The employment number was better than suggested yesterday. Still, over two million are out of work and the average work week has dropped to 33.3 hours. Employers seem to be cutting hours prior to dismissing employee. This would indicate that higher unemployment is coming.
One result of the jobs numbers is probably lower final prices. This will squeeze corporate revenues, margins and earnings.
Nevertheless, we may still have a window here for equity appreciation. But I will keep my inverse ETF, SDS for a while longer to protect my long positions. The discounting process of future recovery may be too far away (4th quarter?) for a long rally but we may be OK until 1st quarter earning numbers come out.
My earlier hopes for Brazil may have to wait for higher petroleum prices. Higher unemployment will erode oil use. Higher oil prices will remain captive to international events rather than industrial growth. I will watch it.
