After a couple of days of relative strength in US equity markets, talking heads and business television anchors have been falling over themselves to declare a bottom.
We on FT Alphaville dare to disagree – and the data is on our side.
Witness the numbers for initial claims for state unemployment benefits, which today hit a 26-year high.
The number of US workers filing new claims for jobless benefits jumped last week by 58,000 go 573,000, the Labor Department said. This is the highest reading since November 1982, when the US was in the grips of a particularly nasty recession.
It is true that data released during the holiday season can be problematic, but even looking at the four-week moving average of new jobless claims – seen as a more reliable indicator – is worrying. By those numbers, new claims reached 540,500 last week, an increase of 14,250 versus the previous week’s revised average of 526,250.
Continuing claims rose by 338,000 in the week ended November 29 to 4.4m. That’s the single biggest increase in 34 years.
These numbers will get worse as corporate America slashes jobs. As Merrill’s North American economist David Rosenberg put it, “this is not just a white collar recession. This is a blue collar recession.”
And it is going to hurt. Bottom callers – beware.
Related links:
Bill Miller calls the bottom – FT Alphaville