With a slowing economic rebound, unemployment fears are rising again. In fact, employers are unlikely to increase hiring for the rest of the year and it’s possible that unemployment could once again reach double digits.
With economic growth at only 2.4% as released on Friday, this has been the economy’s weakest report in nearly a year. Many economists think it is growing even slower. Consumers are spending less and companies are slow to restock their shelves.
Consumer spending rose only 1.6% down from 1.9% in the first quarter. Even the Commerce Department reported that the recession is indeed deeper than previous thought. And that doesn’t even include our nation’s trade deficit which had a much bigger impact last quarter.
Many expect unemployment to rise back to double digits by December and into next year. With the government stimulus winding down, consumers and businesses will only decrease their spending.
Now, Congress may be feeling the pressure to pass more stimulus, but so far, Republicans (and even a few Democrats are breaking ranks) by blocking additional spending measures over fears of an unsustainable national debt. With a recovery that is fizzling out, many concerns have now arisen about whether or not the economy can hold back a “double-dip” recession.
On Friday, regulators closed banks in four more states raising the number of U.S. banks to 108 that failed as the industry continues to grapple with the growing number of loan defaults--both commercial and residential. The FDIC closed banks in Port Saint Joe and Panama City, Florida; Acworth, Georgia; Longview, Washington; and in Eugene, Oregon.
Georgia and especially Florida are among the states with the highest numbers of bank collapses because this is where the real estate meltdown was really focused. With 108 closures so far, the pace outranks 2009 quite a bit as there were “only” 69 banks that had been closed. And this pace will probably only accelerate at least through the end of this year and likely into next.
From a fundamental perspective, things are indeed very bearish--yet the SP-500 spiked higher by over 24 points today and it looks like the momentum will continue--so what gives?
Oftentimes the facts will detach from the charts as investors trade off of what they think will happen down the road.
There have been several pieces of bullish news lately and that has really buoyed the markets; however the overall picture is still bearish. This 'confused' trading is actually very attractive for us spread traders as stocks tend to run in both direction without a truly sustained move either way--exactly what we like to see.
What are the Secrets of the Week?
The Federal Reserve is looking into new ways to bolster the recovery, but as we head into the third quarter and with little momentum, many key metrics are tracking weaker. But fortunately for us, we trade with enough room on either side to breathe easy inside a very broad range of movement. We have three high probable ETF plays for the week, so let’s get started.
You can get in on these trades along with two new high-probability trades per week by clicking here now: www.cashflowheaven.com/ws
Stack the Deck on Every Trade,
Robert
To all our subscribers, God Bless and have an awesome trading week!
To access your free special report on how credit spreads can stack the deck on every trade you make for consistent profits go here now: www.thewinningsecret.com.
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