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The Financials Pit Review

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For the week of March 10th, 2008

Mon, Mar 10 2008, 15:27 GMT
by Kalvin O’Brian

Pit Guru

U.S. Economy

It was only a matter of time before we dipped back below 1300 on the S&P and I believe this week will be more of the same. Last week the Fed came out and announced that in an effort to increase liquidity its Term Auction Facility (TAF) will auction $50 billion to banks on March 10th and another $50 billion on March 24th. This is far more than the original $30 billion amount that was set. They also indicated more auctions will be coming in the future if necessary to ease the credit crisis. Last week the U.S Labor Department said that there was an improvement in the unemployment rate in February from 4.9% to 4.8% while non-farm payrolls also declined 63,000. This drop was weaker than expected and was the largest drop in the last 5 years. The January non-farm payrolls number was revised from down 17,000 to down 22,000. In December, the number was revised from a gain of 82,000 to a gain of 41,000.

What does this mean for traders? Play down to support at 1250 and keep your stops close there will be short in day rallies thanks to discount shoppers.

Currencies

The unemployment rate in Canada remained at 5.8% in February, the lowest in 33 years, with a net gain of 43,300 jobs, much more than expected. This information still left the Canadian with a down day on Friday but this week it should climb with help from crude and gold.

The Bank of Japan met and kept its interest rate unchanged at .50%, as expected. For the first time in almost a decade foreign exchange traders are confident that the Bank of Japan won't intervene in the currency market, creating a perfect scenario for the yen to extend its biggest rally since 2000. This market can and will continue to rally.

Published on  Mon, Mar 10 2008, 15:28 GMT