Jobs jobs jobs spark continued rally

American payroll numbers came in this morning and the results were as good as they could be given current economics. Predicted job losses averaged around 325,000 but initial numbers for July put losses at 247,000. Employers have certainly slowed their layoffs in June and July. Additionally the June number was revised downward from 467,000 to 443,000.

Now, that's a lot of numbers in one paragraph but the underlying message is this. Things are slowly moving forward in the job market, and stemming job losses, which in turn will turn into job creation is the only way towards full economic recovery. Now, some will say that the country is still losing jobs, and that the continuing number of losses in this recession stands at near 7Million, a record for post WWII. Both those facts are true, however an important metric, the unemployment rate, fell from 9.5% to 9.4%, despite expectations that it would rise another 10 basis points.

The jobs report, along with the first profitable quarter from AIG (AIG), up 9%, in almost 2 years sent stocks higher in morning trade, with the DOW climbing about 100 points.

Recession Woes spill into Global Markets

While Americans enjoyed their long weekend holiday, watching New England inch a step closer to NFL perfection, markets in the rest of the world succumbed to US Recessionary pressures and tumbled like dominoes one after another.

In the Great White North, Canada (America's closest economic clone and partner), saw its major Index, the TSX, fall by over 600 points (4.75%). The sell-off was fueled by the Financial and Technology sectors but was market-wide. The sell-off was not limited to North America, markets all over the world closed substantially lower as closing bells in different time zones ended trading Monday.

The selling sentiment was seen largely due to disappointment in the stimulus package proposed by US President George Bush. The $150Billion tax relief plan, designed to spur consumer spending and reverse the trend of slowing US economic growth, is seen by Traders as helpful, but ultimately late. The rolling snowball of slowing growth in the US according to many analysts/economists, is out of control, with a recession in the 2nd half of the year inevitable. As much as been said recently by an analyst out of Goldman Sachs. Markets sold off heavily on worries that this slow down in America would spill over and effect economies worldwide.

A run down of the sell off in major world markets Monday:
Canada down 4.75%
Britain down 5.5%
France down 6.8%
Germany down 7.2%
India down 7.4%
Hong Kong down 5.5%
Japan down 3.9%
Brazil down 6.6%

Recession fears are real and are engulfing all Trader Talk these days, and with that it begs the question, can the minor investor survive? Or is cash the better place to be? I think survival is possible and thriving can be achieved. Investors must be patient, own quality companies, use dividends as a cushion (covered call selling too perhaps!), and look for bargain opportunities.

Now its been well written about how and which sectors perform better under slowing economic growth (Consumer necessities, Consumer Staples, Low Cost Retailers, Beverages, Tobacco etc.) but if everything is falling where can one turn? When is the bottom?

These are questions masses of smaller Investors everywhere are asking themselves and the markets of today aren't giving them many answers, let alone hope. The one beam of light for the Bulls seems to be the Federal Reserve and a potential not only cut, but slashing of Interest Rates. Investors need to keep a keen eye on not of what, but how much the Fed does at the end of the month.

Good Luck.

Goldman Sachs fuels Recession fire, Stocks Bounce at End of Trading

Wednesday seemed to be another sea of red for the markets, and helping to push that was recession commentary from Goldman Sachs. The biggest US Investment Bank outlined its position for 2008 and it wasn't a pretty picture. The company expects the US to slide into a recession in the 2nd half of 2008 citing a rise in unemployment and the current housing crisis spilling over into the economy.

The firm revised its "preferred" holdings weightings lowering Financials and Information Technology percentages while increasing Health Care and Consumer Staples weightings. While stocks slid for most of the day an end of day buyers rally seemed to shift focus from recession talk to over-sold bargain hunting. Many fundamentally solid companies, seeing their market caps eroding over the previous weeks were bid up towards the end of day. Google (GOOG) was just one strong example of this as the company continued its recent slide, hitting as low as $622 but finishing up over $20/share to $653.

Volatility is the name of the game as it has become a trader's month. The Federal Reserve will come into focus soon enough as Ben Bernanke speaks tomorrow. Traders will focus on anything economy related, specifically pointing to troubling times, as this will give the market hope for another rate cut come the end of January Fed meeting. The market is likely to expect a 50 basis point cut given current metric declines in employment and housing.