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Friday, October 2, 2009

Market Thought... a theory on 'jobs'

The employment number in the US is irrelevant. How is that for a theory? It pretty much flies in the face of Cramer's argument (which I am sure is backed up by a bunch of talented hedge fund friends having the same view), along with Mohamed El-Erian (whos opinion I listen to).

The countries out side of the mature economies, while their unemployment levels are high, their job growth is high as well. Within the global economy, the lack of jobs in the US, are being filled by the job growth from the emerging economies.

Companies that rely on local economies (i.e. the home builders, retail), and holders of US credit card debt, will feel the high US unemployment rate. But global companies will not feel it as much. While Ford will not be able to sell as many cars in the North America, its pretty much kicking ass and taking names else where.

If I were an economist, or a man with time to research the detailed numbers on this issue, I would look how the creation of a larger middle class in BRIC, offsets a relatively high US unemployment.

And I understand how the rest of the world is leveraged to the US consumer, but with the massive stimulus packages in the BRIC countries (thanks to their massive surpluses, especially China), they are de-leveraging from the US consumer in a big way.

So few industries are purely local anymore, IMO, its hard to rest everything on 'jobs'.

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