Red Ink Watch: 10.2% Unemployment

" Much worse than expected now month to month job losses totaling 31000. He also loved one point six million of the nation's unemployed. Not even counted in this survey because as we noted it. They have actually stopped looking for work or they've gone at least four weeks without seeking out work which begs the question with this I have unemployment and underemployment. Why the stock market holding Sam Stovall says he's chief investment strategist Sam. You know -- It's it's difficult -- because you say while the market is you know only down a couple of points but you know there's a story behind every job lost -- a family there's a child as a woman is a man. Who is now out of work. Give us the relationship between the stock market and its unemployment number and why we're not seeing more market reaction."

" Well I think basically because investors do try to anticipate. What's likely that happened six to twelve months down the road more likely six months or so. Also a lot of market participants are historians. And they know that the market tends to bottom about nine months before the unemployment rate peaks. And you could look to individual situations back in 1990 the market bottomed at 21 months before the unemployment rate -- If you look at 1953. Was thirteen months before the unemployment rate -- And -- the market was still up substantially. In 1982. Even though unemployment remained above 10%. For a full year so I think investors basically are investing with the eye toward faith. Rather than fund -- having the fate the fundamentals."

" Will change so if we are they looking for any kind of silver lining it may be distant sounds like the fact that we are not taking in stocks that we are holding about Dow 10000. May be an indicator that the market believes jobs. Will roll. A few months or quarters out."

" Think actually in the near term the market probably is rated to digest some of the -- that it has experienced and it's more just a matter of not happening today when the unemployment data came out. I think over the coming twelve months the market will probably the S&P 500 could be challenging the 1200 level but in the near term. It probably is going to be challenging the 1000 level Bob before hand. I think going forward what's what's happening is that investors are a bit concerned about unemployment we probably will see the unemployment rate of average. Around 10% for all of 2010. And then averaged 9% for all of 2011. But again because the expectation is that the trend. Is more constructive here in the US plus we are much more of a global environment that we were many years back that's why investors are willing to be."

" In stocks now -- the top story I think from a stock perspective Sam is that earnings have been up for most of corporate America based on the numbers we've seen so far because of cost cutting -- cut cost cutting all always involves her. Generally tends to involve job cutting because labor tends to be the largest expense on any corporation's balance sheet. So at what point do we say to corporate America we can't reward more cost cutting that we have to have a reinvestment in the overall economy. Otherwise were all just going to be on a slippery slope."

" While I think you can't cost cut your way back to recovery was entirely. We do have to start to see an improvement in overall revenues -- its top line sales have to start growing. And what we do find is that the other revenues do start to improve even before. The unemployment rate starts to come down but usually after the earnings. Picture has started to improve because with -- earnings to to to variable model you've got revenues and cost cutting but obviously with top line growth it's only when to sell more stuff. So in general the the feeling is again that because the market is an anticipatory mechanism. That they are hopeful that revenue will start to improve come the first quarter but that does not happen. Then I think investors might be reassessed in themselves -- ball less than peace and thank you for joining us and have a great."