Archive for the ‘jobs’ Category
Monday, March 1st, 2010
This morning the market is up on the news that consumer spending was higher than expected while incomes, though up, were lower than expected. The savings rate fell to 3.3%. At least we are still saving something. What was interesting about these numbers was that wages and salaries were up .5% but most of that was caused by working longer hours not with an increase in workers.
In every economic recovery jobs lag but the first sign of a jobs recovery is longer work weeks and an increase in part time workers. That seems to be holding true for this one though it seems slower.
ISM manufacturing for February and construction spending for January were also reported this morning. Construction spending was anticipated to be down .6%, an improvement from last month when it was down 1.2%. The actual number was in line with the expectations. The ISM index was targeted to be 58 but came in at 56.5. The market held up after these reports.
The numbers continue to show a slowly improving, struggling economy. Why hasn’t all that government spending translated into a stronger economy? Maybe because a lot of the spending will happen this year and next and most of the money so far has been used to save the banks. Maybe that was necessary but at some point the rest of the economy needs to recover. Healthier banks have not helped the overall economy yet.
Good Trading
Steve Peasley
Posted in banks, Current News, Financial Outlook, housing, Important, Industry Analysis, jobs, Uncategorized | No Comments »
Thursday, February 18th, 2010
The report this morning of weekly unemployment claims jumped unexpectedly which demonstrates the weakness of the economic recovery. Jobs have not started to return and likely won’t for some time. It will be a slow process and will feel like a jobless recovery. The job market is improving but at such a glacial rate no one is going to be happy about it.
Wholesale inflation numbers reported this morning also jumped. January’s number was up 1.4% but core inflation which excludes food and energy was up only .3%. The problem is that both numbers were above expectations.
We will see retail inflation numbers tomorrow. I have a feeling that the producers might be experiencing inflation but they are going to have a hard time passing it along to the consumers. The economy is just too weak at this point to absorb price increases.
It may not feel like it but the economy is gaining strength and will likely continue to do so throughout most of this year. The stock market will realize this and will rise, just do not expect it to be in a straight line or expect it to be like last year’s rally. The rally is going to be much more muted this year.
Good Trading
Steve Peasley
Posted in Current News, depression, Industry Analysis, jobs, Uncategorized | No Comments »
Friday, February 5th, 2010
 The economy is gaining strength but that has not and is not translating into astronger stock market at this point. Yesterday we had a stronger than expected retail sales report, up 3.3% when it was expected to be up 2.5% and factoryorders were up 1%. That too was better than expected. However, it was the big productivity report that was truly surprising. It was up 6% and the work week increased.
Jobs are the focus this morning.
The stock market pressure seems to be coming from a stronger dollar because of the weakness in the Euro. This is a very interesting scenario. Our economy is now looking better than Europe’s and because of that the dollar is gaining strength. The dollar bottomed at the beginning of December and much of that month the stock market continued higher though the pace was very slow. Then in January the market began to correct starting in the middle of the month as the dollar kept gaining strength.
Why this is so interesting is that history has taught us that a strong U.S. dollar means a strong stock market. That relationship has been turned around.
At some point the strong dollar will be viewed as a benefit by investors and traders. It makes sense because the dollar gains strength against other currencies because our economy is looking better than theirs. Of course today it is a world economy and that might be why it’s different this time. However, whenever you think it’s different this time it reverts back to the norm.
This is a correction, one that was expected. It’s a matter of degree.
Good Trading
Steve Peasley |
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Posted in Current News, Financial Outlook, Important, Industry Analysis, jobs, stock market, Uncategorized | No Comments »
Tuesday, May 12th, 2009
The week started on an up note. The stock market got a boost from the existing housing sales report which showed sales up 3% nationwide with a more than 8% increase in the west. Also on Monday a report on China’s economy showed its manufacturing sector growing much stronger than expected. That led the market higher and set a tone indicating our economy will eventually recover.
By mid week, after a couple good days, we had a sell off on Thursday which was broad based and painful. However, this morning with the bank stress test and an employment report for April behind us without any surprises the market decided to rally again, at least so far this morning. This is an obvious case of the market climbing a wall of worry.
The economic numbers actually were very encouraging this week. Retail sales were up for April by .3% and for last week up .7%, but what was more surprising was the first time jobless claims which fell by 34,000 this week and the four week average fell as well by 14,759. True jobless claims sit at over 600,000 which are very high but the stock market cares about the trend and is looking for the beginning of the change. That seems to be happening. Can this change turn into actual growth? At some point it will but not for a number of months, maybe by the fourth quarter this year or next. At some point the worry will turn to the strength of the recovery but so far no one is talking about that, yet!
We have had several weeks in which economic numbers, though still showing us that the U.S. economy is in a recession, seem to point to a turn from free falling to just falling or leveling off. The just ended earnings season came in better than expectations. Of course those expectations were severely downgraded at the beginning of the year therefore beating them is not all that difficult. The real test will be the sustainability of improving numbers. Can that happen?
I believe it will. The LIBOR rate is now below 1% when a few months ago it was as high at 5%. That is the rate banks lend to each other. The mortgage rates are at 5% or less and this week we saw productivity increase by .8%. Add these stats to all the others these last few weeks and we have strong evidence that things will get better. Finally, China, who embarked on their own stimulus plan, is already showing signs of strengthening growth despite the slow down in exports. The guidance, by independent firms, is calling for an increase in China’s GDP from 6% growth to 8% this year.
Does this mean the stock market is going to rally straight up from the March 9th low? Probably not. We will have corrections along the way. Any correction will be one to buy not sell. At the same time taking profits every so often is not a bad thing. Since China is already recovering and growing we have increased our exposure to the Asian market. You need to go where the growth is and since the stock markets of the Far East fell a lot harder than ours it has made all of Asia a good place to invest, despite the risks of lack of transparency and multiple books that their companies keep.
It is time to invest and has been for several weeks. No one knows when and where the bottom is but we can look back and clearly see a strong bottom of the various markets that took place on March 9th. Put fear aside and let’s make some money.
Posted in banks, Currency, Current News, Financial Outlook, Hope, housing, Industry Analysis, jobs, recession, stimulus package, stock market | No Comments »
Tuesday, April 21st, 2009
The market this morning decided to give back some of its recent gains. This certainly should have been expected and it’s a question of how much will the market retract? Actually, a pullback will be a healthy sign that we have reached the bottom set in early March and that the market with the economy has a brighter future for the rest of the year.
The large merger deals announced by Pepsi and Oracle and a great earnings report by Eli Lilly Company did nothing to help the market. Also, Bank of America announced surprisingly good earnings this morning though the bank stated credit defaults were still rising. None of that good news mattered.
The stock market reaction today is a clear sign that it is ready for a pullback. It could be short and sharp, but it should only be a pullback and one that should be bought not sold. Having cash on the sidelines waiting for it to finish its pullback, and having a hedge against this fall has ‘not’ been a benefit in the recent rise, but the market will now give you an opportunity to enter the market at better prices and exit your short positions.
It would be prudent to wait a few days to let the market work.
Good Trading
Steve Peasley
Posted in banks, commodities, Currency, Current News, Foreclosures, GDP, Hope, Important, Industry Analysis, jobs, recession, stimulus package, stock market, Uncategorized | No Comments »
