It has been over a week since my last post and the market has continued up thanks to a boost on Friday.  I happened to be watching the market on Friday when the US reports were released.  In seconds the FTSE went from minus 30 (it had been at minus 56 a little while earlier) to plus 20, finishing the day at plus 48, for an intraday movement of over 100.  Volatility is not dead yet, but was this move justified?

The cause was better than expected non-farm payrolls number, only 247,000 jobs disappeared (-325,000 expected), and even more surprisingly the unemployment number dropped from 9.5% to 9.4%.  How can this be when the day before initial unemployed came in at 550,000, and the average time it takes to find a new job has blown out to over half a year.  So how can the unemployment percentage drop?  It depends on who you count as unemployed.  When a persons unemployment benefit runs out they are no longer counted as unemployed, just what category they now fall into does not matter to the bean counters.

There are moves afoot to extend unemployment benefits in the worst hit states by another 13 weeks.  Mean while the government is hemorrhaging money. Cash for clunkers is the latest, boosting car sales, mainly for Ford. But again only by giving away taxpayers money to people that don’t really need it.  As soon as you drive a new car out of the show room it has lost 25% of its value.

Banks are failing at a steady rate, but it no longer affects the market. What does it matter if a bank fails, the FED steps in and business continues as normal.  In the old days when a bank failed the depositors lost their money, no longer though, so it does not matter if the bank “fails”.  With this weeks failure of three banks the total for the year is now 72.

The market has got well ahead if its self. It will correct but from what level, that is the question.