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Novembers preliminary -11,000 nonfarm payroll figures blew expectations out of the water. A few more of such surprises and we’ll be very close to the first interest rate hike in a long, long time. Which wouldn’t necessarily be a bad thing given the relationship between equities and interest rates.
But whether you believe the number to be accurate or agree with TrimTabs that the statistics are so massaged that they lose all credibility, it is a little too soon to start celebrating. By the way, TrimTabs believes that the number should have been -255,000 according to their own modified methodology.
Gather round and steady your nerves (or get ready to cry into your beer/Haagen-Dazs) as I present some sobering balance to today’s glowing report. First, of all, even if we believe the BLS numbers, this economic contraction has been nothing like the ones we’ve seen so many times in the past +50 years:
Source: Chart of the Day
Going forward, the Fed’s own estimate for unemployment is also quite gloomy:
As well, the duration of unemployment continues to into record terrain, rising from 25 weeks in August to 28 weeks in November. Many are obviously simply giving up after not being able to find a job and therefore, are taken out of the unemployment statistics. Turning things around, the employment to population ratio is still at a 26 year high at 58.5%.
While the major equity indexes peek above their October highs, there is significant loss of leadership. For example, Goldman Sachs (GS) topped out in mid October above $190 and has since slumped to $167. Apple (AAPL) technical outlook isn’t that great either.
Then we have Societe Generale’s top ranked global strategist, Albert Edwards, writing in a recent research report that the market will fall significantly below the March lows. And David Rosenberg of Gluskin Sheff, another prescient observer, argues that because of the collapse in credit as well as asset deflation, we are faced with a depression not a plain vanilla recession.
- 15.7 million American households, or a third of those with a mortgage, have
negative net equity…
- 17.5%, or 1 in 6 Americans, are either unemployed or underemployed.
- A mere 3.2% of respondents to the latest Conference Board’s Consumer Confidence Survey believe jobs are plentiful
- 1 in 7 Americans with a mortgage are now either in arrears or in the foreclosure process.
- Small business failures are up 44% year-over-year as was the case in Q3 this far into a Fed easing cycle.
- 1 in 8 Americans are now on food stamps and there are 239 counties where at least 25% of the population is on the program
- A 35% slide in home prices; a 50% plunge in commercial real estate values; and a 20% mall vacancy rate nationwide…
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