{"id":1183441,"date":"2020-05-08T17:05:47","date_gmt":"2020-05-08T22:05:47","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=109326"},"modified":"2020-05-08T17:05:47","modified_gmt":"2020-05-08T22:05:47","slug":"the-worst-jobs-report-in-history","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1183441","title":{"rendered":"The Worst Jobs Report in History"},"content":{"rendered":"

This post The Worst Jobs Report in History<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

The good news first:<\/p>\n

Today\u2019s unemployment figures were not as cataclysmic as feared. Consensus came in at 22 million.<\/p>\n

Here is the bad news:<\/p>\n

Today\u2019s unemployment figures were cataclysmic nonetheless.<\/p>\n

20.5 million Americans were thrown from work last month \u2014 crushing all existing records.<\/p>\n

By way of comparison\u2026 only two million were heaved out during the darkest month of the Great Depression.<\/p>\n

Even Worse Than Official Numbers Indicate?<\/b><\/h2>\n

Meantime, the United States unemployment rate presently stands at a ghoulish 14.7%.<\/p>\n

Not since government bean-counters began tracking monthly data in 1948 has unemployment soared to such precarious heights.<\/p>\n

Yet the true unemployment rate may be even grimmer\u2026<\/p>\n

The actual rate may scale an abominable 35.7% \u2014 if you accept the verdict of Mr. John Williams and his ShadowStats site.<\/p>\n

This fellow incorporates \u201clong-term discouraged workers\u201d into his models. These unfortunates were read out of official tracking in 1994.<\/p>\n

Mix them back in and you have 35.7% unemployment on your hands… says Williams.<\/p>\n

But cling to the official 14.7% for the moment. If it is additional good news you seek, here you have it:<\/p>\n

An even bleaker figure \u2014 16% \u2014 was consensus.<\/p>\n

Worst Unemployment Report in History, the Stock Market Soars<\/b><\/h2>\n

Wall Street chose the optimistic view today, the glass of water half-filled.<\/p>\n

Stocks were up and away from opening whistle\u2026 and never glanced down.<\/p>\n

The Dow Jones climbed nearly 400 points by noon. It ended the day 455 points higher.<\/p>\n

The S&P gained 48 points, the Nasdaq 141.<\/p>\n

The Nasdaq has now clawed 35% above its March lows… and has gained 1.4% on the year. The index alone is now larger than all the stock markets of the world.<\/p>\n

A Strange Kind of Victory<\/b><\/h2>\n

Consider the situation before us\u2026<\/p>\n

A record 20.5 million Americans were shoved off their jobs last month. Unemployment is (officially) 14.7%, the highest since monthly tracking began in 1948.<\/p>\n

Yet all is joy on Wall Street.<\/p>\n

It is as if a football club were trounced by 49 points. But the oddsmakers had it losing by 63. Thus the 49-point rout is a sort of victory.<\/p>\n

And this losing club\u2019s fanatics erupt in celebration because of it.<\/p>\n

Of course it is no victory whatsoever \u2014 not literal, not moral. It is a complete and thorough whaling.<\/p>\n

But the professionals were quick to place today\u2019s jubilance in proper perspective\u2026<\/p>\n

It\u2019s Not Where You Are, but Where You\u2019re Going<\/b><\/h2>\n

One Michael Farr, for example, is founder and CEO of Farr, Miller & Washington investment counsel. From whom:<\/p>\n

\n

There seems to be a willingness to look past an absence of revenues and earnings, increasing unemployment, an explosion of sovereign and corporate debt and devolving credit ratings based on two things: huge policy response and faith that a meaningful recovery will be somewhere within the next six\u201312 months.<\/i><\/p>\n<\/blockquote>\n

There is also a deep human willingness to whistle past boneyards\u2026 we might note.<\/p>\n

\u201cThe market knows that the job losses are self-inflicted due to the widespread shutdowns,\u201d adds Bleakley Advisory CIO Peter Boockvar. He continues:<\/p>\n

\n

Thus, now that we are beginning the reopening process the market assumes many of these people will hopefully get hired back over the coming months and quarters.<\/i><\/p>\n<\/blockquote>\n

\u201cThe market assumes.\u201d<\/p>\n

We finally come to Mr. Arthur Hogan. He is chief market strategist at National Securities. Says he:<\/p>\n

\n

You have investors that seem to be able to look through the tsunami of negative economic data and earnings and toward the potential for a gradual reopening of the economy. <\/i><\/p>\n<\/blockquote>\n

But is a gradual reopening of the economy the end of the tsunami of negative economic data?<\/p>\n

A \u201cBiblical\u201d Flood of Bankruptcies<\/b><\/h2>\n

A new survey reveals 52% of small-business owners \u201cexpect to be out of business within six months,\u201d Bloomberg reports.<\/p>\n

But assume only 25% sink under. Millions and millions of Americans will nonetheless go scratching.<\/p>\n

If 70% of the United States economy is consumption\u2026 these are millions and millions who will not be consuming.<\/p>\n

Meantime, we are informed that a \u201cbiblical\u201d flood of bankruptcies will wash over America in the months ahead.<\/p>\n

Does the Stock Market Really Discount the Future?<\/b><\/h2>\n

Wall Street\u2019s cheer squad will inform you that the stock market looks ahead\u2026 and \u201cdiscounts the future.\u201d<\/p>\n

Yet the stock market is presently perhaps the most expensive ever.<\/p>\n

A stock\u2019s\u00a0 price-earnings (P\/E) ratio indicates what investors will pay for each dollar of future earnings. If a stock trades at 19 times earnings\u2026 investors are willing to ladle out $19 for $1 of earnings.<\/p>\n

Stocks with P\/E ratios beneath 15 are considered cheap\u2026 historically. Stocks above 18 are generally considered expensive.<\/p>\n

What is today\u2019s forward-looking P\/E ratio for the S&P as a whole?<\/p>\n

Near 21. That is, the S&P is extravagantly expensive by historical accounts.<\/p>\n

It indicates a future economy under full steam.<\/p>\n

Maybe the Stock Market Is Wrong<\/b><\/h2>\n

Whence will corporate earnings originate?<\/p>\n

From the biblical flood of bankruptcies? From the millions and millions of jobless?<\/p>\n

If the stock market discounts the future so reliably\u2026 it must believe the economy has a real trick up its shirtsleeve.<\/p>\n

Either the stock market is correct \u2014 or the economy has no trick up its shirtsleeve.<\/p>\n

We do not believe the trick is up the sleeve.<\/p>\n

That is, we do not anticipate the V-shaped recovery Wall Street sees shimmering in the distance.<\/p>\n

Nor does Bloomberg:<\/p>\n

\n

The breadth of job losses is a jarring signal of the massive challenge of restarting vast swaths of the economy – not just a few sectors – and it therefore serves as a stark indication that a \u2018V-shaped\u2019 recovery will not be possible.<\/i><\/p>\n<\/blockquote>\n

The stock market may have discounted the future at one time. But to our notion, that era is past…<\/p>\n

Down 50%-80% Without the Fed<\/b><\/h2>\n

Wall Street does not so much look ahead to the future… but south to Washington \u2014 at the Federal Reserve.<\/p>\n

Where would the stock market presently sit without the Federal Reserve\u2019s recent liquidity floods?<\/p>\n

The men and women of One River Asset Management recently dug into the question. Here is their answer:<\/p>\n

Down 50\u201380%.<\/p>\n

Let the rah-rah men babble about the discounted future. The facts are visible to any with eyes willing to see:<\/p>\n

The stock market rises and falls on the liquidity pumped in. The past decade offers nearly perfect proof.<\/p>\n

The Market Lives and Dies by the Fed<\/b><\/h2>\n

Do you recall December 2018, when Mr. Powell pledged to continue raising interest rates and draining the balance sheet?<\/p>\n

The market came within an ace of a bear market.<\/p>\n

The chairman immediately raised his surrender flag. He axed rates and plugged the drain.<\/p>\n

And he has lately swung the floodgates open…<\/p>\n

Rates are once again at zero. And some $3 trillion has come flooding onto the balance sheet \u2014 lifting it to $6.72 trillion \u2014 $2.2 trillion higher than previous high water in 2015.<\/p>\n

We hazard it will rise to $10 trillion by year\u2019s end\u2026 or higher.<\/p>\n

We suspect this liquidy future is the future that the stock market is discounting. It is not the economy.<\/p>\n

Main Street Takes the Burns, not Wall Street<\/b><\/h2>\n

Yes, the economy will open, in steps. But that does not mean Americans will throng into restaurants, into malls, into cinemas, into arenas, onto airplanes, into hotels, into theme parks.<\/p>\n

Only a mighty swing of the national psychology will draw them out, we hazard. And we do not believe the psychology will swing until a COVID-19 antidote comes out.<\/p>\n

The economy will not continue to shrivel at a 30\u201347% annualized rate, it is true.<\/p>\n

But assume third- and fourth-quarter GDP \u201crebounds\u201d to a minus 5\u201310% reading. GDP is contracting nevertheless.<\/p>\n

The economy may jump from the roaring fire to the frying pan, that is.<\/p>\n

But the pan still scorches.<\/p>\n

Main Street will take the burns. Yet with the Federal Reserve hosing in trillions in liquidity\u2026<\/p>\n

Wall Street will not.<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/i><\/p>\n

The post The Worst Jobs Report in History<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post The Worst Jobs Report in History<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

20.5 million Americans lost their jobs last month, stocks soar on the news…<\/p>\n

The post The Worst Jobs Report in History<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[3884,3724,366,656,4131,4259,463,1624],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1183441"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1183441"}],"version-history":[{"count":1,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1183441\/revisions"}],"predecessor-version":[{"id":1183442,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1183441\/revisions\/1183442"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1183441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1183441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1183441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}