July 8th, 2009 – House of Cards
Last week’s holiday-shortened trading week came to an abrupt and negative close with yet another dismal economic reading – employment numbers. Punctuating what may be the deepest global recession in half a century, US unemployment levels are now at the highest since 1983, hitting 9.5 percent in June. This latest blow to talk of recovery will likely spark another round of finger-pointing. Since the official start of the recession (December 2007), unemployment has grown by 4.6 percentage points. There is already a chorus of demands for additional stimulus – excluding analysts and economists who suggest that will only exacerbate the problem. The lingering effect from all of this appears to be an increasing level of uncertainty, and during a week of lighter economic data, that will likely translate into choppy trade. There may be a few things investors will look to for cues in lieu of reports.
Commodity prices have been showing apparent weakness, feeling the pull of lower confidence following disappointing US and European data. Crude oil has fallen off last week’s highs, and that may be evidence that the deterioration is not complete. The possibility that expectations had outpaced reality could continue to pare back recent gains; not only in the energy sector, but also the other basic commodities affected by manufacturing and construction. If recovery and demand never materialize then there may be little to support recent price spikes.
Second quarter earnings will also be in focus this week. The official kick-off comes after the close today, so caution will likely be the rule of the day. Recent lackluster consumer confidence numbers – as well as a higher rate of savings – will likely not translate into strong numbers for some consumer-focused companies. Alternately, the accrued savings from cutting labor forces and costs may keep some companies in the black. Either way, the results will have to be marked as a comparison between built-up hopes and actualities. If investors are as overly enthusiastic as they may have been with commodities, the disappointment could bring things much lower.
Past Performance is Not Indicative of Future Results.
Past Performance is Not Indicative of Future Results.
Disclaimer: Futures and options trading involve substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results.
