The all-important Employment Report was positive beating estimates but was lower than previous reports (227K new jobs vs 210K expected & prior revised higher 284K: unemployment rate unchanged @ 8.3%). Under the radar screen were Business Inventories missed (.4% vs .6% expected & 1% prior), and the Trade Deficit worsened (-$52.6B vs $-50.4B). The latter was caused by petroleum which will heighten domestic energy policy debates. The trade report caused Goldman Sachs (GS) to lower GDP estimates to 1.8% as if anyone cared.
"Soon or late, everyone sits down to a banquet of consequences."
Robert Louis StevensonStevenson's quote reminded markets late the Greek default (structured or otherwise) has triggered CDS (Credit Default Swap) events. Some major investment banks (you know, the usual suspects) have underwritten and sold these products for generous fees. Now it's time to pay the piper. Let's see how this will work or not. Is Goldman Sachs on the right side of this trade again for itself? Remember the story about their secret loan deal with Greeks that disadvantaged Greece but enriched GS? (Greeks should beware of GS bearing gifts) Stock markets initially liked the employment report and aftermath of the Greek resolution (perhaps a poor word choice) Friday rallying sharply before coasting lower to the finish line. The important thing for the financial media was to spin: "U.S. stocks end higher Friday; S&P, NASDAQ mark fourth week of gains." Yeah man, that's what it's all about. Now, don't get me wrong, we're long so we're also players in this central bank "let's reflate" deal. Leading stocks higher today were banks (see usual suspects from CDS note) and financials (XLF, KBE, JPM) as theoretically, and unless they're on the wrong side of the CDS dealings, they profit from Greek bailouts. Oddly, since it's out of whack with normal correlations, the dollar rallied sharply as did gold with a sharp reversal. This was out of the norm. Energy prices (USO, UGA, UNG) and commodities (DJP, JJC, JJG and so forth) overall were higher. Volume was ridiculously light as if Friday was a holiday. Breadth per the WSJ was positive. Join the banter with us on twitter and facebook. SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details IWM - The iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the small capitalization sector of the U.S. equity market as represented by the Russell 2000 Index. The index represents the approximately 2,000 smallest companies in the Russell 3000 Index.
See more details QQQ - PowerShares Capital Management LLC is passionate about our goal of delivering the highest quality investment management available through one of the more benefit-rich investment vehicles ever created, the exchange-traded fund.PowerShares QQQ¿, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consists of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The portfolio is rebalanced quarterly and reconstituted annually.
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