Employment, Earnings and Technology’s Endgame

Mike Williams | 11th February 2019
Categories
Letter from America

Forget the false news you hear all the time about how US jobs growth is all about part-time positions getting filled.

That "fact" could not be farther from the truth:

Scott Grannis of the Calafia Beach Pundit shows us this in the chart above.

Interesting, eh?

Part-time employment has actually been flat for the past decade!  Relative to total private sector employment, part-time employment has shrunk impressively over the course of the recent expansion.

Earnings Again

Folks, stats are helpful but let's deal with them as we should; as a sign that we cannot be swayed by panic.

The long-term value of the Barbell Economy™ - as the Baby Boomers hand over the economic reins and reign to the Millennials of Generation Y - does not change on a dime or in a quarterly report.

Emotions, however, do. And they have no value in long-term wealth management. 

By the way, the really busy weeks for this earnings season are just ahead.

And we’ve had weeks of headlines telling us unequivocally that earnings were supposed to be horrible this quarter. 

So, here’s some numbers to put against those stats:

  • We should expect right around $170 - $172 in earnings from the S&P 500
  • That number in 2020 - which will increasingly be focused upon by early summer - should approach $178 - $182, and
  • Using a reasonable 17.5-18 P/E in a world of 35-40 P/E 10-year bonds, it puts you at roughly 3150-3350 on the S&P 500, by end of year 2020.

Patience is the name of the game, especially when it's ugly out there.

Trying to assume there is some "reason" for every little daily/hourly market response, action or event is merely a symptom of the media charade. 

Billions of things happen all over the world and much of the news, though creatively delivered will not have a great deal of value.

Don't Overlook What's Really Happening

Right now the whole book is being rewritten, and the entire world as we know it is rolling through a pace of change that no one has ever lived through.

The noise, if you let it, will not only overwhelm you but it can push you off your long-term path.

Don’t let that happen.

Generation Y will set records in all areas of change every year for at least the next three decades.  Momentum will build and tension will feel out of control at times. Every company will become a tech company if they employ Gen Y kids.

And eventually they all will.