Wednesday, January 07, 2009

Apparently, the economy matters again...

Stocks are off to a pretty weak start today after Intel slashed it's numbers and the ADP job report came out.

I've pointed out before that when companies like Intel or Texas Instruments miss numbers it should be a shock to your system. These are biggest, steadiest tech names in the world and they had lowered their revenue target by over $1 billion just 2 mths ago. So this miss is surprising.

"Fourth-quarter sales dropped 23 percent, missing a forecast that it cut by $1 billion less than two months ago. Intel’s sales decline surpasses the 20 percent drop it reported in the fourth quarter of 2001, after the technology bubble burst."

This echoes what I've heard from others - it feels worse than than 2001 out there.

The ADP job number clearly has moved the markets given the shocking number of jobs that they estimate were lost in December (nearly 700,000). This might fit with anecdotal evidence reported this week that unemployment hotlines around the country have been overloaded (NY's was reportedly down for some time). Historically, the ADP number is actually a little better than the actual jobs number to be reported on Friday. If that trend held, we'd be looking at another month of massive job losses. If our economy is losing 500k+ jobs a month, any stimulus that creates 3 million jobs would only offset 6 mths of job losses.

Cheers!

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