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Importance of the October Jobs Report Dissected
We can ignore the debates over this lagging indicator…
The Labor Department reported on Friday that 190,000 more jobs were lost in October, only slightly worse than the consensus forecast of 175,000 lost jobs, and job losses for August and September were revised to fewer losses than previously reported. Good news. The negative surprise was that the unemployment rate shot up from 9.8% in September to 10.2% in October, considerably worse than expectations that unemployment would rise to 9.9%.
But should the report influence thinking in either direction regarding the prospects for economic recovery?
I don’t think so.
As I have noted in this column…
Recession Has Ended But Has the Bull Market?
Short-term traders continue to dominate…
The Great Recession has ended. Halleluiah! It was the worst recession in many ways since the Great D. Just imagine. After four straight negative quarters the economy recovered in the third quarter. Not only did it recover, but GDP rose 3.5% in the third quarter, even more than the consensus forecast of a gain of 3.2%.
The relief is so great you can . . . . well, you can hardly detect it.
The stock market loved it – for about seven hours, with the Dow closing up 200 points on Thursday after the report was released. The market…
Housing Industry Painting a Mixed Picture
Disturbing reports regarding the first-time buyer program…
In early 2007, after the real estate bubble began bursting and the extent of the problems from sub-prime mortgages became clearer, I predicted the aftermath would have the economy in the worse recession since 1973-74 by the end of the year (2007).
At the time, I also said the problems for the economy began in the housing industry and the recovery would also eventually begin in the housing industry.
Continuing to emphasize the importance of the housing industry, in predicting in February of this year that the stock market would launch into a substantial rally…
Will Q3 Earnings Support the Stock Market Rally?
Less worse may not be good enough this time around…
The rally off the March low has been remarkable. The market plunged too far to its March low, on fears about the economy that had not been seen since the Great Depression. So a substantial rally off that low was to be expected.
Even so the rally has been unusual. A number of long-time successful money-managers have been warning since May and June that the rally was getting ahead of reality, factoring into stock prices a faster and larger economic recovery than will be experienced. Their evidence included that consumer spending,…
What The Heck Are Central Banks Up To?
Could be a deliberate attempt to introduce uncertainty into markets…
At its FOMC meeting last month the Fed said that while it is more confident that the economic recovery is underway, it expects to keep interest rates low for some time to come. Analysts took that to mean until sometime late in 2010.
So it raised eyebrows when a few days later Federal Reserve Governor Kevin M. Warsh said that “unwinding of the Fed’s unconventional policy tools will likely need to begin before it is obvious that it is necessary, and possibly with greater force than is customary.”
However, former Fed…
Double-dip Recession Could Be In The Cards
Deterioration in economic reports is worrisome…
The economic slowdown and severity of the stock market decline last year, and in January and February of this year, had the financial media and investors convinced the recession was headed down into the next Great Depression, and the Dow was therefore headed down to 1,000.
I didn’t believe it. After being bearish and in downside positioning last year enough to be up 9.2% for a year when the S&P 500 was down 36%, I turned bullish in early March. In this column I predicted a substantial rally would take place.
My reasons were that in the…
Federal Reserve’s Toughest Job Lies Ahead
Unwinding with possibly greater force than is customary…
Talk that was simmering before, about how the Fed will manage the eventual withdrawal of its massive economic stimulus programs, intensified last week when the Fed’s statement after its FOMC meeting was even more positive about the economic recovery than its previous statements.
The Fed said “Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing.”
However, the statement also included enough cautionary phrases to keep analysts guessing as to just how optimistic the Fed really is, as the statement also said; Household…
U.S. Dollar Upside Reversal May Be Near
This despite pressure to replace it as the global currency
The U.S. dollar fell to a 12-month low against most major currencies on Thursday, with by far the majority of currency traders believing it will continue its freefall. And on the fundamentals, the dollar doesn’t seem to have much going for it to reverse the trend.
Global interest rates are at historic lows, but few as low as the record low Fed Funds rate of 0 to 0.25% in the U.S. The European Central Bank’s key interest rate is also at a record low, but at 1%. That creates lucrative…
Don’t Bet on Big Changes to the Financial Services Industry
Are Wall Street reforms just window dressing?
Did you think it would last, that feeling that Congress and the people were mad as hell and not going to take it anymore?
I refer to the anger over what Wall Street and the banking industry has done to the nation yet again, and the determination they will be brought under control so it can never happen again.
Not going to happen.
The stock market is rallying again. This economic crisis is over. So the need to worry about it happening again in the future, and taking steps to prevent it, has been pushed to the back…
September Stock Trading Could Defy History
Don’t be fooled by this year’s patterns though
The market has done quite a job of ignoring its history so far this year.
It experienced a sizable loss of 25% in January and February, during its usually positive winter months, not launching into a sizable rally until March (while still in its historically favorable period).
But that rally continued to roll right through May, defying its historical ‘Sell in May and go away’ history.
It did decline for four straight weeks beginning in June, following its history of “If May doesn’t get you, June will.”
The rally then resumed in July,…
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