David Rosenberg appeared on Fast Money yesterday at the end of the day to discuss the economy, employment data, and the stock market outlook. Here are the highlights:
- There have been 600,000 jobless claims consistently over the last 20 consecutive weeks.
- The pace should slow to 350,000 to 400,000 job losses for now.
- Companies have let go 8 million full time workers - 2 million of those were put on part-time.
- The work week at a record low of 33 hours.
- Therefore, even if the green shoots are real, what you'll see is part-timers being upgraded back to full-time, and their hours raised by their employers and so the traditional 100-150,000 new jobseekers who come into the labour force each month - I got bad news for them - no jobs.
- We are going to have the mother of all jobless recoveries, and the unemployment rate will make new post WW2 highs throughout the process.
- The market has priced out a recession, and priced in a recovery for the 3rd quarter - its possible that we may show positive GDP by then, its possible to see some re-stocking eg. we know that the auto production schedule is picking up...
- But, we also know that restocking that is not coupled with an increase in consumer demand is not sustainable, so I think that its possible to have a factually positive 3rd quarter.
- My concern is the 4th quarter - I think we're going to have a relapse in the 4th quarter of what we had in 2002 - we had a gargantuan rally in March of 2002, bonds sold off, it was all good, fiscal reflation, the Fed cut rates doing its job, inventory restocking, infrastructure - none of that happened.
- We had to wait a full year for that - and in the mean time we had a gargantuan credit cycle.
- The market will retest previous lows - that would be normal - but its going to be earnings - so far this market has been P/E multiple driven.
- Now, earnings have to come through.
Click play to watch:
