Well yesterday was a nothing day (for the most part) – slightly up/slightly down and flirting with those supports – as we wait. The wait seems to be between more economic (bad) news vs. the optimistic inauguration of Obama – most certainly a tug of war – the question is who will win?
_________________________________________________
Retail Slump & Rising Unemployment
The bad news seems to be hitting first, as U.S. retail sales fell more than twice as much as forecasted (according the Commerce Department). A 2.7% drop. Even Wal-mart (the recession company) is getting squeezed and had last week lowered their annual forecast – no doubt a survivor, but it is seeing very bumpy times. If the 2.6 million job losses is any forecast of future retail sales number – they are not looking good. Certainly the stimulus package is gaining more headway – but is it too little too late.
To understand the severity of the sales slump, the Sale fell .1% for all of 2008 – the FIRST DECREASE ON RECORD. That’s right – not just slowing growth, but a negative growth. This has concerned many economist as their forecast (on avg.) had fallen far short of the actual numbers. Of course car sales (and other big ticket items) are getting hammered and seeing some of the worse sales numbers on record.
My wife made an interesting observation – if credit card companies are reducing people’s limits – how are people going to be able to purchase bigger ticket items (or make a large payment)? It’s a good question – cutting off credit to consumers is really going to hurt retail even more. Especially as job losses are on the rise, home values are down – some people’s only source to funds is credit – with that shrinking we could see retail sales down for some time.
Maybe it’s a good thing that we get back to SAVINGS and spending ONLY EARNED income instead of credit – that also means a massively shrinking GDP. That just maybe the course being set out – whether we like it or not.
_________________________________________________
Stimulus – with strings attached
I heard our favorite leader of the finance committee this morning on NPR trying to mumble his way through something coherent. It looks like Obama has started his first fight – and it’s with his own people. Obama wants access to the 350 billion (second part of the TARP) – and working on how to deploy it – however Barney (being the master of his domain) is not letting go so easily – he said – I am paraphrasing or translating “We are not just going to say yes, rather yes, but!” – he wants 40 billion of the TARP to bailout foreclosures and wants to have a say of how the money is spent, since he doesn’t seem happy on how the first $350 billion is spent.
The Democrats have already started showing some displeasure with Obama, because they had either been overlooked for positions in the administration or not consulted first. Feinstein being the latest to be upset with Panetta as CIA director (she had her OWN ideas). Harry Reid had also made it clear that he won’t be taking orders from the newly elected president, “I don’t work FOR Barack Obama – I work WITH him!” – he further indicated that a lot of power had moved to the administration under the Bush Whitehouse, it will NOT be happening under Obama’s administration.
Obama has already made it clear, he doesn’t want to see pork and ear-marks (where both sides – Dems and Reps – added over 400 million in pork to the tarp – even house speaker Pelosi added a big chunk.) However the house is not liking that – and are taking it as if they are being TOLD what to do.
Does Obama get the $350 billion of the Tarp (1/2 half) – sure – and there WILL be strings attached. As to his $750 billion stimulus package – I am sure we will see more infighting in both parties – Pork and Earmarks, back scratching, lobbying, etc. – it is all part of Washington and this stupid bickering is getting us nowhere – didn’t they forget we are in a massive economic crisis? Let’s see if Barack can stand up to the House and even his own party!
___________________________________________________
Futures pre market
The futures sure didn’t like the Retail or Unemployment news and has pulled off sharply – Arb traders will be buying the futures to sell the basket – expect to see down side pressure.
___________________________________________________
Support / Resistance
At support or are we?
INDU 8500 / 9000 (It’s about the close – either we are above 8500 or not – it would SEEM like support, but IS it support?)
NDX 1200 / 1250 (Again – about the close)
SPX 850 / 900 (Watch the close)
RUT 450 / 500 (Watch the close)
______________________________________________________
Conclusion
Obama’s inauguration is going to be exciting, but I think the REAL fireworks is going to happen after he takes office – surprisingly he is already rubbing the Democrats the wrong way, as they don’t have any say, consulted, and now are being “Told” what he wants and doesn’t want. The Democrats are trying to real him in and remind him who’s side he is on. Obama – I think is really thinking about the nation and the people – and has left the high school antics to the Congress – he may yet have to play Principal.
No comments:
Post a Comment