Thursday, August 19, 2010

Market Facts, Sentiment, and Active Management Suggestions ....

Few economists forecast today's disastrous economic data: 500,000 new/initial weekly unemployment claims and a manufacturing swing number of negative 7.7% from the Philly Federal Reserve region for August compared to July's positive 5.1%. Either the economy is failing fast or these numbers are both anomolies that struck on the same morning.

POTC believes the equity market will head lower from here (S&P 1,078), and ripple effects through Asia and Europe will be dark.
National unemployment rate for August will post September 3, Friday. For July, the rate was 9.5%, now that rate looks to creep closer to 10% than 9%.

Bad memories return, trading opportunites abound ..
Back in early 2009, Obama's economic team openly stated on CNBC the national unemployment rate would not rise above 8.1% if the $787B stimulus bill passed; stimulus passed and we're on the verge of breaking 10%. 

This economic Change team should resign, like the messenger of that 8.1% promise did (Peter Orszag), or be fired for ineptitude. 

With Labor Day, Thanksgiving, Christmas and other holidays just around the corner, the psychological impact of a 10%+ unemployment rate will crimp consumer spending.

Though some argue this negative data will force the Administration to extend the Bush taxes, we're not convinced after witnessing 18 months of this Change cabinet.

Nearly every policy has been to expand the government at the expense of the private sector. Holding out hope for this president to enact any market friendly measures has become more and more naive.

The longer this Administration drags its feet, the less effect it will have. If they don't do anything within one week from today (August 19), bond prices will continue to rise and stocks drop; the S&P will have a good chance to break below 1,000 very quickly in our opinion.

All of POTC's paying subscribers received specific suggestions on what and how to trade the scenario we see unfolding ...


Anonymous said...

Lost today but took your advice on CME and s*p, thanx. waseem:'

Anonymous said...

Kgrin82, LA

Anonymous said...

cant wait till october alerts guys, mushar g

Anonymous said...

CME was huge, 800%, just wish I held the entire amt. NY nick