The jobs data Friday morning were pretty putrid, halting much of the improvement the labor market has witnessed over the last few months. Jobs grew by just 120,000 last month, half the number the economy added in the previous month. It also marked the fist time job growth dipped below 200,000 since November.
Markets didn’t take the news too kindly. Dow futures tumbled 131 points, or 1%, after having been up 30 points prior to the report. Bond prices jumped, pushing yields lower. The 10-year yield recently fell to 2.05%.
The sharp stock rally over the last six months has pushed the major indexes to multi-year highs. Any economic weakness coupled with a slowdown in earnings and brewing troubles in Europe could knock stocks off that elevated perch, BIG TIME.
Caution vs Enthusiasm
hopefully china will come in with better than expected numbers tonight and we can get some offset. one thing i've noticed about these pullbacks is that AAPL seems to take off in premarket futures and right at the bell.
Admittedly, it is not good. It is likely that the correction will continue a bit further, though i see good media attention keeping lgf away from beta decline over monday. If the market corrects much more, than 1 percent monday morning, then flash crashes are possible. it could get ugly No need to panic just yet, i think we all kind of knew that there weren't new jobs.
The dow manipulations by the banks are what i am looking at. Highs not beating highs, and lows falling lower than previous ones. No new pattern established, but volatility and loss monday are both likely, so TZA, and VXX would play well. If the fed and the banks and the media can't concertedly
reset the floor, you are right, the market could cannibalize. I have an optimistic outlook and think that the rally goes on after a natural one or two percent decline.
The FOMC's easy policy was reaching a critical mass regarding gasoline prices. Since gasoline inserts itself in every aspect of our transportation economy such as planes, trucks and cars, inflation was set to surge. Since trucks deliver food and clothing, the costs of those items must increase as gasoline surged. This would hit the poor and middle-class hard. Since the last two-days when wall-street sensed a cut-back in stimulus, gasoline futures plunged 12-cents from the high. Further, there is a modification of gasoline during the summer months to prevent more pollution. Additives and refining problems with the additives both cause gasoline to rise even more. That indicates that the entire decline in gasoline futures will not be passed on to the consumer. There is a probability that Bernanke does not want to see a reversal where gasoline surges to new highs approaching $4.50 per gallon. My thinking is he'll allow a 10% correction from the stock-market highs, then step in again (read: stocks may fall far more than many think.) JMO!!
To make matters worse, commodity prices minus energy have been tanking.
When commodity prices sink, it may indicate that DEMAND for commodities have fallen which tranlates to less business. If that's the case watch for earnings, which begins next week, to plunge.
DEMAND may be falling because China is in a deeper slowdown than analysts have been led to believe. Europe is China's largest export venue and we all know Europe is in a free-fall. Portugal, which is much larger than Greece is in a dramatic decline. Spain, which is much larger than Portugal, is in a dramatic decline, Italy is starting to tip over into their own downward spiral and they are much larger than Spain. Contagion did not disappear.
Now we see hiring in the USA falling steeply.
Caution my fellow investors is prudent until the fog lifts or until the decline causes panic.
Be grateful LGF is over-the-top. A half glass is still great if the rest of the market plunges.
Just say what you mean. Do you think the lgf success over the weekend would partially resist a selloff? Just because the market retreats doesn't mean every stock does. I tend sound a lot like you, and think your macro assessment may be right on. I am the kind of guy that has no problem leaving the concert during the encore if it means not getting stuck in the parking lot for the rest of the night, ya know?