Commentary: The pace of first-time jobless benefits filed last week were little changed from the prior period - which strongly suggests tomorrow's much anticipated July nonfarm payroll report will show new job creation during the month of something in the neighborhood of 90,000. At that pace, the national jobless rate is almost sure to remain at 9.2%. Current rate sheets already reflect investors' expectations for a puny July employment story. To put the current trend favoring fractionally lower interest rates at risk -- tomorrow's headline payroll number will need to exceed 120,000 or more. While such an outcome is certainly possible - it is not very probable.
I am watching trading action in the stock markets closely. My models are suggesting the Dow Jones Industrial Average is building a bottom as it trades in the 11,600 to 11,500 range (11,532 is the intraday low so far). If my assessment proves accurate - the "flight-to-quality" flow of capital out of the stocks and into the relative safe haven of Treasury debt obligations and mortgage-backed securities will begin to tapper off rather quickly -- an event likely to bring the recent rally to notably lower interest rates to a abrupt end as well. In my judgment the threat of a stock market rally will dissipate should the Dow Jones Industrial Average fall and close below the 11,300 level and/or a meaningful rally for stocks has not developed before the Labor Day Holiday break.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
