nice one

"...the economy will get worse before it gets better."

leroy jenkins

Fear Creeps In

The August Employment report sucker punched the street today. "Employers cut 4,000 jobs in August, the first time in four years that monthly hiring contracted." That's quite a drop from the 110,000 jobs economists were expecting to be created in August. The hardest hit were the goods-producing sector (46,000 manufacturing jobs were cut), Construction cut 22,000 jobs. Meanwhile, Service industries added 60,000 jobs in August. The result of course is the major indices down over 1% across the board. I'm not sure what had more impact on the market today. Was it really the employment report? Or was it Granpa Greenspan's thoughts on the environment of fear enshrouding the markets that reminds him of the good 'ol days of '87 & '98. He was quoted in the Wall St. Journal as saying; "The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987." Ever since he's left the position as Head-of-the-Fed he's been crying for an impending recession to hit. We all know that every time he speaks the markets react, remember Feb.'07? I know everyone equates February's sell-off to a computer glitch, but let's get real.

Sunday afternoon Hodgepodge

We all thought going into last week was difficult to forecast, this week tensions and uncertainty will be even higher throughout Wall Street. Instead of giving my opinion on it all I'm rummaging through the internets to find some points of view and factoids that pertain to the state of our economy.

- China responded to chatter that they might liquidate their holdings of U.S. Treasuries by saying, "China is a responsible investor in the international capital markets." And if that didn't clear the air, they also said "U.S. dollar assets, including American government bonds, are an important component of China's foreign exchange reserves as the dollar enjoys a major position in the international monetary system based on the large capacity and high liquidity of U.S. financial markets." Don't you just love political spin? ahhh The art of not answering a question.

-More hedge funds are coming forward with a statement of their losses. Goldman Sachs' $8 billion global hedge fund is down 26% year to date, or 40% since July '06. If only they would have just invested in a S&P ETF. Meanwhile, Citigroup (C) is reporting losses of $700 million in credit business.

- Of course we've all heard of the Bernanke cash injection this past week. In order to "calm financial markets" (like calming a hyperactive kid by giving them a bowl of candy). Well, the markets are still nervous (if not more so).

- The NYTimes points out that the Fed. Reserve Cash injection is the largest since Sept. 2001 after the terror attacks. It also cites the situation as Bernanke's "first major financial crisis." The operative words there being "major" and "crisis."

- The Fly on Wallstreet's guest blogger "Woodshedder" has a great posting from Friday regarding playing the losing game of trading, with a fantastic link to an article from the Phantom of the Pits (highly recommended you download and read the linked to article).

- Over at UglyChart there's an interesting post and referral links about Quant. trading and the hedge funds that incorporate them.

- Wall St. Warrior and TickerSense do some chart analysis gearing up for Monday's open, putting a spotlight on the 200-day EMA (for the S&P500) that we're all hoping holds as support.

- With all the tumult in the markets Gold prices (though in the upper range of their price trend) aren't acting inversely to the market movements as expected.

- A stroll down memory lane on Howard Lindzon with a news clip from October '87, and indeed THAT was a "bad day." Also, on the DinosaurTraders blog a clip of a more recent "bad day" and the commentary that the talking head sheeple did to rationalize things.

Housing

Here's an interesting look at U.S. Home Price Performance expectations over the next year (as also referenced by WallStreetFighter). Based on the CME Housing Futures (the Composite being -3.3%) Las Vegas is expected to fare the worst (-5.6%) while San Francisco is expected to decline the least (-3.0%). Also are some charts of the historical year-over-year monthly percent change in the actual home-price figures for the 20 cities. "These charts paint a pretty good picture of the severity of the declines in home price appreciation across the board. The one exception is Charlotte, where a decline has yet to take place."
Grace Cheng also provides some data on the murkiness of the U.S. Housing market.

Trade deficit is wider (up more than 10%) as March numbers were released today. -U.S. imports increased 4.5%.
-Record imports of consumer goods and food, feed and beverages.
-Although, exports rose 1.8%.
-U.S. exports to Canada, Germany & China set records
-Shipments to Japan were the highest since March '01.
-The U.S. also exported record amounts of advanced technology products such as computer, telecommunications, aerospace and electronic equipment.
-However, the U.S. trade deficit with China shrank 6.4% to $17.2 billion, as imports from that country were the lowest since May 2006.
-"Despite widening dramatically in March, the trade gap for the first quarter of the year totaled $180.7 billion, smaller than $191.6 billion in the same period last year when the annual deficit hit a record $765.3 billion."