US unemployment data stalls financial markets
Posted on 01 April 2010 with 2 comments from readers
A private US unemployment report from ADP yesterday showed an unexpected fall in jobs by 23,000 in March. This data suggests that the official US government unemployment survey due out tomorrow may not show the expected 184,000 fall in the nation’s jobless.
That said the ADP data was the lowest increase in US unemployment for two years and job losses are clearly slowing down. Still the Dow Jones closed down 0.47 per cent on the day.
Friday’s jobs data
Markets will not be impressed on Friday with disappointing unemployment numbers. The US economy has shed 8.4 million jobs since the recession started in December 2007, the biggest collapse in employment since the Second World War.
The official unemployment rate is 9.7 per cent but when those no longer registered as seeking employment are included this rises to above 15 per cent. Visitors from Arabia say that US unemployment is noticeable now.
High levels of unemployment hamper a recovery in the US housing market, a key driver of demand in the economy, and depress consumption and consumer confidence.
Factory orders have shown a very modest gain from a low base, which has been jumped on by economists as signaling a continued recovery.
Hesitant recovery
But the Institute for Supply Management-Chicago said its business barometer fell to 58.8 from an almost five-year high of 62.6 in February. This is viewed as a forward indicator for manufacturing and a figure greater than 50 signals expansion.
ArabianMoney has been amazed by the resilence of US stock markets in the face of such clear evidence that the economic recovery is at best fragile and for many unemployed persons non-existent. There is no reason to think a V-shaped recovery is in progress, and yet that is what highly valued stock markets indicate.
The scope for disappointment to the downside is enormous, and when stocks reverse the rush for the exit is likely to be particularly dramatic in view of the hedge fund replication strategies of many institutional investors. They can push the button and sell, and will all do so together when the time comes.
That moment can not be far away but ArabianMoney has given up trying to call the top as it seems impossible to second guess the optimism of US investors and the manipulation of this marketplace.
2 Comments posted by readers:
And once again, the head of the New York ‘Federal’ Reserve Bank just used the words, ‘extended period’ to describe the future of the Bank’s zero interest rate.
The rally will continue, probably into 2011, unless oil really spikes. If gasoline goes up to over $4 a gallon in the USA, even free money won’t keep the bubble inflating. But that is unlikely, until sometime in 2011.
Right now, CNBC TV is doing a special on the, now bankrupt, Enrob, ah, I mean, Enron. Crooks, liars, and nuts were running that giant con game. I’m not kidding! Of course, the politicians and accountants that they bought helped them steal. Nothing unusual about that. Not these days. Wall Street was in on the crimes too. I wonder how many people their phony California blackouts killed?
One more thing, CNBC forgot to mention the electric company lineman (a very hard job, hot sun, cold snow, a mistake & you burn, kind of thing) that lost his life savings after the electric company that he worked for, was bought by Enron. His stock became worthless as a result of the bankruptcy. He is now subsisting on Social Security.
Data doesn’t mean anything these days. Markets climbed on Friday and will continue to do so on Monday. My guess is $90 for oil next and then maybe even $100 by summer time. Once we pass the 11000 mark and the 11250 mark we should be seeing 12000 after. Most of the little guys and investors are out of the market now. The only ones holding are the big guys and the market won’t drop until they dump. They won’t dump until they get enough buyers coming in and we haven’t seen this yet as volume shows. All manipulation these days in the US.
Asia on the other hand is a different story.