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Traders Hope Jobs Report Hurries Stimulus

Posted by: Ben Steverman on February 6, 2009

This stock market demonstrates, over and over again, the degree to which bureaucrats and legislators in Washington are influencing trading lately as much (and maybe more than) earnings figures and economic data are.

Today a brutal report showed the U.S. economy lost 598,000 jobs in January. The unemployment rate rose from 7.2% to 7.6%.

And yet stocks rallied on the news. Why?

“The only ‘positive’ of today’s report is that these ugly numbers put even more pressure on policymakers to finally agree on fiscal measures to stop the downward spiral of the economy,” wrote UniCredit economist Harm Bandholz in an instant analysis of the numbers.

I talked with Univest chief economist Gary Wolfer, and he agreed. This week the Obama administration’s political situation got shakier, and support for a stimulus package looked like it was fading a bit.

Now, the jobs numbers are “going to force the hand of the Senate,” Wolfer says. He and other market participants have plenty of criticisms of the stimulus proposals — Wolfer thinks it doesn’t contain enough infrastructure spending and too many extraneous items.

But, he says: “Any stimulus is better than none.”

A major worry remains that it might not be enough.

I like Felix Salmon’s take on the jobs report:

I still think that things are going to get worse before they get worse: I just can’t for the life of me see the engine for any recovery. Certainly the stimulus bill isn’t going to do it on its own — the economic problems facing the US are so large that the government can at best only try to make things slightly less bad than they otherwise might have been.

For workers and long-term investors, complaints about the stimulus proposals are worrying. (And those complaints are all over the map — that bills contain too many tax cuts and not enough, that they’re too large and too small, etc.) All that criticism highlights the possibility that the stimulus plan might not work. Job losses could continue and earnings could continue to slide lower.

Still, traders in the market are betting that, for stocks, some stimulus from the government is better than nothing. And the sooner the better, please.

Reader Comments

Ham Hamov

February 6, 2009 11:57 PM

For surety : Toshiba Corp. and NEC Electronics both would prefer to anticipate reporting losses for the fiscal year ending March 31,2009...

As well as ..."Restructuring alone won't help companies in today's economic conditions," said Masaru Hamasaki, a senior strategist at Toyota Asset Management. "If companies cut jobs or shrink capital spending based on their current earnings level, they risk narrowing their business capacity...."

NEC, Toshiba, Fujitsu, Panasonic and Mitsubishi should better "destruct" or "report" their so called 'hidden network' in Singapore - Finland [Kouvola warehouses] - Russian Retail chains (especially may be mentioned two international retailer's chains: MediaMarkt Saturn and Auchan).


February 10, 2009 4:16 AM

Best website links related to Online Job sites in India!

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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