Unemployment forecasts

Equity analysts play catch-up to ever falling earnings, incrementally lowering their forecasts. Bank economists similarly profess surprise at the high number of jobless claims (at a 26 year high), and are incrementally increasing their unemployment expectations of 2009. According to a wsj survey released today, economists on average said the unemployment rate will peak at 8.4% in 2009. Much more likely is a figure above 10%, a view shared by a few prominent economists.

If anything, the constant revisons show how unreliable forecasts are, and how these sow confusion with investors.

Hard numbers for a change: 0% on Treasuries. As Bill Gross of Pimco pointed out, investors get paid zero for taking risk. If investors accept this proposition, what does that say about the stock market's near-term future? The Dow traded at 8,650 a bit earlier today. Where do you guess it will be in 6 months? Yours truly believes it will be lower - likely significantly lower.