Thursday, August 19, 2010

Market comments for Aug. 19th. (Update)

The Initial Jobless Claims number was announced this morning with the following headlines. "Initial Jobless Claims rose "unexpectedly" to 500,000, the highest since November of 2009, showing companies are stepping up the pace of firings as the economy slows." That says it all. The only thing I would add to the announcement is that many people, including me, expected the number to increase, not decrease. Signs are all around us that the economy is slowing if people just open their eyes.

The prior week's reading was also revised upward from 484,000 to 488,000 Initial Jobless Claims.

The Dow Futures was up about 50 points before the news as was European markets but after the news all fell into the negative. Now the Dow Futures is up slightly.

I expect the market to sell off today, even though it looks like a moderate gain at the open. This news is terrible for the Average family across America, as it says their jobs are even more at risk and this will have a significant affect on Consumer Spending for this quarter and the remainder of the year. This also sets up the Fall Mid Term elections against incumbents and especially Democrats who will most likely lose many seats in Congress to Republicans. So this could start the expected downturn in the market setting up a bad Sept. and October. Options for August expire tomorrow.

I noticed that not much discussion on CNBC this morning about the topic as they appear to want to hide it or get people focused on other news. Dow Futures now down -1.

Update: 7:05am PST

The Philly Fed Index came in a whopping -7.7 for August compared with +5.1 for July. The market has reacted appropriately dropping down about 150 points on the Dow. Other news was that the Leading Indicators came in at +0.1%, which was expected. I believe this number will be revised down next month.

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