With the release of an important jobs report tomorrow morning, investors took money off the table in the final hour of trading today (as has been the trend when any important information is going to be released the following day). While we feel the Government’s employment report will be a downbeat report, the more important issue remains how investors will react to the report. We are anticipating the potential for a similar reaction as we discussed regarding the Black Friday sales results. The market may react positively to the report if there are no unexpected negatives that would lead investors to believe the economy is going to continue to get worse.
At the beginning of the week the National Bureau of Economic Research (NBER) announced that we are officially in a recession, which started sometime in late 2007. Many of you may think that this news is obvious to most, however it is still actually good news. The announcement of an actual recession generally marks the beginning of the end. While tomorrow’s employment report is a backward looking number and we may not get true confirmation of a slowdown in the worsening of economic numbers (or in more mathematical terms, a slowing in the second derivative (rate of change) of economic numbers). If there is any sign in the November employment report that is may be happening then the market could continue back on an upwards trend.
However, any unforeseen negative reported in the employment numbers could start the market on another retest of its lows set in November. DC