The market rallied this past week basically b/c the economic data was not as bad as everyone thought it was going to be. At least it wasnt bad for now. Most people, including me, think the news is going to get worse. The question is how much worse and this past week it seems the market found a reason to be optimistic.
Q32008 GDP only came in at -0.1% and I say only b/c the consensus estimate was 0.5%. The really bad news was that consumer spending was something like -3.0%. The last time we saw numbers like this was 1990-1991, 1980, and 1974. If you are a student of economics or remember these times, you know what I am talking about.
Anyway, for next week the market will be focused on jobs numbers including the unemployment rate for October 2008. I will be pleasantly surprised if the unemployment rate remains below 6.5% and disappointed if the number is higher. A higher number would indicate to me the pace of deterioration is perhaps faster than we thought. However, I am expecting 7% unemployment by the end of the year.
My $0.02.
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