…by the time you read this we will have the employment data for June. Jobs were expected to decline by 345,000 so if you see just 325,000 they will be whooping it up. Such is the nature of green shoots and this despite the worst job market in 25 years.
Not only that but finally condos and co-ops in Manhattan are dropping like a stone, -18.5% year over year as the collapse of Bear Stearns and Lehman Brothers finally caught up with them…what did we expect? This is the first price drop in the four housing recession and it across all sizes and price ranges. Another brown shoot.
Yesterday’s equity market rally just about offset Tuesday’s decline and since the middle of May the indices have been ratcheting down. Did you notice that the rallies have come on the first trading day of the month (except April 2), each month since the March lows. Then we went flat until the next month but that came to a halt in June…good luck. Still the high correlations between all asset classes are making it difficult to do much of anything leaving an alternative of cash yielding less than 1%…not much for compounding. As the return tables yesterday showed, returns in all asset classes are all over the place for various time periods and with no consistent direction…even for treasuries which have been routinely oscillating 15 basis points a day making investing dangerous. There is little if any predicatability and definitely no trends.
Well, let’s see what reaction there is to the payroll data and about two hours later the big traders will be headed for the Hampton’s…if they haven’t been forced to sell their places or are trying to which is a fruitless endeavor. There shouldn’t be much else left today.
The highlight may have already occurred as Johnson & Johnson (JNJ) announced they are investing $1 billion in Elan (ELN) for an 18.4% stake. The shares surged 28% in Euro trading to $9 from $7, last nights close, where they have been hopelessly mired in a range of $7.60 to $6.50 for three weeks. The surge however, is more likely due to short covering as the 40, 50, and 200 day moving averages have converged at $6.97 to $7.21.
We just got the jobs (or lack thereof) data for June and it is awful. 467k fewer jobs bringing the total job loss since Dec. 2007 to 6.5 million! Meanwhile the unemployment rate rose 0.2% to 9.6%….stimulus isn’t accomplish much so far or alternatively, what would it be if we didn’t have it?
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A friend in London, Mark Gilbert, wrote an article today on the big banks crying foul over increased regulation…seems they all still have their jobs despite the stupidity of their herd-following instincts that we are all paying for. Ken Lewis is the epitome of this but most of the other big bankers also failed to use common sense as they violated tried and true banking rules (such as 60% loan to deposit ratios and while those will not come back the might get back to 70% and increase the allocation to treasuries which helps the government…like getting their loans back…while tightening credit and overall lending), in search of a new paradigm….TB has seen this at least four times in his 37 year career and all ended badly.
Meanwhile in Japan, more restrictions are being placed on derivatives bringing cries of ‘stifling innovation’ which most of us would agree is a good thing after the way it served us last time.
It is this latter comment that worries TB the most as the banks are clearly in the sights of the Obama administration but scant attention seems to be trained on Wall Street and hedge funds…better tighten it down, Barrack or growth won’t be the problem…again!
Enjoy your long weekend and think how great it is to be independent…but TB has to wonder what those founding fathers would say if they saw how greed nearly destroyed this great country taking the rest of the global financial system with it!
TB
Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries…as he sees it…and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Hope you find it useful. Copyright TBD Capital LLC, © July 2, 2009.
