Working Group On Financial Markets

The President made some general observations about the economy today after his meeting with his Working Group On Financial Markets. Excerpts:
"This economy of ours is on a solid foundation, but we can't take economic growth for granted. And there are signs that will cause us to be ever more diligent and to make sure that good policies come out of Washington. For example, we've had 52 straight months of job creation, but job growth slowed last month. The core inflation is low, but U.S. consumers are paying more for gasoline and for food. Consumer spending is strong, yet the values on many of the homes in America are beginning to decline, which leads me to say to the American people: For those of you who are paying more and are worried about your home, we understand that. That's why we have an aggressive policy to help credit-worthy people stay in their homes."

Today's White House Fact Sheet on the economy is here.

Meanwhile,unemployment rate jumped to 5 percent in December from 4.7 percent in November, more than the 4.8 percent analysts expected and the highest level since November 2005.

While energy traders could have interpreted that data positively -- in the past energy investors have seen reasons to buy in any economic news likely to prompt the Federal Reserve to cut interest rates -- traders are becoming more concerned that record high energy prices are helping to push the economy into recession.

"The Fed's response to the housing crisis been essentially to aggressively cut rates but that has come at the expense of the dollar and has fed directly in to commodity price inflation."

Next week,weekly reading of initial jobless claims(Thursday) while on Friday import prices for December, expected to rise 0.2 percent, will be watched to see if inflation is quickening.

Investors will watch November pending home sales data on Tuesday, expected to show a 0.5 percent decline. A consumer credit report on Wednesday, also for November, will be watched for possible further credit tightening, which could cut into consumer spending.

Tracking the Dow on Friday,4th January,2008

U.S. stocks tumbled on Friday on a Labor Department report that outlined weak job growth and rising unemployment in December. Towards the closing bell,the hammer and the hangman near the lows of the day depicts a weakening Wall Street.

The psychological 13,000 barrier has been breached and the downtrend has begun.

Bernanke is scheduled to speak in Washington on Thursday about financial markets, the economic outlook and monetary policy.Will the market be dragged down further till the 3rd Friday of the month on index expiry before any light be seen?