Best of the Week
Most Popular
1.SNP Offers Labour Deadly Death Embrace Alliance, Holding England to Ransom, Destroy UK From Within - Nadeem_Walayat
2.Gold And Silver – Most Widely Used Currency In Western World? Stupidity - Michael_Noonan
3.Election Forecast 2015 - Coalition Economic Recovery vs Labour Collapse - Nadeem_Walayat
4.Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - Nadeem_Walayat
5.Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It - Mike_Shedlock
6.Leaders Debate Election 2015 - Natalie Bennett Green Party Convincing Anti-Austerity More Debt Argument - Nadeem_Walayat
7.Labour Economic Collapse vs Coalition Recovery - UK Election Forecast 2015 - Video - Nadeem_Walayat
8.China’s Stock Market Mania; How High can Red-chips Fly? - Gary_Dorsch
9.Gold and Misery, Strange Bedfellows - 31st Mar 15 - Dan_Norcini
10.Ed Miliband Debate Election 2015 Analysis - Labour Spending, Debt and Economic Collapse - Nadeem_Walayat
Last 5 days
U.S. Fears a European “Lehman Brothers” - 5th May 15
How the UK Election Represents the State of Europe - 5th May 15
Crude Oil Price Meets Solid Resistance - 5th May 15
Nick Clegg Sheffield Hallam Seat Won, Race on to Save Lib Dem Marginal's - 5th May 15
Stock Market Waiting for Clarity - 5th May 15
Mice, Mazes & Investor Perception Management - 5th May 15
Conservatives Nightmare of Labour - Lib Dem Minority Government - Election Forecast 2015 - 5th May 15
Gold Long-term Outlook for Massive Parabolic Run to $5,000 - 4th May 15
Silver Bear Market Downside Momentum Easing - 4th May 15
Silver and NASDAQ – Long, Medium and Short Trends - 4th May 15
Let's Make Silver Shine Even Brighter Than Gold - 4th May 15
Six Silver Questions and Perspectives - 4th May 15
Stock Market Last Hurrah? - 4th May 15 - Andre_Gratian
Stocks – Bulls, Bears, And Pigs : Which Are You? - 4th May 15
The Energy Complex: Very Interesting Chartology - 4th May 15
U.S. Long Bond, an Historic Trading Opportunity? - 4th May 15
This Financial “Seismograph” Signals A Monetary Earthquake - 4th May 15
Nate Silver UK General Election Forecast 2015 as Wrong as 2010? - 4th May 15
U.S. GDP Sucking Spoilt Milk From A Bloated Dead Sow - 3rd May 15
Stocks, Gold and Oil Markets Chopsville - 3rd May 15
UK Election 2015 Forecast - The Most Probable Outcome is... - 3rd May 15
Kate Gives Birth to Coalition Government - 2nd May 15
Stock Market Correction Time? - 2nd May 15
Gold And Silver - Thieving Bankers Operate In Open; Public Have Eyes Wide Shut - 2nd May 15
U.S.A. Caught In Enormous Policy Vise - ZIRP & QE Destructive Influence - 2nd May 15
Crude Oil Price Bear Market Is Over - 2nd May 15
Gold and Silver Bear Squeeze Comes and Goes - 2nd May 15
UK Election Forecast 2015 - Who Will Win? - 1st May 15
Gold Developments Say New Mine Supply Is Peaking - 1st May 15
Emerging Mexican Silver - 1st May 15
Investigating The U.S. GDP Deflator: Wildly Differing Results Depending on Your Choice - 1st May 15
JP Morgan Cornering Silver Bullion Market? - 1st May 15
Baltimore Riots Whose Fault? - 1st May 15
Monetary And Economic Insights From Incrementum’s Advisory Board - 1st May 15
Your Best Stock Investment in the "Cloud" Is Right Here - 1st May 15
Stock Market Kondratieff Waves and the Greater Depression 2013- 2020 update - 1st May 15
How One Chart Is Changing My Outlook on Crude Oil Prices - 1st May 15
The Real Reason Why Obama Wants to Lift Sanctions on Iran - 30th Apr 15
Gold and the New U.S. and UK Recession - ZIRP to Continue - 30th Apr 15
Uranium Price Is About to Rocket - 30th Apr 15
Immigration Crisis Drives a Deep Wedge Between E.U. States - 30th Apr 15
Labour Leads in Nick Clegg's Sheffield Hallam Seat, Latest Ashcroft Opinion Poll - 30th Apr 15
Is the Fed about to Ignite the Stock Market Sell in May and Go Away Trade? - 30th Apr 15
Bill Gross on Pimco Hiring Bernanke and Fed Interest Rate Hike 2015 - 30th Apr 15
The European Stock Markets Trend Is Up. We're In. Are You? - 29th Apr 15
Putin: Czar Of Natural Gas, Crude Oil, Uranium & GOLD - 29th Apr 15
BEA Reports Weak U.S. 1st Quarter 2015 GDP Growth at 0.25% - 29th Apr 15
Why Labour Cannot Win Sheffield Hallam and other Lib-Dem / Conservative Key Marginal Seats - 29th Apr 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The War on Cash!

Stocks Modest Boost Ahead of US Jobs Data

Stock-Markets / Financial Markets 2009 Jun 05, 2009 - 04:24 AM GMT

By: PaddyPowerTrader

Stock-Markets

Best Financial Markets Analysis ArticleStocks got a modest boost from a upward revision to Q1 US productivity data (which was corrected to double the initial estimate) and a stabilization in continuing jobless claims. The number of people who have been claiming social security for a number of weeks which fell for the first time since early January.


This despite a wobbly start again yesterday after three-quarters of retailers reporting chain-store sales missed their targets, dashing hopes that consumers are again spending the American way. Oil stocks also saw buying Thursday on the back of a Goldman Sach’s research piece calling the year end price of a barrel of crude to $85.

Today’s Market Moving Stories

  • The blowout in US Treasury bond yields has resulted in mortgage rates hitting 5.3%. Ouch.

    Through the keyhole…now who lives in THIS house?

  • Miner Rio Tinto shares surged 8.2% after the mining giant rejected a $19.5 billion deal to sell part of itself to China’s Aluminium Corp., announced the launch of a heavily discounted rights issue to raise about $15.2 billion and signed a joint venture deal with BHP Billiton (whose shares are up 11% today.)
  • Elan saw its share price rise by 9.4% yesterday after reports that Pfizer may make a bid for the drug maker. The bid was said to enable Pfizer to gain access to the multiple sclerosis drug Tysabri, which Elan has developed in conjunction with Biogen Idec and which analysts believe could generate sales of more than $1bn a year upon its launch. Similar speculation surrounding a potential Pfizer bid of $4bn for Elan emerged in January, while as recently as Tuesday media speculation that Bristol Myers Squibb were reportedly considering a bid emerged. Any potential suitors will have to deal with Elan’s €1.2bn in debt and negotiate around the “poison pill” strategy said to be in place, which allows Biogen to buy the rights to Tysabri in the event of a takeover.
  • In the aftermath of Anglo Irish Bank’s awful results on May 29th, Moody’s has downgraded its senior debt rating by a notch to A3, just one notch above investment grade. It has put the ratings of ALBK, BKIR (and its subsidiary ICS Building Society) and IPM under review, pending a separate review of Ireland’s ‘ability to provide support to its banking system’. It currently rates ALBK and BKIR A3 and IPM at A1.
    According to the release, Anglo’s downgrade reflects ‘the serious challenges faced by the bank as indicated by a significant capital erosion and a liquidity position highly reliant on central bank support.’ It believes significant restructuring will be necessary for Anglo to ‘develop a viable business model again.’

Some Data That Slipped below the Radar

Amid the forest of the green shoots, last week the American Trucking Association (ATA) reported that their truck tonnage fell a seasonally adjusted 2.2% in April, after plunging 4.5% in March. After bouncing at the turn of the year this important guide to activity is slipping again. It’s easy to explain this downturn as an industry aberration. But the renewed downturn mirrors exactly what the railway guys are saying. The Association of American Railroads weekly traffic report also shows that rail freight traffic remains extremely weak compared to the turn of the year.

The American Truckers Association chief economist is a chap called Bob Costello. He is one of the few market commentators out there who seem to have understood what is going on at the moment and is able to square the current circle of madness. Costello said last week, “While most key economic indictors are decreasing at a slower rate, the year-over-year contractions in truck tonnage accelerated because businesses are right-sizing their inventories, which means fewer truck shipments…The absolute dollar value of inventories has fallen, but sales have decreased as much or more, which means that inventories are still too high for the current level of sales. Until this correction is complete, freight will be tough for motor carriers”. This is confirmed by the macro data as well. Inventories have indeed contracted deeply, but they are still wholly excessive in the absence of a revival of final demand

A nice visual from The Big Picture showing the anatomy of the U.S. economic collapse.

The UK is Browned-Off

Sterling has not been able to recover from yesterday’s dump. Rumours that UK PM Brown resigned may have been denied, but speculation is still rife. The latest in the political saga saw Work and Pensions Secretary James Purnell quit the Cabinet and calling for Gordon Brown to stand down to save the Labour Party. His resignation fuels fear of widespread dissent within the party. Meanwhile news Gordon Brown may replace Chancellor of the Exchequer Alistair Darling with Ed Balls has raised concerns about the UK credit rating once more. Darling had pledged to curb the deficit while Balls is a proponent of increased spending before the next general election. In regards to the local elections, first results are expected this morning, with most declarations in the afternoon. Short of any major divergence from expectations, today’s May PPI is likely to be overshadowed by the politics.

Foreign Exchange Mood swings
The German Philosopher, Arthur Schopenhauer, was presumably day-trading FX when he noted more than 150 years ago that “life swings like a pendulum backward and forward between pain and boredom.” The mood swings of the FX market continue to be extremely painful for anyone trying to sustain a position in the cash market amid the vagaries of fickle sentiment. I noted two days ago that the sell-off in the USD had moved beyond what was consistent with the movements in the equity market, and much of the price action since then could be seen as a drift to close that gap, but one which has occurred without any particular fundamental impulse. Instead, analysis of short-term moves is once again falling into the trap of trying to find a trigger for what was simply a shift in market mood, one which recognised that the sell-off in the USD was overdone in the same way that the sell-off in equities back in March was seen as overdone with hindsight !

So the man with the tan, former CNBC uber regular and purveyor of Ninja loans to millions of unlucky Americans, former Countrywide CEO, Mr Angelo Mozilo may have to do some porridge! The was no news on personal tanning machines behind bars as he’ll need more than one hour a day to keep that George Hamilton IV look.

Some humour upon a Friday

Ahead Today.

  • As it’s the first Friday of the month the US jobs report (non farm payrolls) at 13.30 BST will be the focal point o the session. After digesting the many US labour market releases this week, the market consensus is for a further 520k job losses. The unemployment rate release will take some of the limelight, with expectations centring on 9.2% from 8.9% previously.

    The market mood is that the worst job declines have passed and pretty much every labour market indicator points in that direction.

  • Now that we have got used to NFP numbers like -500K or worse, it seems like we will still have to see a forecast miss of 100K or more to get excited. Since August 2007, we have only seen one forecast miss of more than 100K (in November 2008) and last month we saw the number come in better than expected for the first time since July 2008.

    Interestingly, recent price action around the employment data has tended to see equities rally afterwards, presumably because the passage of the data has signalled one more bullet dodged.

  • The reaction after last month’s data was particularly notable for the large equity gains and the start of the USD rot. Currency traders now believe that the number either has to be extremely strong or extremely weak to help the dollar. Anything in the middle will tend to play with the grain of the positive risk appetite.

And finally…….
A new economic plan for America?

Disclosures = None

By The Mole
PaddyPowerTrader.com

The Mole is a man in the know. I don’t trade for a living, but instead work for a well-known Irish institution, heading a desk that regularly trades over €100 million a day. I aim to provide top quality, up-to-date and relevant market news and data, so that traders can make more informed decisions”.

© 2009 Copyright PaddyPowerTrader - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PaddyPowerTrader Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014