Since its 830AM release on Friday morning, the debate on this topic has been a fascinating one to observe. From the typical CNBC market cheerleaders to the predictable bearish response from all those who missed unemployment's sequential slowdown in March/April, it's all out there.
David Rosenberg, who traded in his Merrill jersey for a Canadian one at Gluskin Sheff, actually wrote the following from his new perch: "changes in the second derivative only take you so far." Well, we know Rosenberg really made a boo-boo having people stay short that second-derivative rally. Trough-to-peak moves of +44%-85% in global equity markets are plenty "far" for those of us who mark our performance to market. David, maybe you should roll the Canadian bones a bit and throw some time stamps on your commentary.
Even David, however, didn't make what I thought was THE point in Friday's unemployment stat pack. On the margin, the unemployment rate accelerated sequentially!
Below, Andrew Barber and I show this very basic point using red and green arrows. Using a simple two-factor model (the unemployment rate delta versus the SP500), you'd be hard pressed to convince me that the February to March deceleration wasn't ultimately positive for US equities and the April to May re-acceleration wasn't a negative.
Stock market operators using live ammo beware, second-derivatives matter...
Keith R. McCullough
Chief Executive Officer