Getting Bleaker

In "Not Very Bright," I noted that equity investors are pretty clueless when it comes to assessing and comprehending the bigger picture. Given that, maybe they took the news detailed in the following Calculated Risk post, "Small Businesses Still Reluctant to Hire," as a sign that small businesses are interested in acquiring stocks, not employees? Otherwise, it's hard to see any other reason for today's rally than manipulation or pure, unadulterated stupidity.

From Sharon Bernstein at the LA Times: Jobs outlook for small businesses may be getting bleaker

Intuit Inc., which provides payroll services for small employers, says the nation's tiniest companies had fewer new hires last month than any time since October.
...
To calculate its estimate of national hiring, Intuit uses payroll information from its 56,000 small-business customers. The company defines small businesses as those with fewer than 20 employees.

Intuit's data show that small businesses hired just 18,000 additional workers last month. That's still positive territory, but it's less than a third of the 60,000 that were added in February, when it seemed that an employment recovery was imminent. Additional hiring dropped steadily during the spring, to 40,000 in April and 32,000 in May. Another payroll company, Automatic Data Processing Inc., painted an even gloomier picture, saying that small businesses lost 1,000 jobs nationwide in June.

According to surveys by the National Federation of Independent Business (NFIB), the problem isn't lack of financing or government regulation - the problem is a "shortage of customers".

NFIB chief economist Bill Dunkelberg recently said: “What small businesses need are customers, giving them a reason to hire and make capital expenditures and borrow to support those activities.”

Of course, regardless of how ignorant the bulls are about the world around them, it seems pretty clear that the concerns of small businesses aren't only relevant to that segment of the economy. If the following chart is any guide, I don't expect we'll be seeing a recovery in the overall employment market anytime soon:

 

Comments

[W.C. Varones]

On the other hand, they could just be scrambling to buy something tangible.

I am long stocks, real estate, commodities, gold, silver, food, guns, and ammo, and I expect that portfolio to seriously outperform Zimbabwe Ben dollars and Timmy the Tax Cheat T-bonds over the long run.

[Marion Shaw]

Given the state of affairs in small business, which we
constantly hear is the "backbone" of American commerce,
this article is a glaring contrast to a guest on tv
yesterday who said that corporate America was doing
just fine. Has anyone ever really determined what
percentage of corporate profits are earned overseas
and stay overseas, without taxation? Has anyone ever
determined how many actual American citizens are em-
ployed by corporate America and who is exempt from the
nocuous little rule that if you deposit more than
ten thousand dollars into your bank account, somebody
comes a runnin' to see where you got that money.

[Mark Wolfinger]

Calling the bulls 'ignorant' detracts from your message. You know this market is not suddenly going to 'change it's mind' and drop to the level at which you think it should be trading.

Have patience and present your evidence. The market can remain irrational for a very long time.

[roger]

For those who believe that the so called austerity
program works,watch what happens in the UK..it will be
very interesting.On the other side of the coin,Government
spending or printing are equally disastrous and to put the
final nail on the coffin, the last thing humanity needs is
a good old fashion recovery.

[sharonsj]

I have endlessly repeated this: you cannot spend what you do not have. The problem with middle America is that expenses have gone up dramatically but wages have not. The media completely ignores price inflation. Just because the price of homes tanked, or you can buy clothes at a deep discount, doesn't mean the cost of everything else hasn't gone up. It has.

In the last two years, pet food is up 40%, sugar is up 35%, packaging has shrunk by 1/3 but the price remains the same. Fresh fruits and vegetables are outrageously expensive. Sea food is out of sight unless you are willing to eat toxic, bacteria-laden farm raised fish from China or now, thanks to BP, from the Gulf Coast.

My school and property taxes keep rising despite the housing bubble. My electric bill is due to go up by another 50%. The satellite connection keeps going up (and I need one because I'm in a mountainous area). The only way I'm going to pay for this is if I sell off my belongings. Haven't you noticed the explosion in yard sales and consignment shops...?

[Dan Smith]

Interesting tidbit: My brother in law is a headhunter and told me that his major clients have stated they do not want him bringing them potential hires that are currently unemployed.... he is not sure of the reasoning but the message has been clear.