The Financials Pit Review
For the week of January 12th, 2009: By PitGuru Kalvin O’Brian
U.S. Economy
Earnings season is just about to be in full swing. The expectation is not positive overall. Picture this: last week unemployment increased again from 6.7% to 7.2% in December. Each time it comes out it sets a new record. This time it was the most in 16 years. Now the week before earnings kicks off, we have some important data to be released, and all of it is expected to be poor. On Tuesday, international trade will be reported; Wednesday, retail sales are announced for December and the Fed’s beige book on the economy is released; and Thursday, jobless claims will be announced. After all this disappointment, we move on to earnings. Alcoa is leading the way on Monday; it should be interesting because last week they announced layoffs and a restructuring plan. Profits for companies listed on the S&P are expected to drop over 15% from last year in the fourth quarter. This horror show appears to not have an end in sight and although I believe the market will come back by the end of the 2009 the next couple of weeks will help it hit rock bottom. I would continue to use close stops when trading this market. Also, be aware of when the data is about to hit this week. The reports will cause short volatility spikes that could stop you out.
Currencies
With the overall economic outlook being poor, investors are still finding a safe haven in being cash-heavy. The dollar gained against the euro as the expectation is that this week the European Central Bank will cut its main interest rate to its lowest level since 2005 after the International Monetary Fund announced Europe is “underestimating” the need for fiscal stimulus. If this goes through the currency market should see a little shake up in the short term.
The unemployment rate in Canada has, as expected, mirrored the US increasing from 6.3% to 6.6% in December. They showed a net loss of over 34,000 jobs. Building permits were also down almost 12%; however, for the 2008 year the economy gained 98,000 jobs. Unless crude and gold start to rally I can’t go long the Canadian.
The housing issues across the pond will continue to be a factor working against the British Pound. As part of the fallout, it was announced by the UK’s National Statistics Office that manufacturing output has dropped 2.9% in November, down 7.4% from a year ago. This marks the largest drop in about 28 years.
*Chart Courtesy of Gecko Software’s Track n’ Trade Pro
The Softs Pit Review For the week of January 12th, 2009: By PitGuru Jamie Fink
Cocoa will be struggling to hold its recent price range this week as the late start might have pared deliveries but won't end on a complete down-note.
