Pink Slips - January 2009

http://www.forbes.com/2009/01/09/january-layoffs-fires-lead-cx_kk_0109january09layoffs.html?partner=yahootix

January still has 8 more days to go.

Rapid Stats: Employment Figures

I love numbers. It is sexy. You can report all sorts of numbers, and they can be twisted in a way that suits a situation. However, there is nothing good to report from the numbers below. I believe that Canada is only going to start to see increased unemployment, especially in the oil/energy and automobile sector of the economy.

U.S.

• The U.S. unemployment rate is 7.2 percent in December, the highest level in 16 years, as nervous employers slashed 524,000 jobs
• The unemployment number, however, wasn't. And the 7.2% unemployment rate -- which rises to a whopping 13.5% if you use the broader figure which includes the underemployed as well -- is very, very scary
  

Source: http://seekingalpha.com/article/114055-yet-another-gruesome-employment-report

Canada

• Canada's jobless rate up 6.6% in December 2008, an increase of 0.3%
• Weakness in the construction industry was a major factor in the December jobs report, with 44,000 jobs lost in the sector. Statistics Canada said
• Employment edged down in most provinces, with Alberta posting the largest loss as it shed about 16,000 jobs. The province's unemployment rate rose by 0.7 percentage points to 4.1 per cent, but that was still the lowest in the country.

Source: http://www.cbc.ca/money/story/2009/01/09/unemploymentdec.html?ref=rss

Embrace the Unknown

The harder it is to predict the direction of the markets, the more important investors need to keep things simple. With a tug of war going on between post-Christmas rally and the return of the bears, less information is more.

Concentrate on monitoring the key figures that actually matter: job count, housing prices, and LIBOR spreads.

The Bad news: Latest figures
Jobs

• Continuing to claim jobless benefits jumped unexpectedly by 101,000 to 4.61 million
• Unemployment figures due out Friday are expected to show that the U.S. lost a net total of 500,000 jobs in December
• job cuts are expected to send the unemployment rate to 7 percent in December, up from 6.7 percent the previous month

December Sales

• The International Council of Shopping Centers-Goldman Sachs same-store sales tally dropped 1.7 percent for December, (estimate was for a 1 percent decline
• Same-store sales for the November-December period dropped 2.2 percent, the weakest holiday period since at least 1969
  

The "Good" News:

• Jan 20 - possible news for a $775 billion package of tax cuts and government spending over two years to revive the moribund economy (up to $850 billion with add-ons by lawmaker)

Source: http://news.yahoo.com/s/ap/20090108/ap_on_bi_go_ec_fi/financial_meltdown_20

Job Losses a Concern

Personal Notes:
I briefly celebrating a top-5 position with an "elite" ranking on FSX Player, a stock trading game on Facebook, before falling to 8th for the week. I strongly recommend that even seasoned, experienced investors join the trading game. Investors may test trading strategies without real-world losses.

Now on to the Negativity:
The U.S. reported unemployment rose to 6.5%. The total job loss for 2008 is now 1.2 million. Both GM and Ford reported very poor results, and announced intentions to layoff staff. The theme for the economy remains unchanged. This ongoing theme might be hidden amongst all the headlines about bailouts and stimulus packages from other global nations.

The economic theme is as follows:

• The automobile market is experiencing a "depression-era" economic downturn, precipitated by but suffering more than the housing sector
  
• The financial sector will benefit from loosening liquidity in borrowing
  
• Housing is severely weak in the U.S. and its problems are only slowly showing up in other nations (Canada, Europe, China)
  

The unemployment report needs to be assessed. Growing job losses is now only beginning to feed into the consumer sector. I had already noted that semi-conductor/IT companies warned on weaker revenue last month. This leading indicator makes it no surprise that consumers will spend far less in the months ahead. Christmas is only one month away, but consumers have already been cutting back.

At this time, day traders would benefit most from a market moving in no particular direction. I continue to monitor and search for longer-term plays, as I prefer to hold a few quality companies/ETFs that will make money over an extended period of time.

Investor interested in products/sites I promote, or for my research report should email me at chrispycrunch [at] gmail [dot] com.

A Long Idea: Activision


Activision is displaying a technical signal. A rally to $14US is possible. The stock is trading relatively stronger to the S&P500 (not shown). Fundamentally, the company has a very good basket of products that will appeal to the consumer. The product success and mix is important for the company, because weakness in consumer spending in the next few months is expected.