Dazed and Confused

Well it’s a quiet old Monday today. Volumes sub 60% of average and paltry number of companies reporting in Europe; I counted 3 but only actually saw figures come out from one, Gagfah. If you care about Gagfah figures, a) they were worse and b) you’re in the minority. Perhaps some investors are observing a day’s trading inactivity to mark the 2nd anniversary of BNP suspending 3 funds due to subprime exposure. Or perhaps not.

In any case, there’s a slightly muddled feeling to the market today as we emerge from last week’s earnings induced stupor, the euphoria of the jobless figure settles down and the market looks beyond its glossy veneer. For sure, the number was better, but it was flattered by seasonally adjusting for the auto industry which is redundant this year, and also a bump from the federal census workers. Together this added about 100k to the jobs number which puts the “real” number at about -350k, which is still worse than the nadir of the 01/02 recession when the low print came in at -325k. And while the unemployment rate came in lower on Friday, that’s because the participation rate fell.

In Asia, while HK and Japan were up, the Shanghai composite fell for the 4th session and the Baltic Dry, was down 17% last week, its worse fall since October. On top of that, some of the old favourite correlations have not gone to plan over the last couple of days. The market rallied and the $ rallied. Even if you forget about what the equity market did, the $ rallied!! It’s feels like a long time since we’ve seen that. I can see the rational but it’s not what we’re used to. Commodities are down and yet AUD and NZD are still up. Do these things ever go down? So perhaps, putting all this seemingly conflicting price action together it’s no surprise that markets are a little dazed and confused today. I know I am.