After such a huge move from the March low, the Capital Markets seem to be “Running In Place” lately.
Last week marked the end of the year for many Mutual Fund Companies, and the Capital Markets did not disappoint. Like a bouncing ball, we had big down, up, and down again days, as we ended the reporting year for Fund Companies. Running in place is much better than falling down, and we are certainly due for a pullback, just as a runner slows to catch a breather, the Capital Markets could use a little rest.
As we close the 90 day treadmill, called earnings season, most companies did pretty well, but managers still have concerns moving forward. Being that the U.S. GDP is over two-thirds consumer related, unemployment is still a negative.
Speaking of unemployment, we would eventually, if not today, expect to see a 10% rate, which will make headlines across the country. While this is certainly not a positive, bear in mind it will take some time for managers to get comfortable enough to begin hiring. Keep an eye on productivity (http://biz.yahoo.com/c/terms/prod.html) and capacity utilization(http://biz.yahoo.com/c/terms/indprd.html) numbers for signs of employment (http://biz.yahoo.com/c/terms/emp.html) gains. Eventually, as productivity peaks, and slack capacity is used up, hiring should begin again, of course, in our opinion.
Have a Great Weekend!