Today's Markets

Today's market action illustrated a point I made over the weekend. The market is clearly anticipating a Fed rate cut in September. As such, there is little downside in the market right now. Bad news simply adds to the perception the Fed will cut rates while good news means the economy is in fact doing well.

While the market started lower today it rallied throughout the day. While the market sold-off on high volume at the end, this shouldn't be too surprising. The market made a strong advance today and my guess is traders were taking profits off the table.



Here's the 5-day, 5-minute chart. Notice the uptrend we started mid-last week is still firmly intact.



Here's the 3-month daily chart. Notice we are starting to move away from the cluster of activity around the 200 day SMA and are going into rally mode.

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Today's Markets

Today's market action illustrated a point I made over the weekend. The market is clearly anticipating a Fed rate cut in September. As such, there is little downside in the market right now. Bad news simply adds to the perception the Fed will cut rates while good news means the economy is in fact doing well.

While the market started lower today it rallied throughout the day. While the market sold-off on high volume at the end, this shouldn't be too surprising. The market made a strong advance today and my guess is traders were taking profits off the table.



Here's the 5-day, 5-minute chart. Notice the uptrend we started mid-last week is still firmly intact.



Here's the 3-month daily chart. Notice we are starting to move away from the cluster of activity around the 200 day SMA and are going into rally mode.

Read More

More On Employment

From Mish:

Now that housing is dead I keep asking "what is the next big source of jobs?" No one has yet come up with an answer.

It clearly is not Wall Street, financials, credit card growth, consumer spending, retail, commercial loans, leveraged buyouts, or capital spending. Whatever it is (if it is indeed anything at all) can it possibly make up for expected declines in housing, financials, credit card growth, consumer spending, retail, commercial loans, and capital spending?

Health care has been strong. But can it make up for declines in all the other areas? It does not take a genius to figure out the answer to that question is no. We all can't get rich off Medicaid and Medicare can we?

I agree. There is no segment of the economy that has clearly demonstrated it can be the next big wave of jobs growth. And that should concern a lot of people.

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More On Employment

From Mish:

Now that housing is dead I keep asking "what is the next big source of jobs?" No one has yet come up with an answer.

It clearly is not Wall Street, financials, credit card growth, consumer spending, retail, commercial loans, leveraged buyouts, or capital spending. Whatever it is (if it is indeed anything at all) can it possibly make up for expected declines in housing, financials, credit card growth, consumer spending, retail, commercial loans, and capital spending?

Health care has been strong. But can it make up for declines in all the other areas? It does not take a genius to figure out the answer to that question is no. We all can't get rich off Medicaid and Medicare can we?

I agree. There is no segment of the economy that has clearly demonstrated it can be the next big wave of jobs growth. And that should concern a lot of people.

Read More

About the Commercial Paper Market

This is a chart from the Federal Reserve's Commercial Paper page. Notice the asset-backed commercial paper market has two periods on this chart. I delineated the different periods with a solid black line which I basically eyeballed.

Here is the point: is it possible the asset-backed commercial paper market is simply reverting to a mean? I don't have an answer for this. But notice the incredibly large increase in paper over the last few years.

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About the Commercial Paper Market

This is a chart from the Federal Reserve's Commercial Paper page. Notice the asset-backed commercial paper market has two periods on this chart. I delineated the different periods with a solid black line which I basically eyeballed.

Here is the point: is it possible the asset-backed commercial paper market is simply reverting to a mean? I don't have an answer for this. But notice the incredibly large increase in paper over the last few years.

Read More

Construction Spending Decreases .4%

Link to the report from the Census Bureau.

Overall construction spending decreased (-.4%) from June 2007 and (-2%) from July 2006.

Residential spending decreased (-1.4%) from June 2007 and (-15.6%) from July 2006.

Non-residential increased .6% from June 2007 and 13.9% from July 2006.

Non-residential construction has increased from 46% of all construction spending in July 2006 to 53% in July 2007.

The bottom line is non-residential construction continues to grow at a rate to absorb residential losses. This is good news for the construction employment sector which is an area that we should be watching for signs of weakness.

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Construction Spending Decreases .4%

Link to the report from the Census Bureau.

Overall construction spending decreased (-.4%) from June 2007 and (-2%) from July 2006.

Residential spending decreased (-1.4%) from June 2007 and (-15.6%) from July 2006.

Non-residential increased .6% from June 2007 and 13.9% from July 2006.

Non-residential construction has increased from 46% of all construction spending in July 2006 to 53% in July 2007.

The bottom line is non-residential construction continues to grow at a rate to absorb residential losses. This is good news for the construction employment sector which is an area that we should be watching for signs of weakness.

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Car Sales Aren't Doing Well

From Bloomberg:

The pace of car and truck sales in the U.S. has dropped for seven consecutive months, the biggest string of declines in at least 31 years, according to data compiled by Bloomberg. Economists forecast little change for August when car makers report sales figures today.

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Car Sales Aren't Doing Well

From Bloomberg:

The pace of car and truck sales in the U.S. has dropped for seven consecutive months, the biggest string of declines in at least 31 years, according to data compiled by Bloomberg. Economists forecast little change for August when car makers report sales figures today.

Read More