EmailPage One
Archive
Last Update: 01-Jun-12 08:57 ET
Running for Safety after Lousy Economic Data
A poor US nonfarm payrolls report has added to increasing global economic fears. S&P futures suggest a down open of about 25 points.
Nonfarm payrolls rose just 69,000 in May. April was revised lower to a gain of just 77,000 from an originally reported 115,000 increase. The average workweek, which is an indicator of future labor demand, dropped 0.1 hours to 34.4. The unemployment rate rose 0.1 to 8.2%. It was a lousy report. We're looking for the silver lining but haven't found it yet.
The international news is no better. There was a government report that manufacturing in China has slowed considerably. A similar, though private, report in Europe also showed a slowdown in European manufacturing. The press reports about economic prospects in Europe have become increasingly pessimistic, and talk of bank runs and businesses hunkering down for Greek euro-exit trauma are probably having a self-fulfilling-prophecy effect.
The pervasive gloom is almost certain to provide a platform for bears to promote the possibility of a double-dip recession, further declines in home prices, global depression, or similar enticing topics. Expect the bearish rhetoric to pick up sharply.
Other markets reflect the fears. European stock exchanges are down about 2% on average. The 10-year treasury yield has dropped to a barely believable 1.47%. Oil has dipped below $83 a barrel. Gold is up $18 an ounce to $1582, apparently as a safe haven.
Defensive plays are all the rage...with good reason.
Dick Green
Founder and Chairman, Briefing.com
Nonfarm payrolls rose just 69,000 in May. April was revised lower to a gain of just 77,000 from an originally reported 115,000 increase. The average workweek, which is an indicator of future labor demand, dropped 0.1 hours to 34.4. The unemployment rate rose 0.1 to 8.2%. It was a lousy report. We're looking for the silver lining but haven't found it yet.
The international news is no better. There was a government report that manufacturing in China has slowed considerably. A similar, though private, report in Europe also showed a slowdown in European manufacturing. The press reports about economic prospects in Europe have become increasingly pessimistic, and talk of bank runs and businesses hunkering down for Greek euro-exit trauma are probably having a self-fulfilling-prophecy effect.
The pervasive gloom is almost certain to provide a platform for bears to promote the possibility of a double-dip recession, further declines in home prices, global depression, or similar enticing topics. Expect the bearish rhetoric to pick up sharply.
Other markets reflect the fears. European stock exchanges are down about 2% on average. The 10-year treasury yield has dropped to a barely believable 1.47%. Oil has dipped below $83 a barrel. Gold is up $18 an ounce to $1582, apparently as a safe haven.
Defensive plays are all the rage...with good reason.
Dick Green
Founder and Chairman, Briefing.com
