When Friday rolls around in the Wall Street Daily Nation, we whip out the charts.
After all, it’s much easier to convey a point in pictures than words, right?
- ArcelorMittal’s Q2 2016 Earnings Preview: Cost Reduction Initiatives To Offset Impact Of Weak Steel Prices
- Shell’s 2Q’16 Earnings Expected To Suffer As Commodity Prices Remain Depressed
- UTC Q2 Earnings: Company Beats Earnings And Revenue Estimates; Reaffirms Guidance
- Freeport-McMoRan’s Q2 2016 Earnings Review: Weak Copper And Oil Prices Negatively Impact Results
- Akamai Falls On Missed Earnings & Bleak Future
- Volkswagen Earnings Preview: Amid Scandal Blues, Expect Margin To Be Hit By Added Expenses
With that in mind, this week we’re serving up a snapshot of the U.S. banking system. (Hint: It’s healing.)
We’re also putting the latest jobs data into perspective. It’s still not pretty.
And last but not least, we’re dogging the upcoming Facebook IPO yet again. For a perfectly legitimate reason, of course.
Don’t Bank on Bank Failures
A bank stock, Karim? Really?
That takes some serious chutzpah. But I’d have to agree.
The banking sector suffered mightily through the financial crisis. Literally hundreds of banks went belly-up. But time heals all wounds. And the healing is definitely under way.
So far, the FDIC has only shuttered 23 banks. That’s down from 40 failures at the same time last year. And well below the pace in 2009 and 2010.
The unofficial list of problem banks is falling, too, according to CalculatedRiskblog.com.
Bottom line: Since banks got us into this whole mess, they’re going to have to lead us out. And although the fundamentals aren’t top notch, they’re improving. And that, my friends, is reason enough to be selectively bullish.
My True Stance on Unemployment
Readers reamed me for suggesting last Friday that the employment situation in the United States is just hunky-dory. That’s not what I said.
I merely pointed out that the U.S. youth unemployment rate is nothing to moan about compared to youth unemployment rates in Europe.
I’ll be the first to tell you that the jobs picture in the United States remains less than rosy. Just look at the labor force participation rate, which I called to your attention in early February. It measures the percentage of working-age Americans that are employed or unemployed, but looking for a job. And it keeps dropping.
The current reading of 63.6% is the lowest level since 1981.
Then there’s the fact that a massive unemployment gap remains. Job losses from the start of this recession are far from being recouped in percentage terms.
Bottom line: We’re witnessing a recovery in the employment market. But it’s a mind-numbingly slow and fragile one.
Facebook is NOT the Next Google
It doesn’t compare! Case in point: revenue growth.
In the four quarters preceding its IPO, Google’s sales more than doubled. Facebook’s revenue growth doesn’t even come close to measuring up to that standard. Heck, Facebook’s doesn’t even compare favorably to Zynga.
That’s a bad omen. As you know, Zynga’s IPO has been a total bust, which I predicted.
Bottom line: I still recommend you avoid Facebook’s IPO like the plague.
That’s (almost) it for today. Before I sign off, I need to extend some heartfelt thanks.
In response to last week’s appeal for help, you’ve given more than $5,000 to Operation Smile. That means at least 20 needy children will receive life-changing surgery. Thanks for making it possible.
If you still want to help out, you can learn more here. Thanks again for all your support and encouragement.