Saturday, March 28, 2009

Main Street v. Wall Street, Economic Calendar, Stock Watch

Main Street v. Wall Street

It has been said that perception equals reality. If that is the case, then D.C. politicians and Wall Street may have to hire the best marketing firms on 5th Avenue to sell the latest round of government spending. The U.S. Government is facing increased pressure from constituents. The bailout culture is not sitting well with many Americans. In particular, ordinary citizens are starting to question some of the basic tenants of democracy... and the pecking order of what is important, and what is not! As the Obama Budget comes into debate, and an eventual vote Congress is facing considerable scrutiny. The the Obama administration, the budget means that they will be able to hold the anger of Main Street off with lots of pork barrel projects. However, there is a deeper theme that is echoing in living rooms, break rooms, and unemployment lines throughout America. Country singer John Rich will get a lot of mileage out of this song. Be certain, it will also create fervor on the common man's level.

"Cause in the real world they're shutting Detroit down
While the boss man takes his bonus pay and jets out of town/
And DC’s bailing out the bankers as the farmers auction ground
Yeah while they’re living it up on Wall Street in that New York City town
Here in the real world there shuttin’ Detroit down.
They’re shuttin’
Detroit down.” (1)

The Week Ahead
The market has rallied 20% from its bottom. Gold has taken a beating, oil continues to fluctuate with a continual crawl to the upside. While financials have rallied, I am extremely suspicious that this move is a breather for a market that had sold off too quickly. I do expect the lows to be tested once again. The G20 meeting should lay an interesting background with a BRIC nations showing continued concern over the lack of stimulus from EU, and a sprawling debt from the United States. While much of the conversations that will transpire during the meeting will be kept low-key, rest assured there is a heightened state of anxiety throughout the world.

This week has an economic calendar that is simply loaded with information including Non-Farm payroll and Unemployment numbers that will hit late in the week.

March 31 Consumer Confidence
March 31 Regional Manufacturing Updates (Chicago CPI)
April 01 Auto Sales/Truck Sales
April 02 Initial Job Claims
April 02 Factory Orders
April 03 Average Work Week and Hourly Work Week Survey
April 03 Non-Farm Payrolls
April 03 Unemployment Report

According to one source, there are seven states which are already experiencing double digit unemployment. Up until two months ago, I had heard of people not having jobs, but I did not know of anyone who was unemployed. Now, I have met a half-dozen people who do not have jobs. One person has been looking for a job in food production for one year, and he can't land anything. We should note that there are eight other states who have reached the 9%+ category for unemployment as well.
Michigan registered the nation’s worst rate, with 12 percent of its labor force out of work as of February 2009.

Michigan (12 percent)
South Carolina (11 percent)
Oregon (10.8 percent)
North Carolina (10.7 percent)
California (10.5 percent)
Rhode Island (10.5 percent)
Nevada (10.1 percent)

Stock Watch
RYL continues to drift higher. Unless there is a massive sell-off I will be taking a loss on that one. I still believe it was the fundamentally right decision to make, and may even serve as a leap play should the stock still drift to the upside.

CNK is back on the board. This stock along with several others bubbled up fover the past week or so, in a mis-information euphoria that has not been witnessed since H.G. Wells did his radio broadcast for War of the Worlds.

I will continue looking for additional puts on TM, and look for entry points on SPG, VNO, WYNN, and maybe even load up on more MLHR since it is getting so "expensive" again!

EFU currrency play will be hot this week. The EU will have considerable pressure placed on finance ministers to lower rates...and spend... ut oh!

Sources Cited
1. John Rich, Their Shutting Detroit Down
Bureau of Labor Statistics

1 comment:

AX said...

We should also keep in mind that not all toxic assets are created equally. The best of the worst will go quickly and then the real trash will be left. Will Geithner then need a new plan to get rid of that stuff? Reference Paul Krugman's op-ed in the NYT today...