Unemployment Hits 8.5%

One of the reasons why the stock market rallied yesterday was that the Financial Accounting Standards Board relaxed some of its accounting rules. I’m certainly glad for yesterday’s rally, but let’s be frank: If a company wants to fudge a bit on their numbers, they now have a chance.

The rule change makes sense for insurance companies because they often hold bonds. But it doesn’t make sense for banks that like to sell mortgage pools and other loans.

The big news this morning was the unemployment report. The jobless rate jumped to 8.5% last month to reach its highest level in 25 years. If you include part-time and discouraged workers, then the unemployment rate would be 15.6%. Last month, the economy shed 663,000 jobs.

Even though previous months were revised higher, that happens every month. Since President Obama escaped the G-20 summit without much public criticism, the next hurdle will be the implementation of the Secretary Geithner’s private/public partnership plan, followed by the dismal first-quarter (down 34% for the S&P 500). If we get over these hurdles, then we’ll be in great shape and not look back. Investors should continue focusing on fundamentally superior stocks.

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