Dear Reader,
We get a lot of data and information thrown at us.
The news is all about telling us the cash rate, the PMI numbers, inflation, stock markets gains (or losses)…it’s all important macroeconomic information.
But if you were to pick your favourite, what would it be?
Actually, if you were to pick the one number that you would consider the most important, what would it be?
Let me help you decide.
The most important number, at least right now, is the unemployment figure.
There is no other number that tells us how an economy is tracking better than unemployment numbers.
Nothing else tells us what is really happening with everyday people more than how many of them are lining up for unemployment assistance.
And the higher that number creeps, the more trouble an economy finds itself in.
What’s terrifying right now, is we’ve not really had much information in the way of actual unemployment numbers.
Until now…
The biggest spike on record
While you slept overnight the US released their figures on weekly unemployment claims.
And the number was nothing short of astonishing. Not unexpected, yet still astonishing.
Also take note, this is the number of weekly jobless claims.
And that number was 3.28 million.
Let that sink in…
3.28 million Americans in the last week have made claims for unemployment benefits. It’s the highest weekly claim in the history of record-keeping for this statistic. The previous record was 695,000 in 1982. This is 4.7 times bigger.
And in 1982 during a deep recession that had lingered from the ’70s, the US unemployment rate comfortably punched through 10%. Expect this to leave that for dust too.
Remember we’re talking about weekly jobless claims.
Next week could be equally as bad, I’d suggest even worse.
The speed at which unemployment is going to rise will be breathtaking. And it won’t just be the US that suffers.
As I pointed out in yesterday’s Money Morning, the number four App Store app and the number three Google Play app in Australia was the Centrelink app. Aussie unemployment is likely going to follow the US.
And it will be the same here in the UK. It will be the same in Europe.
Expect upwards of 10% unemployment. I’d expect as much as 15% by the end of April.
That speed is what’s so hard to fathom. But that’s what happens when we’re all sent into house arrest. The economy shuts down. Businesses can’t pay employees when there’s no money to pay them with.
And while there are businesses taking out loans to pay employees, what do you think the flow-on impact of that will be? Furthermore, do you think that overnight when we’re released from our domestic prisons, the unemployment figure will just pick up to where it was before all this?
No it won’t.
As we’ve been warning, the pain is set to come through unemployment. Which we’re now starting to see. Next step will be recession. Expect that pretty soon when the economy contracts officially. And then there will be corporate failures.
Those failures will be a turning point. That’s when we’ll know what companies have the capacity to survive or not.
Quite simply, the markets aren’t done with what’s going on. Not yet. Expect further falls, a deeper bottom. Quite possibly a supplementary crash.
Don’t let false booms trick you into chasing gains. Patience and an understanding of the knock-on effects of global house arrest are crucial.
That’s how we really find the bottom of the market. And that bottom has yet to come. Now with the numbers we’ve been waiting for starting to come through, then we can start to see the market reaction.
And that’s when we prepare for re-entry.
Well, what are you supposed to do then?
Of course, this begs the question, ‘what are you supposed to do then?’
Prepare and be patient. It’s as simple as that.
Make sure you’ve got an online trading account ready to go. Make sure it’s funded with money you’re prepared to risk and invest in the market with.
Make sure you’re up to date with the credible, factual information. Make sure you’ve put the time into understanding what companies you’re going to pull the trigger on.
It’s no good getting to the day you’re ready to reinvest into the market to start looking for companies.
While all this is going on, right now, you should be doing the deep dive into the stocks you want in your new rebound portfolio. They should be set into your watchlist. And yes, most online accounts will allow you to build a watchlist of stocks.
That way at the right time you can strike in an instant. No delay, just buy, buy, buy.
Put this time to good use. In fact, I argue you should be working twice as hard now than you did before all this started. I know I am.
At last count, I’d identified at least eight stocks that investors should be looking to buy when the market is done with this mess. Eight stocks may very well become 12 or more considering how volatile the daily swings are.
That might not sound like loads of stocks. But I’ve already discounted hundreds that don’t fit my criteria. And if you’re wondering what I’m looking for, just head back and check out Money Morning from last week.
Frankly, as difficult and worrying as the economic figures are going to be, I’ve never been more excited as an investor. This is one of those crisis moments when you can potentially mint a small fortune on the turn, or regret your inaction for another lifetime.
I’d suggest you get your ducks in a row now, get ready to move, and capitalise on the opportunity when the time is right. That time is coming, soon, and you won’t want to miss it.
Regards,
Sam Volkering,
Editor, Money Morning
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