S&P 500 day trading course jan 9 employment numbers

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S&P 500 day trading course, market makers squeaking bad news

Federal Reserve policy makers saw "substantial" risks to the slumping economy last month as they cut the benchmark interest rate to a record low and pledged to expand emergency loans if necessary.

Central bank officials believed ''the economic outlook would remain weak for a time and the downside risks to economic activity would be substantial,'' according to the minutes of the Dec. 15-16 Federal Open Market Committee meeting released today in Washington. Some officials saw "the distinct possibility of a prolonged contraction" stemming partly from stresses in financial markets.

Some policy makers last month saw "significant risks that inflation could decline and persist for a time at uncomfortably low levels," the minutes said. Price increases will probably "continue to abate because of the emergence of substantial slack in resource utilization and diminishing pricing power."

U.S. employment fell by 500,000 jobs in December, bringing last year's decline to 2.4 million, the most since 1945. President-elect Barack Obama yesterday called for a record stimulus to prevent the recession from deepening. His plan aims to create or save 3 million jobs and may cost about $775 billion.






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S&P 500 day trading and Economy - labor-unemployment-

The economy declined in the third quarter the most since 2001. New home sales expectedly rose 2.7 percent in September(fast inovators getting in before the final drop) , before credit markets froze, up from a drop of 12.6 percent in August, according to Commerce Department reports.

It is estimated that a Labor Department report on Nov. 7 will show payrolls shrank by 200,000 workers last month. The unemployment rate may jump to its highest level in more than five years.

And in case you are wondering why mortgage yields are higher again, here is a little background provided by our President(can you believe it) that will help you answer any questions you may have. Here are the main drivers:


1) International selling. A variety of factors - including some recent confusion over the semantics of whether the GSEs are "explicitly" or "effectively" guaranteed by the government - have created a new wave of MBS selling around the world. The general "flight-to-quality" has become so intense that investors are now carefully differentiating between degrees of government support and the fact that the GSE backing is considered "effective" but not "explicit" is actually very meaningful to investors in agency corporate debt as well as agency MBS.

2) Unintended consequences of the FDIC guaranteeing more forms of senior bank debt. As more and more investment alternatives become explicitly guaranteed by the government, the new abundance of risk-free investment choices has caused FNMA/FHLMC corporate debt costs to increase. As the GSEs' cost to finance MBS increases, holding MBS in their portfolios becomes less economical and the market expects them to be less involved in purchasing MBS.

3) Similar to #2 above, as sovereign debt issuers around the world issue debt at increasing yields, these investment alternatives also siphon-off potential demand for FNMA/FHLMC corporate debt and force the agency's funding costs higher making additional portfolio growth uneconomical to the GSEs.

4) De-leveraging continues across the investment community and is made worse at the moment since some dealers have year-ends in Nov and are not anxious to dramatically increase positions at this time.

5) Some investors are reallocating money back to stocks and out of MBS. This back-and-forth will obviously continue as the economic story plays-out.

Aug 14 S&P 500 and economy

The Labor Department said that Jobless Claims fell by 10,000 last week to 450k, but remained at levels that show strained labor markets. This is above the 432k that had been forecast although it was the first time that weekly claims fell since early July. The four-week moving average of new jobless claims climbed to 440,500 last week from 421,000 the week before - the highest reading in more than six years.

We also had July's Consumer Price Index, rising at twice the rate expected and showing the fastest rate of year-over-year growth in 17-1/2 years! The CPI was +.8% in July after being +1.1% in June. Prices were up 5.6 percent from a year ago, the sharpest year-over-year rise since 5.7 percent in January 1991. That was also well above the 5.1 percent increase that economists had forecast. The core CPI (ex-food & energy) still was +0.3% in July, above forecasts. Energy prices are coming down, and there is no meaningful probability of Fed rate hikes until things stabilize. After this news, the 10-yr continues to hover around 3.90% and mortgages are unchanged so far.

Treasury could buy Fanniew Mae and Freddie Mac

Treasuries gained as stocks fell, led by financial companies, highlighting rising concern that problems for the U.S. banking system may be worsening. U.S. stocks fell, sending financial shares to their lowest level since October 1998, on heightened concern that bank failures will spread. Washington Mutual Inc. posted its biggest drop ever and National City Corp. tumbled to a 24-year low after last week's collapse of IndyMac Bancorp Inc. spurred speculation that more regional banks may be short of capital.

Treasuries initially declined, pushing the yield on the 10- year note to the highest in almost two weeks, after Treasury Secretary Henry Paulson put a plan before Congress to provide support to Fannie and Freddie, the government-sponsored enterprises that purchase or finance almost half of the $12 trillion of U.S. mortgages.

There are some that feel that the U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an unmitigated disaster and the largest U.S. mortgage lenders are basically insolvent. Some bet that Fannie Mae shares will keep tumbling. Fannie Mae's market value is now about $10 billion, down from $38.9 billion at the end of 2007. Freddie Mac's market value has shrunk to about $5 billion from $22 billion at the end of last year.

Unemployment rate

The unemployment rate in May jumped more than it has in over two decades, reaching its highest level since October 2004 and emphasizing the recessionary risk the U.S. economy is currently facing. The civilian unemployment rate spiked to 5.5 percent from 5.0 percent in April, coming in much worse than the expectation of 5.1 percent. The last time the unemployment rate jumped half a percentage point was February 1985. With nearly 49,000 jobs cut from payrolls following decreases of 28,000 in April and 88,000 in March, May marked the fifth consecutive month of job losses. Overall, the economy has shed 324,000 jobs this year.
The latest decrease was led by declines in construction, professional & business services, retail trade, and manufacturing. Revisions to March and April resulted in a net revision downward of 15,000. On the inflation front, average hourly earnings advanced 0.3 percent in May, coming in above the market projection for a 0.2 percent boost.

With widespread payroll losses, the May non-farm report clearly portrayed further deterioration in the labor sector, lessening the ability of the consumer to support economic growth. The jump in unemployment may very well have been exaggerated for technical reasons such as graduating college students attempting to enter the labor market, but nevertheless points to weakening in employment. May's report has also put the Fed in a tough situation by lowering the odds of a healthy rebound in economic growth later this year. Treasury yields fell on the news and equities fell under downward pressure.

For week ending June 21, the Labor Department reported that the advance figure for seasonally adjusted initial claims was 384,000, unchanged from the previous week's revised figure of 384,000. They also reported a four-week moving average of 378,250, an increase of 2,250 from the previous week's revised average of 376,000.

European Central Bank raises rates ahead of Fed

Treasury 10-year notes rose after the National Association of Purchasing Management-Milwaukee manufacturing index dropped to its lowest since October 2001 and stocks of several financial firms fell.

Citigroup Inc., Merrill Lynch & Co. and Lehman Brothers Holdings Inc. were among the firms that declined. The purchasing association's monthly index of regional manufacturing fell to 39, its fourth straight month below 50. A reading lower than 50 means the number of manufacturers that said business deteriorated was greater than the number saying it improved.
Treasuries earlier fell, extending the biggest quarterly decline since 2004, as inflation in the euro region rose to the highest in 16 years and oil advanced above $143 a barrel.
The retreat pushed 10-year yields up from a three-week low after a European Union report showed the rate of euro-region inflation climbed to 4 percent, bolstering the case for the European Central Bank to raise rates. Why are they ahead of us?

Crude oil for August delivery rose as much as $3.46, or 2.5 percent, to $143.67 a barrel in electronic trading on the New York Mercantile Exchange. It reached $142.99 a barrel on June 27 after the Fed left interest rates unchanged at 2 percent. The market continues to struggle with what to do with the rise in oil.

Economic News

U.S. Mortgage Delinquencies, Foreclosures Rise to 29-Year High. According to the Mortgage Banker's Association, new foreclosures rose to a seasonally adjusted 0.99 percent of all U.S. home loans, the total inventroy of homes in foreclosure increased to 2.47 percent and the delinquency rate, loans with one or more payments overdue, grew to 6.35 percent.
Rates on 30-year mortgages edged up last week to the highest level since March as investors worried about inflation threats. Freddie Mac reported Thursday that 30-year fixed-rate mortgages averaged 6.09 percent, compared with 6.08 percent the previous week. It was the highest mark for 30-year mortgages in 12 weeks since averaging 6.13 percent the week of March 16.

U.S. Payrolls -49K, Unemployment Rate Climbs to 5.5%, after payrolls fell 28,000 in April and 88,000 in March. The unemployment rate, which is calculated using a separate survey of households, jumped 0.5 percentage point to 5.5%, its highest level since October 2004.
Real-Estate Woes of Banks Mount: Lenders Dumping Bad Loans at Discount; Regulators See Losses Continuing. Federal regulators warned Thursday that banking-industry turmoil would continue as financial institutions come to terms with piles of bad loans they made to finance the construction of homes and condominiums, which in turn could lead to billions of dollars in fresh losses.

Household Net Worth Fell 2.9% in 1Q08, the Most in 5 Years. According to our Federal Reserve, stock-market losses and falling home values in the first three months of this year led to the largest quarterly drop in the net wealth of American households since 2002.
Standard & Poor's said the number of entities at risk of having their ratings cut hit a new record of in May as a "material slowdown" in housing and consumer activity amid still-tightening lending conditions continues to deteriorate credit quality.
Mortgage applications in the U.S. last week dropped to the lowest level in six years, reflecting less refinancing as interest rates jumped.
ReconTrust, a unit of Countrywide, filed a notice of default on a $4.8 million Countrywide loan backed by Ed McMahon's home, who is $644,000 in arrears.


Goldman, the most profitable securities dealer, and Lehman, the top-ranked bond research firm in Institutional Investor's annual survey for eight years, bet the economy is too weak to spark runaway inflation and an increase in the Federal Reserve's target interest-rate for overnight loans between banks. Though futures traded on the Chicago Board of Trade show a 67 percent chance policy makers will boost the fed funds rate by year-end, they haven't started to raise borrowing costs with growth below an annualized 2 percent rate since 1980. The capital markets are underestimating how sluggish the economy is going to be. Any tightening priced into the fed funds futures market is premature at this stage of the game.
Fed Chairman Ben S. Bernanke said in an address June 4 at Harvard University in Cambridge, Massachusetts, that data showing the public expects price increases to accelerate is a ``significant concern'' for the central bank.

The case for an increase became weaker on June 6, as the Labor Department said that the unemployment rate surged to 5.5 percent in May from 5 percent in April. The gain was the biggest since February 1986. The economy is not performing at a rate that even remotely suggests they should raise interest rates along the lines that the markets are implying.

The Only way we will get oil under control is to raise Intrest Rates. Protect the dollar.

Treasuries and jobless rate

Treasuries fell pushing the two-year note's yield to the highest since January, after a smaller-than- forecast loss of U.S. jobs in April led traders to bet the Federal Reserve will stop lowering borrowing costs. Two-year notes were on course for a third straight weekly decline amid speculation the Fed's rate cut this week will be its last. The two-year note yield rose to within 1.36 percentage points of 10-year rates, the closest in more than three months. The central bank has slashed its main rate a total of 3.25 percentage points since September to support the economy.
U.S. employers eliminated 20,000 jobs in April, after a decrease of 81,000 in March, the Labor Department said. The U.S. hasn't lost jobs for four straight months since 2003. The jobless rate fell to 5 percent, from 5.1 percent in March.
Traders see an 84 percent chance the Fed will leave its target rate for overnight loans between banks at 2 percent at its next scheduled meeting on June 25, futures on the Chicago Board of Trade show. That likelihood has risen from 80 percent yesterday. The rest of the bets are for the Fed to cut the rate to 1.75 percent.