Sunday, January 06, 2008
Don't Blame the Workers!
My last posting said if the December employment report was bad watch out below. How true that was! The Employment report was bad and the Dow fell 256.54 points to close at 12,800.18. The SPX gave up 35.53 points closing at 1,411.63. Our play is already deep in the green and we are looking good.
The December employment report put the markets in a sour mood Friday when nonfarm payrolls rose by just 18,000. This was well below estimates for a gain of 70,000. Adding injury to insult, the unemployment rate rose 3-tenths to 5.0 percent. The horrible thing is, according to stuff I read in the papers, the unemployment rate has never jumped so drastically since the 1940's without the economy being in a recession. However, with inflation still a concern, we need to start talking about stagflation
All this week the data has been disappointing, including various releases on the manufacturing sector. On Wednesday, the ISM Index fell into contraction territory below 50. It hasn’t helped that energy prices have soared to new highs as well, although crude fell more than a dollar to a price just above $98. Next week will be a quiet one for economic data so we will have to see if this is a positive or negative for stocks. Of course, comments by the Fed will be closely scrutinized for signs of what the Fed plans to do with interest rates at their meeting on the 21st January (I think thats the right date!). The Fed fund futures Friday were pricing in a 50 percent chance of a 50-basis point cut and a 35 percent chance of a 25-basis point cut.
Our play is almost worthless. We can probably buy it back for about 10c and then decide if we want to place something else for the last 10 days in the trading cycle.
We'll see what happens Monday and make a decision then.
Until next time.
The December employment report put the markets in a sour mood Friday when nonfarm payrolls rose by just 18,000. This was well below estimates for a gain of 70,000. Adding injury to insult, the unemployment rate rose 3-tenths to 5.0 percent. The horrible thing is, according to stuff I read in the papers, the unemployment rate has never jumped so drastically since the 1940's without the economy being in a recession. However, with inflation still a concern, we need to start talking about stagflation
All this week the data has been disappointing, including various releases on the manufacturing sector. On Wednesday, the ISM Index fell into contraction territory below 50. It hasn’t helped that energy prices have soared to new highs as well, although crude fell more than a dollar to a price just above $98. Next week will be a quiet one for economic data so we will have to see if this is a positive or negative for stocks. Of course, comments by the Fed will be closely scrutinized for signs of what the Fed plans to do with interest rates at their meeting on the 21st January (I think thats the right date!). The Fed fund futures Friday were pricing in a 50 percent chance of a 50-basis point cut and a 35 percent chance of a 25-basis point cut.
Our play is almost worthless. We can probably buy it back for about 10c and then decide if we want to place something else for the last 10 days in the trading cycle.
We'll see what happens Monday and make a decision then.
Until next time.
# posted by Paul @ 8:30 AM 
