NFP

Written by Hugh, on September 7th, 2007

How about those non-farm payrolls? NFP is of course a report of the number of people employed at non-agricultural businesses. I wasn’t able to trade last night and missed out on some pretty substantial moves. For the first time in 4 years

NFP has been down and is one of the first major signs that the US economy is weakening.

I was watching CNBC in the hotel room on my trip on Wednesday and one segment featured a few people talking about rate cuts. It sounded like some people were still on the fence about if the Fed will cut rates or not. After this employment showing, it seems likely that they will cut rates this month…now it’s a matter of how much.

Personally, I don’t know if they will go as far as to cut it 50 points on this first time around. I think Ben and company will probably take it easy on this cut. If they were willing to cut the discount rate and allow concessions to Citi and BofA before cutting the benchmark rate, that tells me that they don’t want to cause a major painc in the markets and will not do anything too drastic unless completely necessary. I’m looking for a 25 basis point cut and I think it might still be a little too early to tell if additional cuts are going to be necessary. Of course I could be wrong.

I’m not a doom and gloom type of person, but I also think that we are in a recession. Of course you never know that you are actually in a recession until later when the analysts tally all the numbers. But the signs are there, inversion of the yield curve earlier in the year (short term rates higher than long term rates), stock market volatility, economic pressure (subprime) and job losses (probably mostly due to subprime). But that’s just my opinion.

The great news is that you can still make money! In fact, sometimes you can make more money in a down market than an up market, but you have to know what you are doing.

I hope you have a great weekend and I am back from my trip so I look forward to trading again next week.

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