Thursday, December 17, 2009

Losing streak resumes on Wall Street....

Greetings good citizen,

Where to begin? I picked up on an article early in the trading session figuring it would be woven into today’s ‘narrative’. As you know, the ‘Stupidity Index’ closed down 130 points today…well, when I snipped tonight’s offering the Dow was already down 40.

Will ‘The most wonderful time of the year’ be the backdrop for another ‘bloodbath’ on Wall Street? Christmas is only a week away…

Dow Slips for a Third Day, but the Dollar Strengthens

Published: December 17, 2009

Wall Street investors sold off on Thursday as light trading amplified concerns about foreign debt and a weaker-than-expected report on the labor market. [Now tonight’s second offering]

As traders turned away from the risks of the stock market, the dollar strengthened, hitting a three-month high against the euro. [Otay, NOW the markets sink when the dollar climbs…back when the markets were bouncing off of 14,000, the dollar was tanking.]

Losses in the financial sector also helped drag shares lower, pushing the Dow Jones industrial average down for a third day. Citigroup shares fell 7.25 percent, to $3.20, after the Treasury Department said it would delay plans to begin unwinding its stake despite the bank’s desire to free itself of government support. Citigroup had priced its shares at $3.15, below the $3.25 at which the government assumed its one-third stake. [Truth be told, this ‘offering’ failed to attract enough bidders so the Gummint got ‘cold feet’ and backed away before somebody got lynched!]

The dollar surged to its highest levels since September. It hovered slightly above $1.43 against the euro, after weeks of trading at or above $1.50.

By the end of the day, the Dow Jones industrial average had fallen 132.86 points, or 1.27 percent, to 10,308.26. The Standard & Poor’s 500-stock index dropped 13.10 points, or 1.18 percent, to 1,096.08, while the Nasdaq composite index declined 26.86 points, or 1.22 percent, to 2,180.05. Crude oil dropped a penny a barrel to settle at $72.65.

A light trading day exaggerated the declines, analysts said. In recent weeks, hedge fund managers and investment strategists have sold shares in an effort to cash in on profits.

On Thursday, an unexpected increase in the number of people filing for unemployment benefits left investors turning to dollars as a safe haven. [Are investors really that stupid or do they merely think we are? What we saw today was profit taking, nobody really believes the employment markets are coming back anytime soon!]

The number of filings increased to 480,000 last week, 15,000 more than expected. Still, the job market has shown signs of improvement recently though at least 15.4 million Americans are still out of work. [It only stands to reason that they can’t throw EVERYBODY out of work and 15 million puts a pretty big dent in the number of ‘expendable’ people out there.]

Traders are nervous about emerging markets, particularly after the debt crisis in Dubai. On Thursday, those concerns came to the fore when Standard & Poor’s downgraded the credit rating of Greece, which has struggled to reduce its deficit. Some analysts worry that growing deficits could steer weak economies into fresh downturns. [That’s a bold faced lie too…the real worry is monkey see, monkey do…that civil unrest will get out of hand and they’ll have to call in the ‘big guns’ in to restore order…then the damn jig will be up. If the UN is called in, it’s automatically ‘Game on!’ (Not that there’s enough of the UN to go around.)]

Investors appear to be backing off a rush to sell the dollar that dominated the markets for much of the year. Yields on Treasury bonds have steadily risen, and many investors say they believe an end is in sight to the near-zero interest rates imposed by the Fed, strengthening the dollar’s appeal. Higher interest rates mean more lucrative returns for dollar holders. [And if The Fed throws the US ‘under the bus’ to satisfy the investors, there ain’t a fucking thing you can do about it!]

On Wednesday, the Fed said it would leave low rates in place for an “extended period,” which most analysts took to mean at least six months. But Brian Dolan, chief currency strategist at, said rates could remain low even longer, keeping the dollar weak. [Why do you suppose Brian is saying this? Could it be because he can’t imagine the havoc that will be created when the markets ‘seize up’ again? Yeah, I think that’s what he’s saying…]

“It’s not at all clear that the Fed is going to tighten rates in 2010,” Mr. Dolan said. [Although they might if the ‘recovery’ commits suicide early in 2010.]

As the recovery takes hold, investors seem to be finding reasons for restraint in each economic report. Signs of strength create worries that the Fed will raise interest rates; indications of a slow recovery make investors nervous about the risk for another downturn.

“We’re transitioning from an ‘end of the world’ outlook to a fragile recovery,” said Stephen P. Wood, chief market strategist for Russell Investments. [Um, geez Steve, why do you think that or more succinctly, how do you tell the difference? It’s still looking a lot like ‘game over’ from where I’m sitting…a lot of things have to go extremely well just to keep this apple cart on its wheels.]

New Jobless Benefit Claims Rise Unexpectedly

[Without further comment, here is the report of the ‘unexpected’ rise in unemployment…]

Published: December 17, 2009

Filed at 9:20 a.m. ET

WASHINGTON (AP) -- The number of newly laid off workers filing claims for unemployment benefits unexpectedly rose last week as the recovery of the nation's battered labor market proceeds in fits and starts.

The Labor Department said Thursday that the number of new jobless claims rose to 480,000 last week, up 7,000 from the previous week. That was a worse performance than the decline to 465,000 that economists had expected.

The four-week average for claims, which smooths out fluctuations, did fall, dipping to 467,500, the 15th straight decline, viewed as an encouraging sign that the labor market is gradually improving. The four-week average is now at its lowest point since late September 2008, the period when the financial crisis was hitting with full force.

Unemployment claims have been on a downward trend since this summer. That improvement is seen as a sign that jobs cuts are slowing and hiring could pick up as soon as early next year. But the rise in weekly claims of 7,000 last week, which had followed an increase of 19,000 the previous week, shows that the improvement has been halting.

Economists closely monitor jobless claims, which are considered a key gauge of the pace of layoffs with continuing claims viewed as an indication of how quickly laid off workers are getting new jobs.

Analysts believe that claims need to fall to about 425,000 for several weeks to signal the economy is actually beginning to add jobs.

The government said that the number of people receiving regular benefits rose by 5,000 to 5.19 million for the week ending Dec. 5. That figure does not include millions of people who have used up the regular 26 weeks of benefits typically provided by the state and are now receiving extended benefits for up to 73 additional weeks, paid for by the federal government.

The people receiving extended benefits jumped to 4.73 million for the week ending Nov. 28, an increase of 143,759 from the previous week. That big rise reflected the fact that a total of 17 states are now processing claims for the extension of benefits that Congress approved last month.

The economy grew at a 2.8 percent annual rate in the July-September quarter, the first growth in the gross domestic product after a record four straight quarters of shrinking GDP. A recent string of more positive reports is causing some analysts to revise higher their forecasts for growth in the current quarter to 3 percent or slightly better.

However, the concern is that unless unemployment starts to come down in a sustained way, consumer spending, which accounts for 70 percent of economic activity, will begin to falter, putting in jeopardy the fragile recovery from the nation's longest recession since the 1930s.

The jobless rate did dip in November to 10 percent, down from a 26-year high of 10.2 percent in October. But analysts are worried that unemployment will resume rising in coming months and will not peak until hitting 10.5 percent next summer. However, the November jobless report did show that businesses slashed their payrolls by just 11,000 jobs on net in November, the smallest decrease since the recession began two years ago.

Federal Reserve officials on Wednesday concluded their final meeting of the year with a decision to hold interest rates at ''exceptionally low levels'' for an extended period. The Fed has kept its key federal funds rate at a record low near zero percent for the past year and many economists don't look for any increases until the unemployment rate begins to move lower on a consistent basis.

In its assessment of the economy, Fed officials noted that economic activity was continuing to pick up and the pace of layoffs has been slowing.

There were 29 states with increases of more than 1,000 claims for the week ending Dec. 5 led by California, with a rise of 28,353, which it attributed in part to the fact that the unemployment offices were open for the full week giving applicants more time to file following the Thanksgiving holiday. Other states with big gains were Georgia, North Carolina, Pennsylvania and New York.

The two states with declines of more than 1,000 were Kansas, with a drop of 3,803, and Kentucky, down by 2,048.

Thanks for letting me inside your head,


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