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HomeUnemployment Report 3-6-09
Posted by Larry Doyle on March 6th, 2009 9:21 AM |
The highly anticipated monthly unemployment report was just released. On the surface, the numbers may appear to be in line with expectations, but looking deeper into the numbers the report is actually worse than expected. Let’s dive into the numbers and comment on what they mean for our economy and markets.
The Unemployment Rate jumped from 7.6% to 8.1%. The rate was expected to move to 7.9%. The 8.1% rate is a 25 year high.
Non-farm Payrolls lost 651k jobs against an expectation of a loss of 650k jobs. In line with expectations, right? Well, one needs to look at the revisions to the prior two months to get the full picture. Non-farm payroll revisions from the prior two months show a further loss of 161k jobs over and above initial reports. That’s ugly!! Total jobs lost since December 2007, when the recession officially began, are 4.4 million!! More than half of those jobs have been lost in the last 4 months.
Average hourly earnings only rose .2. This number is not exactly robust and will further pressure consumers who are already cash constrained. (more…)
Midday Market Update . . . U-G-L-Y
Posted by Larry Doyle on March 5th, 2009 12:45 PM |
I had written that yesterday’s 2-3% upward move in the market was very likely a Dead Cat Bounce. Well, that cat is burrowing further into the ground as markets have more than fully retraced yesterday’s upward move and are making new lows. This type of price action, known as lower highs and lower lows, confirms bearish trends.
I hope our readers know that all financial information you could possibly want is on the Market Data tab on the Sense on Cents header. That resource provided by the Wall Street Journal is not only a great way to get a quick and comprehensive snapshot of all sectors of the market, but also a great way to keep your brokers and financial planners on their toes and working for you!!
Let’s take a quick look at the markets and then I will offer some commentary. (more…)
Dead Cat Bounce
Posted by Larry Doyle on March 4th, 2009 3:00 PM |
The equity markets are up almost 3% today. Did we just put in a bottom? Can we at long last expect better price performance? Are we seeing a turnaround in the economy? Well, in Wall Street parlance today’s price action is known as a “dead cat bounce.” I had mentioned a day or two ago that a short term RSI (relative strength index) had fallen below 30%. Anytime that index gets that low, the market is susceptible to a bounce to force some short covering.
The Federal Reserve released a report, known as the Beige Book, and highlighted that they expect No Turnaround Soon in the economy.
Additionally, even though the major market averages are up 3%, why is it that the major capital providers are down significantly on the day? Look at the price changes for the following: (more…)
How Wall Street and Washington Betrayed America!!
Posted by Larry Doyle on March 4th, 2009 11:03 AM |
While politicians, bankers, regulators, and commentators can and will point fingers as to where and how our system of financial oversight broke down, make no mistake it was due to too many people making and taking too much money!! I have highlighted the grotesque system of lobbying that has developed and corrupted our society in More Legalized Bribery.
We watch daily hearings on Capitol Hill in the spirit of doing what is right for our country. Please!! Spare me the nonsense and pandering. While collectively we deal with markets that are now down over 50%, the pols and the bankers have effectively robbed the bank and left the taxpayers with the bill to clean up the mess. Barron’s wrote a brief piece on this topic: how the Financial Sector Spent $5 Billion Lobbying Washington Over the Last Decade!!
It is high time we attach names and faces to those politicians and lobbyists who fed at this trough!!
LD
Mo’ Money…
Posted by Larry Doyle on March 3rd, 2009 2:48 PM |
There are a string of events in the market today that all highlight the need for entities to refinance debt and raise capital. Given the tightness of credit and the onerous terms being exacted within the bond market, many firms are massively capital constrained. These issues are global in nature. From our friends at Bloomberg, I offer the links to a number of these situations. In light of these types of situations, one does not need to be in a hurry to buy stocks. Additionally, given the demands for capital, I still maintain that rates are headed higher.
I will share with you some of the current problem situations getting serious attention:
1. GE Falls Below $7 on Concern Finance Unit May Need More Capital
2. Corporate Bond Losses Drive Investors ‘to the Bunker’
3. Metlife, Lincoln Sink as U.S. Stock Rout Increases Capital Need
4. German Real Estate Firms Owe Billions, Face Deadlines
LD
Why is George Soros Short the Euro? MUST READ!
Posted by Larry Doyle on March 3rd, 2009 6:10 AM |
In very short order, I have gained a deep respect and regard for our Economic All-Star, John Mauldin. I have come to appreciate that Mauldin and I view the market through the same lens focused on the global economy. While many media outlets focus on the day to day, if not hour to hour trading activity, I believe they are truly missing the forest for the trees.
While I have written twice over the last week about eastern Europe being the weakest link in the world of global finance, Mauldin and his colleague Niels Jensen of Absolute Return Partners provided insights and analysis that is numbing.
Why is George Soros short the euro? Let me provide a synopsis of Mauldin’s and Jensen’s “Europe On the Ropes.” Assuming those visiting Sense on Cents have an interest in the markets and economy, this piece is somewhat lengthy, but a MUST READ!! A link is provided at the end of my review. (more…)
A Virtual Smorgasbord
Posted by Larry Doyle on March 2nd, 2009 4:24 PM |
On the heels of the news about AIG, Berkshire, and HSBC, the equity markets have found no support today and are down 4%. While the malaise of the markets has much of the focus, let’s review a few other items that I see on today’s menu:
1. In regard to AIG, current CEO Edward Liddy and former CEO Hank Greenberg have started some public feuding over the nature of AIG’s problems. Greenberg is trying to make the case that the risks underwritten at AIG occurred after his departure. Liddy responded that the culture, the compensation system, and the division housing the bulk of AIG’s risk all developed under Greenberg. Wow!! When our country is screaming for leadership, we have senior executives playing the blame game and pointing fingers. How pathetic!! (more…)
What’s Driving the Market Lower Today?
Posted by Larry Doyle on March 2nd, 2009 9:50 AM |
Stock markets are expected to open lower by another 1.5% on the open this morning. What’s driving them lower….again?
1. News that AIG reported an actual 4th quarter 2008 loss of $61 billion. The government will inject ANOTHER $30 billion into this black hole. WHY? Very simply because AIG is the largest holder of CDS (credit default swaps) that serve as insurance for a number of banks and money managers. These CDS cover a wide array of assets but primarily the sub-prime mortgage space. Kevin Doyle of 12th Street Capital, and a guest here on my weekly No Quarter Radio program back in early January, shares that the index that tracks the sub-prime market is at its lows. No surprise there.
While the various media outlets are highlighting this story now, I wrote extensively about AIG and How Does One Lose $125 Billion? on February 24th. I not only wrote about the losses, but also delved into the culture that developed over the years at AIG under Hank Greenberg. Not a pretty picture and seemingly not a lot of integrity in that company. Now we pay. (more…)
The Weakest Link is Weakening
Posted by Larry Doyle on March 2nd, 2009 6:00 AM |
The other day I highlighted the fact that 12 eastern European countries would solicit a bailout from the European Union over the weekend in Brussels. I defined this bloc of eastern European countries as currently the Weakest Link in the global economy. Well, if they were the weakest link then they just got weaker as they were rebuffed in their request for aid.
The dynamic at work in the weekend’s emergency meeting held in Brussels is a play on beggar-thy-neighbor policies implemented during times of economic stress.
There are actually a number of factors influencing the European Union’s refusal to provide bailout money to these eastern European nations. Included in these factors are the following: (more…)
