GNP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 10

[DanS]

"And insignificant in the US ? Thou speaketh in riddles again..."

No, the reason why I said it this way is because I don't know on a comparitive basis where Europe and Japan are on the IT curve. Ahead of us? Behind us? If Europe is a couple of years behind us, then those comparitive figures should be "corrected" over the next couple of years. Of course, we'll each implement those tools a little differently, but by and large there should be parity.

"0.25-0.5 %points come from statistical gimmicks we don't use."

Ah, yes, the infamous Roland Fudge Factor.

[Roland]

"No, the reason why I said it this way is because I don't know on a comparitive basis where Europe and Japan are on the IT curve."

Wouldn't expect much difference. Much of the US early adoption was premature, and spending levels aren't that far apart....

"Ah, yes, the infamous Roland Fudge Factor."

Or the Bundesbank's.

[DanS]

"Much of the US early adoption was premature"

Huh? How can we know that? Yes, the spending was higher than a sustainable level. But companies profited by the spending--just not as much or as quickly as they had hoped.

edit: What do you think of the Euro warning Germany? Is Germany destined to go over the 3% deficit mark? Are there any proscribed remedial actions?

[Roland]

"Huh? How can we know that? Yes, the spending was higher than a sustainable level."

You just answered it.

"But companies profited by the spending--just not as much or as quickly as they had hoped."

Which is what I called "premature". Of course a lot has been simply put to useless purposes, too, but a part of that can be "recycled". But all that output from equipment makers, and the "output" of the dotbombs added to GDP. Profitable or not is no criterion for national accounts.

"Is Germany destined to go over the 3% deficit mark? Are there any proscribed remedial actions?"

Should stay in the 2.5-3 % region. At this stage the worst thing that can be done is an admonition.

Colon: About the ICQ - I meant the sept 11th effects + the reaction, where a lot of consumption was pulled forward.

[Colonâ„¢]

Regarding the wages pressure I’ve been talking about, the latest employment costs index indicated that compensations rose 0.9% Q-Q and 4.1% Y-Y in October through December, pretty much line with previous quarters.

Roland, so Q3 GDP should have been higher and Q4 lower?

[Roland]

Originally posted by Colon
Roland, so Q3 GDP should have been higher and Q4 lower?

My main point is that consumption was pulled forward from Q1. A good deal of that was met from inventories, so the effect on GDP is hard to quantify. As far as Q3/Q4 goes, some demand that was pent-up in September may have come through in Q4.

The bigger problem concerning distortions and noise in the numbers is that a bounceback from september is pushing up all those indicators that are measuring not performance as such, but performance growth or changes in performance growth. How much of that is sustainable, esp with the Fed's latest rampjob running out of steam, is the question... and well, it ain't.

[Roland]

Btw, where do Wallstreet and Washington get all those clowns from ? There was one who did not deidiotize himself to still claim US accounting standards are the best and US companies are the most transparent.

LMGDFAO...

[Colonâ„¢]

Roland, so in essence, your issue is with how people interpret data and not with the reliability of the data itself?
I agree that it’s fair to point out that people shouldn’t look too much into the 0.2% due something like zero-percent financing for purchasing cars but if the statisticians register this event, then they have only done their job.

[Roland]

Yes, that's why I wrote "yawn" at the spike in durables (I think that was where the issue started).

I have quibbles over several issues regarding statistics, but not about the q-to-q issues here.

[Colonâ„¢]

So you were preventively yawning at the commentators celebrating this? Can’t you be a bit clearer when you yawn next time?

[DanS]

Weird Unemployment Blip

Employment was oddly strong. Perhaps we ought to revisit the ECI as Colon suggests.

This was a faux recession, thanks to some fast acting by Bush and Greenspan and some necessary spending stimulus. Could be a double dip, as savings come in line, but most likely a pretty anemic turnaround unless the productivity numbers get an unexpected boost. Possible.

That's all the econobabble I can bring to mind today. 75 degrees and sunny outside.

[Roland]

"So you were preventively yawning at the commentators celebrating this?"

Yeah, sorry. I'm so used to the US cheerleading...

"Employment was oddly strong."

Where ?

"This was a faux recession, thanks to some fast acting by Bush and Greenspan"

ROTFL.... you sure you don't wanna buy that tunnel ?

[Colonâ„¢]

What interests me most about the strong compensations growth (assuming it remains) is the cause. Back then, at the heights of the bubble several commentators warned on the risks of the increased use of stock options. (which also subdued wages growth at the time) They stated that if the bubble pops companies would be forced to increase traditional remuneration to compensate for the decreased profits out of stock options and I wonder whether this is happening now.

[Roland]

That may play a role. More importantly, I'd say it is a sectoral issue. In say healthcare and some construction activities and for bancruptcy lawyers, there is a lot of demand, their pay rises. But the dotcom or manufacturing or Nortel person won't get a paycut, but rather a layoff.

[Colonâ„¢]

Probably yes. However, it would be easier to draw conclusions if I’d know how big the use of stock-options really was at the time and is now. IMO I’d also be easier if the statistical agencies like BLS wouldn’t have this tendency to lump service industries together.