within 6 hours.
The data I am citing here is from Figures 1a, 2b, and 3c in the paper – the two extremes (1a, 3c) and the middle case (2b).
This study doesn’t cover survival in aerosols or in feces, which are two other methods of contagion, but it’s likely that the bugs die at about the same rate when they are in aerosols or feces as they do on surfaces.
As a practical matter, if there is an epidemic and it’s warm and wet outside, it might be wise to turn off the air conditioning and open a window or two to make things warmer and wetter.
This is obviously not very helpful advice in February in the higher latitudes of the Northern hemisphere, but it might be a good thing to do later, in the spring or summer months.
In winter, it might be wise to turn up the heat and run a humidifier in all buildings if there’s a risk of contagion.
The authors themselves suggest that this might be a good way to kill the bugs in hospitals – from the abstract, “TGEV and MHV could serve as conservative surrogates for modeling exposure, the risk of transmission, and control measures for pathogenic enveloped viruses, such as SARS-CoV and influenza virus, on health care surfaces.”
The viral preference for dry/cold is fairly common – that is the reason for the seasonality/winter peaks of regular flus (and other pathogens that cause illnesses to spike in winter).
The question I have is whether the key factor is dry…dry being a function of cold (humidity drops as temperatures do).
And, could virality/spreadability be as monumentality simple/stupid as ambient humidity literally “weighing down” viral particles in the atmosphere.
That is, hot=humid=heavier virus particles=less inhalation?
That would seem to be so simple as to be stupid and something that 100 yrs of medical science would have let us know about.
But stranger omissions have been made…
Read it. Sounds to me like the survival on SS is a marginal factor in what is obviously the main vehicle of transmission, human to human it a VERY brief time period.
Admittedly, it makes the case that transmission via surfaces will be slower in warm moist weather. But given the apparently almost immediate speed of human- to- human transmission, the long periods that an asymptomatic carrier ( or super carrier) is infectious, I can see no reason for the pandemic to extinguish via weather change if the survival rate on stainless steel was ten seconds.
Agree it will help but of course in the vast expanses of China there will be places where it is rarely if ever hot and humid.
Interesting study though. I didn’t know this type of virus outside the body was so averse to heat/ moisture.
One puzzle for any theory: how are cases on these quarantined ships increasing? Surely everyone is being careful what they touch and they are confined to their cabins. If the answer turns out to be ‘airborne’ and air is circulating through the ship…
This market is certainly an interesting one.
The coronavirus caused a major demand gap, particularly in commodities, and it’s full effect is not known yet.
Economic data had been weakening for a while in cyclicals, and now we see the first signs of weakening in services & employment.
The US stock market is at all-time highs. Everyone knows it’s driven by central bank liquidity.
According to the wall street sentiment survey were at 17% bulls and 75% bears.
Rauol Pal says to bet on bond yields declining, but I’ve tried with TLT before and I’m reluctant to again. Gold seems a good bet … it should be okay if everything falls and it should go up if the central banks continue to juice the markets. I’ve been increasing a bit to my portfolio of gold miners lately.
I’m definitely nervous about the FANG stocks … Every passive investor is highly invested in each of those without realizing it, and they could all try to exit at once, just as blindly as they entered. However, I sure as heck wouldn’t short them – a bit more easy money going into passives and they’ll inevitably go up.
I still like high yield defensives. And I still want to keep a good bit of money on the sidelines in case of a pullback.
It’s hard to argue with having a decent cash position. You can always just put in short term treasuries and still get some nominal yield. Unfortunate that their are very few legitimate high-yield growth investments that don’t have the appearance of pixie dust about them.
High Yield international bonds denominated in USD pay 5-7%, there are funds that specialize in this area. When the foreign debt is denominated in USD you don’t have to worry about the currency haircut, should that nations currency plummet. Lot’s of solid blue-chip company’s in Dubai/Qatar borrow from these pools.
It’s hard to get excited about 1.5% ROI on CD’s, UST is much the same or worse, we can only hope that Volcker returns
U can’t be in anyone place in this era, just be well diversified. GOLD as typical 10% for insurance, as in ‘gold in the hand’; Not really possible anymore in USA with gold purchases/sales tracked; Everywhere else on earth gold is still traded for cash on every corner. Most USA holders of “GOLD” own paper gold, which is also your pixie-dust.
The stock-market seems to be the last bastion, probably should just see it as the bellwether, as the PTB will continue to prop up the market until the FED is no more. Makes sense, since the Fascist Gov is owned by the Corporations, that they make sure the #1 priority of FED is to buy stocks. That said I really think US stocks have run their historical bull course, best to look at cyclical INTL stocks blue-chip stocks that should do well in coming decade. The future of the USA is civil war, and nothing more, so anything ‘prison’ related as an investment in USA should do well in coming decade. TASER to the moon.
And I to consider myself a pessimist. Can’t disagree much, however.
JT,
“I’m definitely nervous about the FANG stocks … Every passive investor is highly invested in each of those without realizing it, and they could all try to exit at once, just as blindly as they entered”
100 pct right. At those PEs, the FANG are priced at 2 to 4 times perfection.
And the cap weighting of the major indices creates a huge feedback loop among passive investors in these stocks – both on the way up and on the way down. I don’t think enough attention has been paid yet to the cap wtg effect, especially in the context of hugely increased passive invts.
This is spectulation but what about GEO. Its a private prison REIT with high dividend yields. Not highly sought after for political vulnerability. But I feel thats not realistically likely to be changed. Thoughts?
I’ve been trading GEO a bit to be honest. MO as well. Good yields, but both are in overall bearish patterns so sell at significant lines of resistance. GEO’s at one now in fact, I’ll sell tomorrow morning and buy back if it either dips back to the 200 day MA or if it overshoots and then pulls back to find support at the 50-day (thus beginning to look bullish).
Both stocks have great yields and decent earnings, but political pressure that makes funds want to divest a bit.
1) Recession best indicator : Fred ==> SAHM.
When the national unemployment rate U3 monthly ma(3) rise by 0.5%,
or higher, above last 12 months bottom, it signal recession.
2) Currently at zero level.
3) Today SPX made a new all time high. Wall street ignore coronavirus.
4) If coronavirus cases unexpectedly will hit US, or even death, people
will shy away from : work, supermarkets, malls, restaurants, casinos,
crowded streets or places place…
5) Panic will engulf US and Dr. Claudia SAHM will popup > 0.5%.
Only I would think stocks would start to spiral before that…even added liquidity from the fed may not be incentive enough for investors to “buy the dip” in that mess. Compounding on top of an already weakened economy…the wheels of recession would already be in motion before the unemployment even started to grow. But I did hear this interview. Very well constructed plan and very solid and timely basis as well as proposed response.
At some point this so-called “boom” is going to end. Maybe this is a leading indicator. My guess, about the time the election is over we will know for sure, that is recession is coming, that is assuming Trump and the Fed can drag it out until then.
In my area of the south, over 25% live below the poverty line. There are very few jobs available to take anyone above $25k. A job is a job I suppose to the federal government, but even here, making below $60k just ain’t living.
What’s the old joke, “The President says he’s created 10 million new jobs, and I’ve got three of them.”
Yes, here at the home of Walmart, they all got a raise to $10 about 2017, they were replaced the next year with self-checkout. Laying off the disabled door-greeters made the stock raise though.
$10 per hour is 20K/year if you work full time. Who here last made 20K while in the workforce? 40-50 years ago I’ll bet.
Paulo, you just outed yourself. 20k/yr is probably more common than you might think, wouldn’t surprise me at all. Now if you mean a double income, that’s a different subject.
I’m pretty sure there are remaining jobs remaining for outsourcing to far away places, considering the huge ongoing support for the globalist labor arbitrage trade.
CCP currently has it’s sights concentrated on the global tech industry, and they’re making good progress.
B,
“few jobs available to take anyone above $25k. ”
People do not realize what a large percentage of jobs this is…even looking at 60k median HH incomes people need to understand the huge percentage of 2 earner couples (=2*just 30k).
A very, very large chunk of individual Americans make under 30k per yr…at their peak.
I read somewhere the the median income of the bottom half of wage earners is around $19,000
Big “heads-up”.
The plunge in payrolls occurred with a sharp plunge in base metals and crude oil.
Taking the Baltic Freight Rate from an already serious decline into free fall.
Industrial commodities turned down before the health scare out of China.
Exactly , it’s much deeper and broad based than the “Coronavirus” but that sure isn’t helping The equities markets are detached from reality due to the FED
The virus started in China in November, running hard in December, and went public in January.
Wuhan is the “Chicago of China”, and has been completely shutdown for a month now, I don’t even see long-haul trucks running the routes on the ‘silk road’ anymore, haven’t seen the trucks for over a month. Used to see them 24/7 every few minutes.
The demand for fuel in China has completely dropped, and started dropping in November.
Since early January with a majority of Chinese city’s in lock-down causes an enormous drop in energy consumption. Nobody is leaving their homes.
Regarding the Baltic-Index, stuff had been grinding to halt since Trump’s Taxes started last year. In the past year I have seen complete panic with the major shippers of China, seeing lots of containers being sent with just one pallet, as the container can be sold at destination and pay for the shipping.
But the real NAIL on the coffin is the virus which since December has caused a 50% or more drop in fuel demand. Should cause the international fuel prices to collapse in the coming months.
On the LinkedIn page of CoventryLeague, there are a couple of recent posts related to Ohio.
(1) A 50% surge in 2019 WARN notices (it’s called The Worker Adjustment and Retraining Notification Act), which requires employers to provide a 60 day notice to the state concerning any mass layoffs.
(2) The state’s public pension plan (OPERS) just announced cuts to benefits (will go into effect 2022) to stave off insolvency.
So, if you have a LinkedIn account, then just go to the company page and scan the last couple of posts because these are not on CoventryLeague’s Blogentary:
LinkedIn.com/company/CoventryLeague
If anyone has WARN data for other states, I’d welcome a link…
Let’s see majority of all new jobs now is ‘gig’, that be delivery, UBER, fast-food, ….
With the Virus deal, nobody should eat out, nobody should sit in a ‘taxi’, nobody should go out in public places
Just about everything that the ‘gig’ revolves around is being shutdown
So it wouldn’t be surprising that all the ‘gigs’, just dissapear
Nobody wants home delivered food anywhere on earth, in ASIA everyone is being told, no takeout, no home-delivery, not even buying ‘street food’, everybody is being told to buy your own fresh food and cook at home.
Also group eating is out. Fast-Food eating is out.
Sure a few people will ignore the above, but its already ALL in full effect in ASIA, and it will come to the West very soon, just need a few hundred more virus cases to cause a panic in the West.
“delivery, UBER, fast-food, ….” Necessary evil, down to competing for the nitty-gritty remains high school students traditionally occupied.
Remember what we were told; “Americans don’t want “dirty” jobs.”
Next phase, coding (aka: tech) will be outsourced as well.
“Next phase, coding (aka: tech) will be outsourced as well.”
Old news. The Indian capture of the American tech economy is all but complete.
Drag and drop websites and phone apps are not coding. Serious, difficult coding such as embedded systems started offshoring in a major way 10 years ago.
Vancouver BC Chinatown restaurants (really Richmond BC) is down 50-70% already according to a Global news broadcast last week. There are 2 Vancouver Coronavirus cases. 2!!
I’m going to town tomorrow for a dentist visit. My wife suggested we start stocking up, on top of our large amount of existing stores. I am hearing this often and I live in the middle of nowhere. Ahh, I’ll probably buy more than normal……
i got a seat without waiting at fay da bakery on mott street! that never happens. before the corona virus, the seniors would buy one bun and tea and sit there for hours. now, they are all staying home. and we don’t have a single documented case of novael corona virus here.
The next five years will be peak retirement season for the baby boomers. Even if many keep working part time, many of their former jobs may be eliminated. Looks like the pie keeps shrinking.
Apropos of Coronavirus, a Harvard Prof. of Epidemiology gave an interview published today. A few key snippets:
“This is really a global problem that’s not going to go away in a week or two.”
…
“In terms of the so-called “R-nought,” or how many secondary cases a single case infects, experts’ assessment is getting tighter around a level of transmissibility that’s perhaps lower than SARS, which was about 3 and higher than pandemic flu, which can be up to about 2. But what makes this one perhaps harder to control than SARS is that it may be possible to transmit before you are sick, or before you are very sick — so it’s hard to block transmission by just isolating confirmed cases.”
…
“On severity, estimates are that it’s worse than seasonal flu, where about one in 1,000 infected cases die, and it’s not as bad as SARS, where 8 or 9 percent of infected cases died. I’ve been working with some colleagues on estimates. They’re preliminary still but bounded by those two. That’s a large range, however, so the important question is where the final figure ends up, because 3 or 4 percent of cases dying would be much more worrisome than 0.4 percent.”
…
“There’s likely to be a period of widespread transmission in the U.S., and I hope we will avert the kind of chaos that some other places are seeing. That’s likely if we continue to be prepared, but I think it’s going to be a new virus that we have to deal with. That won’t be because the United States government has failed to contain it, it will mean that this is an uncontainable virus. If we’re dealing with it, it’s because everybody’s going to be dealing with it. I think that’s a likely scenario.”
…
“I think we should be prepared for the equivalent of a very, very bad flu season, or maybe the worst-ever flu season in modern times, since we’ve had ventilators and been able to provide intensive respiratory support.”
https://news.harvard.edu/gazette/story/2020/02/harvard-expert-says-coronavirus-likely-just-gathering-steam/
Yeah, the apparent complacency around covid-19 (novel coronavirus just got a name) is frankly baffling. All professional opinion that I have heard so far on the outbreak suggests that this is a serious danger for the whole world.
And yet it appears that the main understanding people broadly have is that this is something that will blow over any day now, and that China is already in the process of firing up its economy to full steam again, and that Tesla will shortly be delivering hundreds of thousands of vehicles from its Shanghai Gigafactory.
Job is a human right. We need to force companies to hire workers at $15/hr. Also everyone gets a house and car and boat and free healthcare.
/sarcasm
Why pay $15/hr when you can hire a small army for the same, transport the finished goods with no import duty into countries that despite failing to service their obligations, still consider themselves developed?
Maybe just anecdotal, but in Sacramento, things have slowed down a lot in the last couple months, and most folks around me that had an easy time finding jobs / gigs are telling me they are having a much harder time since the end of last year. Its going all around now and the slowdown is obvious.
I’ve been seeking full-time tech or engineering for a while – but all I am seeing is very short contracts, with equally short extensions. Recruiters are optimistic that it will pick up in February and March, but I’m not seeing a lot of action. Not sure the catalyst, but something seemed to break, and now they are closing postings, seemingly unfilled after several months.
On the bioinformatics side – COVID19 seems to have some serious reasons to be concerned – and maybe the accelerant one way or another. Remember, $100 goes a long way towards preparedness: some emergency food and water, disinfectants, first aid household supplies and some ways to entertain yourself. Disasters of some sort are always inevitable, and physical insurance is best to have in place before such things.
The failure of Just in Time supply lines is pretty amazing to see start to unfold – you really need 1-month isolation on products, and from what I can tell, things like Car Manufacturing are feeling JIT failures heavily already.
Yesterday I had Comcast cable guy come to house in the east bay, we were talking and he said that cable tv is getting hit hard by streaming and comcast just said they will be laying 1000 cable installers/repair.
Walmart aging door greeters where replaced by Ivanka college grad
millennials online pickers.
If coronavirus will cause panic, they will get a lot of action.
I know of companies that have had Jobs Available sign out front for 10 or more years. I think it is more a fishing expedition. These companies are job shops.
Interesting for sure as a potential leading indicator. When will we see an update on the commercial and industrial loans?
On another note: can anybody give any instruction on how to go long volatility? I need to be able to use an ETF or an ETN & I don’t want to trade this, but instead make Long Vol part of my portfolio for the long haul.
I got this idea from Christopher Cole of Artemis Capital Management
He has what he calls the 100 Year Portfolio (I believe it’s also called the Dragon Portfolio.
I can pretty much replicate the rest of the Portfolio, but the Long Vol part is difficult without a hedge fund. I found one ETF (XVZ) that maybe could be used long term and another that’s an ETN (VXZ) that I suspect is a vehicle for short term trading. This is to gain Tail Risk portfolio protection- Wing Hedging. I know that it loses money most of the time, but it makes up for it in short boughts because it is highly uncorrelated to the S&P & Equities & Bonds in general.
The CTA part I believe I can just do owning some individual Commodity Equities combined with a Commodity ETF like DBA, or RJA.
Thanks for any advice here.
The Federal Reserve will create as much money as necessary to prevent an economic crash. Besides buying most of the Treasuries, they’re growing theyre asset sheet (putting $ indirectly in to the stock markets).
They’ve stopped growing their balance sheet as of the end of Dec:
WisdomSeeker, You’re right about the ZeroHedge trope.
However, I think ZH was quite transparent in its charts and source data.
For example, it used “Waiter & Bartender” to make a point about the surge in jobs under the FRED category “All Employees: Leisure and Hospitality: Food Services and Drinking Places (CES7072200001)” and compared it to the plummeting of jobs categorized as “All Employees, Manufacturing (MANEMP).” No hidden agenda – ZH disclosed this data/descriptions in the first paragraph of its blog.
I’d encourage anyone to view the FRED data going back to at least the 1940s (mfg) and you’ll see a disturbing pattern. The turning point was 1979/1980 and the initial downturn/job losses happened quickly (~3 years).
Mfg jobs (often decent paying ones):
Mid-1979 (19.5m);
mid-1990 (16.6m);
mid-2010 (11.5m);
mid-2019 (12.8m).
Now look at the Food Services and Drinking Places category (what ZeroHedge calls “Waiter & Bartender” to get people’s attention and wake them up from their slumber):
Mid-1979 (no FRED data w/ this classification)
Mid-1990 (6.5m);
mid-2010 (9.4m);
mid-2019 (12.0m).
So, from 1990 to 2020:
* Mfg jobs declined by 3.8m jobs (or -22.9% of base)
* Food Services and Drinking Places jobs increased by 5.5m (or +84.6% of base)
ZeroHedge justifiably used the “Waiter & Bartender” trope to make a point that is difficult to rationally refute by using objective FRED data.
** In less than one generation (since 1979), the U.S. has lost more than one-third of its mfg base (in number of jobs)!
** “Waiter & Bartender” jobs have likely tripled in number of jobs since 1979 (it has practically doubled since 1990, after all).
Here is CoventryLeague’s Blogentary that referenced the ZH post and source data (c. 2013):
coventryleague [DOT] com/blogentary/2013-jobs-manufacturing-vs-waitersbartenders/