No, that’s not a shocker. Ironically enough, some of those who are calling for the next Great Depression don’t have Depression style economic forecasts in their models to begin with (Roubini’s GDP and unemployment estimates for 2009, last I checked at least, were -5% and 9%, respectively).
For the Depressionistas you see, it’s all about being an alarmist, flying around in helicopters, and writing books – it is not about The New Reality, which is quite simply that the Bears are doing as bad a job managing the upside in this rally as the bulls managed the downside into March 9th. Risk works both ways…
The sequential ascent of the 4 week moving average for jobless claims is starting to decelerate (yellow line in the chart). Much like US Housing, or our bullish early cycle calls on semis to copper, when considering the second derivative, this is actually quite positive. With Obama’s 4M jobs coming on line, and both the US housing and stock markets stabilizing, I expect this to be a big economic story in Q2 of 2009 – US Employment is going to get less bad!
Everything that matters to our macro models happens on the margin. If US unemployment stops going up at an accelerating sequential rate, this will be one more bullish early cycle indicator that the Depressionistas will have to look back at and call it for what it was – The Great Recession.
Keith R. McCullough
CEO / Chief Investment Officer