Wall Street Getting Used to Terrible News
April 3rd, 2009
The March unemployment statistics were released this morning at 8:30 AM by the US Department of Commerce to largely a show of indifference. Wall Street must be getting used to a steady parade of bad news.
The Dow Jones industrial average (INDU) was down about 14 points, or 0.2%, with 15 minutes left in the session. The S&P 500 (SPX) index added a few points. The Nasdaq composite (COMP) added 7 points, or 0.5%. After bouncing around a bit immediately after the Non Farm Payroll report was released the market seemed to discount the terrible news and settled down to narrow range trading in the afternoon.
As expected the report was not good. Employers cut 663,000 jobs from their payrolls in March, after cutting a revised 651,000 in the prior month. Economists surveyed by Briefing.com expected 650,000 job cuts.
The unemployment rate, generated by a separate survey, rose to 8.5% from 8.1% in February, in line with estimates.
“The markets have had a bit of a ‘the sky is falling’ fear built into them, but that’s not been the case,” said Blum. “We’ve been in a really bad recession and I don’t think we’ll get out of it until 2010. It’s going to be lackluster for a while but the sky is not falling” said Len Blum, managing director at Westwood Capital.
Investors seem to have become more greedy again rather than fearful. The stock market cheerleaders are doing their best to once again encourage buying. The current rally does seem to have legs and may well last for some time, perhaps even until after Memorial Day. However, eventually traders are going to realize that we are not in a short term recession.
We are presently in a deflationary deleveraging depression. With housing prices still tumbling lower and commercial real estate now showing real signs of weakness the contraction in economic activity in coming months will overwhelm the government’s stimulus efforts.
If you must buy stocks on this rally it would likely be wise not to fall in love with them. In most cases buy and hold will be the way to certain disaster. Wall Street may be getting used to terrible news but I doubt if it is ready for a complete panic and meltdown.
This Long Crisis will be with us for a very long time and conditions in the US will never return to “normal”.
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I agree with some of the points above. Tougher regulations and ethics will be a determining factor for Wall St. in order to turn around the economy. So much of what we see and read in the media is based on fear as the motivator . We can learn from the root causes of the meltdown highlighted so well here:
http://www.youtube.com/watch?v=Nay4VbUJl3E
Rather than believe what is coming from the media, we need to re-evaluate the bailout tactics and continue to adjust the perception through positive economic decision making.