The world deserves a long holiday weekend! After a horrific August, the worst since 2001, we head into September, which is historically a very bad month for the stock market. The first day was a down day for the market, as the European tail wagged the U.S. dog again.
Decision-making in Europe actually makes Washington look downright decisive. They must deal with more than the typical right-left divide. They must deal with issues of national pride and lingering ethnic issues over past wars. (Interestingly, they don't have the divide between social conservatives and more secular voters?)
In addition, the most important monthly economic report is the Jobs Report. Traders typically take money off the table in advance of that volatile report, pulling the market down. This report will be even more volatile because the impact of the Verizon strike is so unclear. Nonetheless, economists were expecting about 80 thousand new jobs but NO jobs were produced, which is about 300 thousand less than we need. Last month's estimate was also reduced 32 thousand. Private sector jobs created dropped from 156 thousand last month to only 17 thousand. (The health sector lost 32 thousand??) Futures plummeted indicating a loss of about 185 points on the Dow at the open.
In the way of paybacks, the European markets dropped instantly when our Jobs Report came out. Gold went up and the interest rates on Treasuries went down, as investors seek the safety of Treasuries for now.
More importantly, does this make a recession more likely? Yes! Does it mean we will have a recession? No! We knew the economy was bouncing along sideways, and that was confirmed this morning. Does that mean the third quarter GDP growth rate will be negative? Nobody knows! Stay tuned . . .
