Recently I was alerted to two interesting bits of information:
- As Italian yields moved higher, so did equities. The opposite of what you would expect.
- Despite the rash of headlines on the Eurozone, there appears to be a decent correlation between jobless claims and equities.
Does this mean that markets are being moved` solely by unemployment and are unaffected by Europe? I have no idea. I would guess no, but who knows what moves markets, these days?
What the above links do demonstrate, in my opinion, is how important it is to create jobs for the economy (obviously) and the market. Take a look at this graph via Calculated Risk:
Two things standout:
- The job loss from the last recession is much larger than any at other time since WWII.
- The recovery from the lost jobs will no doubt be much longer than any
atother time since WWII.
As I have mentioned before, I think it will take time to go through the deleveraging cycle. This jobs chart is an example of the sluggish growth that we have experienced and probably will experience for the next few years.
That said, if we can figure out a way to create jobs the great likelihood would be not only a nice economic lift, but also a corresponding bounce in the stock market.
