Blue Point Trading Market View – March 07, 2013
Tale of two cities – DOW record high, EU record unemployment. The Dow Jones Industrial Average surged to an all time record high this week, a level not seen since 2007. Markets around the world are surging and many are closing in on all time highs. You see, Obama fixed the global economy. All is well now – correct?.
Meanwhile, unemployment in the 17-nation euro-zone rose to a record high of 11.9 percent in January with nearly 19 million people out of work, while inflation fell sharply in the wake of flagging consumer demand. In the 27-member EU, the unemployment rate edged up to 10.8 percent from 10.7 percent in December, with 26.2 million jobless. Eurostat said that compared with December, some 201,000 joined the jobless queues in the euro-zone in January and 222,000 in the EU. This is a sharp acceleration from December, and shows that the end to the labour market downturn is not yet in sight for the EU.
The highest jobless rates were in bailed-out Greece, at 27 percent – although this figure is for November – and in struggling Spain, on 26.2 percent. The lowest rates were Austria with 4.9 percent, and Germany and Luxembourg, both on 5.3 percent. Euro-zone youth unemployment was put at 24.2 percent in January, up from 21.9 percent in January 2012. In the EU, under-25 unemployment rose to 23.6 percent from 22.4 percent. For Greece, the youth unemployment rate in January was given as 59.4 percent, with Spain on 55.5 percent and Italy 38.7 percent. The youth unemployment picture is a tinderbox ready to explode.
We shall see this coming Friday how the US employment picture is doing, when the release of the NFP report is due. Mostly likely it will be tame and show some improvements. But the data is curious. When one looks at the shadowstats, it shows a very different picture. It shows that in the US unemployment picture is far worse and even more disturbing, it shows that the trend is going in the opposite direction and the diversion between the two data points is growing, compared to what the US government is reporting. Who is right?
We truly are living in the Charles Dickens time of the Tale of Two Cities – or in this case, two economies. Our leaders are oblivious to what is going on – in fact many here in the EU are prancing around trying to convince people, that all is well. But no real policy changes have occurred to change the situation – except more debt and the institutionalizing of “too big, to fail.” The current trend continues up until the bubble pops. But of course market timing will be everything. Let’s hope as traders we are not oblivious.
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