Impact on our views: Labor markets showed some signs of deterioration in January with a higher than
expected drop in payrolls, but the unemployment rate fell to 9.7%. This fall was helped partly by an increase in
the number of “discouraged workers” or people giving up looking for work. Bright spots included Temporary Help
Services, Healthcare and Retail Trade, which showed strength. We believe overall conditions are likely to
improve only slowly as economic headwinds continue and we maintain our Underweight rating on Robert Half,
which trades at a substantial premium despite late cycle characteristics.
What's new: Payrolls edged down in January with a decline of 20k MoM, much worse than consensus
expectations for a 15k increase, with losses in Manufacturing, Transportation and Construction offset
partially by gains in Temporary Help Services, Healthcare and Retail Trade. Cuts in Construction
increased slightly, while manufacturing was down modestly. Manufacturing payrolls dropped 11k MoM,
while construction payrolls declined 75k MoM. We anticipate both sectors will continue to see losses in the
coming months. Jobs within Professional and Business Services increased 44K MoM and were led by
Temporary Help Services employment, which increased 52k MoM. This sector has added 247K jobs since its low
in September last year. Retail trade employment increased 42K MoM.
Read the Full Report HERE
I dunno about shorting in the close..Ever think this is just a trading range and the correction is done? We covered 75% of our shorts yesterday AM and are net long. We played aggressive on the long-side.
ReplyDeleteThe volatility yesterday was some great put-selling times and booked nice realized day gains but the harder trade seems short here, no?
1. Greece's GDP is roughly equivalent to the GDP of Washington state.
2. Portugal's GDP is equivalent to the GDP of Louisiana.
That being said, if you look at it from that perspective, things look a little different.
We are not perma-bulls, we just are in the camp that the market will be boring for the next two quarters, drive out some retail gamers, and a simple trading range between 1050 or 1125.
We may be wrong..
All of your points are very valid which I agree with in regards to the size of those economy's but what your not considering if they do default whos holding the bag? Who sold the credit default swaps and are they efficiently capitalized to make good on there obligations? The sovereign debt issue is very real because were there is smoke there is usually fire. I also would like you to consider the damage the European Union could face if Germany finally just says enough is enough and were leaving, That would would cataclysmic effects to the EURO which would carry over to the USA, and YES I AM A GRIZZLY BEAR,
ReplyDeleteBelieve me, I am not questioning these problems. These problems are real and will be felt by the select countries and their debt holders but I don't exclude the possibility that the European Monetary Union may issue a E.U. debt guarantee or provide loan relief.
ReplyDeleteWe are already betting against Japan and will build it into larger scale in time. The debt crisis in Japan will make the subprime blowout look like nothing, in our view...it's just a matter of timing.
Lastly, the trader in me wants to ask, what's your favorite long and favorite short?