In spite of a weak jobs report today, and further concern regarding the auto industry, stocks managed to rally today, ending the dismal decline that began on Wednesday. The government reported that a total of 240,000 jobs were lost in October, slightly above estimates, and September lost more jobs than first reported. The nation’s unemployment rate now stands at 6.5%. Apparently, this bad news was priced into the market over the previous two days, and the market actually may have been expecting worse news. Nonetheless, it was a bad number and a reminder of just how weak this economy is currently.
The market will now be turning its eyes to Washington to see what Congress and the Bush administration, along with input from the income Obama administration can do to stimulate this dismal economy. However, the primary issue is that banks refuse to lend money to anyone at decent terms, even to the most qualified of loan applicants. This is in spite of the fact that the credit markets have thawed dramatically over the last couple weeks as the 3 month LIBOR has dropped from its high of about 4.8% to about 2.3% today.
Until the banks begin to lend money for car loans and home loans, and other business loans, this economy has no chance of improving. The federal bailout has simply allowed the big strong banks a chance to consolidate and strengthen their positions by buying distressed banks. Yet, there does not seem to be any outrage at this in Washington.
More to come!
Scott Cole
www.bestdaytradingstocks.com
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