TheMarketTone.com

The US economy has officially entered a recession and the labor market numbers that are due on Friday will confirm that. Not only do we expect the US economy to report its eleventh consecutive month of job losses but the job losses will probably be the largest in 26 years. In 2001, there [...]

The National Bureau of Economic Recession final admits that the US in a recession and it is about time! According to official recession dating agency, the US economy hit a peak in December 2007. According to the WSJ, the peak marks the end of the expansion that began in November 2001 and the beginning [...]

Half a million jobs were lost in the US economy over the past 2 months, driving the unemployment rate to a 14 year high. Even though October non-farm payrolls fell short of our -300k expectation, the 240k drop and the revision from -159k to -284k for the month of September is just as pessimistic. The US labor market is in a recession and the latest numbers confirm that. However equities actually rallied on the bearish report as investors interpreted the data to mean that the Federal Reserve will cut interest rates by 50bp next month. The sell-off in the US dollar against every major currency pair except for the Japanese Yen indicates that it is the rally in equities that is driving currencies. Trading will be interesting in the week ahead with the lack of any major US economic data until Thursday. Retail sales are due for release on Friday and the expectations of a sharp decline in consumer spending could send investors back into the US dollar and Japanese Yen.

The price action in the equity markets today was nothing short of impressive. We literally had a W shaped trading day where stocks opened down 600 points, rallied back into positive territory, sold off again by another 600 points before recovering most of its losses by the end day. The volatility that we have seen [...]

For the second day in a row, Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Paulson pleaded to the power players of Washington to pass their request for $700 Billion to implement their Troubled Asset Relief Program (TARP). However if we move the letters around a bit, TARP becomes TRAP and that is [...]

Over the past few days, the markets have shrugged off the government’s bailout of AIG and a flush of liquidity from central banks around the world. No matter what the Federal Reserve or the US Treasury tried to do, they failed to please the markets. However in the last few hours of trading [...]

The US dollar dropped like a rock at the open of the Asian trading session on Sunday. It has been a long weekend for US government officials and the leaders of Wall Street Banks. Bank of America and Barclays pulled out talks to buy Lehman Brothers as the government refused to provide sufficient funding. [...]

EURO BREAKS 1.40 HOW MUCH FURTHER CAN IT FALL?
The Euro broke 1.40 following the Reserve Bank of New Zealand interest rate decision as traders realized that the European Central Bank could cut interest rates over the next few months. Despite the hawkishness of ECB President Trichet, it should just be a matter of time [...]

Since the middle of July, a little less than 2 months ago, the Euro has lost approximately 1900 pips or close to 12 percent of its value against the US dollar. As the currency continues to slide and comes within a whisker of our 1.40 target, the next question on everyone’s mind is when [...]

This weekend, the US government announced that they have seized control of Fannie Mae and Freddie Mac, also known as the Government Sponsored Enterprises (GSEs). The sharp rally in the Asian and European stock markets as well as the move in Dow futures suggest that we will see similar strength in US stocks. [...]