Monday, May 18, 2009

Jaw-dropping chart

Courtesy of Chart of the Day

According to the chart itself, this is the inflation adjusted earnings of the S&P 500 going back to 1935. This is an unprecedented crash in corporate earnings. It also explains why companies are shedding employees. They cannot afford to keep them with no earnings to pay them. Just in case you were confused, and wondering if things are getting better...

I have been surprised by the legs of the recent rally in the stock market. The length and breadth have been decent, although "the surge" has been on low enough volume to make it suspect.

Moreover, I have been deeply skeptical about what job growth/income is going to drive the economy into the positive territory. Most of the experts all seem to see positive growth in the second half of this year.

From what rebound in jobs? Automotive? Housing construction? Newspapers? Retail shops? Government work? Casinos? Last time I checked, all these sectors of the economy (as well as many others not mentioned) were shedding jobs by the thousands.

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