Unemployment rising

Today is Christmas Eve and for those of us who share the Christian faith it is a time for reflecting on a year gone by and looking forward to the future. It is a time for sharing gifts with each other to celebrate what some consider the second most important day in the Year.

The other evening I went out to a local restaurant and saw a woman wearing the quintessential sign of the times, It was a large "Pink Slip" that read "Merry Christmas, your terminated" pinned to her shirt. She was one of the many at the bar that night that had just worked their last day at the local Yatch builder. "Will it reopen if times get better", I asked. I doubt it she said, "they were moving the equipment out for the last couple of weeks". Where will this equipment go, I wonder?

Unemployment, or at least new claims, rose to the highest level since 1982, and up 86% from January 2008. That can’t bode well for corporate earnings during the first quarter and therefore stock prices likely will slump even more. To me, it is looking more and more like this market is going to remain soft to trending down over the next few months, maybe longer.

President-elect Obama, enjoying what may be his last opportunity to vacation with his family for quite a while, is going to take office in just under one month and will be facing a lot of problems from Iraq, Afghanistan, the economy, to the clamoring for delivery of expectations created during the campaign by his supporters. Each of those issues complicate and make enormously more difficult the other. On the plus side, he is getting unprecedented co-operation from the current administration in terms of the transition process. Unlike the last turnover when childish pranks like removing the “W” from the keyboards was the order of the day.

For the rest of us, hunkering down, spending only what is necessary to preserve capital until the market rebounds, will be the order of the day. This is a self preservation tactic that will ultimately bite us in the butt by making the recession more severe and longer lasting. We will be sharing the pain with our neighbors at home and abroad.