Looking for a bottom when there is nowhere to look
According to The Wall Street Journal (subscription required), "It's basically impossibly hard to call a bottom for bank stocks," said Craig Peckham, equity-trading strategist with Jefferies.
There are many reasons given for the ongoing stock sell-off. Banks may be taken over by the government, for instance. But that's a weak excuse. Bank stocks are so low, there's not much money for shareholders to lose. Earnings at tech companies and consumer products companies could get worse. That would indicate that business and consumer spending are not coming back this year.
Retail sales could keep falling, an indication that any cash the consumer has is still going to savings or paying down debt. The consumer is already doing that.
The reason the market cannot find a bottom is the employment picture. It drives everything else in the economy. The Fed has finally admitted that joblessness could be at 8.8% in less than a year. However, that does not include people who have been out of work for months and have stopped looking. Include them and the number of people who are actually out of work could be 12% or 13%.
The Fed's picture may be too optimistic. Some economists think unemployment will be over 10% early next year. If that happens, no part of the economy will recover and the burden on the federal government and states to provide support for all of these people will by unimaginable.
The market can't find a bottom because no one knows when the economy will stop bleeding jobs.
Douglas A. McIntyre is an editor at 24/7 Wall St.