Daily Investment Interpretations

Thursday, March 19, 2009

2009-3-19:  The markets did, in fact, give us a little elbow room. The NASDAQ was diminished by 7.74 (-0.52%) to 1,483. The Dow divested itself of 85.78 points (-1.15%) to 7,401, and the S&P 500 sacrificed 10.31 (-1.3%) to end the day at 784. Oil jumped $3.47 to close at $51.61, while Gold gained $69.70 to reach $958.80. The VIX climbed 3.62 to 43.68.
    This would seem to me to be a normal breather in a market that has advanced so fast. (As of yesterday, the Dow was up 15% from last Monday's low.) But we'll see. (Rally's legs may wobble if gains based on short-covering) At the same time, there was glum news, at least at the level of the general public. For example, the layoff rate may still be increasing very slightly, although it isn't exploding the way it was last October. It appears that the economy is still on a steep downward course, although the road isn't necessarily getting steeper. However, the unemployed and underemployed may be expected to feel the pinch more as time goes on. 

2009-3-19 (Noon-ish):  The markets are giving us a little elbow room this morning.. This week's new jobless claims dropped a little this week to 646,000, but the four-week average rose to the highest level since the 1982-1983 recession (654,650, bearing in mind that these number are said to be understating the current unemployment rate compared to the 1982-1983 unemployment rate): Split verdict on joblessness. "'We will probably see a larger rate of job losses than the 651,000 we saw in February,' wrote economists for Bank of America/Merrill Lynch."
    Leaden indicators "'Strengths and weaknesses were roughly balanced' in the index, said Ken Goldstein, economist at the Conference Board. 'Financial market volatility remains strong, and the credit market freeze is relenting very slowly.'"
    "There's no sign of a bottom, wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note. 'The trend remains clearly downwards, consistent with continued outright contraction in the economy,' Shepherdson wrote."
    Meanwhile, the prices of oil (up $2.63 a barrel) and gold (up $65.40 an ounce)  have soared, which suggests to me the anticipation of a recovering economy and rising inflation.