Unemployment

Posted by Ray on October 1, 2009 under Main | Be the First to Comment

Unemployment tomorrow is going to be horrible, how do I know? Goldman upped its estimate from 200K to 250K and we know they got that direct line to treasury and those ‘advanced’ reports. Remember this happened in August as well and guess what, the numbers came in plus or minus 5% of Goldman’s estimates. I mean seriously, can you make it less obvious?

I did mean to post this earlier, so I am sorry, but if you followed my bearish tone then you would already own TIPS and 2 year treasuries and while you would not have done as well as equities you would have been up some 3.4% and 2%, respectively, in the recent months. That’s not too bad for bonds, but I even trimmed my exposure there just because things do not seem right. I did increase my exposure to PCY because it has been stable, it’s outside of the dollar, which will have a nice rally in the near-term, and I love emerging market debt. Outside of that when the dust settles I plan on jumping into the BRIC heavy and other foreign investments trying to leave anything exposed to US credit markets behind.

Of course, I will own some US stocks, but it will not be the largest holdings I have by any stretch of the imagination. As you all know this rally is done and rational thinking is about to bring us, in a very abrupt and radical way, back down to Earth. We have not had economic data that merited this type of rally to begin with, but what do I know. Anyhow, a couple of things made me chuckle, apparently Cramer, with his canny ability to pick losers, told everyone to buy CIT and Citi, CIT is dead and Citi is headed back to the $2 area.

The other vindication is the fact that David Rosenberg confirmed exactly what I have been saying all along about unemployment. During a credit collapse unemployment is a leading indicator, not a lagging indicator. I was beginning to think I was nuts, kidding of course, but hearing all the idiots on CNBC makes one nuts after awhile when you hear 550K a week job losses are a lagging indicator when the problem is defaults on loans and credit products, duh. I am still waiting to see the young idiot who debated Trim Tabs Charles Biderman last month claiming his economic indicators are “on fire” and GDP will be up”4 or 5% in the 3rd and 4Q09 and then some.” Based on the data from yesterday and the ISM today, car sales data, unemployment and pick any other horrendous data point you want I certainly don’t see 4 or 5% GDP growth any time in the near future, but that asshat did. Yeah, our educational system is fine when we are turning out clowns like that.

Yet, guess who continues to astonish me? Mr. Doom and Gloom himself Marc Faber who said things are bad, but said in March that we will have a major rally before a selloff happens again. Hmm, guess what seems to be happening? As evidence of his holinesses rightness I have included recent videos confirming it below, enjoy.