Thursday, February 04, 2010

Jobs suddenly matter?

The market rallied earlier this week on virtually no news - some vague hints at a "sustainable" economic recovery were enough to power the market forward. However, today felt like 2008 when the market couldn't get out of it's own way. The market only has about a 2% cushion for the last line in the sand for the technicians - 1038 on the S&P 500. Below that things could get very interesting.

So nothing that worried the markets really seemed like news to me ---

1) Initial jobless claims came in higher than expected. This helped to boost the 4 week moving average and indicates the job market remains weak. This also seems to indicate that many companies that postponed layoffs in December have resumed their cost cutting in January. This fits with what I've heard, but it's hasn't' been showing up in all of the data.

2) Concerns about sovereign debt in Greece, Portugal and Spain thumped European stocks and that carried over to the US. Hmmm, where have we heard about that risk before....

"Greece, the Baltics, Spain and Ireland are all in deep trouble. I think there is a possibility that 2010 could be the year of "sovereign defaults". That guy sounds like he might know a thing or two :)

3) Worries about Friday's jobs report. The ADP data should foreshadow a pretty strong number on Friday, but it may be overshadowed by the Birth/Death adjustment that will vaporize 800,000 jobs overnight. Obviously, tomorrow's number will dominate the news flow tomorrow.

FYI - there is a small probability of anything happening over the weekend, but there's plenty of buzz on the internet about possible events in the next few weeks that might make gas very expensive.


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