There truly is a disconnect between Wall Street and Main Street. The pinstriped crowd looks at the world through some-colored glasses, and while we're not sure whether they're rose or some other shade, their view of the world is certainly clouded by dollar signs, at the least. Their vision is that of an amorphous blob, a mass of numbers and data points and signals, charts and vector graphs all pointing in one orderly direction: toward their commission check. It is difficult for the average Wall Streeter to comprehend how people could miss a payment, budget and save, or go without something they desire.
Main Street's view is much more realistic. People are paid - and taxed - according to their worth, for the most part. You produce or you go home. You work or you become part of the underclass. Most Main Street Americans - businesspeople and consumers alike - comparison shop, love a good bargain and are generally (as compared to their Wall Street counterparts) frugal. They try to make ends meet, keep their places of employment and their homes clean and operable and they do most of these manual chores themselves. They understand just how much a dollar can buy and how many dollars they need to get through the week and the month. They have real needs and many of them are just a paycheck or three away from despair, if not already there.
These differences were never more noticeable than this afternoon, when the Federal Reserve announced that consumer credit outstanding declined at an annual rate of 5.6%, seasonally adjusted, down $11.5 billion, to $2.448 trillion in Febraury.
Wall Street's reaction to Main Street's frugality? You guessed it: fear and near-panic. Consumers not spending like drunken sailors is anathema to Wall Street. And not using credit is regarded as almost other-worldly. Wall Street just cannot get it through their heads that the rest of the world doesn't drive a Bentley, wear $2000 suits and fly to Curacao for weekends. Thus, when evidence like today's consumer credit condition - in decline 16 of the past 17 months - the investor class runs scared.
Sooner or later, they're also going to find out that many people can't afford the homes they're living in, and when that reality strikes home, it will make today's little scurry to the downside look like a walk in the park.
To illustrate just how much a drag on the US economy housing really is, this post and these graphs point out how far above historical levels housing prices galloped in the 2000s and just how poor the government's attempts to "stimulate" the market have been.
Since that's a story for another day, suffice it to say that Wall Street took a hit from the old reality pie straight in the kisser this afternoon. Following an exceptionally-well-received 10-year Treasury auction (another condition the "experts" had completely wrong), stocks were basically treading water until just before 3:00 pm, when the consumer credit news hit.
The Dow was off 124 points at the worst level, having earlier recovered lost ground after the $21 billion, 10-year Treasury auction which witnessed a 3.72 bid-to-cover ratio (far above the recent average of 2.87) and a solid 3.90% yield rate, which pushed 10-year yields further down, to 3.86%, by day's end. Yesterday, I wrote about fears of the 10-year heading North of 4% and why it isn't going to happen. Today we saw what was true. Indirect bidders (foreign central banks) accounted for 42% of the total, suggesting that maybe some people like US Treasuries at under 4% more than Greek's at around 7%.
Sure the Greek bonds offer more bang for the buck, but, then again, their economy might just blow up, too. Risk-avoidance is "in" once again.
Dow 10,897.52, -72.47 (0.66%)
NASDAQ 2,431.16, -5.65 (0.23%)
S&P 500 1,182.44, -6.99 (0.59%)
NYSE Composite 7,546.18, -58.26 (0.77%)
For a change, declining issues outpaced gainers, 3928-2577; new highs remained high at 600, compared to just 48 new lows. The most significant numbers were the volume readings, however, which evidenced a noticeable spike in trading activity. From a technical perspective, after days of low volume gains, a high-volume decline is a harbinger of doom and a sign that a corrective phase could soon be upon the markets. Almost everybody knew that stocks were overbought heading into earnings season and these upcoming 2-3 weeks could be damaging to sentiment long term.
NYSE Volume 5,700,141,000
NASDAQ Volume 2,872,620,250
The commodity market seemed uniformly confused by the day's data. Crude oil took a bit of a breather, losing 96 cents, to $85.88, but gold galloped ahead $17.20, to $1,152.30 and silver pushed higher by 27 cents, to $18.18, close to 52-wee highs. The metals moves make no sense at all in what can only be described as a deflationary environment, unless there was a rampant short squeeze, which many suspect this was. The metal may be giving an extended head-fake or be reacting to the credit numbers in a flight to safety.
Either way, the US is far from being clear of the crisis. Wall Street may be just beginning to find out what Main Street already knows.
Wednesday, April 7, 2010
Tuesday, April 6, 2010
Fear and the 10-Year Treasury Yield
Talk is rampant in financial circles over the trending 10-year bond yield, the benchmark Treasury that touched the 4.00% mark on Monday. In general terms, rising bond yields mean rising interest rates overall, from everything from credit cards to home mortgages and also serves as a early warning sign for inflation.
The run-up of the 10-year bond yield has sparked new widespread fears that inflation may return to US markets, crimping the year-long rally in stocks and pounding down any hope for recovery in the housing sector. These fears are largely unfounded, however, because the alignment of Treasury yields to the real economy is simply not sensible at this time.
First, the Fed isn't going to move on interest rates any time soon, even though they merely follow the direction of the markets as a normal course of operations. Second, higher interest for loans is something of a mystical chimera, since only mortgage loans have been held lower by the unprecedented slump in residential housing. Credit card rates for most Americans are already sky-high, with no relief in sight from the immoral banks and credit lending companies.
Third, as an inducement to inflation, bond yields should work as a dead weight on equities, as investors can make worry-free money on Treasuries as opposed to stocks. If stocks, and their underlying companies are forced to pay more for money that is going to slow down everything, from sea to shining sea. Additionally, high unemployment is underpinning the entire economy, producing slack demand, though the incredible sums of stimulus money has worked as an inducement to spend, baby, spend.
Treasury yields on the 10-year have been abnormally low for some time and will probably remain so, until there are real, powerful signs of a sustained recovery. The 160,000 jobs created in March are a one-off, hardly indicative of a trend, though one would have to believe that businesses simply cannot cut many more workers.
There are more factors at work, including flat wage growth and tight lending standards which are keeping robust economic growth in check. The 10-year hit 4%, and backed off immediately, as is the cyclical nature of the beast. The chances that it will surpass that mark and remain there are about as good as they are for yields to fall back into the 4.4 to 4.6% range, which is where they're likely to head in coming weeks and months.
What may be the real concern not finding any voice anywhere, is that foreign investors have soured on the longer-term Treasury offerings, the 10 and 30-year bonds, and are demanding a better payout. That would make more sense than any other argument recently being offered.
Investors on Wall Street still don't seem very afraid of anything, as stocks fell early in the day but rebounded on US dollar weakness. The weak dollar - strong stocks trade continues to be the height of Spring fashion, even as wrong-headed as that condition appears to be.
Dow 10,969.99, -3.56 (0.03%)
NASDAQ 2,436.81, +7.28 (0.30%)
S&P 500 1,189.43, +1.99 (0.17%)
NYSE Composite 7,604.44, +3.51 (0.05%)
Volume remained subdued as advancing issues soared past decliners late in the day, 3706-2731. New highs beat new lows by better-than a 10-1 margin, 917-90.
NYSE Volume 4,615,025,000
NASDAQ Volume 2,122,137,250
Oil rose for the sixth straight day, as though the warmer weather would serve as an inducement for everyone in America to go out for a leisurely drive. Crude for May delivery rose 22 cents, to $86.84, based entirely on nothing. There's are better arguments for oil selling for lower prices than there exists for supporting higher ones: higher prices for energy serve as a tax on consumers and takes away from other discretionary spending. But, being summer in America and the media foisting the parlance of "recovery" upon us, $3.00 a gallon is already standard in larger metropolitan areas.
Gold finsihed ahead by $2.20, to $1,135.10, though silver fell 19 cents to $17.92. We may be close to a temporary top in metals and most other commodities as well. The global economy cannot withstand a bout of inflation at this juncture, especially with entire nations suffering from the debt bomb. Consumers seem to be still pretty well entrenched, so where the spending is coming from is anybody's guess.
The bond yield bulls have it all wrong. Longer-dated instruments aren't going to exacerbate an already steep yield curve.
The run-up of the 10-year bond yield has sparked new widespread fears that inflation may return to US markets, crimping the year-long rally in stocks and pounding down any hope for recovery in the housing sector. These fears are largely unfounded, however, because the alignment of Treasury yields to the real economy is simply not sensible at this time.
First, the Fed isn't going to move on interest rates any time soon, even though they merely follow the direction of the markets as a normal course of operations. Second, higher interest for loans is something of a mystical chimera, since only mortgage loans have been held lower by the unprecedented slump in residential housing. Credit card rates for most Americans are already sky-high, with no relief in sight from the immoral banks and credit lending companies.
Third, as an inducement to inflation, bond yields should work as a dead weight on equities, as investors can make worry-free money on Treasuries as opposed to stocks. If stocks, and their underlying companies are forced to pay more for money that is going to slow down everything, from sea to shining sea. Additionally, high unemployment is underpinning the entire economy, producing slack demand, though the incredible sums of stimulus money has worked as an inducement to spend, baby, spend.
Treasury yields on the 10-year have been abnormally low for some time and will probably remain so, until there are real, powerful signs of a sustained recovery. The 160,000 jobs created in March are a one-off, hardly indicative of a trend, though one would have to believe that businesses simply cannot cut many more workers.
There are more factors at work, including flat wage growth and tight lending standards which are keeping robust economic growth in check. The 10-year hit 4%, and backed off immediately, as is the cyclical nature of the beast. The chances that it will surpass that mark and remain there are about as good as they are for yields to fall back into the 4.4 to 4.6% range, which is where they're likely to head in coming weeks and months.
What may be the real concern not finding any voice anywhere, is that foreign investors have soured on the longer-term Treasury offerings, the 10 and 30-year bonds, and are demanding a better payout. That would make more sense than any other argument recently being offered.
Investors on Wall Street still don't seem very afraid of anything, as stocks fell early in the day but rebounded on US dollar weakness. The weak dollar - strong stocks trade continues to be the height of Spring fashion, even as wrong-headed as that condition appears to be.
Dow 10,969.99, -3.56 (0.03%)
NASDAQ 2,436.81, +7.28 (0.30%)
S&P 500 1,189.43, +1.99 (0.17%)
NYSE Composite 7,604.44, +3.51 (0.05%)
Volume remained subdued as advancing issues soared past decliners late in the day, 3706-2731. New highs beat new lows by better-than a 10-1 margin, 917-90.
NYSE Volume 4,615,025,000
NASDAQ Volume 2,122,137,250
Oil rose for the sixth straight day, as though the warmer weather would serve as an inducement for everyone in America to go out for a leisurely drive. Crude for May delivery rose 22 cents, to $86.84, based entirely on nothing. There's are better arguments for oil selling for lower prices than there exists for supporting higher ones: higher prices for energy serve as a tax on consumers and takes away from other discretionary spending. But, being summer in America and the media foisting the parlance of "recovery" upon us, $3.00 a gallon is already standard in larger metropolitan areas.
Gold finsihed ahead by $2.20, to $1,135.10, though silver fell 19 cents to $17.92. We may be close to a temporary top in metals and most other commodities as well. The global economy cannot withstand a bout of inflation at this juncture, especially with entire nations suffering from the debt bomb. Consumers seem to be still pretty well entrenched, so where the spending is coming from is anybody's guess.
The bond yield bulls have it all wrong. Longer-dated instruments aren't going to exacerbate an already steep yield curve.
Monday, April 5, 2010
Self-fulfilling Market
Does it take a genius to see where the market is headed and why the rally which began a year ago is probably the most overblown equity bubble of all time?
Probably. And you're probably not a genius, so you have to trust the talking (nodding) heads on CNBC and Fox Finance for direction. Or maybe your broker, or cabbie, or the shoeshine guy.
Stocks just keep going higher, and we all know that they shouldn't be where they are, especially when unemployment is still at 9.7% and the housing market is in the midst of a 10 year slump. Why complain? We're all getting richer.
Well, OK. Former VP Dick Cheney said "deficits don't matter." He also said the Iraqi resistance was in "their last throes." That was 2005. So, take your advice from him if you like, but many of us with just a little dose of common sense understand that deficits do matter and that Dick Cheney was - and is - a liar galore.
Dow 10,973.55, +46.48 (0.43%)
NASDAQ 2,429.53, +26.95 (1.12%)
S&P 500 1,187.44, +9.34 (0.79%)
NYSE Composite 7,600.93, +61.91 (0.82%)
Advancing issues socked it to decliners again, 4872-1690, almost a 3-1 margin; new highs beat new lows, 926-106. Volume, however, was so low that it now has become an embarrassment to any serious student of markets. The persistence of low volume in the market is indicative of one that is self-funded, and when the wheels come off, when the game is over, these very same self-funders will be rending each other's flesh, just like in 2008.
NYSE Volume 4,269,053,500
NASDAQ Volume 2,050,514,750
Crude oil broke through some key resistance and gained $1.75 on the day, closing at $86.62, the highest price in nearly 18 months. And it's done this in an environment full of surplus. We should expect Dick Cheney to come out of his crypt and declare that supply and demand doesn't matter, either.
Gold is closing in on its all-time high, gaining $7.80, to $1,132.90. Silver scored another 23 cents to finish at $18.10.
It's all just so perfect for a world full of suckers who don't want to feel any hardship.
Probably. And you're probably not a genius, so you have to trust the talking (nodding) heads on CNBC and Fox Finance for direction. Or maybe your broker, or cabbie, or the shoeshine guy.
Stocks just keep going higher, and we all know that they shouldn't be where they are, especially when unemployment is still at 9.7% and the housing market is in the midst of a 10 year slump. Why complain? We're all getting richer.
Well, OK. Former VP Dick Cheney said "deficits don't matter." He also said the Iraqi resistance was in "their last throes." That was 2005. So, take your advice from him if you like, but many of us with just a little dose of common sense understand that deficits do matter and that Dick Cheney was - and is - a liar galore.
Dow 10,973.55, +46.48 (0.43%)
NASDAQ 2,429.53, +26.95 (1.12%)
S&P 500 1,187.44, +9.34 (0.79%)
NYSE Composite 7,600.93, +61.91 (0.82%)
Advancing issues socked it to decliners again, 4872-1690, almost a 3-1 margin; new highs beat new lows, 926-106. Volume, however, was so low that it now has become an embarrassment to any serious student of markets. The persistence of low volume in the market is indicative of one that is self-funded, and when the wheels come off, when the game is over, these very same self-funders will be rending each other's flesh, just like in 2008.
NYSE Volume 4,269,053,500
NASDAQ Volume 2,050,514,750
Crude oil broke through some key resistance and gained $1.75 on the day, closing at $86.62, the highest price in nearly 18 months. And it's done this in an environment full of surplus. We should expect Dick Cheney to come out of his crypt and declare that supply and demand doesn't matter, either.
Gold is closing in on its all-time high, gaining $7.80, to $1,132.90. Silver scored another 23 cents to finish at $18.10.
It's all just so perfect for a world full of suckers who don't want to feel any hardship.
Thursday, April 1, 2010
Gathering Momentum Prior to Payroll Data... April Fools?
First, an apology for yesterday's misinformation, in which I stated that the non-farm payroll data would appear within 24 hours of yesterday's post. I was mistaken, having jumbled Thursday and Friday. The government jobs data for March is due out Friday morning - tomorrow - at 8:30 am. Markets are closed, so the number can slip into the mainstream without much reaction, until Monday, that is.
Traders were tripping over each other today to buy stocks. Not that there was any particular rationale; stocks are overpriced right where they are. However, since it was the first trading day of a new quarter, there were probably a good number of funds with cash on hand, so, instead of just letting that money take up space, they put it to work. One can't really blame the traders, brokers and fund managers. They just don't know how to do anything else.
Dow 10,927.07, +70.44 (0.65%)
NASDAQ 2,402.58, +4.62 (0.19%)
S&P 500 1,178.10, +8.67 (0.74%)
NYSE Composite 7,539.02, +91.22 (1.22%)
Gainers beat back losers, 4348-2107. There were 593 new highs, and 73 new lows. Volume was better than average on the NASDAQ, but down in the dumps on the NYSE.
NYSE Volume 4,502,472,000
NASDAQ Volume 2,281,689,000
Oil gained $1.11, to a 17-month high, at $84.87 per barrel. Gold shot up $11.80, to $1,125.10, and silver was up 38 cents, at $17.88.
Most of the enthusiasm could be tied to this morning's initial unemployment claims figure, which came in at 439,000, which was a little better than the 450,000 expected, and slightly lower than last week's revised 445,000.
Call me skeptical, but the initial claims numbers sure seem more alarming than reassuring. If the investor class can get jazzed over beating expectations by 11,000, which works out to a 3% beat, then I suppose that the Dow could gain 1000 points if it were ever revealed that the US was actually creating jobs instead of losing them.
Unemployment remains stubbornly high at 9.7%, and these weekly unemployment claims should be falling into the neighborhood of 200-340,000 in a stable economy. From the looks of things, we're nowhere close to that.
Wall Street loves the numbers, though, as they seem to love every number, finding a silver lining in just about any data, no matter how horrific. It is rumored that many of those working on Wall Street also believe in the Easter Bunny. He looks a lot like Ben Bernanke.
Traders were tripping over each other today to buy stocks. Not that there was any particular rationale; stocks are overpriced right where they are. However, since it was the first trading day of a new quarter, there were probably a good number of funds with cash on hand, so, instead of just letting that money take up space, they put it to work. One can't really blame the traders, brokers and fund managers. They just don't know how to do anything else.
Dow 10,927.07, +70.44 (0.65%)
NASDAQ 2,402.58, +4.62 (0.19%)
S&P 500 1,178.10, +8.67 (0.74%)
NYSE Composite 7,539.02, +91.22 (1.22%)
Gainers beat back losers, 4348-2107. There were 593 new highs, and 73 new lows. Volume was better than average on the NASDAQ, but down in the dumps on the NYSE.
NYSE Volume 4,502,472,000
NASDAQ Volume 2,281,689,000
Oil gained $1.11, to a 17-month high, at $84.87 per barrel. Gold shot up $11.80, to $1,125.10, and silver was up 38 cents, at $17.88.
Most of the enthusiasm could be tied to this morning's initial unemployment claims figure, which came in at 439,000, which was a little better than the 450,000 expected, and slightly lower than last week's revised 445,000.
Call me skeptical, but the initial claims numbers sure seem more alarming than reassuring. If the investor class can get jazzed over beating expectations by 11,000, which works out to a 3% beat, then I suppose that the Dow could gain 1000 points if it were ever revealed that the US was actually creating jobs instead of losing them.
Unemployment remains stubbornly high at 9.7%, and these weekly unemployment claims should be falling into the neighborhood of 200-340,000 in a stable economy. From the looks of things, we're nowhere close to that.
Wall Street loves the numbers, though, as they seem to love every number, finding a silver lining in just about any data, no matter how horrific. It is rumored that many of those working on Wall Street also believe in the Easter Bunny. He looks a lot like Ben Bernanke.
Wednesday, March 31, 2010
Employment Data Bangs Stocks
People in the Bronx were probably wondering what that sound was right about 8:15 am, emanating from the financial district across the East River. It was the collective groans of investors heard upon the release of this morning's ADP Private Employment Report [PDF] for March.
The private data compiled by the experts at ADP should be held in much higher regard than the government's overworked and over-adjusted non farms payroll data, though it is not. Too many people have come to the erroneous conclusion that the government data is reliable, when nothing could be further from the truth. ADP, which, unlike the government, has no agenda to promote, offers a clear view of who's hiring, who isn't and in which sectors jobs are either gaining or losing.
This morning's report showed a decline of 23,000 jobs from February to March, and also revised February's loss from 20,000 to 24,000. So, the company has reported a total of 47,000 job losses in the private sector over the past two months.
And we're supposed to be in a recovery. The pundits and promoters on CNBC and in the financial press will tell you that employment is a lagging indicator, but believing in this kind of lag is getting a little bit old, so to speak. The economy "officially" turned the corner out of recession in the third quarter of 2009 (Remember "cash for clunkers?"), so, according to the usually suspect "experts", the US began growing again in July of 2009 and has continued to accelerate, or so we're led to believe.
Third Quarter 2009 GDP, according to the final estimate provided by the BLS, was up 2.2%, and the 4th quarter was up by even more, something on the order of 5.6%, again, according to official government estimates, which begs the question of how an "estimate" can ever be deemed "official."
In any case, it's now been 9 full months since the economy began to "recover,' but nowhere are there new jobs to be found, accentuated by today's ADP report. Many investors are still not going to be convinced that the economy isn't growing until the government data is released on Friday, which happens to be the Christian holiday of Good Friday, thus, the markets will be closed as is the tradition.
Now, when the government comes out with its data, expected to show an increase of anywhere from 75,000 to 300,000 jobs, the real story will be underneath the headline number and it will say that most of the new jobs were temporary Census jobs which will end in August. So, the big question for tomorrow is whether investors will come to their senses and realize that the March jobs number is, in reality, going to be pretty much a stinker, and get out of he way of the coming sell-a-thon, or will they stand fast, close ranks and defend their stakes in corporate America?
The answer will be provided within the next 24 hours, but I'm betting, based on today's down-up-down pattern, that stocks won't be affected too badly, only because our insider friends at Goldman Sachs, JP Morgan, Merrill Lynch and Citigroup will be there to backstop any precipitous decline, to say nothing of the clandestine work of the PPP.
It should be fun to watch, but, the truth of the matter is that jobs aren't gaining, and 9 months is an awful long LAG, somewhat unbelievable.
Dow 10,856.63, -50.79 (0.47%)
NASDAQ 2,397.96, -12.73 (0.53%)
S&P 500 1,169.43, -3.84 (0.33%)
NYSE Composite 7,447.80, -12.92 (0.17%)
Declining issues laid all over advancers, 3885-2575. New highs: 337; new lows: 52. Nothing unusual there, but volume was a bit higher than normal, an ominous sign for the Bulls.
NYSE Volume 5,221,368,500
NASDAQ Volume 2,398,859,000
Commodity traders may be in an even deeper state of denial than equity traders. Oil for May delivery rose another $1.39 today, to $83.76. Gold gained $8.80, to $1,113.30 and silver was up 20 cents, to $17.51.
This is where it gets tricky. The dollar index was down pretty sharply on the jobs report, which pushed commodity prices higher, though it's a fool's trade, because there's simply slack demand, no inflation and therefore, all asset classes should be discounted, not appreciated. The US dollar will rise and fall in the currency markets for a boatload of different reasons, most of them speculative, but the deflationary spiral continues unabated.
For a better perspective, US treasury bonds offer some clues, as they were driven higher today, pushing down yields, a natural occurrence following a weak economic report. The bond market is screaming double-dip, while the commodity and equity markets - which require much less discipline - are still lining up on the side of economic recovery. They both can't be right, and the smart money would side with the bond sellers, who must demand more in a weakened situation.
The US is in better shape than Europe, though not by much. Probably the best places outside the US to put money to work would be Brazil or India, whose economies at somewhat detached from the US-Europe-China triad.
The private data compiled by the experts at ADP should be held in much higher regard than the government's overworked and over-adjusted non farms payroll data, though it is not. Too many people have come to the erroneous conclusion that the government data is reliable, when nothing could be further from the truth. ADP, which, unlike the government, has no agenda to promote, offers a clear view of who's hiring, who isn't and in which sectors jobs are either gaining or losing.
This morning's report showed a decline of 23,000 jobs from February to March, and also revised February's loss from 20,000 to 24,000. So, the company has reported a total of 47,000 job losses in the private sector over the past two months.
And we're supposed to be in a recovery. The pundits and promoters on CNBC and in the financial press will tell you that employment is a lagging indicator, but believing in this kind of lag is getting a little bit old, so to speak. The economy "officially" turned the corner out of recession in the third quarter of 2009 (Remember "cash for clunkers?"), so, according to the usually suspect "experts", the US began growing again in July of 2009 and has continued to accelerate, or so we're led to believe.
Third Quarter 2009 GDP, according to the final estimate provided by the BLS, was up 2.2%, and the 4th quarter was up by even more, something on the order of 5.6%, again, according to official government estimates, which begs the question of how an "estimate" can ever be deemed "official."
In any case, it's now been 9 full months since the economy began to "recover,' but nowhere are there new jobs to be found, accentuated by today's ADP report. Many investors are still not going to be convinced that the economy isn't growing until the government data is released on Friday, which happens to be the Christian holiday of Good Friday, thus, the markets will be closed as is the tradition.
Now, when the government comes out with its data, expected to show an increase of anywhere from 75,000 to 300,000 jobs, the real story will be underneath the headline number and it will say that most of the new jobs were temporary Census jobs which will end in August. So, the big question for tomorrow is whether investors will come to their senses and realize that the March jobs number is, in reality, going to be pretty much a stinker, and get out of he way of the coming sell-a-thon, or will they stand fast, close ranks and defend their stakes in corporate America?
The answer will be provided within the next 24 hours, but I'm betting, based on today's down-up-down pattern, that stocks won't be affected too badly, only because our insider friends at Goldman Sachs, JP Morgan, Merrill Lynch and Citigroup will be there to backstop any precipitous decline, to say nothing of the clandestine work of the PPP.
It should be fun to watch, but, the truth of the matter is that jobs aren't gaining, and 9 months is an awful long LAG, somewhat unbelievable.
Dow 10,856.63, -50.79 (0.47%)
NASDAQ 2,397.96, -12.73 (0.53%)
S&P 500 1,169.43, -3.84 (0.33%)
NYSE Composite 7,447.80, -12.92 (0.17%)
Declining issues laid all over advancers, 3885-2575. New highs: 337; new lows: 52. Nothing unusual there, but volume was a bit higher than normal, an ominous sign for the Bulls.
NYSE Volume 5,221,368,500
NASDAQ Volume 2,398,859,000
Commodity traders may be in an even deeper state of denial than equity traders. Oil for May delivery rose another $1.39 today, to $83.76. Gold gained $8.80, to $1,113.30 and silver was up 20 cents, to $17.51.
This is where it gets tricky. The dollar index was down pretty sharply on the jobs report, which pushed commodity prices higher, though it's a fool's trade, because there's simply slack demand, no inflation and therefore, all asset classes should be discounted, not appreciated. The US dollar will rise and fall in the currency markets for a boatload of different reasons, most of them speculative, but the deflationary spiral continues unabated.
For a better perspective, US treasury bonds offer some clues, as they were driven higher today, pushing down yields, a natural occurrence following a weak economic report. The bond market is screaming double-dip, while the commodity and equity markets - which require much less discipline - are still lining up on the side of economic recovery. They both can't be right, and the smart money would side with the bond sellers, who must demand more in a weakened situation.
The US is in better shape than Europe, though not by much. Probably the best places outside the US to put money to work would be Brazil or India, whose economies at somewhat detached from the US-Europe-China triad.
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