2/5/10

Good morning. Yesterday’s stock market drop dominated the financial news and the markets did not pay much attention to Non-Farm Productivity increasing over 6% during the fourth quarter of 2009. Efficiency in the last nine months of 2009 soared at the fastest pace since 1966 as companies cut worker hours even after sales stabilized. And Factory Orders for November were up 1%, better than expected. But the focus, and one of the reasons given for stocks taking a beating, was on Jobless Claims which hit a 7-week high.
There is certainly a lot to be nervous about. There is the concern that around-the-world budget deficits will need to be financed by issuing more debt. Oil prices declined over 5% while gold prices also fell, down over 4%. This morning, Non-Farm Payrolls fell 20,000 in January which was less than expected. Conversely the Unemployment Rate dropped to 9.7%, once again highlighting the fact that a sharp increase in the number of people giving up looking for work helped to depress the jobless rate. After this news surprisingly, mortgage prices are holding steady.