Thursday, January 08, 2009
But She Is Screaming So Loudly
We are in a bear market rally, which kinda just started. One day of bad jobs data and balls also shrink back inside. People start to quote how bad the unemployment data is or will be.
Come on people!!! Do you expect jobs data to be good now, in December, January or even February???
Why do you think equity markets collapsed 6 months back???... precisely because we ALL KNOW jobs and the economy will be really bad in the first and second quarter of 2009 at least. So, what gives??? Use economic data properly, economic data tells you what has just happened and what is happening, not what will be happening.
I am not saying the numbers are not bad, but its way within even the most bearish estimations. Where is US unemployment now, around 6%? Ask any economist where they think unemployment will be peaking before recovering... many have said 7%, 8% and some even 9%... so how to get there without bad jobs data now???
You think the central banks and governments huge fiscal measures and liquidity injections were for fun? They precisely expected this scenario. Its like you know your wife has been wheeled into labour... midway, you start to tremble and fear and exclaim "but she is screaming so loudly"... duh... she is in labour la, not eating Haagen Das ice cream. Where do you think we are in the economic cycle??? Why act so surprised!?
Economic data is confirmation of what stock markets predicted a few months back. A bear market rally is confirmed by market trading indicators such as VIX, yen rate, ratios of new highs/new lows, corporate bonds/Treasuries spread, average volume buy/sell strength indicators...
Use proper indicators to make proper assessment. I am of the firm view the bear market rally has just started. Get a hold of yourself, its a bumpy ride but its Space Mountain baby, its fun.
p/s photos: KC Concepcion