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Breaking News
The Government employment data was just released and the numbers were much lower than expected. This was the first decline in payroll numbers in four years and the largest decline in manufacturing jobs since July 2003.
Ok, now what does this mean? Traders were looking to this employment data to get a clue on what the FOMC might do on September 18th. The thinking was that if the employment data was 'soft' it would add to the traders confidence of a coming rate cut. But with the numbers we got this morning it may have actually crossed an invisible line in the sand and now traders are more concerned now with the chances of a recession are higher. So a rate cut is now secondary to the concerns of a recession.
With the employment data showing negative growth today the chance of a rate cut is certainly raised, but now the reaction may be more centered on the recession possibility and is why we are seeing a large drop in futures. It may come down to things are worse than thought and a rate cut may be too little too late now.
At this time the futures are all down very large. What happens when the markets open remains to be seen.
Again, this is why we have been telling you to sit in cash and not be in there trying to fight this market. If you took long positions yesterday there is a high probability chance that all of your trades will be wiped out today. While others keep saying to buy we are telling you to wait it out and preserve your capital. Let others throw their money away, we are saving ours and NOT LOSING IT !
Knowing when to trade is just as important as what to trade!
4 Comments:
Recession or not the Fed is mostly interested in stimulating the economy. How? By making money readily available. Banks seem to be balancing things out by being more defensive about who they will lend money to, however because of the following my guess is that the 18th will see rate cuts.
The indications today were:
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Nonfarm payrolls fell 4,000 in August, the first decline in four years. After large downward revisions to June and July data, payroll growth has averaged just 44,000 per month over the past three months -- down from about 150,000 earlier in the year.
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Manufacturing payrolls dropped by 46,000, the most in four years. Construction firms cut 22,000 workers. Only health care maintained strength, adding 35,000 jobs, with restaurants hiring 24,000.
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The nation's unemployment rate remained at 4.6% -- but only because 340,000 people, as calculated by the Labor Department, dropped out of the labor force.
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Employment as measured by the household survey fell by 316,000 in August and is flat for the year.
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The employment rate, representing the percentage of adults working, fell to 62.8%, the lowest since December 2005.
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The percentage of industries that were adding jobs in August fell to 51.3%, the lowest since late in 2003. Among 84 manufacturing industries, roughly one-third -- just 32.7% -- were hiring.
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The total number of hours worked in the economy has fallen since June.
You think there will be a rate cut by the 18th? I agree, it is most likely now.
what is your opinion on the uses of
the more liquid leveraged short
etfs like qid sds
I like them, but you still need to chart their inverse index for good entries. Traded QID many times.
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