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Friday, August 7, 2009

Morning Market Report

Employment numbers just came out and the economy just lost only 247,000 jobs which is the best number of the Obama administration and the best number in nearly a year. On top of this hourly earnings were up .2% from June, and weekly hours were slightly up off their lows in June. These were great numbers all around. The jobs report follows a better than expected Gross Domestic Product number. Also, numbers were revised slightly better in June and May. The unemployment rate also actually dropped to 9.4%.

This is now overwhelming evidence that the economy is getting better though it isn't necessarily time yet to celebrate. The economy still has a long way to go. In the short term however, equities look a lot better and the bonds look a lot worse. All the major indices are looking up about a percent in the pre markets. Meanwhile, bonds look like they are trading somewhere near ten basis points worse. The Ten year U.S. Treasury Bond is now at 3.85%. It was below 3.50% this time last week. The yield spread between the two and ten year bond is up slightly to 2.55%. (it was 2.53% at the beginning of the day yesterday) Oil also continues to head higher and is now trading at $71.94 a barrel. A couple weeks back, oil was trading below $60 a barrel.

Equities in the Far East were mostly down. The Hang Seng in China was down 2.51%, the NIKKEI in Japan was up .23%, and the Straits Time Index in Singapore was down 2%. Meanwhile, in Europe equities were almost all up. The FTSE in London was .27%, the DAX in Germany was up 1.24%, and the Spanish index was up .89%. Only the Italian index was down and it was down .36%.

The dollar is mostly better, presumably because of the jobs report, against most other currencies. It's up by .37% against the Euro, up .21% against the British Pound, and it's up by 1.26% against the Japanese Yen.

Meanwhile, in China, officials are going to scrutinize stock gains for fears that a bubble is forming.

Chinese officials said they will scrutinize gains in stock prices without capping new lending after a record $1.1 trillion of loans in the first half added to credit risks and threatened to cause asset bubbles.

The government wants stock-market stability and is studying share-price rises, Vice Finance Minister Ding Xuedong said at a press briefing in Beijing today. The People’s Bank of China has a range of tools to limit money supply, Su Ning, a deputy governor of the central bank, told the briefing.

So, while the U.S. is mired in a recesssion, things are so booming in China that they are worried about a bubble.


Anonymous said...

So much for your "the July NFP will end Obama's agenda" theory.

If I didn't know any better, I'd just say Obama pwn'ed you.

mike volpe said...

It wasn't a theory but a thought experiment. I don't predict what jobs numbers will be because they are too unpredictable. I only made a theory on what would happen if they were bad which went to show just how vulnerable he is.

He's still vulnerable. We'll see what August is and his agenda is on life support with or without bad numbers.

Anonymous said...

The only reason unemployment fell to 9.4 is because 450'000 peple quit looking for work