It’s another new new unemployment record, America! The happy month of March saw 669,000 U.S. jobs vanish, bringing the jobless rate up to 8.5% — the highest since the end of Reagan’s Lil’ Depression at the end of 1982. About 5 million jobs have now been lost in this current Great Recession. And stocks are on fire — the Dow’s over 8,000 again!
This always seems weird, with these Economic Downturns, how at some point absolutely nobody can ever predict with any certainty, the markets turn around. How can stocks rally when these awful unemployment numbers keep coming out, month after month?
Because! Also, there are Other Indicators, which are looking a little bit hopeful. Here are the big ones, today:
- The G20 meeting actually accomplished a trillion-dollar stimulus bill, hooray! And it looks like they’ve agreed to avoid the worst sort of protectionism that made the Great Depression so “great.” [MSNBC]
- American mortgage rates hit an all-time low, 4.78% for a 30-year-fixed, which means you can probably buy a pretty decent foreclosure today and the payment will almost certainly be (and will stay) less than your rent. [Reuters]
- And that small uptick in pending home sales seems to be supporting this “now people will buy” theory, especially with the FHA now guaranteeing a third of all mortgages, which you can get into for as little as 3.5% down. (Yes, this may also cause a whole new wave of foreclosures, unless the FHA starts cracking down on fraud-o-lenders and/or real-estate prices stabilize.) [Forbes]
- China’s manufacturing is rising, for the first time in six months. Somebody’s starting to buy some more shit somewhere! [Bloomberg]
- The main cause of the financials rally is this new rule from the Financial Accounting Standards Board, which takes effect as of yesterday (the beginning of the second quarter) and will change the way banks are forced to value the shitty mortgages they’re holding — the “mark to market” thing. Never mind, it just means banks will officially have smaller losses on this trash, which may have the weird effect of making the things worth more, in a recovering market. WTF, right? [MarketWatch/New York Times]
- Unemployment is what’s called a “lagging indicator.” A recession is well on its way before companies start laying off workers, and a recession is usually over for six months before companies start hiring people back. Sucks, but it’s true. [Bloomberg]
- Facebook is about to do an IPO. Jesus, when’s the last time you remember hearing about a tech company with no revenue or business model doing a public offering? Web 3.0, bitches! [Breaking Views]
{ 48 comments }
Unemployment is actually a nagging indicator.
Also, stock prices go up because the more jobless there are, the lower the wages employers have to pay, the higher the profits corporations make and, shazzam, the higher the value of their stock. Screw labor! Capitalism is here to stay!
> The Repugs new budget came out yesterday and shook the world.
> Newt embraces Papism and idol worship.
> Coulter receives surgically implanted stretch marks to signify that he is anti-abortion.
Awesome! Break out the Visa Card! Humvees and Useless Comsumer Goods for everybody!!! I’m gonna buy solid gold paperclips and a gazpacho maker!
[re=279399]charlesdegoal[/re]: Not quite, but everybody has a theory, right?
How can stocks rally when these awful unemployment numbers keep coming out, month after month?
Because the interests of shareholders (Capital) can be directly opposed to the inerests of Workers.
You Americans need to brush up on Marx.
See? Fox news is right. Obama is bad for the the stock market.
Again, I am breathlessly awaiting the siren on Drudge and for Shithannity to aknowledge that this is due to the Republican budget released yesterday…
Facebook is about to do an IPO.
*fap fap fap fap fap*
Can you feel it? The trickling down! It tastes like Hope.
See? Socialism works! Hooray! Suck it, Glenn Beck.
I’d argue that stocks go up and down because everyone’s making emotional decisions on imperfect information. The process of deciding whether to buy or sell is really no different than the process of deciding whether or not to call the girl who gave you her number at Marvin’s last Friday night.
[re=279414]Mild Midwesterner[/re]: That might be why *you* buy or sell, but institutional investors make up the huge majority of buyers and they at least pretend their decisions are based on information — although it’s really just based on *agreement* about the information.
And you know what’s teh awesomest about all this? According to the google state legislatures cannot bypass the governor in asking for stimulus funds. Therefore, the good citizens of South Carolina, who are likely enjoying 15% unemployment by now, are soooooooooo royally fucked they might as well just permanently attach their wrists to their ankles.
Stocks are up because productivity has increased. True, American manufacturers haven’t made shit in six months, but now they’re doing it with five million fewer workers.
Sounds like all the “Fearless Freddies” have “hit the crack pipe”.
I was at this fancy Chinese restaurant the other night, and I made the mistake of trying to order in Chinese. The next day I had 3 trillion ping pong balls delivered to my house.
So yeah, that whole chinese manufacturing thing was my bad.
Obviously, this is a good time to invest the Social Security Trust Fund in the stock market.
Ken, you had me at “huge”.
Boy, I know comedy when I hear it and this, this is comedy. Fuuuuuh-neee.
Really. I’m laughing right now. Just on the inside.
Limbaugh just said the market rally is because Obama is out of the country. No, seriously, he said that. Today.
[re=279415]Ken Layne[/re]:
I personally prefer to consult the Oracle at Delphi, though I do confess it can take some guesswork to interpret:
“Day after day the bird of prey sweeps down from on-high and clutches the defenseless hare in its talons. She feasts upon the poor creatures entrails, but spits the bitter pieces onto the dusty soil beside her perch. Worms emerge and devour these parts. They grow larger, stronger, and more ravenous with time, until finally, one day, while the bird of prey is distracted by her feast, they lunge at her, they smother and devour her corpse also. Thus the bird of prey that fed upon worms while she was a chick in her mother’s nest, in maturity fed these same worms like her own children, and was devoured by them in old age.”
I think that means “Buy TSX at 17 1/4.”
[re=279435]ChernobylSoup[/re]:
When Obama gets back Limbaugh will tell us that the market rallied because Obama was back and couldn’t get us into any more trouble over seas.
DOES NOBODY RESPECT THE HAYEK FACTOR?
This must be giving Republicans fits because if they want to blame the unemployment numbers on Obama, then they’ll have to give him credit for the rising stock market which means they can’t blame him for the unemployment numbers. Of course, they could do so anyways and just sound retarded which hasn’t stopped them before.
I don’t care. I’m still planting a recession garden.
[re=279435]ChernobylSoup[/re]: My loathing for the man–and I use that term loosely–has now achieved escape velocity and gone orbital. Ye gods.
The market is up because of the extra $20 dollars on people’s paychecks due to the income tax holiday. BTW I bought a pair of truknutz with mine.
The market is merely reacting to the impending introduction of the single world currency, which will be called the Obamaro.
Bank error in my favor? Huzzah, I think I’ll buy those 4 houses I was planning on my Baltic Avenue property.
If Levi’s is paying good money to run a picture of some lady’s ass in skin-tight white jeans on a political blog, then I suppose things must be improving.
[re=279435]ChernobylSoup[/re]: Can you imagine how high it could go if his fat ass left the country?
[re=279415]Ken Layne[/re]: thats great,… but can *you* answer this “Marvins” question?
Damn Kristof and his column about 40 more children dying per week-day-minute, ( like talking about trillions of dollars, there’s a point when the brain can’t sort it out) because of the Greater Depression. A total “let’s celebrate the return of happy days on Wall Street” buzz kill.
[re=279463]Come here a minute[/re]: Parker Bros. should totally market a Monopoly (TM) Housing Bubble Edition.
Bandito: Yes! With hobo cars and homeless shelters instead of Park Avenue and Boardwalk! It would be awesome.
“Today’s stock market is further proof that investors have no confidence in the President or his administration. This is a firm repudiation of the socialistic increases in spending and government power we’ve seen in the past two months.” says Michael Steele.
Somebody’s starting to buy some more shit somewhere!
I’m pretty sure it’s Chinese Sham-Wows, the Punched Hooker Edition.
[re=279531]horned_viper[/re]: hobo cars??? we need more eco-driving!
…the INVERSE relationship between Main St. and Wall St. has existed for nearly 20 years now. Think about all the business practices that led to hyper inflated markets over the years:
-Outsourcing jobs
-Cutting wages/benefits
-Collusion
-Implementing fairytale accounting
-Laying off workers
-Ponsi/Pyramid schemes
-Phony valuation of assets
All of these business practices have been REWARDED by the market, in the form of higher stock prices. But their effect on main street has been utterly disastrous. The stock market indexes are designed to measure the overall profitability/viability of a company(and that is in a vacuum). The stock market doesn’t care if some poor schmuck in the mailroom cant afford to feed his family; what the market cares about is squeezing another dime out of the bottom line. This is why it doesn’t surprise me when the market skyrockets because of “new” accounting rule that allows companies pull asset values out of their asses!
Monsieur DeGoal is too right. Brokers know that when the workers suffer, the profits increase. Big layoffs always kick up the price of stock, even within individual corporations. That’s why big companies will do mass layoffs after a particularly GOOD quarter; it will kick up the stock another 10 points in time for the CEO to dump some of his bonus shares at an even better profit. Nothing makes the brokers more nervous than full employment; if it combines with a big union organization, it can dent prices significantly. Ah, the perversities of our premier legalized gambling! Crop failure in the Midwest and famine in Uganda? The corn futures market will be on fire!
[re=279563]AngryBlakGuy[/re]: Triple and quadruple word
Just as long as we get to where capital isn’t taxed. Then everything falls into place.
See, I thought the plural form of ‘index’ was ‘indices’ but teh spell chkr wunt let me.
Unemployment worsens and the dow soars! Why haven’t I yet heard anyone (except for me) calling this whole mess the Manic Depression?
[re=279414]Mild Midwesterner[/re]: I cannot agree. Calling the girl who gave you her number last Friday night is always a “Yes!” decision. Buying or selling stocks is a coin toss.
[re=279491]freakishlystrong[/re]: Rush said he was leaving New York, that’s not the country, but, it is a good start.
I always liked that Monopoly guy: top hat, handlebar moustache, morning coat, and a causally snobbish attitude towards the poor.
[re=279563]AngryBlakGuy[/re]: So right.
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