Sunday, November 9, 2008

Rough Week Ahead ?

Certainly a herculean challenge for our new administration. Frankly I don't think a quick fix exists just as there is no quick fix for certain diseases. You incubate and wait, as only time itself will heal the wound or illness.

On Friday, Goldman called for the biggest rise in joblessness since WW ll. Here is a blip from their piece:

The unemployment rate is expected to rise to 8.5% by the end of next year and inch even higher in early 2010, economists for Goldman Sachs wrote Friday. The cumulative trough-to-peak increase of more than 4 percentage points in the jobless rate would be the most since World War II, they said. Goldman analysts lowered growth forecasts for the next three quarters, and said they now expect the Federal Reserve to cut its interest rate target to 0.50% by December. "The main reason for these changes is the accumulation of evidence that U.S. domestic demand and production are dropping sharply," they wrote. "We do not see a resumption of anything close to trend growth before 2010." End of Story

And retail should see more pressure. Analysts are looking for a fourth consecutive monthly drop. The last time that happened was 1974. Here is what CIBC is saying:

"October will prove to be a disaster for retail sales, with only the discounters having anything to cheer about," wrote Avery Shenfeld, an economist for CIBC World Markets. "Note that the ex-autos number will partly reflect the drop in nominal gas-station sales on falling pump prices, and will therefore exaggerate the decline in real terms."

Credit Suisse is saying this:

"The forces of tighter credit, a slackening labor market, falling household wealth and the deluge of negative news headlines are intersecting to create one of the worst backdrops for consumer demand," according to a Credit Suisse note. "As a consequence, vehicle sales collapsed in October and chain-store reports were softer than already scaled-back expectations."

Here is a peek at next weeks calender of events. I'm shorting any rallies.


steve said...

Speaking from some personal experience, GS is well positioned to discuss unemployment rates. Maybe they are forecasting further shrinkage in their own house.

upsidetrader said...

i think u r right and i think it's going to $50-60

EDC said...

Why not zero? wait PPT is on their payroll....

agreed, I can't wait to see the news when they are trading that low.

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.