Unemployment Numbers-I'm Confused

[AzCactus]

Hi guys!  I'm not a macroeconomist by any stretch of the imagination but I like to think that I have a bit of common sense.  Unemployment numbers came out today and they were the worst on record if I'm not mistaken.  The markets are UP ~4-~5%.  I guess my question is, did I miss something super obvious here?  My statement would be that based on what we have seen over the past 3-4 weeks of trading for anyone who's a proponent of EMH---can you please explain what's going on.

 

Thanks,

 

David

[rb]

Well, simply the number is good. There are roughly 152 million jobs non-farm jobs in the US. Out of that about 17 million are in leisure and hospitality. With maybe 30% of US economy offline and maybe 70% of leisure and hospitality offline a 3 million print is good, REALLY GOOD. But we also don't know. You could have a temporal issue and next week's number comes in at 6 or 7 million. Who knows.

 

As for EMH, I can't help you there buddy. If that thing were true we wouldn't have stock market crashes. Good luck with that one.

[Uccmal]

At the moment stock markets are not a reliable indicator of anything.  They are caught in the hands of professional manipulators who trade continuously for a living. 

 

They simply are not reflecting reality which is that the main street economy is at least 50% closed.

 

I wouldn't worry, markets will figure out soon enough that governments can help people stay alive and fed but cannot prop up an entire moribund economy. 

[Broeb22]

The markets are forward-looking so today's number was already priced in to some extent. Apparently folks thought it would be worse. Maybe it will be.

[gokou3]

I wonder if the unemployment numbers are 'small' due to some computer system overload which prevents people from even filing.  I know Canada has some issues with EI claims.  Btw, Canada has almost 1M claims, so US at 3M with 10x the population seems mild by comparison?

[Gregmal]

Yea, the numbers may change and will short term get worse, but for Christs sake, shit just went down 40% in a couple weeks. Some things are definitely priced in.

[rb]

We're actually 23% down. Not a lot priced in.

[Spekulatius]

We're actually 23% down. Not a lot priced in.

 

I would agree. We are still up from the low late 2018 and the economy is much much worse. I am personally lightening up, but who knows what is happening next.

[Gregmal]

In basically 4 weeks S&P basically went from 3400 to 2250. So it’s a little odd people are so caught off guard by, a bounce.

[chrispy]

I know a personal trainer who was receiving one more paycheck (2 weeks of pay) and then would file for unemployment.

 

I know a car salesman and the dealership can't determine if they will go limited time because people need cars or if the sales department is closed and everyone files for unemployment. Either way no one is selling their typical amount of cars.

 

I don't understand how the process works but it would seem that this is not picked up in any numbers yet. These folks are not spending more then required.

[rb]

I'm not. I'm just saying that. That's where we are right now, and 23% is far from 40%, and we never got to 40%.

[fareastwarriors]

Interesting thing is how unemployment insurance for Gig workers would work. That group of workers would add substantially to the numbers.

 

[Guest cherzeca]

is there unemployment insurance for gig workers? (ie independent contractors)

[fareastwarriors]

is there unemployment insurance for gig workers? (ie independent contractors)

 

No, not right now. The pending stimulus bill has it.

 

Obviously it's not law yet...

[Santayana]

I'm not. I'm just saying that. That's where we are right now, and 23% is far from 40%, and we never got to 40%.

 

Going from almost 30,000 to just over 18,000 on the Dow is close enough to 40% that it doesn't invalidate an argument.

[rb]

Well you're not at 18,000 on the dow. You're at 22. But if you know how to buy the dow at 18,000 right now do let me know cause I'm definitely interested.

[Santayana]

You said we never got to 40%, and I was pointing out that we got awfully close.  You could have bought near 18,000 on Monday.

[Santayana]

Gregmal, said things went down 40%, not that we were currently 40% down. 

[Gregmal]

I thought the general point was obvious, and didn't think things would devolve into stupid nitpicking. Since it didn't technically go down exactly 40% in exactly 4 weeks, there s obviously no reason this employment print shouldn't have gapped us down another 10%....got it.

[ERICOPOLY]

The Dow is a poor measure.  The retail sector is represented by Walmart, for example.  Consider, the current crisis helps Walmart sell more toys, being practically the only toy retailer (other than Target) still open on California's main street. 

[ERICOPOLY]

Companies that look like they might not make it had their shares beaten up.

[rb]

I thought the general point was obvious, and didn't think things would devolve into stupid nitpicking. Since it didn't technically go down exactly 40% in exactly 4 weeks, there s obviously no reason this employment print shouldn't have gapped us down another 10%....got it.

Yeah got it. Sorry, I thought you were trying to say something else.

[Santayana]

Dow isn't the best measure, but it's the headline number the public knows about.  S&P was down 35% peak to trough, which still makes Greg's point.  A lot has been priced in and today's unemployment didn't surprise anyone.

[AzCactus]

Here's my concern---people are saying that things are priced in.  But if we don't know how bad this thing is going to get (I sure don't) how can we say things are priced in.  Do we know for sure whether this will last 6 weeks or 6 months ?  Do we know how quickly restaurants, airlines, cruises etc will get back to "normal?"  And the unemployment numbers exclude certain people as well if I'm not mistaken who may be underemployed which does change behavior. 

[ERICOPOLY]

Today's market action may not be related to the jobless numbers at all. 

 

It just may be that people believe Trump can dictate to the governors, which he can't.  So (potentially) you've got his followers moving their savings back into their mutual funds after liquidating them at lower prices last week.  When Trump's wishes to pack churches goes ignored by the states, they'll sell lower again.

 

And stimulus passed the senate as well.