The past year was marked to be the worst year the Americans lived through after the Great Depression, the endless turmoil had seized the economy leaving it with a total of 2.59 million terminated jobs, pushing the unemployment rates to the highest since January 1993, now the United States is in no shape of hiring workers due to their endless fear from the protracted Credit Crisis which stole all the confidence.
No money to spend, household incomes continue to deteriorate with more jobs terminated, according to some surveys which where held previously it shows that Americans are spending money in hesitation heading only to the discounted items believing that the turmoil is not over yet and more downturns are to be seen this year.
December the main month retail sellers depend on because citizens across the world head toward the shops just to spend money, but the squeeze in cash this last year along with the long lost confidence had resulted in anchoring those levels to some historical lows.
This pessimism got backed up by the failure of the TARP bailout, which gave the treasury a wide open door to purchase preferred stocks in more than 140 companies just to provide them with cash to continue functioning. Yet a total failure was stamped on the TARP file because since it was established, it did not spread any tranquility rather than cushioning various banks and cooperation from filing for bankruptcy.
After the surge in the Unemployment rates and the continuous failure of the TARP bailout the US indices fell heavily for the first time since this year started; Dow Jones industrial average fell 1.64% or 143.28 points reaching 8599.18 levels recording a 2.02% losses since the beginning of the current year, S&P 500 fell 2.13% or 19.38 points reaching 890.35 levels and NASDAQ lost 2.815 or 45.42 points reaching 1571.59 levels.
The fall in indices seen on Wednesday was a result of the revised down profits, as the big chain stocks such as Macy's Inc and Gap said earlier that the sales fell in the holiday season leaving them with the worst earnings in a while.
Distress continues; markets are waiting to see more fundamentals released from the United States with expectations that weakness is obvious this week. Tomorrow we will start with the Trade Balance reading with expectations that the deficit narrowed down to $51.0 billion from the previous $57.2 billion as the weak dollar continues to bolster the export levels,
Later on the week the Retail Sales reading will be released which would be clearing that sales fell in December by 1.2%, and the excluding auto's reading will be falling with a total of 1.4%. Also we will see that import prices dipped down to -5.3% according to the median estimate and falling down on the year to -9.5% levels.
On the other hand, producer and consumer prices dipped in negative levels in December due to the fall in crude prices along with ongoing slowdown in the world's demand on various goods.
In December crude prices continued the steep fall which started on July 2008 after reaching to an unprecedented high at $147.28 per barrel, to close at $35.14 per barrel at the end of the prior year. The fall in crude prices due to the weakening global demand on the black gold had pushed prices down, as today February contracts reached a low of $39.71 per barrel.
From the European Continent we have got the zone's rate decision, the ongoing weakness in markets from the protracted Credit Crisis which materialized in the real economy had pushed markets participants to believe that a rate cut would be taken by the European Central Bank later this week.
According to the median estimate a 50 basis points will be reduced from the zone's benchmark rates reaching 2.00%, yet doubt is still filling markets because Trichet and various members from his committee said that no real fundamentals will be released before February also adding that they want to see the effect of the past rate cuts before taking any further attempts.
Economies continue to struggle with the prolonged Credit Crisis even after most governments intervened in order to spread back tranquility in their markets.