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Thursday, November 19, 2009

Morning Market Report

It's an ominous quiet in the market for the third straight day yesterday. All three indices were down but all less than a half a percent. That's the third relatively quiet day in a row. This despite all sorts of economic data, politically economic news, and still all sorts of economic jitters.

The first time jobless claims just came out. A couple weeks back, a commenter asked to explain this number. This is a survey of how many people file, for the first time, for unemployment benefits. Concurrently, the continuing claims are also reported along with this number. The continuing claims are those folks that ask for an extension. This week the number was "shocking". In that, the consensus was right on. I am always amused by the so called consensus number for any economic data. That's because the shock is when the so called experts actually get it right. This week the first number came in at 505,000 and the continuing claims came in at 5.61 million.

There's a million ways to look at the number. All these numbers are getting better. There's no doubt that all jobs indicators are getting better. We lost less than 200,000 in October and 700,000 in February. The first time jobless claims is now near 500,000 where it peaked above 600,000 in the summer. All of that is good. It should also be noted that the employment picture was desperately unsustainable. If we were to continue to lose 700,000 jobs we'd be on our way to zero employment. So, the question remains how robustly will the economy and jobs recover.

Bonds continue to maintain a strong position. The ten year U.S. Treasury bond is at 3.34%. It was up a couple basis points yesterday but it's gaining all that back this morning. That continues to be at the low end of a month and a half range and it's held there for nearly a week. The yield spread between the two and ten year is at 2.62%. It's been bouncing about ten basis points between 2.57% and 2.67% but it remains extremely high and so expect inflation, massive inflation, in the next two to three years. Crude oil is relatively steady at just below $80 a barrel. It's currently trading at $79.31 a barrel. Gold is trading at $1140 an ounce which is just below all time highs.

Markets around the world were mixed. The Hang Seng in China was down .86%, the NIKKEI in Japan was down 1.32% and Straits Time Index in Singapore was up .5%. The broader Chinese index was up .53%. In Europe, it was all down across the board. The FTSE in London was down .49%, the DAX in Germany was down .46%, and the Spanish index was down .76%.

In currencies, the dollar is mixed. It's up .5% against the Euro, up .7% against the British Pound, and down .63% against the Yen. I've recently spoken about the alarming trend of the stock market gaining at the same time the dollar weakens. That's something to continue to watch.

Finally, the The Organization for Economic Cooperation and Development increased its forecast for economic growth among the developed nations.

The Organization for Economic Cooperation and Development doubled its growth forecast for the leading developed economies next year and predicted a further acceleration in 2011 as China powers a global recovery.

The economy of the group’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011, the Paris-based organization said in a report today. Output will contract 3.5 percent this year. The OECD, which advises members on economic policy, forecast 2010 growth of 0.7 percent in June.

In individual company news, Sears had better than expected earnings, JP Morgan is down after announcing it would purchase Cazenove, and Dick's Sporting Goods will lead a few more big names in announcing earnings after market.

1 comment:

Anonymous said...

The real job creators are afraid to hire because cap and trade and health care reform are not settled. They don't know what the future holds so they are in a holding pattern. Once these two are finalized, hopefully not passed into laws, business and hiring will return.