UNEMPLOYMENT SURGES TO 10.2%, LOSSES WORSE THAN EXPECTED
Not a pretty set of numbers. The recession on Main Street continues as the unemployment rate jumps to 10.2% and losses for October come in at 190K. This is substantially worse than the unemployment rate of 9.9% and 175K in losses that analysts were expecting.
The one bright spot in the report appears to be the 0.3% increase in hourly earnings. All in all, it looks like an ugly report at first glance. The dollar is surging on the news as the risk trade comes off the table. Futures are down nearly 1% following the news.
At this point in the chess game you have to start thinking several moves ahead. The unemployment rate is likely to remain very high into Q1 & Q2. What will the chatter from Main Street be in June of 2010 if the unemployment rate is at or near 10% and the Fed and White House continue to ramble on about their recovery that has been fictitously printed on your devalued currency?
I’m inclined to agree with Barry:
http://www.ritholtz.com/blog/2009/11/non-farm-payroll-preview/
TPC Reply:
November 6th, 2009 at 6:12 AM
This market would have ripped higher on better than expected figures. Also, I think data such as this is proof that you can’t print your way to prosperity. As great as this liquidity injection might feel in the near-term, at some point people are going to realize that it is not the foundation for a sustainable recovery.
Octopus Reply:
November 6th, 2009 at 6:22 AM
I think that now there’s a decent risk reward ratio to short the mkt again (i.e. you don’t have to place stops too far away)
TPC Reply:
November 6th, 2009 at 6:22 AM
Futures don’t seem to be taking the number too badly though….It looks like investors are looking beyond the report. At what? I am not sure, but apparently jobs don’t matter too much as long as the Fed is forcing investors out of cash and into risk assets.
Octopus Reply:
November 6th, 2009 at 6:25 AM
I agree, this is the risk of the trade now
I guess you can give Helicopter Ben some credit for saving us from out and out deflation, but the recovery myth just got exposed. You can’t fight a debt problem with more debt, and a “jobless recovery” is simply an oxymoron. I wouldn’t be surprised to see a 3% down day today.
Rob Reply:
November 6th, 2009 at 6:25 AM
I wouldn’t be surprised to see a 2% up day today. Down 1% in the morning and then blow out all the new short positions.
TPC Reply:
November 6th, 2009 at 6:30 AM
Exactly….The herd is still being forced into stocks.
VCC Reply:
November 6th, 2009 at 6:38 AM
Not today..the headline numbers were just too dismal.
Rob Reply:
November 6th, 2009 at 6:38 AM
The big sell of will probably be on good news that offers a hint of a reason to tighten global monetary policy.
Bad news is good news and good news is bad news in bizzaro market.
Rob Reply:
November 6th, 2009 at 6:44 AM
I stand corrected. No 1% down. Just straight up.
To put things in perspective aggregate weekly hours are the same as they were in November 1997.
U1 Percent Of Civilian Labor Force Unemployed 15 Weeks & over is now 5.7%. The highest value in prior recessions as 4.2% in 1982-1983. No need to mention that U6 is 17.5% and rising fast.
The good news is the average weekly hours didn’t fall below 33.0 (the lowest since the BLS started recording that stat).
AIG reports a nightmare quarter, Fannie Mae asks for $15B more, UE rate at 10.2% and stock futures aren’t even down .5%. What have all these bailouts done for Main Street? I mean, it’s great that we’re not cliff diving any longer, but how long can we sustain this Fed induced recovery before we simply lay the foundation for the next great disappointment?
We need to fix the fundamentals problems as opposed to trying to cover them up with liquidity.
Is anyone else watching Bloomberg? They just had 3 different guests on who all said the same thing in the last 15 minutes: this market will end positive because this data means interest rates are staying low.
It looks like everyone is beginning to price in the low interest rate environment. Who is left to buy the liquidity rally as the underlying fundamentals remain weak?
TPC Reply:
November 6th, 2009 at 6:42 AM
There you go Nasdaq positive. I think this appropriately sums up the mentality of investors right now: “fuck it dude, just buy”.
SS Reply:
November 6th, 2009 at 6:45 AM
Ha. That’s exactly right!
Octopus Reply:
November 6th, 2009 at 6:49 AM
You are right! You can’t fight this mkt now.
The Finn Reply:
November 6th, 2009 at 9:39 AM
That’s what they want you to belive. This market will end negative. I think Wall Street will start to worry about what Christmas shopping is going to look like with these high unemployment numbers.
My company (Fortune 500 IT firm, privately owned) just gave layoff notices to 5% of the workforce yesterday. The reason they gave was revenues so far were well below expectations set at the beginning of the year, as well as exhausting other cost cutting measures. This may be anecdotal, but I’m not seeing any recovery.
I think the new motto is: “is what’s bad for Main Street is good for Wall Street!”
The dollar tanks, stocks rally. All hail Bubbly Ben!!!!!!!!!!!!
The real question is: so we all know the real economy stinks. We also know Ben is pumping billions into the markets every day. So, if we’re in the midsts of another bubble do we buy now or do we wait it out for the inevitable bust?
The CEO of the world’s largest independent auto parts maker is optimistic on US light vehicle sales for 2010. He thinks they will hit 11 million units. That is about the same level as 1969 (30 years ago, population 30% lower).
Of course, lots of workers will no longer be needed. Competing suppliers will go bankrupt. But it is good for his company because they will pick up market share and when the market rises back to the sales level of the mid 1970s, their business will turn profitable once again.
TPC Reply:
November 6th, 2009 at 7:47 AM
Rob,
You’re being rational and doing some real analysis. Don’t you know you’re just supposed to go buy stocks? Everyone is doing it. It’s the new “in” thing.
The Finn Reply:
November 6th, 2009 at 9:28 AM
Yes, but he did some mistake.:)
“That is about the same level as 1969 (30 years ago, population 30% lower).”
I still do not understand why people do not want to get in the AAPL, INTC, GOOG, AMZN, GLD trade. If you owned a stock that was continually issuing new shares every week would you want to own it, obviously not as you would get diluted. So why people want to sit cash/UST as the supply expands and your dollars become diluted is beyond me.
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