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Big Money expecting a Rebound on Wed-Thurs ahead of Big Numbers on Friday.

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June 01, 2010 – Comments (2)

Instead of consistantly losing jobs, the US Job market is expected to generate over 1/2 Million Jobs on Friday. 

Economists expect the US economy generated about 540,000 jobs in May-a large portion of which expected to come from Census hiring-and many analysts will be hoping that's enough to assuage investor fears that the European debt contagion could cause a double-dip recession.

"The market's just looking for affirmation that the economy here is still growing. That's the biggest concern," says Gary Flam, portfolio manager at Bel Air Investment Advisors in Los Angeles. "If the economy continues to grow and this is just a normal correction, the market will continue to grow. But if Europe drags down our economy, some more dour outcomes can be envisioned."

The markets have reacted violently over the past six weeks to fear that Europe's problems could become US problems. Major averages have sold off a shade more than 10 percent from the most recent high, putting stocks in correction territory.

But Tuesday's manufacturing numbers show how far a little good news can go: Futures indicated the Dow would sell off more than 100 points off the open, but stocks had a relatively strong session.

A strong print on the jobs number, then, could head the correction off at the pass.

"Solid job growth is going to make a huge difference this year," says Kurt Karl, chief US economist at Swiss Re in New York."We should get about 200,000 a month. It's not a gigantic number but it will be enough to sustain this recovery."

2 Comments – Post Your Own

#1) On June 01, 2010 at 5:40 PM, davejh23 (< 20) wrote:

"Economists expect the US economy generated about 540,000 jobs in May-a large portion of which expected to come from Census hiring-and many analysts will be hoping that's enough to assuage investor fears..."

Why would this calm any fears?  A large number of Census jobs added that we know for a fact we'll be losing within a matter of months?  That's not very encouraging.  I just read an article on Yahoo! about employers hiring fewer full time workers...it noted that 32% of current workers are contract workers without benefits (far worse than I would have guessed) and that number is expected to grow to 40% fairly quickly.  This doesn't look like economic strength...of course, it could just be employers trying to get around healthcare legislation...

"But Tuesday's manufacturing numbers show how far a little good news can go: Futures indicated the Dow would sell off more than 100 points off the open, but stocks had a relatively strong session."

This seems to be happening over and over.  Futures are down, the market opens down and then quickly reaches positive territory, and then the market goes right back to the lows late in the day...the Dow lost 30 points in the last 2-3 minutes!

"Solid job growth is going to make a huge difference this year," says Kurt Karl, chief US economist at Swiss Re in New York."We should get about 200,000 a month. It's not a gigantic number but it will be enough to sustain this recovery."

200,000 a month might help calm investor's fears, but this will not sustain an economic recovery.  The unemployment rate will continue to increase if we only add 200K jobs a month going forward.

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#2) On June 01, 2010 at 5:53 PM, simplemts (< 20) wrote:

If "big money" is already expecting this then they are already positioned.  Seeing how everyone is selling like mad, I highly doubt your blog has any credibility to it.  Not to mention, after losing over 3% in the last 2 days a "big bounce" may just make up for 2 days worth of losses and not be making any real momentum or positive ground.

 The trend is still down, and the rebound will need to be HUUUUUUGE to mean anything at this point.

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