Market Review: US Job Numbers—The Key to Market Movement
Email This Article
Print This Article
Digg This
Delicious
SubscribeMOST POPULAR ARTICLES
- Kaeppel's Corner: 2009, The Year of Investing Differently
- Kaeppel's Corner: The Early January Alert
- Option Watch: Jan 6—Mover & Shaker USG Corp.
- Weekly Outlook: January 5, 2009
- Hot Shots: "Obamaistic, Not Foolish"
- Closing Wrap-Up, January 5
- Closing Wrap-Up, January 7
- Outside the Box: Controlling Risk Is Key for a Trading Business
- Growth Stock Swing Option: Jan 5, 2009
- Commodities Roundup: Soybeans
- Kaeppel's Corner: 2009, The Year of Investing Differently
- Outside the Box: Using Government Backed TIPS to Insulate a Portfolio
- Commodities Roundup: Soybeans
- Kaeppel's Corner: The Early January Alert
- Hot Shots: Wind at Our Monbacky?
- Option Watch: Jan 6—Mover & Shaker USG Corp.
- Foreign Exchange: Rise of the Euro
- Options Corner: A Butterfly for Christmas
- Hot Shots: "Obamaistic, Not Foolish"
- Interview Central: Brian Shannon, Part III
- Analytical Toolbox: Tools for Developing Your Outlook, Part I
- Market Insight: Cogent Exhibiting Strong Earnings Growth
- Midday Action: January 8
- Hot Shots: Wind at Our Monbacky?
- Outside the Box: Controlling Risk Is Key for a Trading Business
- Kaeppel's Corner: The Early January Alert
- Economic Watchdog, Jan 7
- Midday Action: January 7
- Option Watch: Jan 6—Mover & Shaker USG Corp.
- Commodities Roundup: Soybeans
SPONSORED LINKS
April 4, 2008
US
Ben Bernanke in his testimony to the Joint Economic Committee admitted for the first time that the US could be headed into recession in the first half of 2008 before recovering in the 2nd half of the year. Economic data this week certainly supported the view that the US is in a mild recession.
ISM non manufacturing index measures the service industry. It improved for the second consecutive month and while the number was better than expected, it still showed that the sector is in contraction. The headline number was up 0.3 to 49.6 in March. The market was expecting 48.5.
Weekly jobless claims made a surprise jump. The number of claims last week surged to 407,000 the highest level since Hurricane Katrina.
All eyes are on the non-farm payroll numbers out on Friday where the market is expecting a decline of 50,000 in the number of jobs in March.
Dell is looking to cut $3B in costs over the next 4 years. As part of that plan, the computer giant will cut 8800 jobs.
Strong demand for the share offering from Lehman Brothers supported financial stocks this week. Lehman Brothers raised $4 billion to help liquidity in the stock.
Asia Pacific
In Japan, the Tankan index for the 1st quarter showed that confidence plunged on the back of a stronger Yen and rising input costs. The Tankan Large Manufacturers index came in at a reading of 11 compared to a reading of 19 previously.
In Australia, retail trade for March fell 0.1% compared to the expected climb of 0.3%. The numbers reinforced the view that the interest rate cycle had peaked with the market now expecting the Reserve Bank of Australia to keep interest rates on hold in coming months.
The Reserve Bank of Australia Governor, Glenn Stevens, said that growth in demand in Australia was moderating despite uncomfortably high inflation which is expected to come in at 4%. The Reserve Bank tries to keep inflation within a 2-3% band. The speech didn’t have a huge impact as the market didn’t perceive the comments to be different to previous comments and policy.
UK
In the UK, the spotlight was on mortgage lenders. First Direct, which is part of HSBC, said that they would withdraw mortgages to homeowners who were not existing customers.
There were also reports that Lehman Brothers had stopped writing mortgages to 2 of their UK units and Halifax is expected to do the same. The reduction in lending is not good news for the housing market and could cause the mortgage market to freeze up.
End Note
The International Monetary Fund cut global growth forecasts from 4.1% previously to 3.7%. It also projected a 25% chance of global recession in either 2008 or 2009. While stocks rallied on expectations that the cycle had bottomed, there are still significant downside risks. The biggest risk at the moment is to company earnings. Many analysts still haven’t downgraded forecasts based on a slowing global economy. As the IMF forecasts show, the market is now increasingly anticipating slower global growth. The jobs numbers in the US out today will be the key. If they are better than expected, expect markets to rally on expectations that the US economy has bottomed out and turned towards the better.
Happy Investing!
Julia Lee
Head of Fundamental Analysis
HUBB Financial Group
Trading Tutors Team
© Copyright 1995-2009 Optionetics. All rights reserved. This material is for personal use only. Republication and re-dissemination, including posting to newsgroups, is expressly prohibited without the prior written consent of Optionetics. Optionetics is a registered trademark of Optionetics, Inc.