Friends
As we mentioned this morning, the non-farm payroll number was another body blow to sentiment, but knowing that the first half of the year GDP averaged only .70%, it really comes as no surprise. Economists have continuously indicated that we would need GDP to grow at 3% or better to get any real measurable job creation. Unfortunately, today’s news just adds to the negative feedback loop that we are caught up in as we continue to talk ourselves into a recession.
The other major concern is what is going to happen in Europe next week. As we have noted for a while now, there is likely to be some sort of “Lehman” moment over there, and most likely some type of “Tarp” solution. The first thing we will likely get is a lowering of interest rates by the ECB and President Trichet. Traders simply did not want to be too exposed to stocks going into a three day weekend and basically a buyers strike ensued.
Stocks began the day to the downside and continued to drift lower as the day went on. The Dow Jones Industrial Average finished the day down 253 points. The S&P 500 was down 30 points to end the day at 1174. 1200 on the S&P did not hold for the week, so it would seem we are back in the 1100 to 1200 trading range. We have noted we would not be surprised if we tested that S&P 1100 level soon. Gold rallied $50 on the knowledge that lower rates here and likely over there (Europe) are here for quite some time.
Next week we get the beginning of the NFL season, and the resumption of the political football season with President Obama’s speech/jobs plan on Thursday. But early in the week, traders will be focusing on Europe, and the markets will likely take their cues from the goings on over there. As we enter what is typically a volatile season, we stand ready with our “protect” bucket firmly fortified and look to add items to our “growth” bucket as opportunities arise.
Have a great Labor Day weekend everyone. We’ll be strapped in ready to go next Tuesday.
