Are we there yet?
This ride to the bottom is getting a little tiring but I still hang on to a shred of hope, much like Lot, I just need to find 10 righteous analysts to agree with me and we can spare the markets from destruction.
Unfortunately, also like Lot, I read and read and read and I watch CNBC and Bloomberg and (ugh) Fox Financial and I can find not even one righteous analyst to agree with me. This, of course, kind of makes me question my own sanity as the front page of the WSJ On-Line today carries the following (not skipping anything as of 8am):
- Problems Mount for Carlyle
- Housing, Bank Troubles Deepen
- Futures Stall; Payroll in Focus
- Collateral Call Goes Unanswered
- Regulators Push Banks
- Private Labs to Oversee Toy Safety
- Obama Fund-Raising Record
- Japan Nominates New BOJ Chief
- Israel Plans to Continue Talks
- Write-Downs Take a Toll at Fortis
- Ambac Raises Capital to Keep Rating
Is it just me or does anyone else have the impression that Murdoch is short on the markets?
Asia headed for the exits this morning with the Nikkei (down 432) and the Hang Seng (down 841) both taking 3.5% hits. As mentioned in the Journal, BOJ governor Fukui is being replaced by Prime minister Fukuda and he is choosing deputy minister Muto, who hopefully will be confirmed in short order.
Europe is trading off about a point ahead of our open with financials leading the downturn over there but surprising weakness in the miners, often a precursor to falling metal prices, which there is no evidence of so far.
The Fed Announced $100Bn of Term Auction Facilities at 8:15 to inject liquidity into the markets. These are 28-day loans so not a huge deal but it does give the financials a little manoeuvering room and also shows the Fed is on the ball and is working on the problem. Also the announcement indicated the Fed is working with foreign CBs to alleviate the credit crisis but the markets sold off on the news prior to the 8:30 jobs report on the assumption that something must be very wrong for the Fed to jump in like this (probably not the reaction the Fed had hoped for).
8:30 – Feb Non-Farm Payrolls declined 63,000 while wages went up 0.3% so that’s more stagflation. Manufacturing lost 52,000 jobs and Construction dropped 39,000, the 8th straight drop in construction. Had government not grown by 38,000 jobs we would have had a 100,000 job decline for the month! So let’s give a shout out to the Bush administration, who has overseen the largest expansion of government in our history (after Clinton cut it by 15%) – they may talk the talk, but they do not walk the walk!
NOW we get a good test of the bottom, the closing today will be critical and, if we are going to close lower on the day, then we will need to start working our way out of positions and getting either into cash or into very neutral positions over the weekend.
Our Jan 22nd closing lows were: Dow 11,971, S&P 1,310 (already below!), Nasdaq 2,215, NYSE 8,661 and Russell 671 (already below). All spiked below those levels on that day but Jan 22 was a Tuesday, not a Friday and we absolutely do not want to go into the weekend with an ugly close like that.
Hopefully we’ll have an opening spike down and recover from there, that would be better than a pre-market rally but my plan is to take out callers, cahs in puts and either re-cover with lower callers or just kill the positions entirely – there are a lot more things you can do with cash than with a spread! It’s going to be a rough and busy morning!
