News
"NOBODY LIKES THE BRINGER OF BAD NEWS" - By Roger Slaalien
November 17, 2008
"NOBODY LIKES THE BRINGER
OF BAD NEWS." Ancient Greek playwright Sophocles.
Last week may have been a holiday-shortened week as
the Bond market was closed on Tuesday in honor of
Veterans Day, but it was far from quiet as financial
markets reacted to several pieces of bad economic news
brought throughout the week.
The week began with the news that Circuit City filed for
Chapter 11 Bankruptcy, and will be closing 150 stores -
and this in advance of the holiday season, when most
retailers make a larger portion of their profits for the
year. Department store Nordstrom reported its growth
rate is down 16%, where they were expecting an increase
of 10%. Poor economic reports from Best Buy and Macy's
followed a few days later, as well as lower future
earnings guidance from Wal-Mart and Intel. As if the
headlines of the week weren't enough, Friday's Retail
Sales report showed that overall retail sales fell for
the fourth straight month and plunged to their worst
level since record keeping began in 1992. Looks like a
pretty dismal holiday shopping season ahead...probably
the worst that retailers will have seen in a long, long
time.
In addition, there was bad news for the automobile
industry as Deutsche Bank downgraded shares of General
Motors from hold to sell, giving a price target of
$0...yes, $0. As a result, General Motors stock fell
below $3 for the first time since April 13, 1943.
Interestingly enough, the automaker was not even making
cars at that time but producing only military equipment
for WWII.
And the bad news continued on the job front as well, as
the Initial Jobless Claims report revealed the highest
number of first time unemployment claim since 2001. In
addition, Continuing Jobless Claims reached their
highest level in 25 years. Remember, poor economic news
and a weak labor market usually cause Bonds and home
loan rates to improve. This is because fewer jobs and
lower confidence about keeping or finding work causes
people to spend less. In turn, businesses and retailers
lose pricing power, and this is a cycle that keeps
inflation - the arch enemy of Bonds and home loan rates
- at low levels, especially if oil remains near present
reasonable prices.
However, despite all the bad economic news of the week,
Bonds and home loan rates were unable to make
significant improvements this week as they fought to
defeat and move convincingly above a very important
technical level called the 200-Day Moving Average. Read
on, to understand more about the significance of this
technical indicator.
LOSING A JOB IS ALWAYS A TOUGH EXPERIENCE, BUT IT
PAYS TO FOLLOW GOOD ADVICE IF YOU OR SOMEONE YOU KNOW
RUNS INTO THIS SITUATION. CHECK OUT THIS WEEK'S MORTGAGE
MARKET VIEW FOR JOB SEARCH TIPS THAT CAN MAKE ALL THE
DIFFERENCE IN TOUGH MARKETS.
Forecast for the Week
There are several important economic reports ahead this
week...is more bad economic news on the way? Tuesday and
Wednesday will be big days on the inflation front as
Tuesday brings the wholesale measuring Producer Price
Index while Wednesday's Consumer Price Index (CPI)
report will show us inflation at the consumer level -
that is, how much more expensive goods and services are
for consumers this month over last month, as well as
year over year. Given the Fed's recent rate cuts (which
can trigger inflation), it will be important to see what
these reports show.
Wednesday will also bring a read on the new construction
housing market with the Housing Starts and Building
Permits Report, and Thursday is another important day to
note as the Philadelphia Fed Report will be released.
This monthly survey of manufacturing purchasing managers
conducting business around the tri-state area of
Pennsylvania, New Jersey, and Delaware is one of the
most-watched manufacturing reports. Given both the poor
Jobs and Retail Sales reports of late, this is likely to
be somewhat negative as well. Weak economic news
normally helps Bonds and home loan rates improve, as
money flows out of Stocks and into Bonds, so I will be
watching very closely for improvement during the coming
week.
However, to gain improvement, Bonds would have to
convincingly defeat and move above a technical level
called the 200-Day Moving Average. A moving average is
the average closing price of a financial instrument over
a given time period. In this case, the 200-Day Moving
Average can act as a "ceiling of resistance", preventing
Bond pricing from moving higher and helping home loan
rates improve, or a "floor of support" that can keep
Bond prices from moving lower and causing home loan
rates to worsen.
You can see in the chart below how Bonds danced around
this level all last week, so I will be watching closely
during the coming week to see if Bonds and home loan
rates can breakthrough this resistance and move in an
improving direction.
Chart:
Fannie Mae 5.5% Mortgage Bond (Friday Nov. 14, 2008)
The Mortgage Market
View...
Tips for Finding a Job
in Tough Markets
Finding a job during tough economic times
doesn't have to be tough...if you know which strategies
work. Here are some tips for beating the odds:
Take Networking to the Next Level: Networking is
always a great job strategy, but in the current economic
climate, you need to go a step beyond letting your
contacts know you are looking for a job, since many
other people may be doing the same thing. Instead,
develop a compelling business idea for your field or the
field you would like to enter. Then, when you call or
email your contacts, let them know you are researching
your idea and would like to meet with industry insiders
to discuss its viability. With this strategy, people
will see you as someone with something to offer them,
rather than as someone who needs something. And if the
people you meet with like your idea, your meetings could
lead to a job offer even though you never asked for a
job.
Focus on Sectors That Are Hiring: No matter what
industry your background is in, the skills or experience
you possess may qualify you for a position in a new
field. For instance, sales and customer relations are
skills needed in a variety of industries. To begin, make
a list of your experiences and skills that could help
you find a job in a sector that is currently hiring.
Then, gear your resume and cover letter to focus on
these particular skills and experiences.
Aim for Your Dream Job: Many job seekers begin to
panic and apply for any job that's available. This is a
mistake for several reasons. First, passion and
enthusiasm are your best weapons for succeeding in your
job search. Employers can tell the difference between
someone who really wants to work for them...and someone
who will take any job. Second, when you are focused on
finding a specific job versus any job, you make it
easier for friends and colleagues to help you because
they will have a clearer idea of who they could contact
for you. Third, if you're in the middle of a job
transition, why not use the opportunity to enter the
profession you have always wanted to try?
Be Creative About How You Start: During tough
markets, many businesses are hesitant to add new
employees and increase their level of fixed costs. You
can offer to begin as an independent contractor for a
period of time before receiving a review and possibly a
future permanent job. This would give you a chance to
earn an income while demonstrating your skills and value
to the company. In turn, it lets the company evaluate
your performance in a less costly way, because you would
not receive benefits during this time; and with less
risk for the company than having to make the decision to
hire a permanent employee. You could also volunteer your
way to a paid job. Many nonprofit organizations have
powerful executives on their boards. By demonstrating
your skills and work ethic as a volunteer, you could
meet important connections that could lead to your next
position.
The bottom line is this: Losing a job is tough during
any market, but finding a job doesn't have to be tough
when you are willing to be creative and use strategies
that work!
Economic Calendar for
the Week of November 17 – November 21
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