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Wednesday, November 4, 2009

Morning Market Report

The ADP private sector monthly jobs number just came out. The ADP number showed a loss of 203,000 of lost jobs. That's the lowest its been in 19 months. That number is treated by many as a solid pre cursor of the BLS number which will come out Friday but I've found that the number is often not much of a pre cursor.

That's no matter because the markets absolutely do process the number and respond. The markets are responding well in the pre market. The Dow is up about 70 points before the open. Markets were relatively unchanged yesterday however bonds took some serious losses yesterday. The ten year U.S. Treasury bond went up to 3.47% and is already above 3.50% this morning. The yield spread between the two and ten year also continues to grow and its now 2.56%. At about 1:15 CT, the Fed will release its minutes. No one still expects any change in rate but their statement will be watched and hyperanalyzed by market observers and traders everywhere. So, a lot of what is happening now is simply a pre cursor to the announcement later today.

Meanwhile, an analysis by Nouriel Roubini continues to get exposure. He calls it the "mother of all carry and trade bubbles". By this, Roubini means that the dollar is weak and so foreigners are buying them in droves to invest in risky investments within the states. This is really a form of an inflation bubble. It's too many dollars chasing too few assets. Obviously, if Roubini is right, that spells serious problems for the markets in the future, near or later term.

We had all sorts of positive action in both the Far East and Europe. The Hang Seng in China was up 1.76%, the NIKKEI in Japan was up .42%, and the Straits Time Index was up 1.03%. In Europe, the FTSE in London was up 1.05% the DAX in Germany was up 1.42%, and the Spanish index was up .98%.

In currencies, the Dollar is down .48% against the Euro, down .58% against the British Pound, and up .49% against the Japanese Yen.

1 comment:

Anonymous said...

Mike, you forgot to mention the biggest piece of market moving data from Tuesday: That the Central Bank of India purchased $6.7 billion in gold from the IMF.