Friday, April 3, 2009

Enjoy the Weekend

Well, today's payroll data was not a barnburner. Consensus forecast was for a loss of 660,000 jobs for March, the number came in a a loss of 663,000. I was a bit surprised by the headline print, I was expecting a number of about -700,000 jobs. Please note that the January number was revised from a loss of 651,000 jobs to a loss of 741,000 jobs.

That brings the unemployment rate to 8.5%, the highest since the Fall of 1983. The ADP data states that 4,813,000 jobs have been lost since the start of the current recession, the BLS data states that 5,133,000 jobs have been lost since the start of the current recession. The average is -4,973,000.

What are the prospects for the job market? The weekly data in the graphs below is pretty clear, there is no turnaround on the horizon.

This leads to the following news item:

The story refers to a report by bank regulators that mortgages restructured in 2008 are not performing very well. The default rates are over 40%. Ostensibly, the mortgages were restructured so that homeowners would face lower payments. The problem is, when people have NO JOBS, it doesn't matter if the payment is a few bucks lower. LOOK AT THE ABOVE DATA WASHINGTON, D.C. !!!!!!

Back to the table below. It tracks homeowners equity versus debt. On average, the entire country continues to have the economic incentive to default on their mortgages. Why pay the bank when the bank owns more of your house than you do? This is catastrophic data as far as I am concerned and has been the major reason for my continued bearish stance. I know that I was a few days early in suggesting the end of the rally was upon us (the last few sessions were a bit of a surprise to me), but I can't understand how market "experts" use words and phrases like "not since the Great Depression", "hasn't happened in 30 years" and "never happened before" when describing the economy and somehow expect that normal equity trading patterns will prevail.

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