It Would Take Another COVID-19 for This to Happen

The mainstream media is at it again... News outlets are back to trumpeting "stagflation" fears. They're certain it's on the way. [Chaikin PowerFeed]( It Would Take Another COVID-19 for This to Happen By Karina Kovalcik, senior quantitative analyst, Chaikin Analytics The mainstream media is at it again... News outlets are back to trumpeting "stagflation" fears. They're certain it's on the way. In case you're unfamiliar, stagflation is a period of high inflation and high unemployment at the same time. I discussed the media's infatuation with the term [back in July](. And five months later, not much has changed. Here's just one of many recent examples. Fortune magazine published this headline last week... [Chaikin PowerFeed] On the surface, it's a reasonable fear. After all, [as I've said for most of this year]( the Federal Reserve is going to put us in a recession. And if that happens, unemployment will go up and job openings will go down. But the thing is, it would take a pretty major recession to relive the 1970s stagflation era. In order for that to happen, the same number of folks would need to lose their jobs as during the COVID-19 shutdowns a couple years ago. And then, on top of that, two-thirds of these folks would need to be unable to find another job. If that sounds crazy to you... that's because it is. Let's take a closer look... Recommended Links: [The EXACT Day Stocks Will Finally Bottom]( Goldman Sachs doesn't know... Bank of America doesn't know... Morningstar doesn't know... but Marc Chaikin believes he does. He called the bottom in 2020, just 24 hours before the fastest bull market in history. Now, Marc has spotted the NEXT market bottom - and he's sounding the alarm. Plus, he's sharing the names of what he says will be the best- and worst-performing stocks of 2023. [Click here for full details](. [A Gold Wave Is Coming]( Some of the richest men in the world are jumping in right now... because evidence suggests we could see MUCH HIGHER gold prices before the end of this year. But if you're not taking advantage of a little-known way to invest for less than $10, you're missing out. [Click here for full details](. Measuring unemployment seems simple. It's just the number of unemployed workers divided by the labor force. However, in reality, it's a bit more complicated... You see, the labor force isn't what most folks think it is. The labor force only consists of people who are employed or have actively looked for work in the previous four weeks. So if you don't have a job and you haven't looked for one over the past month, you're technically not unemployed. Instead, you're what's called a "discouraged worker." In order for the unemployment rate to rise, one of two things needs to happen... - The number of actual unemployed workers needs to go up, or - The total labor force (minus discouraged workers) needs to go down. Let's apply this idea to the stagflation era of the 1970s and early 1980s... Back then, the unemployment rate peaked at nearly 11%. For context, during the 2008 and 2009 financial crisis, it peaked at about 10%. And during the COVID-19 shutdowns in 2020, it peaked at almost 15%. Here's the thing... The unemployment rate is currently at 3.7%. That's a long way from those previous peaks. The ratio of job openings per unemployed person is just as important. In short, it tells us how likely people are to find new jobs if they lose their current ones. The U.S. entered the COVID-19 era with 1.2 job openings per unemployed person. Today, this ratio is at 1.9. In order for the country to hit 1.2 again, 18% of people would need to lose their jobs and the job openings would need to disappear. (And I don't mean "disappear" as in get filled. I mean "disappear" as in the companies would stop hiring.) That's obviously a huge change. But we're far away from those levels today. And trying to unpack the math makes the issue even more obvious... Let's say 10% of Americans lose their jobs during the next recession. And let's say 20% of the available jobs disappear as well. That would be a big shock to the system. And it would leave us at around 1.2 job openings per unemployed person. At that point, the unemployment rate would be roughly 13%. But here's why that's unlikely... This hypothetical scenario assumes that no one who becomes unemployed would find a new job. And yet, with 1.9 current job openings per unemployed person, at least one-third of unemployed people should be able to do that. If that happened, the unemployment rate would be 10%. If half the people found jobs, the unemployment rate would be 8.5%. Regardless of what the unemployment rate could be, in order for 10% of the labor force to be unemployed... roughly 16 million people would need to lose their jobs. During the worst few months of the COVID-19 shutdowns in mid-2020, 16.6 million people lost their jobs. So it's possible. But even if the Fed throws us into a recession, I just don't think the recession will be as bad as the world shutting down. In other words, I doubt 16 million people will lose their jobs. So where does that leave us on stagflation? Folks, things look bleak in the real world. And they're getting worse. A recession is likely coming. But the reality is that we're still a long way from the stagflation levels of the 1970s. In fact, for us to get there, another COVID-19-level shutdown would need to occur. And while I'll never say never, that kind of outcome seems unlikely today. Good investing, Karina Kovalcik Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.47% 10 17 3 S&P 500 -0.85% 109 270 119 Nasdaq -1.40% 24 55 21 Small Caps -1.32% 418 991 481 Bonds -1.68% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks have turned somewhat Bearish. Major indexes are mixed. * * * * Top Movers Gainers [rating] NRG +1.58% [rating] WFC +1.53% [rating] DGX +1.48% [rating] MPC +1.20% [rating] GL +1.17% Losers [rating] WBD -6.66% [rating] KMX -5.45% [rating] WYNN -5.17% [rating] DIS -4.77% [rating] CZR -4.70% * * * * Earnings Report Reporting Today Rating Before Open After Close GIS FDS FDX, NKE No earnings reporting today. Earnings Surprises [rating] HEI HEICO Corporation Q4 $0.60 Missed by $-0.06 * * * * Sector Tracker Sector movement over the last 5 days Energy -1.56% Staples -3.14% Health Care -3.57% Industrials -3.62% Utilities -3.89% Financial -4.54% Materials -5.06% Real Estate -5.13% Discretionary -6.00% Communication -6.06% Information Technology -6.24% * * * * Industry Focus Capital Markets Services 21 39 4 Over the past 6 months, the Capital Markets subsector (KCE) has outperformed the S&P 500 by +7.04%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #3 of 21 subsectors and has moved down 2 slots over the past week. Top Stocks [rating] AMP Ameriprise Financial [rating] HLI Houlihan Lokey, Inc. [rating] AMK AssetMark Financial * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. 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