AOL “when issued” starts trading today in the low 20’s as they continue to lose traffic and face headwinds from Google. Futures are up in the U’S. but weaker in Asia. Worries in Dubai and Greece have resurfaces and I’m short the Acropolis.
The Congresional Oversight Panel is out today saying TARP was a fail and hasn’t done its job. Wells and Citi are on bended knee trying to get out from under TARP but Timmy basically said “no go”, raise more money first. Geithner is also seeking a TARP extension until next October.
The dollar and unemployment are the key drivers of this market and will continue to steer the ship. I’m just watching the dollar here, it closed last night over the 50 daymoving average for the first time since April. Significant? We’ll see.
Here are some thoughts from Credit Suisse on the jobless front.
No News: The unemployment rate printed with a 10-handle again on Friday. The two-tenths decline to 10.0% was most likely a statistical fluke related to the still weakening labor force participation rate, as the labor force continued to shrink (see chart). The real business cycle test is when the unemployment rate falls with the labor force rising.
n Good News: The non-farm workweek rose, adding an estimated 3/4 of a million full-time equivalent paychecks to the aggregate economy. A longer workweek is not as energizing as a full-time job, but still the 0.7% rise in total paychecks was the best in over 2 years and gives firepower for some increment to spending and saving.
n Now for the Sting in the Tail: The normal business cycle pattern approaching the absolute bottom in the labor market is to get a rogue month or two of better performance only to slip back for a few more months. Even once the bottom is reached, at an est. 10.6% unemployment rate in Q1, we expect the labor market recovery to be agonizingly slow, with unemployment still near 9½% at this time next year, and at least another year after that just to get the total job count back up to 2007 levels.
HAVE A GREAT DAY!!