It looks like the job picture is already coming into view....
Reuters
Aug private sector job growth lowest in 4 yrs
Wednesday September 5, 8:44 am ET
The report also revised July's private sector job growth downward to 41,000 from the originally reported 48,000 jobs. The employment report was developed jointly by ADP and Macroeconomic Advisers LLC.
Economists polled by Reuters had forecast 83,000 new jobs for August. The 38,000 result was the smallest increase since June 2003 and could reinforce market expectations for an interest rate cut by the Federal Reserve.
The ADP result followed a separate survey by Challenger, Gray & Christmas Inc. that showed planned U.S. lay-offs rocketed in August. The housing slowdown and subprime mortgage debacle led to record job cuts in the financial sector, the independent group said.**************
Takeaway? Friday's job report will be interesting; and I think the report 1 month from now will be much more stifling than anything shown this Friday. Not sure why the market is ignoring the reality of the economy but this is the marvel of the market. Perhaps they can bring out Volkler to do a speech this week, since this seems to be the status quo - market in trouble? bring on a speech, letter, minutes, something wordy to solve all the ills!
Adding to the 3 ETF shorts: TWM, SRS, SKF positions - they are now positiongs #2, #3, and #4 in the fund - representing from 3.5 - 4.5% each. Strategy will be to sell these down if/when the market falls, then rebuy in periods of strength, since the fund is long only and this is a way to get exposure to the dark side, along with the 30% cash position.
Long Ultrashort Russell 2000, Ultrashort Real Estate, Ultrashort Financials in fund and in personal account
2 comments:
The employment numbers were one of the primary things clouding the view of the market, I believe. Sure things looked bad, but they were temporary as long as the jobs held up and growth continued.
Now we begin seeing the ripples from all this mess, lowest employment growth in 4 years, lowest pending home sales since Sept 11, 2001, and a possible UN report today stating that in 2007, the US will fall behind the EU and Japan in GPD growth.
I think I'm going to follow your lead and load up on some of those ultrashort indexes. The only risk is that all this negative news increases the possibility for a Fed rate cut.
What do you think?
Fed cuts will help psychologically and provide short term bounces but what happens on Sept 19th once its priced in? People still will be having $3800 mortgage payments on $56K salaries. I have also read that temporary jobs are being cut at the highest rate in quite a few years, and they are the first to go...
Short of a 50 basis intrameeting cut I am not sure what more to the 'upside' could provide fuel. This 25 basis point cut seems baked in the numbers... and if it happens this week or next week instead of Sept 18 - well the market will react joyously but does it matter if its Sept 11 or Sept 18? These things takes 6-12 months to filter through the economy....
You can never predict the fickle market mood, and reactions but the reality behind the scenes won't change.
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