Can someone explain what just happened?

By: ispeculatornew
Date posted: 12.08.2008 (4:00 am) | Write a Comment  (5 Comments)

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So Friday morning, 8AM EST, investors are looking at the time as they await the most important jobs report that is to come out at 8:30AM as is always the case. The media has deemed this one very important and the forecasts are very very bleak with predictions of close to 500K in job losses. Wow, depressing isn’t it? But in fact, it turned out even worse than the darkest forecasts, coming up at -533,000 jobs! Wow! I know of quite a few people who were incredibly happy to get a short market position at the market open, and as you can see in the graph above, the market did start to go lower as investors started to feel like once more, we were further than ever from an economic recovery.

But then, markets started turning around and basically went up without many setbacks during the whole afternoon leaving many short investors clueless as to what happened. Are investors starting to think that we’ve reached new lows? True, a lot of stocks do look cheap right now, but even then, it’s tough to see how they could have looked more attractive with such an enormous and disastrous jobs number out. It was the worst number since 1974 in fact.

Sure, the new Obama administration is starting to form and that is giving some confidence to investors about the future. As well, it looks increasingly probable that the government will get a deal done with the big 3 of the auto industry to keep them alive and off of bankruptcy for at least a few more months. As well, Obama has signaled he wanted to make important investments in infratructure in this weekend’s address, you can see it or read about it here. What looks very positive is that many of these ideas (except for saving the big 3) will obviously put the US economy in a better competitive position if it can be more energy efficient, have better infrastructure, etc. These are probably better fixes for the economy than a lot of what had been suggested.

These will certainly be up and down weeks for a while but the fact that such a bleak number did not completely spook the markets tends to signal that a lot of investors think we might have reached the bottom point and that the bumpy ride might start to go in an upward direction…

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  1. […] into the market all the way down. But being bearish can’t and won’t pay off forever. Investors will get over it. With these crazy yields on government debt it’s getting too expensive to be a […]

  2. Comment by Heidi — December 9, 2008 @ 12:05 pm

    I hope it does start going up, but I bet we dip down at least 1-2 more times after this.

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