What to Watch This Week
Given the lack of noteworthy earnings announcements and economic indicators for the coming week, I would normally use this time to offer everyone a chance to step back from the headlines and relax.
Under the circumstances, I know better!
This week, expect further developments from companies such as Citigroup and GM whose situations have become precarious to say the least. I am hoping this may spur government into further action.
On Thursday, expect retail sales figures to reinforce any volatility found in the market, and Friday's Consumer Sentiment figures will remain historically low.
What I Saw Last Week
From time to time I enjoy the chance to revisit past quotes from my columns and reflect on what has changed in the world. Over a mere three weeks, it's scary how quickly our economic picture has deteriorated. This is a quote pulled from the Feb. 16 column:
"Last week had some concerning moments with the stock market's substantial, albeit brief, drop midweek following Treasury Secretary Timothy Geithner's lack of clarity in announcing a feasible plan to remove toxic bank assets.
Other than to show Secretary Geithner that Wall Street demands clarity, the following rebound served as a pulse check for those who continue to believe that 7,900 was/is a point of capitulation in the Dow. This is a level that I also have been stating is a support level."
By market close on Thursday of last week, the Dow was down 281.40 points to end at 6,594.44. This marked a single day drop of 4 percent and a staggering 1,305.56 decline from the 7,900 level that had been touched upon just three weeks prior.
The speed at which the equity markets have declined is astonishing, and it is my sincere hope that the current administration sees that Wall Street is looking for greater direction and detail relative to proposed stimulus measures.
Last week's Column emphasized the importance of watching Monday's Institute for Supply Management Index (ISM), Tuesday's Pending Home Sales Report, and Wednesday's Fed. Beige Book and initial unemployment claims announcement. In follow up:
:: The Institute for Supply Management's factory index, which is a national survey of purchasing managers, rose to 35.8 in February, an improvement from January reading of 35.6, yet still a signal of contraction as it remained below 50.
:: The Pending Home Sales Index, as reported by the National Association of Realtors, fell 7.7 percent to 80.4 in January, down from December's figure of 87.1. This figure was far worse than analyst anticipation and functions to show the impact of jobs being lost around the nation.
:: The Fed's beige book announcement made it painfully clear that the economy continues to deteriorate as we continue to progress into 2009. The survey offered this very straightforward conclusion: "National economic conditions deteriorated further... The deterioration was broad based, with only a few sectors such as basic food production and pharmaceuticals appearing to be exceptions."
:: The Labor Department announced: "In the week ending Feb. 28, the advance figure for seasonally adjusted initial claims was 639,000, a decrease of 31,000 from the previous week's revised figure of 670,000."
ADP's announcement effectively overshadowed the announcement with their own, indicating private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. While stomach churning, this actually proved to be above some analysts expectations!
NWMLS statistics released during the week, as I often say, were uninspiring.
Other eye catching announcements came in the form of GM's audit, which hinted at the possibility of an upcoming bankruptcy, Citigroup trading below $1.00 per share, Boeing experiencing a sharp decline in airplane orders in February, and controversy surrounding Microsoft's planned reduction in contractor pay.
Anecdotally and on a positive note, I did notice a slight uptick in local investment headlines, specifically, in Seattle's multifamily market.
Also, hidden behind Expedia's undisclosed number of layoffs, some rumblings of hiring at Microsoft, and plans to put layoffs on the backburner at Starbucks.
Quote of the Week
