The Market Ticker

Challenger Layoffs up 15.9% this month.

Leading industries? Auto and energy, along, of course, with financials.

Housing-related layoffs fell? Yeah, right!

Consumer spending appears to have gone off a cliff. Been to the mall lately? Where's the crowd carrying shopping bags? You know, evidence of actual consumption?

I love the people who say "oh but traffic is up!" Well yes, we've trained our Pavlovian dogs well to salivate at the possibility of spending... but when the card is blackened....

ADP Employment report came in up 189,000?! Two and a half times the estimate?

WHAT?!

Friday is going to be really interesting now! Anticipation was that we'd get a horrible print and that would give The Fed plenty of room to cut rates.

Now, well...... wait - didn't the market basically price in 50 bips of cuts over the last week or so with that huge snapback rally? It sure did!

Now certainly, some of that was seasonal hiring (temporary) but what are we looking at here? Are we really going to get more liquidity injections and rate cuts into a market that appears to have no liquidity problems AND no immediate employment problems?

Uh, maybe not. And let's remember that the EFF is trading right at the FFT..... which would imply no movement in the Fed Funds target at all.

Productivity 3Q final +6.3%, Unit Labor Costs down 2% (both final)

You have to wonder where the market put the schizoid drugs. As soon as the ADP numbers sunk in the futures did a moon shot, up strongly, over 1% on all three major indices.

Uh, wait a second - last week we got a moonshot in the indices on the premise that the economy was weakening so The Fed would cut rates (even though The Fed doesn't set rates)

Now we get a strong employment print that suggests that The Fed has no reason to cut rates (again, although The Fed doesn't set rates) and the futures rally again.

And you wonder why I call equity investors "short bus" riders?

Anyway, at the end of the day there's no point in fighting the tape; clearly, the "pump monkeys" are more interested in mainlining some crack than looking at reality.

Oh, speaking of reality, 4Q and FY08 profit estimates continue to come down with the 4Q S&P500 numbers now approaching negative!

But but but....... it was all good, right? In October we rocketed to highs because there was no crunch, there was no problem, 3Q profits sucked but we'd have 11% in the 4th Quarter and double-digits into 2008.

Now profits don't matter either?

Guys and gals, a few things:

• Learn how the banking system and The Fed actually work. The Fed does not set interest rates. The Fed follows the cost of commercial credit.
• You buy stocks for earnings GROWTH. When you have profits DECLINING, it is just plain stupid to be buying stocks. You should be SELLING them.
• Oh, and don't be a polyanna. You can't have "a great market" because "The Fed will ride to the rescue and save the market", and then at the same time have a great market because "Jobs are great!"

This sort of irrational behavior was precisely what we saw towards the end of 1999 and into early 2000.

Oh, and back then you had Abbey Cohen pumping stocks too - just as she's magically reappeared in the last few days to..... pump stocks.

'Nuff said.

Oh, today Bush (and of course Hitlery) trot out plans to "Freeze ARMs for five years".

Do any of these politicians have a brain? Let's think about this one for a minute.

Abrogation of contracts cause the following, immediately:

1. Lawsuits. Lots of them. Illegal "taking", theft by conversion and on and on and on. That will go on for years.
2. The ARM mortgage has been officially taken out and shot. That will cause an instantaneous cratering of the housing market (beyond what's already happened!) in any place where house prices are beyond affordability limits for people on 30/fixed mortgages. That'd be, oh, most of the country.
3. Securitization? Ha! Oh yeah, I want to be long a securitized bond in this situation. Heh, just curious - how many billions worth of ARMs do Freddie and Fannie have on their books? Oh, I wonder what this does to the NIM on their book? AIEEEEEE!

Yeah. This ought to be cute. Wait until the market gets its ARMs around the implications of these schemes....

Here's the technical......

PS: No Tickers until Monday; gonna be doing family stuff.... enjoy!