Really? The Recession is Over

What’s in the Szelhamos Portfolio?

RealityReality and reality don’t always coincide

The official word came out that the recesssion was over.

Unfortunately, as incomes were also reported to still be falling and the unemployment picture is only as good as the next revision, it’s hard to rejoice at that reality.

Especially when wages are now lower than when the recession began.

I’m certainly not one to argue with the proclamation, but since the recession was reported to have ended in June 2009, you’d think that enough time would have passed for some tangible obvious improvements.

Although I’m, not one to argue, by far those that posted comments on the New York Times report, took exception to the reality as reported. Although aomw of the recommendations may have shown an equally questionable understanding of reality.

Of course, talk of a “triple dip in housing” can’t be what recoveries are made of, but that’s the latest fear, which should be taken seriously if you believe in the reality that housing drives the economy.

Reality does sometimes have a way of catching up to the real reality.

Take the Occupy Wall Street situation.

No doubt that its been spreading, growing and gaining steam. It’s even being exported to other cities and college campuses, despite the fact that no one has actually reported on the aims and objectives of the original Occupy Wall Street group, much less the spin-offs.

But that’s changing. Today, camera crews were actually beginning to show up, demonstrating that media outlets are perceiving the reality of the situation, although maybe it’s just a slow news day, what with the Kardashians keeping a low profile, as they prepare for the upcoming Jewish harvest holiday of Sukkoth.

As if Jews didn’t have enough problems.

Fortunately, those problems don’t include the Kardashians.

Since I only watch CNBC and don’t have a Daily Show kind of staff to scour all the networks and cable stations, I can only comment on CNBC coverage.

And today, there was some. They were right there.

Despite the perceived reality that the Occupy Wall Street protestors were a collection of society’s professional laggards, John Carney reported otherwise.

In fact, they seem to be pretty mundane, having even organized into committees to establish standards of protest behavior. Doctors, lawyers and college graduates will generally do those things that reek of structure.

They even are reported to have a drug usage policy, and rather than being “use as much as you can, dude”, the policy is that there should be no drug use.

Advil is reportedly acceptable and there may be other exclusions for certain extraordinary circumstances, like needing a buzz.

That doesn’t really support the dirty hippy characterization, neither reeking in a literal nor figurative sense.

While there’s probably enough detestable behavior to go around, maybe much of it even emanating from Wall Street, pointing out the obvious may not bring us closer to a meaingful soluion, especially if the obvious is not the root problem at hand.

The reality is that the Federal Reserve’s mandate to keep interest rates low can only continue as long as wages stay low and discretionary spending is curtailed. Since their dual mandate also includes keeping employment high, at the moment that can only be accomplished by keeping the cost of employment low.

Remember “supply and demand”? What better way to bring unemployment down than by being able to pay the same total dolars but for more employees?

There’s lots of political pressure to go to a single mandate, although others would just as soon get rid of the Federal Reserve altogether and have you eat your gold reserves in the event of residing for extrended periods in your nuclear fallout shelter.

That solution probably isn’t very realistic.

The European Central Bank, on the other hand, has only the single mandate, that of maintaining price stability. But there too pressure is mounting to ease up on that mandate in order to get an employment surge.

Obviously, despite what the protestors believe, it’s not easy being a banker.

European bankers must especially be wondering “what’s next?”. The market was buoyed today by some rumor of a secret plan concocted by Merkel and Sarkozy that will make everything alright.

Actually, there’s not yet a plan. Instead, there’s a commitment by them to come up with a plan. This comes on the heels of the market moving news last week that the EU fiscal crisis was going to be taken seriously.

Small steps, but over-sized responses.

Sarkozy, being the chief proponent of politicizing the ECB in order to bring more full employment is the reality. But so too is Merkel, since she’s got the money, but maybe not the political will nor backing of her fellow Germans, much less the Slovaks and Maltese, who really have little at stake.

The fact that they have little at stake is reality, as well as the reality that they can throw a wrench into the works every bit as easily as Germany or France.

Greece could as well, but that would require some effort.

So that’s not going to become a reality because of the reality.

Whether today’s market move was a reality borne of a dream or not didn’t really matter to me. Although I watched my assigned shares of Halliburton, Freeport McMoRan and QQQ head even higher today, I didn’t mind, especially since I still owned more Halliburton and Freeport McMoRan shares.

As usual, despite knowing that entering the market to pick up shares whenthe market is already up 200 points isn’t a long term winning strategy, I was flush with cash and had to do something.

So I added to positions in Mosaic, ProShares UltraShort Silver ETF, Morgan Stanley and JP Morgan. I also picked up shares of Alcoa, despite the fact that it’s just moved up about 25% and reports earnings after Tuesday’s close, kicking off yet another earning’s season.

While the market stayed up, I sold calls on all of those, as well as Halliburton and British Petroleum, while I looked for more upside on the likes of DuPont, Rio Tinto, Transocean and some others, that I don’t yet have hedged.

The reality is that despite a nice week, the past few weeks had been brutal. Despite what looks like good news at the end of the day and despite the very nice month’s worth of options premiums, the bottom line hasn’t been terribly good.

Sort of like what most of the nation seems to be going through, as long as you believe that 99% represents a majority of the nation.

So is the recession actually over?

As a famous past President once said, “it depends on what your meaning of the word ‘is’ is”.

The term “jobless revcovery” is time worn, but that’s what it looks like we’re seeing.

The people that those occupying Wall Street are presumably protesting against try to paint a different reality.

They claim that they can’t find people to fill their jobs. They claim that people would rather collect unemployment for an extended period of time than go to work.

That reality may apply to some people, since just about every situation applies to someone. Who knows, Chaz Bono may win this season’s Dancing with the Stars.

Hard to imagine that could be reality, but it could.

For all I know, today’s reality was second guessed by those citing the semi-holiday feeling to the day, since there was no bond trading, in commemoration of Columbus Day.

You remember Columbus Day, don’t you? That’s a day that we commemorate something other than the reality of Columbus.

Suspending belief is sometimes a useful tool. It’s worked pretty well for Columbus and it can work for us, as well.

So, yes, the recession is over. There are jobs galore and throngs are gathering on Wall Street to demonstrate the overwhelming gratitude of 99% of the nation to those who actively seek a greater tax burden.

Reality is awesome.



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