Homes & Jobs

We know that the consumer is 2/3 of the American economy.  So, with home prices falling and home equity withdrawal at basically zero now after being so high for so many years, it’s no shock that spending is falling and hurting the economy in a bad way.  On top of that, you add more and more people losing their jobs, and you have a struggling economy which leads to a struggling stock market.  This is why you hear so much on the news about upcoming jobs reports.  Will they be bad?  Will they get worse?  Yes & Yes.

Below is a picture I’ve posted before which is the unemployment rate (inverted) on top of the S&P 500.  The latest unemployment rate is 6.5% and some estimate it could reach 9% by the time it’s all said and done.  You’ll notice the stock market leads good economic data and unemployment turning around.  However, on the way down, it lags.  Perhaps we (the stock market investors) are optimistic people and then we’re in denial when things get bad.  Here’s the question I get a lot:  “Hasn’t the stock market discounted the bad news?”  My answer is essentially no.  The reason I say that is because I believe the market discounts out 6-9 months.  Based on all the research I’ve done, I think the economy will be worse 6-9 months from now, not better.  That means I’m not real excited to load up on stocks just yet.  More importantly, I don’t want to buy until I see some commitment by others to buy equities.  Sure, I may do some trades but I’m keeping it light.  All that is going on right now is trading, not investing.  Feel free to participate in the trading as there are opportunities.  Volatility can be a good thing.  Just be careful.

unemployment-rate

Advertisements

0 Responses to “Homes & Jobs”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s




KARL’S TWITTER (www.twitter.com/karleggerss)

December 2008
M T W T F S S
« Nov   Jan »
1234567
891011121314
15161718192021
22232425262728
293031  

%d bloggers like this: