More People Looking For Work

The jobless claims report came out today much higher than anticipated.  I won’t bore you with the numbers but the bottom line is more and more people are looking for work as this economy continues to struggle.  I believe this economic recovery will look like an “L”, not a “U” or certainly not a “V” like 2002.  This is worse and longer in duration in my opinion. 

Many will argue that the stock market looks ahead and will anticipate a recovery so by the time you and I see a recovery, the market will be much higher.  Although this is true, we’re not even close to that economic recovery.  The leading indicators I look at the economists I follow show more of these weak reports coming in the next few months.  So, we’ll have our rallies from time to time but when will it bottom for good?  Who knows.  I’m not going to and you shouldn’t try to predict or game that.

I think our economy has perhaps avoided a collapse but there is a lot of damage to repair.  That just takes time to sell those empty homes (lower prices will help) and get people back to work.  I belive this will look more like 1991 than 2001 & 2002.  A more longer term slowdown.  The one thing that could change that is if global growth begins to re-accelerate and that is certainly a possibility.  This global growth story is something we’ve never seen before.  I think that’s what’s kept us out of a really deep recession so far.

Below is a picture of the continuing claims.  You can see that it’s still rising as more people look for work and it may even pass the number we saw back in the early part of this decade.  Also, think back to that time.  The market bottomed at the end of 2002 when that number started falling.  The stock market peaked when the number of people looking for work began to increase in late 2007.  Not a coincidence.


Jobless Claims

Let’s not over think this.  We’re in a tough economy right now.  The global economy is still very strong but slowing.  Stocks are adjusting to this.  When stocks run up, take profits and when great fundamental stories get too beaten down, buy them.  Also, I’ll continue to trade around the shorts meaning I’ll sell them when there’s too much fear and add them back on when investors are too comfortable.

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2 Responses to “More People Looking For Work”


  1. 1 Raja August 7, 2008 at 2:09 pm

    Karl,

    When you say “Also, I’ll continue to trade around the shorts meaning I’ll sell them when there’s too much fear and add them back on when investors are too comfortable.”, do you mean VIX? Looks like the current “comfort” level us 16 and “fear” level is “30+”

    Love your insights, both here and on the air…

    Thanks

    .raja

  2. 2 keggerss August 7, 2008 at 2:10 pm

    I’m not sure what those levels you reference but I’m talking about the Crazy Investor Indicator which takes into consideration the Vix.


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