Weekly Recap & Outlook – 10.02.09

Tower Private Advisors

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  •  Lost one this week
  • Very brief dispatch

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I suppose many of us here experienced a first this week, the passing of a co-worker.  It certainly was a first for me.  Melissa Dyben wasn’t someone I worked closely with, but I knew her.  I’d occasionally see her at the drive-up window at our Waynedale Financial Center and more frequently when she moved downtown.  Deaths always put dollars into perspectives, and deaths of kind people even moreso.  Melissa was kind, and she’ll be missed.

Capital Markets Recap

 Today was the bloodbath that wasn’t, so far.  It looked like it would be an ugly day, though.  sp501After making another run at a new 2009 high, the S & P was bloodied for two days straight, and the economy didn’t help.  In fact, as usual, it was blamed for some of the selling.  The ADP Employment Change index was quite a bit worse than expected, although it improved from August.  The Chicago Purchasing Managers index retreated well below 50, to 46, while economists expected it to rise to 52.  In short, the markets entered Friday on tenterhooks.  Futures looked just soft until 8:30, when the Nonfarm Payrolls report for September was released.  That report showed that payrolls, instead of shrinking by (-)175,000 shrunk by (-)263,000, a worsening of the data.  In August payrolls fell by (-)216,000 (bright spot:  that was revised to the better, to (-)201,000).   The Unemployment Rate rose by 0.1% to 9.8%, and Hours Worked fell to the all-time low, again, of 33 hours.  Dow Jones 30 futures were quickly down by 111 points, and S & P 500 futures dropped to 1,012.  But as of 2:18 pm, the market headed steadily higher–but still in negative territory.  Only coincidentally, of course, the market’s decline was checked by the 55-day moving average, also only coincidentally a Fibonacci number.  (You may return to your seat, Professor.)  As I get ready to click the Publish button, we enter contra-hour, that time when the big boys and their algorithms go to work, so anything goes.

At some point after uploading the six-day chart above, the blogging software refused to allow any more, so I’ll only briefly mention some results here.  Stock markets fell from (-)1.57% to (-)2.54%, with little correlation to market capitalization or locale.  Bonds, however, rallied hard, with the yield on the 10-year rallying by 4.03%; the 30-year, by 2.97%.  That 30-year yield is the lowest since early February.  Clearly, bonds are not worried about inflation for some time.  Nor are bond investors worried that the Fed might raise rates.  Instead, the worry, is that deflation will trump inflation, and the Fed will be keeping rates where they are for quite some time.  Bond investors don’t see any risk in the economy rising enough to but the brakes on deflation nor causing the Fed to raise rates, speeches by Fed governors notwithstanding.

Next Week

There’s very little going on next week.  We get the ISM Non-Manufacturing survey.  On Thursday, as usual, we get Initial Jobless Claims.  Economists expect that first-time filings for jobless benefits fell slightly.

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