Posts Tagged ‘jobs report’

Markets Drop 200 Pts; Banks Take Hit

Friday, September 2nd, 2011

After 4 days of phenomenal gains, markets remain volatile. Yesterday’s last 60 minute drop was led by a report that the US government was seeking billions from US banks did not stem the selling. The Dow Jones Industrial Average opened sharply lower, led by BofA down 220 points to 11270. Employment growth  or the lack of exacerbated the selling, grounded to a halt in August as non-farm payrolls were unchanged, according to the Labor Department—the weakest reading since last September. Despite the lack of employment growth, the jobless rate held steady at 9.1 percent. So as long we stay above that 1270, markets can possibly regroup and come back. Anything below 1270, will signal a sell.

A lawsuit is being prepared against the big U.S. banks by the Federal Housing Finance Agency. Separately, the Fed has asked Bank of America (NYSE:BAC) to show what measures it could take if business conditions worsen, adding to the bank’s sharp decline. The federal agency that oversees the mortgage giants Fannie Mae and Freddie Mac is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble, and seeking billions of dollars in compensation.

The Federal Housing Finance Agency suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs, and Deutsche Bank. The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value. Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

Last month, the insurance giant American International Group filed a $10 billion suit against Bank of America, accusing the bank and its Countrywide Financial and Merrill Lynch units of misrepresenting the quality of mortgages that backed the securities A.I.G. bought.

Greek Drama

Meanwhile, Greece and its international lenders said that the country will miss its budget deficit target this year, adding to concerns that the region’s sovereign debt crisis may worsen. Greece’s 2011 budget deficit will be higher than originally thought. Just how high remains a point of disagreement between the Greek government and officials from the IMF and EU, as talks over handing over the next tranche of aid to the ailing euro zone member continue in Athens.

The IMF and EU now see the deficit hitting 8.6 percent of gross domestic product while the Greek government put the number closer to 8 percent, blaming a deeper than expected recession. The IMF and EU, while aware of the recessionary impact, are reported to believe failure to implement medium-term fiscal plans are behind the higher than expected shortfall.

To add further to the insult talks between Greece and international inspectors on whether it has met conditions for a new aid tranche have been put on hold, officials said on Friday, after disagreements over why and by how much its deficit cuts program has fallen behind schedule. Finance Minister Evangelos Venizelos said the talks had been suspended and would resume on Sept 14, after technical experts had had a chance to study relevant data. The first cycle of negotiations is completed. The inspectors will return in 10 days to see the budget plan for 2012 and conclude the procedure.

There are no Greek government bonds maturing before March next year, which means the country will not be at immediate risk of default even if it does not get this month’s 8 billion euro tranche from the rescue package as planned. But the country is continuing to generate large deficits and could at some point face cash shortages. An official close to the inspectors said on Thursday the 2011 budget deficit will be at least 8.6 percent of GDP compared to a target of 7.6 percent.

On Tap Next Week:

MONDAY: Labor Day Holiady—All Markets Closed
TUESDAY: ISM non-mfg index, Fed’s Kocherlakota speaks; Earnings from PepBoys
WEDNESDAY: Weekly mortgage applications, Beige Book; Earnings from Hovnanian
THURSDAY: BoE announcement, ECB announcement, international trade, jobless claims, quarterly services survey, oil inventories, Bernanke speaks, consumer cerdit, TI mid-quarter update, OECD’s global economic outlook, Obama talks jobs/economy; Earnings from Smithfield Foods
FRIDAY: McDonald’s August Sales, wholesale trade, G7 finance ministers meet; Earnings from Kroger, Lululemon Athletica

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Markets Soar 100+ After Jobs Data

Friday, September 3rd, 2010

The DJIA rose more than 110 points after employment numbers were better than predicted for August. Here’s the relatively good news just posted by the U.S. Department of Labor: Nonfarm payroll employment changed little — down just 54,000 jobs in August, and the unemployment rate was about unchanged at 9.6 percent. Because of the end of many Census jobs, government employment fell by 114,000. But private-sector payroll employment continued to trend up modestly, adding a net 67,000, the government reported. The August report also revised earlier numbers from June and July. Initially, a combined job loss of 351,000 had been reported. Revised, the loss was reduced to 229,000.

Job gains were reported in the health care and construction sectors. But jobs fell by 27,000 in manufacturing. Hours on the job were unchanged. Average hourly earnings were up by just 0.3 percent. The still-disturbing number: 14.9 million workers are unemployed and looking for work, and about 6.2 million of them have been jobless for six months or more.

It’s not a great report, but it’s much better than the market was expecting. You are seeing job growth, but it’s really not enough. One encouraging sign is temp-help payrolls rose 17,000, meaning employers may be willing to hire fulltime workers in the near future. Temp-help payrolls had stalled in June and July after averaging a monthly gain of 45,000 from October to May. It’s still suggesting more of the same positive job growth, but not especially strong.

President Barack Obama is scheduled to make a speech about the economy later this morning.

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Anemic Job Growth Report Tanks Markets Then Recovers

Friday, August 6th, 2010

The move lower was largely triggered by a weaker than expected jobs report and word that Goldman Sachs had ratcheted down their growth expectations for the economy. U.S. stocks finished well off earlier lows on Friday, leaving intact strong weekly gains, as investors re-assessed news of worse-than-expected job losses in July amid hopes that the Federal Reserve might next week hint at new steps to boost the economy.

The DJIA 10,654, fell 21.42 points, or 0.2%, to end at 10,653.56. The index recovered much of a 160-point morning drop to gain 1.8% during a week of light volumes. Also weighing Friday was a decline in consumer credit amid increased saving by American households. Consumer credit outstanding fell 0.7% in June, while the national savings rate rose to 6.4% from 6.3% in May, the Federal Reserve said in a report late Friday.

U.S. employers cut 131,000 jobs from nonfarm payrolls in July. June payrolls were revised to show 221,000 jobs were lost that month, nearly twice the original estimate. The unemployment rate held steady at 9.5 percent. Economists had expected to see payrolls drop by 65,000 in July and the unemployment rate to rise to 9.6 percent. Jobs in the private sector rose by 71,000, after a 31,000 gain in June, while the government lost 202,000 jobs in July. Economists had expected private-sector jobs to increase by 90,000. Job recovery appears to be a myth. Like I have been stating all along, inorder to creat jobs we need a new revoloution, a new sector, now technology as the “internet age” brought for the 1990′s.

Meanwhile, Goldman Sachs economists cut their forecasts for U.S. economic growth in 2011, saying GDP is likely to average 1.9 percent next year versus a previous forecast of 2.5 percent. Goldman took down their 2010 estimates due heightened concerns of Congressional resistance to do what is necessary in terms of fiscal stimulus. They also expect the jobless rate to rise to 10% in early 2011 and stay there for the rest of that year. Goldman said if the Fed starts reinvesting its money, it would be a “baby step” toward renewed unconventional easing.

Next Tuesday, the Federal Open Market Committee meets to discuss monetary policy. While policy makers are widely expected to hold rates steady, traders will be watching for whether the Fed will resume buying mortgages and Treasurys.

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S&P Fails To Break 1105

Thursday, June 3rd, 2010

The S&P 500 bumped up against its 200-day moving average and failed to break through the third time it has done so in the last 2 weeks. A break through that 1,105 level would be a bullish signal.

We brushed agianst the 200-day moving average by mid-day and then pulled back with volume being light. With the constant tug and pull off this leve, these are the things that give me fear as and investor. 1105 had been support and now it’s become resistance. Also, the market has priced in a strong jobs report already. I lean to the bearish camp.

Will Friday’s jobs report provide the catalyst to take this market higher?

G-20 Meeting

The G-20 was established in 1999, in the wake of the 1997 Asian Financial Crisis, to bring together major advanced and emerging economies to stabilize the global financial market. Since its inception, the G-20 has held annual Finance Ministers and Central Bank Governors Meetings and discussed measures to promote the financial stability of the world and to achieve a sustainable economic growth and development.South Korea will use this weekend’s meeting of Group of 20 finance ministers to enlist support for an international levy on bank transactions, an idea Korean officials like because they think it can limit volatile currency flows that beat up smaller economies like their own.

To tackle the financial and economic crisis that spread across the globe in 2008, the G-20 members were called upon to further strengthen international cooperation. Accordingly, the G-20 Summits have been held in Washington in 2008, and in London and Pittsburgh in 2009.

The concerted and decisive actions of the G-20, with its balanced membership of developed and developing countries, helped the world deal effectively with the current financial and economic crisis. The G-20 has already delivered a number of significant and concrete outcomes. It committed to implement the unprecedented and most coordinated expansionary macroeconomic policies, including the fiscal expansion of US$5 trillion and the unconventional monetary policy instruments; significantly enhance the financial regulations, notably by the establishment of the Financial Stability Board(FSB); and substantially strengthen the International Financial Institutions(IFIs). Building on it’s past achievements and close cooperation among members, the G-20 will double its efforts in 2010 to help the world make a successful transition from global recovery to stronger, more sustainable and balanced growth.

A draft communiqué for the G-20 meeting, produced Thursday by deputy ministers from the participating countries, contained no clear statement on a bank levy. The thinking on bank levies in South Korea is being shaped in part by Shin Hyun-song, a Princeton University economist who studied short-term borrowing of U.S. securities dealers and is spending this year as a senior economic adviser to President Lee Myung-bak. “We see this as a crisis-prevention tool rather than a revenue-raising tool.

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Markets Up Cautiously On Mixed Data

Thursday, June 3rd, 2010

U.S. stocks edged up Thursday as investors focused on positive signs from a mixed medley of economic data but remained cautious ahead of Friday’s key jobs report. 

The jobs reports sent conflicting signals over the strength of the labor market’s recovery, but investors refrained from making any big bets ahead of Friday’s key government nonfarm payroll and joblessness report. The Labor Department said in its weekly report Thursday that initial claims for jobless benefits fell by 10,000 to 453,000 in the week ended May 29. Economists who were surveyed by Dow Jones Newswires had predicted claims would decrease by 5,000. Despite this latest drop, the four-week moving average, which is meant to smooth volatility in the data, increased slightly for the week ended May 29. Meanwhile, private employers added 55,000 jobs to their payrolls in May, according to a report from payroll giant Automatic Data Processing, less than the increase of 75,000 economists had predicted.

Reports from retailers on May same-store sales also reflected the economy’s uneven recovery. Costco Wholesale slipped 1.5% after reporting that same-store sales rose 9% as net sales climbed 11% to $6.09 billion. But Target gained 0.6% after its same-store sales rose 1.3%, a whisker ahead of expectations for a 1.2% advance.

In other economic data, the Institute for Supply Management’s non-manufacturing purchasing managers’ index held at 55.4 in May, the same reading as in April and March. Forecasters had expected the May PMI to edge up to 56.0. Separately, the Commerce Department reported that new orders for U.S. manufactured goods rose 1.2% in April to $420.08 billion, less than the 1.7% expected increase.

As I indicated yesterday we’re still in tight trading range in the S&P between 1040 and 1105. We have not been able to break above this point. Until we close above this point and then break the 1050 mark, I’m not convinced to buy into this market until all headwinds are worked through.

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Dow Pares Loss to 0.5%; Palm Falls

Thursday, February 25th, 2010

U.S. stock indexes recouped the bulk of their losses on Thursday to finish modestly lower as Greece’s debt andan unexpected rise in weekly jobless claims furthered worries about the economy. Bears took the reins bright and early this morning, as an unexpected surge in jobless claims.  Meanwhile, both Standard & Poor’s andMoody’s have now warned that Greece’s long-term credit ratings are in danger of being slashed, reigniting concerns about the country’s fiscal health. As if that weren’t enough uncertainty to sendthe broad-market indexes reeling, traders also took note of a brewing partisan battle on Capitol Hill, with Democrats and Republicans slugging it out at a six-hour health care summit. Stocks attempted to bounce back in afternoon trading, but succeeded only in paring the worst of their losses. The DJIA was down as mush as 190 points but managed to finish on a much slimmer deficit of 53.1 points, or 0.5%.

The last of the week’s Treasury auctions, for 7-year notes, was met with decent demand: The high yield was 3.078 percent and the bid-to-cover ratio was 2.98 percent. 

Orders for durable goods, big-ticket items such as cars and refrigerators, fell 0.6 percent in January; economists had been expecting a 1-percent increase. And mortgage rates ticked higher this week: The average on the 30-year fixed rose to 5.05 percent from 4.93 percent last week.

There was more buzz about Greece today: Ratings agencies indicated they may downgrade Greece’s debt, raising concerns about potential defaults and the cost of a bailout. Meanwhile, Fed Chairman Ben Bernanke said the central bank will investigate traders betting against Greece with credit-default swaps.

“We are looking into a number of questions related to Goldman Sachs and other companies in their derivatives arrangements with Greece,”Bernanke said in response to a question from Sen. Christopher Dodd.

Ironically, these kinds of trades have a striking resembalnce that nearly brought down AIG. Hmm makes you wonder?

UPDATE:

PALM: Did exactly what we were anticipating making it our biggest short position and bet to the downside. I truly believe they lag behind the Iphone and the newly introduced Google phone, which I must add is a  phenomenal piece of technology. It dropped as low as $6.30 to finish the day at $6.50  down almost 20% making a total profit of 28%for the week. Read my initial alert here. But wait we’re not done. The option which I had suggested to jump in, has garnished a whopping 210% gain. Not bad for 3 days of work. Again, shorts just ticked up a bit more to a level of 74 million. We have a slight more downside to go, but feel free to take some profits off the table.

DDR: Keeps on trucking!!! Today it ties it’s 52 week high of 10.66 to finish the day at $10.63 Up 6% for the week and again we’ve not finished. Our options which I had also mentioned here, to jump on finished at .75 for a gain 87.5%

SRZ: I regret to inform you we must jump ship. After a trading freeze this morning and a notice ,subsequent to their quarter end reporting, they were unable to retrieve financing with respect to the current default. This is a short candidate. Never give your hopes up as one lost provides another opportunity.

Still to Come:

FRIDAY: 2nd read on Q4 GDP; consumer sentiment; existing-home sales; Fed’s Kocherlakota speaks; Madoff hearing; Earnings from Berkshire Hathaway
ACE

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