The Day After the Day After

The market is weakly recovering today after the second-worst sell-off this year. Yesterday’s 2.37% loss for the S&P 500 was only exceeded by a 2.46% plunge on June 1st. Right now, we’re up by about two points.

This morning we learned that weekly jobless claims fell 8,000 to 355,000 however this data set over the next few weeks will be impacted by the effects of Hurricane Sandy. We may see a bump up in jobless claims in another month, but for now, the numbers look good.

The government also reported that the trade deficit fell by 5.1% in September. The trade deficit is now close to its lowest levels in two years. Of course, much of this isn’t due to strength here, but weakness there.

Speaking of which, the biggest news today came from the Bernanke of Europe, Mario Draghi. The head of the European Central Bank said he’s ready to buy bonds as the European economy continues to get worse. The ECB met today and decided to leave interest rates at 0.75%.

The concern now for the Europeans is that Germany is beginning to look weak. Until now, that country had been holding things together. Now some analysts think that an ECB rate cut will come before the end of the year.

The big area of concern now is Spain. This is one of the reasons why I told investors to expect a difficult market this autumn. Spain needs to ask for a bailout but they haven’t done so yet. The problem is that the political leaders see what’s going on in Greece where folks are rioting over forced austerity. As a result, Spain wants the best deal it can get. The problem gets worse because the ECB can’t make any hard promises before the fact. An economy is a dynamic system and facts on the ground can change quickly.

There at least was some good news for Americans today. Monthly sales at McDonald’s ($MCD) fell for the first time in nine years. We’re either getting healthier, or perhaps, going to Arby’s.

Posted by on November 8th, 2012 at 10:34 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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