This Week; we believe will be one of the most important weeks in the last few months for the financial markets. Very key economic data this week; but none more important than Friday's Feb employment data. The key data points this week are personal income and spending for Jan, both ISM manufacturing and services reports, Feb auto and truck sales, and the Fed's Beige Book release. What will make this somewhat of a watershed week, and the relevance of the data releases, is what occurred last week with the very deep decline in consumer confidence. Markets are translating the collapse in confidence to more job losses and no improvement in wealth. We will add that many consumers that have managed to hold on, and hoped to wait the recession out, are now beginning to retreat as the end is slipping farther out for many that so far have "weathered" the economic recession. The early estimates for the Feb jobs report are for just 20K jobs lost and the unemployment rate to increase to 9.8% from 9.7% in Jan. Early this week we are not expecting any additional improvement in the bond market, and equity markets to be relatively quiet. Based on the early estimates for the non-farm jobs, we believe the decline in jobs will be more than that, and the unemployment rate will be closing back toward 10%. The decline in interest rates last week had two legs; the continued increase in sovereign debt caused by debt problems in Greece, and safe haven moves by investors into treasuries that are taking some money off the table. Look for the week to become increasingly volatile at mid-week as players make adjustments for employment data.
