Apparently not in America!
What an ugly day today in the markets. The stock sell off today was fueled by Intel's profit warning and ADP's shockingly horrific December jobs report.
Lets get right to ADP:
"Jan. 7 (Bloomberg) -- Companies in the U.S. eliminated an estimated 693,000 jobs in December, the most since records began in 2001, a private report based on payroll data showed.
The drop in the ADP Employer Services gauge was larger than the median estimate of economists surveyed by Bloomberg News. Today’s report is the first to reflect methodological changes that ADP says will narrow the differences between its calculations and the government’s payroll numbers.
Companies are accelerating the pace of firings as the recession plaguing the world’s largest economy heads into a second year. The Labor Department may report in two days that employers slashed jobs in December for a 12th consecutive month, putting total job cuts at 2.4 million for 2008, according to a Bloomberg survey median.
The ADP report was forecast to show a drop of 495,000 jobs, according to the median estimate of 24 economists in a Bloomberg News survey. Projections ranged from declines of 250,000 to 550,000. "
As you can see, nearly 700,000 jobs evaporated in December according to ADP! Gone! Poof! Just like that! The scary thing here is ADP has consistently been light numberswise versus the government print that we will see on Friday. Supposedly ADP claims that they have fixed the discrepancy. Yeah OK. I will believe that when I see it.
This was way worse than expected and the market sold off almost immediately. What I find amusing is how shocked everyone is when these terrible economic reports come out. I was not surprised the losses were this bad.
Here is my question, How can these economists be so consistently wrong on the bullish side month after month regarding everything around the economy? I almost feel like plugging my ears anytime I hear an economist speak! Whats troubling is most of these economists graduated from the finest universities in the country. Yale, Harvard, and all the other ivy's should be embarrassed!
Who are teaching these brilliant economists? Dick Fuld and Madoff?
The bottom line here is consumers without jobs cannot continue to consume or pay mortgages. I am almost afraid to hear how bad the jobs number will be on Friday.
Tomorrow we get December retail #'s. I am sure those will be just rosey.
The ADP number ruled the day in my opinion. I wanted to share a few thoughts around the market:
I took some profits today on a few shorts. I sold some QID and all of my TBT. I held onto all of my financial shorts even though I see no price action here. The only reason I keep them on is because I pretty much hate this sector with a passion. These greedy pigs have possibly destroyed this country and our way of life. They can all rot in hell as far as I am concerned. I will keep these shorts on based purely on principle. They are small positions, and I hope someday they will payoff when these bloated pigs finally are forced to admit they are broke.
Folks, from a trading perspective the financials are DEAD. I am going elsewhere for trading ideas. No one wants to buy financials and no one wants to sell financials.
I have come to the conclusion that the market doesn't view this area of the market as tradeable anymore. Everyone knows they are all insolvent but the government won't let them fail. They also continue to refuse to admit their losses. I think the market has totally lost interest and confidence in this area of the market as a result.
There are way better places to trade in my view. I am even starting to question SRS at this point. You cannot do TA on this one because it settles at the end of each trading session, but the traders seem to have commercial on ignore as well.
In my view, no one wants to play in these stocks because they have been so manipulated via government interventions, fraud, and lack of transparency. Placing bets on the financials at this point is pure gambling. You better know someone at the Fed if you plan on making money trading here.
The area that is starting to get hot again is commodities. They are volatile as hell which makes them a traders dream! I continue to own CHK which held up well today considering the selloff. Gas inventories are out tomorrow so this one should move depending on the #. I am out on a nice pop. I think oil got a little too pricey at $50. I am not surprised to see this selloff today.
So where are we now? I think shorting the hole here is dangerous. Obama is out with a big economic speech tomorrow. I gotta say folks: This guy is smooth as silk. I am really impressed with his presence. His stimulus will never work, but he sure makes it sound like it will when he speaks! The retail #'s will be terrible tomorrow, but I don't think the market reacts to it much unless the numbers are way worse than expected.
I plan on sitting on my hands on Thursday. I think the next opportunity to trade is following the jobs report on Friday. If the jobs number is ugly but within reach of ADP, I plan on taking a little long position following any drop at the open. I may make this trade a larger position if we sell off again tomorrow because the entry point will be even more yummy.
Guys and Gals, I don't think this corrective bounce in the markets is over yet. There was some buying at the end of the day today. Obama continues stay in the news each day preaching hope and government stimulus. For now, it seems the both Americans and the bond market are buying it.
Eventually, this hope is going to turn into anger and despair as the job losses continue to mount.
This psychological shift is rapidly approaching, but I don't think we are quite there yet.