Market Commentary – September 8, 2009

Posted By on September 14, 2009

General Market Comment:    September 8, 2009

 The focus last week was on the August labor report and private sector indications of the recovery’s status . . . the takeaway is the economic indicators continue to outperform expectations much to the chagrin of the bears.

 Here is some color on the employment report you might not have noticed in the breathless reporting on the financial networks.

 From Bespoke Investment Group ( we get the following comment:

This morning’s employment report for August showed that non-farm payrolls declined by 216K.  This is the best monthly reading (if you can call a decline of 200K+ jobs good) in the ‘post-Lehman’ era.

ScreenHunter_01 Sep. 14 14.38

In the 12 months since Lehman’s bankruptcy, the US economy has now lost 5.8 million jobs, which is the largest 12-month decline in history.  In percentage terms, the 5.8 million jobs lost in the last year is equal to 4.44% of the total workforce.  Over the last seventy years, this level has only been breached during two other periods.

 From Scott Grannis at the Calafia Beach Pundit ( we found that layoffs “have all but vanished”

ScreenHunter_02 Sep. 14 14.38

Layoff announcements by corporations have fallen dramatically over the course of this year, providing strong evidence that the recession has run its course

 From Mark Perry at Carpe Diem we found the following note:

 The Monster Employment Index rose in August, seeing its highest monthly rate of improvement in four years, as a majority of industries, occupations, and regions registered increased online job availability following the slow summer hiring activity. The Index’s annual rate of decline continued to moderate, indicating some signs of improvement in underlying demand for labor nationwide

 The labor situation is improving – period – don’t let anyone lead you astray.  It will get even better this fall – just in time for the Q4 holiday season and entering 2010.

 We also got information on the rate of improvement in the economy from the ISM Survey data on manufacturing and non-manufacturing businesses last week.  The data is presented in the form of diffusion indexes where a score above “50” means the economy or the particular data set is expanding and a score below “50” means the reverse – falling of contracting.  The series that got my attention were the “New Orders”, and “Employment” indexes.  Both are sharply moving up.  New Orders leads growth in Employment.  The charts are obvious – have a look below.

 ScreenHunter_03 Sep. 14 14.39


 Here is one of my favorite charts – New Orders overlaying the Employment index.  You don’t need to have taken even high school statistics to see the correlation.  The sharp recovery in new orders is consistent with the comments I have made in the past about the weekly leading economic indicators recording the sharpest recovery since ECRI began keeping records in 1967.

ScreenHunter_04 Sep. 14 14.39 

Of course with the economic data recovering strongly we shouldn’t be surprised to see net earnings estimate revisions continuing to rise.  Rising earnings and rising stock prices . . . Hmmm . . . they go together like “peas and carrots” as Forest Gump might say – eh?

 ScreenHunter_05 Sep. 14 14.40

I continue to believe we will not see any material correction (i.e. down 10% or so) as we move toward Q4.  Q4 continues to shape up to be very strong.    


About The Author

Mr. Terry draws upon over 30 years of investment experience in the areas of venture capital, leveraged buy outs, foreign emerging markets and public stock markets. From 1976 to 1980, Mr. Terry was engaged in venture capital and corporate finance at First National Bank in Dallas. From 1980 to 1986 he was engaged in private equity investing in diverse industries. From 1986 to 1990 Mr. Terry was Co-General Partner of a private hedge fund affiliated with a high net worth Texas family office, involved in investment activities including convertible arbitrage, venture capital and strategic investing in public securities. From 1991 to 1996 Mr. Terry managed a team of four professionals to provide hedge investment services to high net worth clients. Hedge services included rigorous fundamental evaluation and technical analysis of portfolio companies. Prior to starting Aberdeen in August, 2001, Mr. Terry was a VP in the Private Client Services Group of Bear Stearns & Co., Inc. focused on technology and emerging markets. Mr. Terry has an MBA from Columbia Graduate School of Business and a BBA from Southern Methodist University. Aberdeen Investment Management, LLC is a Registered Investment Advisor in the state of Texas.


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