Well..Well..Well
Non Farm Payrolls disappointed stock investors this morning. While Bond Investors who have already enjoyed a nice run of late were rewarded for their patience.
Looking at the headline numbers, the economy lost 263,000 jobs last month, much worse then the 180K estimate. The unemployment rate nudged up to 9.8%, which was in line with estimates. I have always said its the rate that matters, not the total number of jobs. The unemployment rate is the rate that everyone talks about. If we can keep that in single digits, we are ahead of the game sort of speak. As soon as the figure hit the tape, the futures dumped some 8 points quickly, the market obviously didn't like the figure, although the unemployment rate was in line. Whats really pressuring futures this morning are the bad revisions to months. July was revised down to a loss of 304K from a loss of -276K. June was left unrevised, but that figure of a loss of 463K will be revised downwards going forward. All of the downward benchmark revisions will hit March 09 payrolls to a figure of -824K. Some say that Unemployment is a lagging indicator, to which I say "Bullshit." The market agrees with me. We will continue to bleed jobs well into early 2010, with a moderation starting in mid 2010.
But, what does this mean going forward for the market? Does this mean all is lost? Will we revisit the lows from March? The answer to all of this is NO. Let me say, I think the market will be down today. It will be down some 100-150 points on the open, as the prior revisions and headline numbers were ugly. But we will have many who say the unemployment rate didn't nudge above 10%, which is good. Well of course it is. The market has support at SPX 1000 and Dow 9200, as well as major support at SPX 980 and Dow 9000. I believe those figures will be tested some time before the end of the year. I stated previously that the market can rally above 10200-10500 on the DOW, this was predicated on a good to decent payroll print, which we obviously didn't get. So that is not happening I don't believe this year, which is very good for the markets in the long run. There was far too many pom pom waving by the same people who missed the credit crisis, so they need to pipe down now. I also don't believe the doom and gloom crowd as well. There is simply far too much to lose for the Obama Administration. They will continue to print money, buy mortgage debt, sell treasuries, there will be no shortage of consumer led buying programs, the Housing Tax Credit probably gets extended to at least end of 1st Quarter 2010, and so on. Most importantly, this paves the way for some sort of Stimulus 2 program. All of this equals the Obama/Geithner/Bernanke Put similar to the Greenspan Put all throughout the 90's. There seems to be a floor for equity prices, so short players will not over press their bets, remember, if you are in the bear camp, you are going against the US Government and their open checkbook. Also remember that the up tick rule may or may not be implemented by year end, another equity floor setter.
If I sound bullish, forgive me. I am less bearish as I was months earlier. The Banks are still in horrible shape, but they are "Too Big To Fail". They won't be allowed to go bust. The government will not allow the economy and stock market to go into a death spiral, simply as there are grave Geo-Political and National Defense issues prevalent. If the economy, stock, and credit markets take a dive, what makes you so sure that some sort of terrorism doesn't take place when the country is reeling?
This is how the game is played. The futures are down some 14 points at the moment, but I have a feeling that these losses may not stay or hang around for long.
No comments:
Post a Comment