Keeping Tabs on the Market

If its Saturday, then its time for the latest from Barron’s Alan Abelson. He references a stealthy market watcher who is none-too-sanguine about 2006:

"Where does that leave the market? Probably right where it was — namely, shaky. But since that has been our diagnosis for it seems like an eternity, we thought it might be worthwhile getting a second opinion. So we did, from an old pal who has been keeping tabs on the market ever since he was a pup (and that was quite a few years ago). Not the least of his virtues is that he shuns publicity, which means that only his clients (a select, savvy and rich bunch) and the occasional accidental kibitzer (like us) are privy to what he thinks.

OK, OK — we hear you — what does he think? We should note, incidentally, that he’s the last of the great contrarians (while just about everyone else was beating the drums for a burst upward, he cautioned that September would see a weak rally — and so it did). Our friend is one of those strange people with the capacity to read the entrails of the market — new highs, 200-day moving averages, that sort of arcana — and what he sees is a mean shakeout this month, followed by a rally that might carry into next year.

But that rally, he feels, will be just another of the bear-market rallies of various intensity and duration we’ve been witness to these past several years and, at some point in ’06, stocks will begin to go down again big time and the bear market resumes in earnest. Keep in mind, he urges, if and when you choose to play the rally, that big investors, a famously edgy crew, likely have taken a lot of short-term profits this year, which means that they could be eager for offsetting losses to shield those profits from the grasp of the tax collectors. Hence, any number of beaten-down stocks that seem like raging bargains may get even more beaten down as the pachyderms unload."

(OUR PROPHETIC OLD PAL, as intimated, likes to dabble in the black art of technical analysis.)

Sounds about right to me . . .


Paging Jane Doe
Barron’s, MONDAY, OCTOBER 10, 2005      

Category: Investing, Markets, Technical Analysis

For a Nickel I Will

Category: Finance

Economists React to NFP

October 7, 2005 10:58 a.m.

The WSJ notes that "the U.S. economy lost jobs in September for the first time in over two years as economic convulsions from Hurricane Katrina damped the job market. The Labor Department said Friday that nonfarm payrolls declined by 35,000 jobs last month. That marked the first decline since May 2003, when the labor market was struggling to get back on its feet after being set back by the 2001 recession. The drop was the largest since a decline of 54,000 jobs in April 2003.

Meanwhile, the unemployment rate rose to 5.1%. Does the September employment report present an accurate picture of the labor market after Katrina? What does it mean for the economy going forward? Economists weigh in."

* * *

These were the two most interesting comments, in my opinion:

We doubt that this report has captured all the job losses caused by this storm and none of those that may have been triggered by Hurricane Rita. (For instance, the city of New Orleans last week announced that its loss of revenues was forcing it to cut workers this month.) Thus, next month’s report could reveal additional storm-related job losses. When re-hiring resumes, monthly job gains will tend to generate above-trend growth in employment. It is going to be especially difficult for at least the next two to three months to gauge the underlying national trends in the job market.
(emphasis added)

– David Resler and Gerald Zukowski, Nomura Securities International

We can’t ignore the pain in the Gulf Coast, but we shouldn’t ignore either that for the rest of the country the economy looks to be in good shape. The Fed is more concerned about rising inflation than weakening growth and this report should strengthen that case. With today’s report, I see no reason to expect the Fed to slow its measured pace, but they won’t see any need to go for a half-point bump either. Stripping out energy prices, almost all of the underlying inflation numbers are benign. Wall Street may not like today’s report, but Main Street should like it just fine. 
(emphasis added, absurdity in the original)

– Bill Cheney, John Hancock Financial Services

There’s more after the jump . . .



Economists React
October 7, 2005 10:58 a.m.

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