Fear of Recession Shakes Markets

The Dow lost 500 points amid renewed fears of a protracted recession and an expected grim jobless reports on Friday.  Goldman Sachs for instance began issuing lay off notices to 3,200 employees globally as the bank slashes 10% of their work force.  What do you think is happening?

Another report, from payroll services firm ADP, showed that the private sector lost 157,000 jobs last month, up from a revised drop of 26,000 last month.

The reports were especially worrisome ahead of Friday's big government report. That report is expected to show that employers cut 200,000 jobs from their payrolls in October. Meanwhile, the unemployment rate, which is generated by a separate survey, is expected to rise to 6.3% from 6.1% the previous month.  See CNN Money article    HERE

Last week the Dow  market had its larges one week advance in 34 years and many anticipated that the market would give back some of those gains in profit taking.   Volatility swept over the markets trading day again, feeding the decline.   Stocks were set up for a decline by most expectations.

As some analysts noted,  it did not matter who won the white house,  these problems in the economy are not going away any time soon.  We are in a recession and people are locking in profits when they recognize we are not yet out of the woods.

Although the market expected Obama to win the election, as the session wore on investors were clearly worrying about the weakness of the economy and pondered what the Obama administration might do. Analysts said the market is already anxious about who Obama selects as the next Treasury Secretary, as well as who he picks for other Cabinet positions.  see yahoo finance article HERE

 

Are we on a downhill treadmill?  How do we get off the train before it runs off the track?

The market is not out of the rocks yet.   The jobless report on Friday is not expected to be good news.

But with the largest increase in one week, in the last 34 years,  profit taking was inevitable.

At the opening, the markets are down again after yesterday's plunge and amid deepening worries about the jobless rate and questions about what lies ahead for our economy.

What do you think it's going to take to bring us out of this seeming tailspin?

I think this will continue to be a bad week tommorow as well.   I expect the jobless numbers to drop the market further on Friday,  the only hope that it does not,  is the jobless numbers come in lower than anticipated.

We still have a liquidity and cash crisis and foreclosures continue despite the bailout that was supposed to bring a halt to foreclosures and the infusion of major capital into the banks and even a semi nationalization of the banks making the Fed partners in a dozen banks.     

All those programs that were designed to help....are having zero impact so far because there are no mandates, no requirements which specify how the money is to be used.

The so called bailout is but one more layer of incompetency added to a history of incompetency.

And we now have a Democratic congress proposing yet another rebate check to tax payers which is not going to work any better than the first rebate check worked.

The underlying fundamentals are still not being addressed and until they are addressed  the volatility in the market will continue as fear continues, about the prospects for the next few years.  Hedge funds remain the 800 lb gorilla in the market.  Naked short selling continues to manipulate prices,  and the waters remain a stormy sea for investors.

The New York Times at this hour headlined:

  Stocks Fall on Bleak Spending and Jobs Data

  Between slumping retail sales and trouble in the technology and auto industries, the outlook for the economy is looking bleaker by the day. Investors on Thursday bet that the worst was yet to come.

  The Dow Jones industrial average plummeted 443.16 points at the close, erasing a week’s worth of gains and adding to a 486-point deficit from Wednesday. The broader Standard & Poor’s 500-stock index was down 5 percent.

  “There’s a lot of fear out there,” said Brian Gendreau, a strategist at ING Investment Management in New York. “Normally markets are driven by fear and greed. Now it’s fear and fear....”

Markets have been down nearly all day, the Dow hovering between -300 and -400 for much of that time.  But, as bad as that was, the Dow threatening to drop even further before finally closing down "only" about 450 pointes.

Early figures put the Dow's close at just under 8700.

And tomorrow, Friday, brings end of week reports which coiuld further alter the markets' outlook.

All analysts have been steadfast in saying that we are not yet out of the woods.  Paulson and Bernake have stated the very same thing.   We had the largest single week rise in the Dow.   Its been followed by the largest two day decline.   Thats just more of the very same phenomenon that has plagued this market,   fear,   which is indicated by the volatility.

The market goes up.  Investors are worried about the economy.   More bad news comes out.   The investors sell off taking profits.   The market numbers decline.   Whether the big swings are intra-day or over the course of a couple of weeks they are still volatile and fear driven. 

Until that fear dissipates,  the volatility is going to continue with big swings up and down.

Hmm,

most of the manufacturing is outside of the USA (electronics, shoes, clothing, cars, etc.). Investors (capital owners) have moved the capital outside of the USA. Income from the capital is or will be heavily taxed. I do not see any near term improvement. It seems that the number of the nonproductive people has reached the point where it overwhelms the number of the productive people. I see NO solution to this.  

I can understand "new jobless benefit claims", but just what does does "continuing to draw" mean?  Does it mean drawing a second week, after one has been counted as a "new claimant"?  Does it mean still being on the rolls at the end of the calendar month after one has been a "new" claimant. Neither of those seems to me to justify (except in very literal language) the description of "longer-term jobless benefits".

You might want to take a look at the charts in the thread -- Jobless Rate tops Highest in Decade

Spend some time looking long and hard at those two charts.   The charts demonstrate beyond a shadow of doubt that the Bush administration has sold myth and lies about the economy since taking office.  Our economy, labor, and unemployment numbers have been in trouble since Bush took office.  In fact only two years of the eight years of his administration actually had good numbers.

The claims of 96% employment...claims that I myself have repeated... turn out to be a manipulation of truth and are patently false.