April 2009 Job Report
Some points for consideration:
- Job losses in February and March turned out to be deeper, according to revised figures
- Employers cut 681,000 positions in February, 30,000 more than previously reported
- 699,000 jobs cut in March, more than the 663,000 first reported
- Unemployment rate climbed to 8.9 percent, the highest since late 1983,
- Total unemployment: 6.35 million
Source: http://finance.yahoo.com/news/Layoffs-slow-to-539K-in-April-apf-15180898.html
Canada reported a net increase of 10,000 jobs. Amazing? Not really, unfortunately. Many of the unemployed workers decided to be their own boss and to work for themselves.
Conclusion:
Headline numbers tell us that things are less bad, but let us look deeper. Let us look at U6. U6 includes part-time workers who want to be full time. That figure is 15.8%.
U6
"The comprehensive unemployment rate which is referred to as U6 and
includes part time workers that want full time jobs and discouraged
workers that have stopped looking but will take a job if offered, rose
to 15.8% from 15.6% and 9.2% in April 2008."
Source: The Big Picture by Peter Boockvar
Half-Truth is not enough: Other comments for last week
1. Why is WFC, and banks for that matter, rising on the belief that all is well based on an easy stress test? Bank stocks are up. Banks are selling shares to raise capital, using expensive high p/e shares (WFC). The bank is essentially improving balance sheets at the expense of the sucker investor. Show me actual improving earnings. Then I'll buy WFC.
2. China is a net saver. It has net cash. It is no longer buying and funding the U.S. in its spending spree. It might say it is, or it might do so to reduce its exposure to US assets. Whatever media says, China is not a net consumer. 10-year and 30-year Treasuries will essentially fall further than current levels.
3. USD may collapse, finally...but where is the money going to go? Another currency? Probably not. Gold? Maybe. Silver? Maybe. What about oil? Have small positions in all of those areas to hedge against the USD.
4. Inflation is a greater likelihood again at least in the short term, because energy prices are rising. You often hear of CPI ex-energy. Well, energy is still a big cost for companies and consumers...well at least the ones who still have a job and need to commute.
5. One abating decline in job losses does not make a trend. Watch price levels but do price in an economy but estimate total unemployment ~10% for the US. That equates to an additional 1M - 1.5M jobs lost. The bank stress test used 9.5% unemployment.
6. Commercial real estate is the next problem on the horizon that has not been priced into the market. Read up on it.
