Market Update, Friday Night Edition: Pondering the Data

June 5, 2009


There was enough confusing data to tame bull and bear alike today. The victims today were commodity bulls, dollar bears and bond holders. Employment data was superficially “better than expected” despite the headline 9.4% unemployment rate. But inside the numbers things were disappointing with revisions and the ongoing games played with the birth/death model. The latter is an official guess of how many folks have given up looking for work. It’s a crude and easily manipulated number.

The bottom line is things still suck, as evidenced by the continuing climb in unemployment.




Markets started out like gangbusters but faded quickly given other realities like rising yields, horrible consumer borrowing data and perhaps just a “news selling” opportunity after sharp run-ups.

Volume increased significantly in some sectors while breadth was essentially a push.





















































































Continue to Part 2: Commodities, Global Markets >>

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Comments

[TGordoB:]

I think your understanding of the birth/death model might not be exactly correct. My understanding is that it's a statistical assumption that job losses from businesses that go out of business will be replaced by a certain percentage of new business. My guess is the model assumes a certain level of "replacement" business related specifically to the businesses that die. If my assumption is right, that number suspect because it's not difficult to imagine that dead businesses aren't getting replaced right now in the current environment.

Jun 06 12:02 AM

[tobi:]

Of course the number is not reality and there was some fixing, but what matters in the end is how the market reacts and the market has loved all the numbers and manipulative methods so far, the market to myth accounting and AIG money was what started it all in the first place.I only hope they continue to do so and get better at it while the market stays naive.

Jun 06 12:13 PM

[Dave Wrixon:]

Market reactions are just froth. Ultimately valuations are determined by fundamentals even if it takes months or even years for the thundering herd to wake up to reality.

The fundamental hinge of new capital investment that is going to increase the wealth generating core of the economy which has been severely hollowed out in recent years and replaced by consumer waste base on cheap and easy credit. To my view there is on evidence of either the materialisation of the necessary capital investment or indeed the cheap easy credit.

What that means in short is that whatever the sentiment on Wall Street the impending slowdown is starting to look a lot like one of those nuclear test train crashes.


On Jun 06 12:13 PM tobi wrote:

> Of course the number is not reality and there was some fixing, but
> what matters in the end is how the market reacts and the market has
> loved all the numbers and manipulative methods so far, the market
> to myth accounting and AIG money was what started it all in the first
> place.I only hope they continue to do so and get better at it while
> the market stays naive.

Jun 06 03:03 PM

[MarvinMBA:]

Its obvious that the Treasury Bubble is starting to burst and will gain downward momentum. Stay out of this market or you will get burned badly.
Upward pricing in energy cost is just the beginning of a second downward economic crisis thats brewing...MarvinMBA...PS Gold is cheap.

Jun 08 01:59 AM

[Daniel Herkes:]

I thought that was Enron. We just go from one not-so-clever scam to another don't we.


On Jun 06 12:13 PM tobi wrote:

> manipulative methods so far, the market to myth accounting and AIG money was what started it all in the first
> place.

Jun 08 07:02 AM