This morning seemed like a European selloff as the strike continued in Greece and the $23 billion of austerity measures (which would open up the next tranche of $40 billion of aid) seemed on the verge of not passing. On top of that news, the pillar that the economy in Europe was pinned to finally began to show signs of slowing. It is actually amazing it has been so strong for so long. Data on Wednesday showed output slid by 1.8% on the month in September, more than forecast and the sharpest drop since April. A day earlier, data had shown industrial orders fell 3.3% month over month in September. Economic advisers to the government, traditionally known as the "wise men", said Germany's economy would probably hit a low-point this quarter and grow just 0.8% this year and next, mirroring forecasts published by the European Commission on Wednesday.
The German economy slowing is a big deal, almost as big as the problems in Greece. If the austerity measures don't pass, Greece doesn't receive its next $40 billion bailout payment. If it doesn't receive that payment, Greece will likely be kicked out of the European Union. While I hope that everyone with exposure to Greece has prepared themselves for this event, it will be the mental shock to the system that really does Europe in.
So we have the European selloff combining with the Obama selloff to produce one of the worst days on the market in more than a year. Oh, don't forget the nor'easter that is bearing down on the Northeast. It has already started to snow/rain in New York City. Now this storm wouldn't be much to think about, but the scars of Sandy are still everywhere. We still don't have heat in the office (I am attempting to type this while wearing gloves; it is not going so well).
By David Urani
Welcome to the election hangover, folks. The market is down more than 300 points and this is the worst selloff the market has seen since last November. The selloff really began this morning before the market opened, seemingly at the same time that ECB chief Mario Draghi spoke about recession taking hold in Germany.
Yet, the deeper I look at the market today, the more I see evidence of a Barack battering. In keeping with the theme of Draghi's comments, I took a look and I see financials really taking a hit, which is typical during Europe-based selloffs. But it's the American banks that are really taking the heat. Bank of America (NYSE:BAC) is down almost 6%, Morgan Stanley (NYSE:MS) more than 6%, Goldman Sachs (NYSE:GS) 5%, and so on.
Coal is really taking a hit as well, with the likes of Arch Coal (ACI) off almost 13%, Peabody (BTU) down almost 9%, and Walter Energy (NYSE:WLT) down more than 7%. I will say that in the President's previous term most of the damage to coal was probably done already. It's hard to think how else he would tighten down on these stocks but perhaps they had prematurely run-up ahead of a potential Romney win.
But if you thought Obama was bad for all stocks you'd be wrong. As with last election, it's likely that now that a Democrat is retaining power folks are going to run out and exercise their 2nd amendment rights while they still can. Two of the clearest winners in today's trading are Smith and Wesson (SWHC), up almost 8%, and Sturm Ruger (NYSE:RGR), up almost 6%.
A look at JOLTS
Taking a look at the Job Openings and Labor Turnover Summary, or JOLTS report, we can see fewer jobs available in our economy during September. The highlight of the report was that the number of available jobs in the U.S. declined a bit, providing some evidence that the jobs situation may not improve moving forward as companies are likely to cut back openings in the face of slowing global economic growth and the looming so-called U.S. fiscal cliff of automatic tax increases and government cutbacks. The number of job openings in September was 3.56 million, down from 3.66 million in August, representing a 2.73% drop. At the moment, the number of job openings still remain well below the 4.26 million openings when the recession began in December 2007; however, the number of job openings has increased 48.9% since the end of the recession in June 2009. Among the largest contributors to job openings in September were Education and Health Services, which totaled 697,000, and Professional and Business Services, which totaled 651,000.
Hiring decreased by 225,000 to 4.19 million, representing a 5.74% decline, and firings declined to 1.70 million from the 1.85 million posted in August, representing a 7.95% drop. This data comes after Friday's rather encouraging jobs number that showed an unemployment rate of 7.9% and an increase in nonfarm jobs of 171,000 in October.
It is also worth looking at the number of unemployed per jobs available, which has been on a down trend since the third quarter of 2009. However, most recently this ratio has been held fairly flat, showing very little room for improvement. So while there are fewer layoffs, there is also less hiring going on, and for those that currently have jobs, they are much more unlikely to quit in search for something else.